STB Proposes Rail Switching Rule Repeal: Boosts Shipper Access

The U.S. Surface Transportation Board (STB) has proposed a sweeping rule change to repeal regulations governing reciprocal rail switching, a landmark move aimed at dismantling long-standing barriers to freight rail competition. This initiative seeks to empower shippers by replacing prescriptive rules with a case-by-case evaluation system, aligning with a broader federal mandate to reduce regulatory burdens and promote market forces.

Main Body:

In a significant policy shift, the Surface Transportation Board has formally announced a Notice of Proposed Rulemaking (NPRM) that calls for the complete removal of existing regulations that define the prescription of reciprocal switching agreements. According to the STB, the current framework imposes unnecessary regulatory hurdles for businesses seeking competitive rail access. The new approach would allow the agency to adjudicate shipper requests for switching on a case-by-case basis, a method the board believes aligns more closely with statutory intent and fosters a more dynamic, market-driven environment in the freight rail industry.

This proposal represents a fundamental departure from previous efforts to address rail competition. A prior STB rule, adopted in 2016, created a limited pathway for shippers to gain access to an alternative rail carrier. Under that rule, a shipper located within a terminal area and served by only one Class I railroad could petition the STB for a reciprocal switching agreement, but only if they could demonstrate that their rail service fell below specified performance levels. The new proposal effectively scraps these preconditions, potentially opening the door for a much wider range of shippers—including U.S. manufacturers, farmers, and energy producers—to seek competitive bids without needing to first prove poor service.

The timing of the STB’s action is directly linked to a wider federal deregulatory push. The board’s announcement follows the March 2025 launch of the U.S. Department of Justice’s Anticompetitive Regulations Task Force. This task force was established in response to a presidential Executive Order declaring a national policy for federal agencies to “alleviate unnecessary regulatory burdens.” By removing what it considers restrictive rules, the STB is positioning its action as a pro-competition measure designed to unleash market forces and enhance the efficiency of the nation’s supply chain.

Key Takeaways

• Increased Shipper Leverage: The rule change could significantly strengthen the negotiating position of “captive shippers” who currently depend on a single Class I railroad.
• Shift to Case-by-Case Adjudication: The STB will move from a rigid, criteria-based system to a more flexible, merits-based evaluation of individual switching requests.
• Alignment with National Deregulatory Policy: This action is a clear implementation of the executive branch’s agenda to reduce regulatory oversight and promote free-market principles in key industries.

Editor’s Analysis

This proposed repeal is more than a procedural adjustment; it signals a potential seismic shift in the competitive landscape of the North American rail freight market. For global logistics managers and shippers, this could unlock new efficiencies and pricing power within the U.S. supply chain. If enacted, the rule may force Class I railroads to compete more aggressively on service and rates, even in areas where they have historically enjoyed a monopoly. However, the industry should anticipate fierce opposition from the major railroads, who will likely argue that forced access undermines network efficiency and disincentivizes capital investment in infrastructure. The outcome of this regulatory battle will be a critical bellwether for the future of rail regulation, with implications for how markets worldwide balance the interests of infrastructure owners and their customers.

Frequently Asked Questions

What is reciprocal rail switching?
Reciprocal switching is a mechanism that allows a shipper served by a single major railroad to request access to a competing railroad’s line at a nearby interchange. The incumbent railroad is required to move the shipper’s freight cars to the competitor’s line for a regulated fee, thereby giving the shipper an alternative transportation option.

How does this proposed rule differ from the 2016 rule?
The 2016 rule permitted shippers to petition for a switching agreement only under specific, restrictive conditions, such as being captive to one Class I carrier and experiencing documented poor service. The new proposal seeks to repeal these limiting regulations entirely, enabling the STB to consider any switching request on its individual merits without these preconditions.

What are the next steps in the rulemaking process?
The STB has opened a public comment period. Interested parties must submit their initial comments by March 10, and reply comments are due by April 24. After reviewing the feedback, the STB will decide whether to adopt the final rule.