The shipper would need to show that:

• That the shipper’s/ receiver’s facility(ies) for which competitive switching is sought are served by only one Class I railroad.

• That there is no effective inter- or intramodal competition for the movements for which competitive switching is sought (with no consideration of product or geographic competition). The League provides some formulas for calculating whether there is not effective competition, such as that the controlling Class I carrier has handled 75% or more of the freight volume transported for a movement for which competitive switching is sought.

• That there “is or can be” a working interchange between a Class I rail carrier and another carrier within a “reasonable distance” of the shipper(s) facility(ies). Again, the League provides some proposed definitions of how this would be determined, such as facility(ies) are within a radius of 30 miles of an existing interchange at which cars are “regularly switched.

However, the League’s petition also proposes that a competitive switching request would not be required be on either rail carrier if the railroad can establish that the proposed switching is not feasible or is unsafe, or that the presence of a competitive switching arrangement will unduly hamper the ability of either carrier to serve its shippers.
Lastly, the proposal would allow shippers who cannot qualify based on the above rules to still petition the STB to force a competitive switching agreement.

According to the transportation industry analysts at Wolfe Trahan, "the proposal from the NIT League applies further pressure to the STB by providing the clearest and most specific example of what shippers seek and a clear timeline for when the STB must respond."

They added that they had spoken "with several lawyers who expect the STB to follow the NIT Leagues proposal and open up a rulemaking [session] to consider the possible changes."

However, that would set off a somewhat lengthy process sure to include vigorous counter efforts from the railroads. Wolfe Trahan believes that would take at least a year if not longer, followed by another period of time to implement the changes.

That also means it is possible the process could go past the 2012 elections, which might have the potential to change the climate in Congress and/or direction from the Whitehouse to the STB.

Another question even if the STB eventually adopts the new rules is whether there will be a set fee schedule, or the rates would be determined on a case by case basis.

Some studies, such as one the STB itself authorized in 2007, have found that reciprocal switching may be the most fair way to address the issues, versus other choices such as tightly regulated "bottleneck pricing."

That report from Christensen Associates noted that "reciprocal switching and terminal agreements were more likely to create favorable economic benefit/cost conditions than more sweeping access reforms."

The NIT League petition notes the strong support for such changes by many others, including the US Department of Agriculture, 25 different shippers associations, and individual companies such as Dow Chemical, Dupont, PPG and other chemical industry firms.

That is in part because reciprocal switching requirements could open up chemical companies in the Houston area that are now captive to Union Pacific to new service from Burlington Northern as well.

What do you think of the NIT League proposal? Is it enough? How much of an impact on rates and service will it have? Can the railroads fight back? Let us know your thoughts at the Feedback button below.