The Surface Transportation Board has finalized a rule requiring railroad carriers to let competitors onto their tracks if there are service delays.
The rule, unanimously adopted Tuesday by the 5-member board, allows the agency to authorize “reciprocal switching” agreements if railroads fail to meet their estimated times of arrival, if transit times for shipments deteriorate from a standard, or if railroads struggle to perform local deliveries and pick-ups of railcars within a planned service window.
"The new reciprocal switching rule provides access to competition where there was none. And most importantly, we are allowing competition between carriers to be the driving force for better service, rather than heavy handed dictates by the Board," STB Chairman Marty Oberman said in a statement.
"Shippers can petition the board to prescribe an agreement if Class I carriers — a category of railroads that earn more than $250 million per year — struggle to meet those service standards," Oberman said.
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Agreements can last between three and five years. If carriers are able to show that service levels stem from unexpected surges of 20% or more in traffic, highly unusual shipment patterns, “acts of God" beyond their control, or delays stemming from the dispatching choices of a third party, they could be excused by the board from a reciprocal switching agreement.
National Grain and Feed Association President Mike Seyfert said data-sharing measures in the final rule "will serve to both inform and incentivize railroad performance." He called on the agency, however, to do more to improve service, including finalizing a "petition for rules that govern rail carriers' use of private railcars."
A spokesperson for the Association of American Railroads said the organization is reviewing the rule but added "it remains true that the well-functioning freight market will almost always achieve better outcomes than bureaucratic mandates."
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