Association of American Railroads President and CEO Edward R. Hamberger expressed how the rail industry’s position, which remains unchanged, claims forced access is an ill-conceived approach that compromises the efficiency of the entire network.
The Surface Transportation Board (STB) on Wednesday proposed new regulations that it said will improve the availability of reciprocal switching.
“The proposed rules allow a shipper to gain access to another railroad if the shipper makes certain showings,” the STB said in a press release.
The STB said the action “is an outgrowth of a petition for rulemaking submitted by The National Industrial Transportation League (NITL) in July of 2011, which the Board is granting in part.”
In addition, the board expressed how the proposed regulations create an avenue for it to impose a reciprocal switching arrangement.
“Generally speaking, reciprocal switching refers to the situation in which a railroad that has physical access to a specific shipper facility switches rail traffic to the facility for another railroad that does not have physical access. The second railroad pays compensation to the railroad that has physical access, typically in the form of a per car switching charge. As a result of the arrangement, the shipper facility gains access to an additional railroad,” the STB explained.
Under the proposed rule, a shipper seeking reciprocal switching has to show that the arrangement is “practicable and in the public interest” or “necessary to provide competitive rail service,” the STB said.
In addition, the board expressed how it would make its findings “based on evidence presented by the shipper and the railroad.”
STB added, “The existing standard, which was adopted by the Interstate Commerce Commission in 1985, requires a showing that reciprocal switching is necessary to prevent an anticompetitive act. Since 1985, almost no requests for reciprocal switching have been filed, and none have been granted.”
The NITL told American Shipper in a statement, “We thank the STB for issuing a decision on the NITL’s proposal on competitive switching. Our member companies across a host of industries need this type of competitive, market-based rail transportation alternative. NITL is grateful that the board is providing a forum for stakeholder comment, and we look forward to responding on behalf of our members following further review and analysis of the STB’s decision.”
“I thank NITL for bringing their reciprocal switching proposal to the board for consideration and I am pleased that today we are granting that petition in part,” said STB Chairman Daniel R. Elliott III. “I encourage all stakeholders to participate in the notice and comment process and I look forward to meeting with them to hear their views directly.”
The Association of American Railroads (AAR) said it disagreed with the proposal.
“The freight rail industry acknowledges the complexities the STB had to take into consideration in arriving at this proposed rule, but, at the end of the day, the board should have dismissed the petition without further proceedings, as imposing new regulations like this are a step backward from the deregulatory path that has allowed railroads to make the capacity investments required to meet customer demand and further modernize a nationwide rail network that benefits shippers and consumers.” AAR President and CEO Edward R. Hamberger said.
“The freight rail industry’s position remains unchanged: forced access is an ill-conceived approach that compromises the efficiency of the entire network by gumming up the system through added interchange movements, more time and increased operational complexity,” he said. “Forced access would be a step backwards for the supply chain in our country as railroads would ultimately require more resources to move the same amount of freight, which would impact operational efficiencies introduced under the Staggers Rail Act.”
Hamberger said existing STB regulations already protect rail shippers as railroads voluntarily switch traffic under the current system, and by law, if freight can get from its origin to final destination only if it is carried by two or more railroads, railroads must cooperate to move the shipments.
STB proposes new regulations to improve reciprocal switching availability
