19 replies to this topic

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Forbes.com, 4/2:

Reciprocal Switching May Negatively Impact Railroads By Eating Into Revenues

In July 2011, the National Industrial Transportation League set forth a proposal to the Surface Transportation Board of the U.S. requesting that new rules be established regarding switching of freight between Class I railroads on request from captive shippers, if certain conditions were met. On March 25, 2014, the Surface Transportation Board again held a hearing regarding the proposal where the National Industrial Transportation League presented a report claiming that once implemented, the “Reciprocal Switching” would lead to a cost saving of $900 million to $1.2 billion for captive shippers. At the hearing, CSX, a leading railroad company in the eastern U.S., and the Association of American Railroads, an industry trade group representing primarily the major freight railroads of North America, argued that the loss arising from the proposal far outweigh the benefits. The Association of American Railroads claims that the proposal would lead to a loss of $7.8 billion in revenues for railroad companies.

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[CNJRoss]

STB news release 7/27/16:

 

SURFACE TRANSPORTATION BOARD PROPOSES NEW RECIPROCAL SWITCHING REGULATIONS, SEEKS PUBLIC COMMENT    
 

The Surface Transportation Board today proposed new regulations to improve the availability of reciprocal switching. The proposed rules allow a shipper to gain access to another railroad if the shipper makes certain showings. Today’s 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.


The proposed regulations create an avenue for the Board 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.


Consistent with the statute, under the proposed rule a shipper seeking reciprocal switching must show that the arrangement is “practicable and in the public interest” or “necessary to provide competitive rail service.” The STB would make its findings based on evidence presented by the shipper and the railroad. 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.


“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 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 Board’s decision in Petition for Rulemaking to Adopt Revised Competitive Switching Rules, EP 711, and its proposed regulations and request for public comment in Reciprocal Switching, EP 711 (Sub-No. 1), may be viewed and downloaded at the Board’s website, www.stb.dot.gov, under "E-LIBRARY / Decisions & Notices / 07/ 27 /16 " .

 

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[CNJRoss]

Bloomberg News, 7/27:

 

Railroads Must Switch Cargo to Rivals Under Proposed U.S.

The U.S. Surface Transportation Board proposed a rule Wednesday allowing shippers to switch cargo among large railroads if there’s reasonable access to competing tracks.

 

The regulation would potentially upend decades-old restrictions that limit shippers’ control of their own rail freight. Currently, rail carriers pick up cargo and carry it to its final destination without customers being able to request that it be dropped off for a competitor to handle.

 

The rule “would allow a party to seek a reciprocal switching prescription that is either practicable and in the public interest or necessary to provide competitive rail service,” the regulator said in a decision posted on its website.  .  .  .

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[CNJRoss]

Material Handling & Logistics, 8/7:
 

Will the STB Railroad Reciprocal Switching Decision Really Help Shippers?

 

The Surface Transportation Board’s proposal to allow railroad reciprocal switching garnered immediate praise from shipper groups, but after shippers have a chance to examine it more closely, they might not be as happy.

 

The board issued its proposed rulemaking notice on July 27 and public comments are due on October 25. The STB acted in response to a request filed by the National Industrial Transportation League (NITL) in July 2011—exactly six years earlier.

 

Reciprocal switching is defined as the switching of a railcar between the interchange tracks of one railroad to a customer’s private or assigned siding on another railroad for the purpose of loading or unloading freight. It is needed by shippers with rail spur lines that go directly to their facilities. 

 

Under the proposed rule a shipper requiring reciprocal switching must prove to the STB that the arrangement is in the public interest and needed for competitive rail service.  .  .  .

 

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[CNJRoss]

The Hill,  9/26:

 

Congress Blog - The Hill's  forum for Lawmakers and Policy Professionals

Meet the new Robber Barons

 

By Marc Scribner

 

There was a time when railroad tycoons built empires by exploiting government connections to take advantage of the little guy. Today, the tables are turned, and it is large multinational corporations trying to persuade the government to dictate rail industry practices in order to drive shipping rates below market prices. We have seen this before, and last time it nearly drove America’s private railroads to extinction.

 

SNIP

 

A Democratic-controlled Congress and President Jimmy Carter were brave enough to deregulate railroads in 1980. Since then, the United States has enjoyed a 45 percent decline in average inflation-adjusted rail rates,  .  .  .

 

SNIP

 

But now some shippers object to paying the market rates necessary to preserve such economic well-being. They claim they pay too much to use the special tracks railroads have built to support their operations and that the railroads have engaged in anticompetitive behavior. 

 

SNIP 

 

America’s deregulated major railroads now generate more than $270 billion in annual economic activity, directly employ nearly 170,000 workers, and support 1.5 million jobs indirectly, according to a recent Towson University study. It would be a grave mistake for the STB to continue treating these belligerent shippers as legitimate complainants—a mistake the United States cannot afford to make again.

 

Marc Scribner is a research fellow at the Competitive Enterprise Institute in Washington, D.C.

 

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[CNJRoss]

AAR news release:

 

 

AAR Submits Reply Comments to Surface Transportation Board Over Proposed Forced Access Regulation

 

 

 

 

WASHINGTON, D.C., Jan. 13, 2017 – The Association of American Railroads (AAR) today responded to comments filed by a group of shippers pushing the Surface Transportation Board (STB) for a new regulation that would force railroads to turn their traffic over to competitor railroads.

 

In its reply comments, the AAR outlined to the STB how the shipper comments "…do nothing to contradict the conclusion that the Board's proposed reciprocal switching rules are unlawful…" and "…the shippers are using the proposed rule as a means of circumventing existing rate regulation standards."

 

The filing also states: "…The narrow self-interest of certain shippers in a revenue transfer in their favor – based on government intervention that they would never tolerate in their own industries – cannot offset the multiple flaws in the Board's proposal."
 
The AAR contends the shipper comments underscore the need for the STB to terminate the proceeding and withdraw its forced access proposal because it violates the STB's governing statute, principles of sound economics, and longstanding policy without any coherent rationale. 

 

AAR President and CEO Edward R. Hamberger said forced access is an ill-conceived approach that compromises the efficiency of the entire network: "This proposed regulation represents a sweeping reversal of the market-based approach favored by Congress over the last three-plus decades," he said.

 

Hamberger pointed out railroads are capital intensive, and they must spend massive amounts of money on rail infrastructure and equipment so that taxpayers do not have to – a huge public benefit considering the crumbling state of many taxpayer-funded transportation enterprises.
 
"The impact of the STB's proposed changes would be far reaching, touching consumers, businesses and passenger rail lines from coast to coast," said Hamberger. "The government intervention into railroads' business and operations will inhibit their ability to invest sufficient funds back into the nation's rail networks to expand capacity, while they also meet the needs of a growing economy or further improving safety."

 

Hamberger again noted 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. 

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[CNJRoss]

The Hill, Washington, DC 10/24/18:
 

Incoming railroad regulators should protect consumer benefits

 

By Liam Sigaud, opinion contributor

 

 

President Trump’s three nominees to the Surface Transportation Board (STB) – whose nominations have been in limbo for months – may soon be confirmed by the U.S. Senate. If confirmed, these nominees will be responsible for overseeing the nation’s railroads, an industry that supports about 1.5 million jobs and generates nearly $274 billion in annual economic activity.

 

They’ll have their work cut out for them. A new report by the organization I work for, the American Consumer Institute, details how a proposal by the STB threatens to harm the rail industry and erode billions of dollars in consumer benefits.

 

The STB’s plan – known as “forced access” or “forced reciprocal switching” – would make it easier for regulators to require freight railroads to open their lines to competitors, regulate prices, and give preferential treatment to certain shippers. In effect, forced access compels railroad operators to subsidize would-be rivals and shippers through below-cost wholesale rates regardless of expected costs, revenues, and cash flows.

 

Liam Sigaud works on economic policy and research for the American Consumer Institute, a nonprofit educational and research organization. Follow on Twitter @ConsumerPal.

 

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[CNJRoss]

Railway Age, 12/14/21

 

Reciprocal Switch Peril Grows

 

 

No two words torment railroad executives and their investors more than “reciprocal switching”—a potential Surface Transportation Board (STB) decree that a railroad with sole physical access to a shipper facility transfer (switch) a shipper’s cars to a junction point with a second (competing) railroad. The second railroad pays a compensatory per-car switching fee whose reasonableness is determined by the STB.

 

To obtain reciprocal switching—known as “interswitching” in Canada, where it is in use for more than a century—the shipper must prove to the STB that the reciprocal switch is feasible and necessary to enhance competition.

 

Statutory authority to impose reciprocal switching dates to 1980, when Congress, in partially deregulating railroads, created safeguards against rail market power abuse where shippers are captive to a single railroad at an origin or destination terminal.

 

SNIP

 

Oberman also cited “significant changes in and affecting the rail industry” since the long languishing NPRM was issued at the NITL’s urging in 2011. Notably, not a single reciprocal switching remedy has been imposed by the STB or its Interstate Commerce Commission (ICC) predecessor since the mid-1980s.

 

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[CNJRoss]

Progressive Railroading, 1/31/22

STB won't delay schedule for considering reciprocal switching regs

 

 

The Surface Transportation Board (STB) has denied a request to extend the procedural schedule for the board’s proposed reciprocal switching regulations.

 

All procedural dates remain unchanged, including those for the public hearing beginning on March 15, STB officials said in a press release issued late last week.

 

The decision, and the scheduled public hearing, concerns the proposed reciprocal switching regulations under which the board would exercise its authority to require rail carriers to establish switching arrangements in certain circumstances.

 

 

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[CNJRoss]

AAR The Signal

 

February 15, 2022

 

 

Sign the Letter: Urge the STB to Scrap Forced Switching

 
The U.S. Surface Transportation Board is again considering a rule that would mandate forced switching among freight railroads. The agency will hold a hearing in March to examine this policy of forced access. GoRail is organizing a letter to the STB from all this policy would negatively impact. Sign a letter to the STB, urging them to reject the proposed rule on forced switching.

 

 

 

Dear Chairman Oberman and Members of the Surface Transportation Board,

"Continued investments are critical to safety and efficiency on this network. Because EP 711-1 stands to undercut rail revenues, it also stands to undercut the massive investments that enable efficient service. Less efficient service disadvantages rail customers and pushes them to other modes.

Especially in this moment, when our supply chain, economic recovery and environmental future are top of mind, rail is a tool that could address multiple national goals. For these reasons, we urge the Board to oppose the proposed rule on reciprocal switching (EP 711-1)."

 

 

 

Sign the Letter