[Federal Register Volume 88, Number 179 (Monday, September 18, 2023)]
[Proposed Rules]
[Pages 63897-63917]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-19543]
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SURFACE TRANSPORTATION BOARD
49 CFR Part 1145
[Docket No. EP 711 (Sub-No. 2)]
Reciprocal Switching for Inadequate Service
AGENCY: Surface Transportation Board.
ACTION: Notice of proposed rulemaking.
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SUMMARY: This decision proposes, in a new subdocket, a new set of
regulations that would provide for the prescription of reciprocal
switching agreements to address inadequate rail service, as determined
using objective standards based on a carrier's original estimated time
of arrival, transit time, and first-mile and last-mile service. To help
implement the new regulations, the Surface Transportation Board (Board
or STB) proposes to require Class I carriers to submit certain data,
which would be publicly accessible and generalized; and to adopt a new
requirement that, upon written request by a customer, a rail carrier
must provide to that customer individualized, machine-readable service
data.
DATES: Comments are due by October 23, 2023. Replies are due by
November 21, 2023.
ADDRESSES: All filings must be submitted to the Surface Transportation
Board either via e-filing on the Board's website or in writing
addressed to 395 E Street SW, Washington, DC 20423-0001. Filings will
be posted to the Board's website and need not be served on other
commenters or any other party to the proceedings.
FOR FURTHER INFORMATION CONTACT: Valerie Quinn at (202) 740-5567. If
you require accommodation under the Americans with Disabilities Act,
please call (202) 245-0245.
SUPPLEMENTARY INFORMATION:
Overview. In 2016, the Board issued a notice of proposed rulemaking
in Reciprocal Switching (2016 NPRM), EP 711 (Sub-No. 1) et al. (STB
served July 27, 2016), under which the agency would exercise its
statutory authority to require rail carriers to enter into reciprocal
switching agreements under 49 U.S.C. 11102(c). Due to developments in
the freight rail industry since the Board's 2016 notice, including
critical and ongoing service problems, the Board has decided to focus,
at this time, its reciprocal switching reforms on more specific and
objective remedies for
[[Page 63898]]
inadequate rail service. Therefore, the Board is closing Docket No. EP
711 (Sub-No. 1) and proposing a new set of regulations that would
supplement the Board's existing provisions on reciprocal switching in
cases where the rail carrier is providing inadequate service. A
separate notice announcing the closure is being published concurrently.
The newly proposed regulations would provide for the prescription
of a reciprocal switching agreement when service to a terminal-area
shipper or receiver fails to meet certain objective performance
standards. The proposed standards are intended to reflect a minimum
level of rail service below which regulatory intervention may be
warranted, considering shippers and receivers' need for reliable,
predictable, and efficient rail service as well as rail carriers' need
for a certain degree of operating flexibility. The Board proposes
that--when an incumbent rail carrier's service fails to meet the
performance standards, the incumbent carrier lacks an affirmative
defense, and the prescription of a reciprocal switching agreement would
be practicable--it is in the public interest to allow access to an
alternate rail carrier through prescription of a reciprocal switching
agreement, which is consistent with the public interest prong of
section 11102(c). The use of objective performance standards would also
provide predictability and efficiency in regulatory proceedings in
which a petitioner seeks a prescription. 49 U.S.C. 10101(15).
To facilitate implementation of the new regulations, the Board
proposes to require Class I rail carriers to provide, upon written
request by a shipper or receiver, that customer's own individualized
service data. Additionally, to ensure that the Board would have an
informed view of service issues across the network, the agency proposes
to make permanent the filing of certain data that the Board has
collected on a temporary basis in Urgent Issues in Freight Rail
Service--Railroad Reporting, Docket No. EP 770 (Sub-No. 1), and to
provide for consistency in reporting that data.\1\
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\1\ Following the completion of Docket No. EP 711 (Sub-No. 2),
the Board intends to take further action in Docket No. EP 770 (Sub-
No. 1) and in First-Mile/Last-Mile Service, Docket No. EP 767, in
which the Board invited comments on first mile/last mile (FMLM)
service issues.
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The Current Framework for Alternate Access through Reciprocal
Switching. Alternate access generally refers to the ability of a
shipper or receiver or an alternate railroad to use the facilities or
services of an incumbent railroad to extend the reach of the services
provided by the alternate railroad. The provisions of 49 U.S.C. 11102
and 10705 make three alternate access remedies available to shippers/
receivers and carriers: the prescription of terminal trackage rights,
the prescription of reciprocal switching agreements, and the
establishment of through routes. As discussed below, reciprocal
switching agreements provide for the transfer of a rail shipment
between Class I rail carriers or their affiliated companies within the
terminal area in which the shipment begins or ends its journey on the
rail system. The incumbent rail carrier either (1) moves the shipment
from the point of origin in the terminal area to a local yard, where an
alternate carrier picks up the shipment to provide the line haul; or
(2) picks up the shipment at a local yard where an alternate carrier
placed the shipment after providing the line haul, for movement to the
final destination in the terminal area. The alternate carrier might pay
the incumbent carrier a fee for providing that service. The fee is
often incorporated in some manner into the alternate carrier's total
rate to the shipper. A reciprocal switching agreement thus enables an
alternate carrier to offer its own single-line rate or joint-line
through rate for line-haul service, even if the alternate carrier's
lines do not physically reach the shipper's/receiver's facility. See
2016 NPRM, EP 711 (Sub-No. 1) et al., slip op. at 2.
A reciprocal switching agreement can be voluntary or may be
prescribed by the Board as provided in section 11102(c). Section
11102(c) authorizes the Board to require rail carriers to enter into
reciprocal switching agreements when practicable and in the public
interest or when necessary to establish competitive rail service. 49
U.S.C. 11102(c)(1). Currently, the Board has two sets of regulations
under which it considers whether to prescribe a reciprocal switching
agreement in non-emergency situations.
Part 1147 of the Board's current regulations addresses reciprocal
switching related to inadequate service. Under part 1147, the Board
will prescribe a reciprocal switching agreement (or terminal trackage
rights under section 11102(a) or a through route under section 10705)
if the Board determines that there has been a substantial, measurable
deterioration or other demonstrated inadequacy in rail service by the
incumbent carrier. 49 CFR 1147.1(a). Part 1144 governs reciprocal
switching to address a broader set of issues, including certain types
of complaints about pricing and/or service. Under part 1144, the Board
will prescribe a reciprocal switching agreement or through route as
necessary to remedy or prevent an act that is contrary to the
competition policies in 49 U.S.C. 10101 or is otherwise
anticompetitive, provided that certain other conditions are also met.
49 CFR 1144.2(a)(1); 49 U.S.C. 10101.
The 2016 NPRM. In the 2016 NPRM, the Board proposed to remove the
references to reciprocal switching from part 1144 and to create new
regulations at a new part 1145 to govern reciprocal switching. The new
regulations would have eliminated the requirement that the petitioner
show that the reciprocal switching agreement was needed to prevent an
act that is contrary to the competition policies in section 10101 or is
otherwise anticompetitive. Under part 1145 as proposed in the 2016
NPRM, the Board would prescribe a reciprocal switching agreement when
it either was practicable and in the public interest or was necessary
to provide competitive rail service, based on certain criteria. 2016
NPRM, EP 711 (Sub-No. 1) et al., slip op. at 16; see also id. at 9
(proposing to repeal part 1144 and to reverse the policy adopted by the
Interstate Commerce Commission in Midtec Paper Corp. v. Chi. & NW
Transp. Co. (Midtec), 3 I.C.C.2d 171 (1986), to the extent that the
agency indicated an intent to treat the two standards in section
11102(c) as a single standard).
In assessing whether a reciprocal switching agreement would be
practicable and in the public interest, the Board proposed a general
test that would consider whether the benefits of the proposed agreement
would outweigh its potential detriments, considering all relevant
factors. 2016 NPRM, EP 711 (Sub-No. 1) et al., slip op. at 18. Examples
of potentially relevant factors included (1) whether the arrangement
would further the rail transportation policy of section 10101; (2) the
efficiency of the proposed arrangement; (3) whether the arrangement
would allow access to new markets; (4) the impacts, if any, of the
arrangement on capital investment, quality of service, and employees;
(5) the amount of traffic that would be moved under the arrangement;
and (6) the impact, if any, of the arrangement on the rail
transportation network. 2016 NPRM, EP 711 (Sub-No. 1) et al., slip op.
at 18. The Board proposed not to find that the prescription of a
reciprocal switching agreement would be practicable and in the public
interest if either of the affected rail carriers showed that service
under the agreement is not feasible, is unsafe, or
[[Page 63899]]
will unduly hamper the ability of that carrier to serve its shippers.
Id.
In assessing whether a reciprocal switching agreement would be
necessary to provide competitive rail service for shippers served by a
single Class I railroad, the Board proposed to consider whether
intermodal and intramodal competition were effective with respect to
the movements for which the agreement was sought. Id. at 27.\2\ As with
the other test, the Board proposed not to prescribe a reciprocal
switching agreement based on certain feasibility, safety, or
operational considerations.
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\2\ The Board also proposed possible methodologies for
determining how an incumbent carrier would be compensated if the
incumbent carrier and the alternate carrier could not reach
agreement on their own. 2016 NPRM, EP 711 (Sub-No. 1) et al., slip
op. at 24-26.
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The Board engaged the public on the proposal in various ways,
including by receiving and reviewing filed comments, holding a public
hearing, and subsequently inviting supplemental comments. Board Members
also participated in ex parte meetings in which they received input
from numerous interested parties.
The 2016 NPRM and hearing generated a broad range of responses from
those supporting reform and those opposing the reciprocal switching
proposal. A fuller overview of the initial comments and replies
submitted in response to the 2016 NPRM can be found in the December 28,
2021 notice announcing the hearing. See Reciprocal Switching, EP 711
(Sub-No. 1), slip op. at 4-6 (STB served Dec. 28, 2021). Rail carriers
generally objected to modifications to the Board's current reciprocal
switching regulations. Other commenters suggested a streamlined
approach to reduce complexity and provide more certainty. Some
commenters recommended procedural changes, (see Shipper Coal. Comment
23-31, Oct. 26, 2016), and others raised concerns with various aspects
of the proposal.
Service Problems. As the Board was developing and considering the
2016 NPRM, it was also addressing a series of major service problems
plaguing the rail network. In April 2014, the Board announced that it
would hold a hearing to provide interested persons the opportunity to
report on recent service problems, to hear from rail industry
executives on plans to address their service problems, and to discuss
additional options to improve service. U.S. Rail Serv. Issues, EP 724,
slip op. at 1 (STB served Apr. 1, 2014). Docket No. EP 724 ultimately
led the Board to adopt rules requiring the Class I railroads, and the
Chicago Transportation Coordination Office through its Class I members,
to file weekly service data with the Board. U.S. Rail Serv. Issues--
Performance Data Reporting, EP 724 (Sub-No. 4) (STB served Nov. 30,
2016).\3\
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\3\ See also Revisions to Reguls. for Expedited Relief for Serv.
Emergencies, EP 762 (STB served Apr. 22, 2022) (proposing to amend
the agency's emergency service regulations and noting that, since
late 2013, railroad service challenges have periodically affected a
wide range of geographic regions and commodities).
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In April 2022, given widespread concern about rail service and
deteriorating trends reflected in the data collected, the Board
convened a two-day hearing to explore issues related to the reliability
of the national rail network. Urgent Issues in Freight Rail Serv., EP
770, slip op. at 1 (STB served Apr. 7, 2022). The Board stated that it
had been hearing from a broad range of stakeholders about inconsistent
and unreliable rail service related to tight car supply and unfilled
car orders, delays in transportation for carload and bulk traffic,
increased origin dwell time for released unit trains, missed switches,
and ineffective customer assistance. Id. at 2. Shippers also expressed
concern in the reciprocal switching proceeding that carriers' recently
adopted operating procedures have introduced new service issues and
that captive shippers have had little, if any, recourse during these
disruptions. (Coal. Ass'ns Comment 10, Feb. 14, 2022; Priv. Railcar
Food & Beverage Ass'n (PRFBA) Comment 20, Feb. 14, 2022; Indus. Mins.
Ass'n-N. Am. Comment, Feb. 14, 2022; U.S. Wheat Assocs. Comments, Feb.
14, 2022; Am. Fuel & Petrochem. Mfrs., Feb. 14, 2022.) \4\ The
Coalition Associations further asserted that service disruptions
following changes to a railroad's operating practices exposed the
inadequacy of the Board's current regulations to remedy service
disruptions effectively. (Coal. Ass'ns Comment 10, Feb. 14, 2022.) In
Docket No. EP 770 (Sub-No. 1), the Board has required additional,
temporary reporting of data needed for a timelier understanding of the
extent and location of acute service issues and labor and equipment
shortages and has required the four largest U.S. Class I rail carriers
\5\ to submit to the Board ``service recovery plans.'' Urgent Issues in
Freight Rail Serv.--R.R. Reporting, EP 770 (Sub-No. 1) (STB served May
6, 2022); Urgent Issues in Freight Rail Serv.--R.R. Reporting, EP 770
(Sub-No. 1) (STB served May 2, 2023) (extending the temporary reporting
period for all Class I rail carriers to December 31, 2023).
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\4\ A number of these parties sought reciprocal switching relief
as part of the acquisition of Kansas City Southern and its railroad
affiliates by Canadian Pacific Railway Limited. Canadian Pac. Ry.--
Control--Kan. City S., FD 36500 et al., slip op. at 83-85 (STB
served Mar. 15, 2023).
\5\ BNSF Railway Company (BNSF), CSX Transportation, Inc.
(CSXT), Norfolk Southern Railway Company (NSR), and Union Pacific
Railroad Company (UP).
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New Approach. Given the major service problems subsequent to the
2016 NPRM and the history of recurring service problems that continue
to plague the industry, the Board has concluded that it is appropriate,
at this time, to focus reciprocal switching reform on addressing
inadequate service. The Board recognizes that, over the past several
months, Class I carriers have taken steps that are intended to improve
service and that, in some cases, service has improved. These recent
developments do not, however, provide the certainty that is needed to
protect the public interest, as well as the interests of rail
customers, in adequate service on a general and sustained basis. The
Board expects that the more objective and transparent standards,
defenses, and definitions in this proposal, compared to the previous
proposal, would provide that certainty. Through the approach that is
proposed in this new subdocket, the Board intends to provide
appropriate regulatory incentives to Class I carriers to achieve and to
maintain higher service levels on an ongoing basis. The Board
anticipates that the data access and standardization provisions in this
proposal, which have no equivalent in the previous proposal, would
ensure and enhance these benefits.
Accordingly, to allow the Board to focus on service issues as
provided herein, and to advance more objective standards and related
defenses and definitions, the Board will not at this time adopt the
rules proposed in the 2016 NPRM. We will close Docket No. EP 711 (Sub-
No. 1) and instead propose, in Docket No. EP 711 (Sub-No. 2), a new
rule focused on more defined processes for the prescription of a
reciprocal switching agreement in cases of inadequate service.
As discussed more fully below, under part 1145, the Board would
find that prescription of a reciprocal switching agreement is
``practicable and in the public interest'' based on objective standards
measuring the adequacy of rail service and a straightforward analysis
regarding the practicability of the proposed agreement. 49 U.S.C.
11102(c). It is clear that both the reliable and timely delivery of
rail shipments and the efficient movement of shipments through the rail
system are essential to meeting the public need for adequate rail
service. The public need
[[Page 63900]]
for adequate rail service is, in turn, central to the design of the
Interstate Commerce Act, as amended by the ICC Termination Act of 1995,
Pub. L. 104-88, 109 Stat. 803: an essential aspect of the rail
transportation policy set forth in the Act is to ensure the development
and continuation of a rail system that meets the needs of the public
and the national defense. 49 U.S.C. 10101(4).
The Board's experience in recent service oversight proceedings
reaffirms that carriers' failure to provide reliable, timely, and
efficient delivery of rail shipments can result in serious consequences
for the transportation network and beyond. For example, in the year
following the Urgent Issues hearings in 2022, the Board has continued
to closely monitor rail service performance data submitted in that
docket and pursuant to 49 CFR part 1250.\6\ That data showed that, for
certain metrics, railroads did not meet the performance targets that
the railroads themselves set for improving service. Overall, the data
for key performance indicators--such as velocity, terminal dwell, FMLM
service (i.e., industry spot and pull), operating inventory, and trip
plan compliance--showed that railroad operations remained generally
challenged through much of the last two years, with associated impacts
on shippers and the public. Poor performance by rail carriers can
substantially impair shippers' ability to operate their businesses on
an economic basis. That impairment in turn harms the United States'
economy as a whole. See, e.g., Am. Fuel & Petrochem. Mfrs. Written
Testimony 4, Apr. 28, 2022, Urgent Issues in Freight Rail Serv., EP 770
(noting that its ``member companies have been forced to reduce facility
throughput and subsequently inform their downstream customers that
shipments may be delayed''). Inadequate rail service, particularly when
it can be avoided or mitigated, is therefore contrary to the public
interest. See Oversight Hr'g Pertaining to Union Pac. R.R. Embargoes,
EP 772, slip op. at 2-3 (STB served Nov. 22, 2022).
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\6\ Rail service data collected pursuant to 49 CFR part 1250 is
available on the Board's website at www.stb.gov/reports-data/rail-service-data/.
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Relationship to Other Access Rules. The new regulations at part
1145 would provide an independent basis for prescription of a
reciprocal switching agreement, separate and apart from parts 1144 and
1147, rather than replacing aspects of part 1144 as proposed in the
2016 NPRM, even though those parts, historically, have not been
utilized frequently by the rail shipper community.\7\ For the reasons
set forth in this NPRM, the Board has determined that the proposed part
1145 would provide an essential addition to the current remedial
framework. In particular, since part 1147 was promulgated,
technological advancements have permitted railroads to track and to
provide much more granular and timely service data, which in turn gives
the Board and other stakeholders a better view of service difficulties.
Accordingly, the Board's concerns in Expedited Relief for Service
Inadequacies about delineating specific standards for service adequacy,
see Expedited Relief for Service Inadequacies, 3 S.T.B. at 975, are far
less pressing today. Worrisome and persistent declines in service
reliability are more clearly demonstrated now than when the Board
adopted part 1147 in 1998.
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\7\ Although concerns about reliability also underlie part 1147
of the Board's regulations, 49 CFR 1147.1, see Expedited Relief for
Service Inadequacies, 3 S.T.B. 968 (1998), that rule does not appear
to have had its full intended effect. Among other things, part 1147
does not include provisions that provide certainty to industry
participants, such as by setting a minimum term for the duration of
a prescription thereunder. Despite demonstrated widespread service
failures across the national network, no petition for prescribed
access has been pursued under part 1147 in many years. Separately,
comments from shippers and their counsel indicate that they
interpret current part 1144 as unduly restrictive as to a shipper's
ability to obtain relief under part 1144. 2016 NPRM, EP 711 (Sub-No.
1) et al., slip op. at 8.
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The Board notes, however, that, even after the enactment of the
proposed new part 1145, shippers may still pursue access to an
alternate rail carrier under parts 1144 and 1147 and that these parts
do allow for continued development, including, as appropriate,
reassessment by the Board of adjudicatory policies and the appropriate
application of those rules in individual cases.
Indeed, in choosing to focus reciprocal switching reform on service
issues at this time, the Board does not intend to suggest that
consideration of additional reforms geared toward increasing
competitive options--e.g., further changes to the reciprocal switching
regulations (either with regard to the public interest prong or the
competition prong), or reforms regarding terminal trackage rights,
through routes, or the so-called ``bottleneck'' doctrine--is
foreclosed, whether in this subdocket or otherwise. For example, as
discussed infra at note 27, the Board is considering whether the
prescription of terminal trackage rights under 49 U.S.C. 11102(a) would
be an appropriate remedy for proven failures in local service.
To provide a clearer path to address the impact of service
deficiencies on the network, the new regulations at part 1145 would
provide for prescription of a reciprocal switching agreement based on
defined service standards pursuant to the ``practicable and in the
public interest'' prong of section 11102(c). Further distinguishing the
new approach from parts 1144 and 1147, the Board proposes to expressly
overrule the standards and criteria regarding reciprocal switching
established in Midtec as applying to any petition under the new part
1145. And a petition filed under the proposed part would not be
required to address any of the standards or criteria established under
part 1144.\8\
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\8\ Based on the long history of the Board's consideration of
issues stemming from Midtec and the ensuing caselaw, and the
numerous comments submitted in response to the 2016 NPRM, the Board
recognizes that stakeholders may have broader views of what actions
the Board should consider undertaking with respect to the residual
application of part 1144, as well as the application of other
competitive access statutes, regulations, and caselaw. In light of
the approach proposed in the new part 1145, the Board welcomes
comment on what other actions, if any, it should consider with
respect to competitive access and, in particular whether it should
further broaden the application of the public interest prong of
section 11102. See also infra note 27.
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Proposed Standards. The standards that are proposed here are
informed by the recent level of performance that carriers themselves
have acknowledged largely do not meet the expectations or needs of the
public. While, in some cases, an increase in shipping times might be
due to circumstances beyond the carrier's control, some carriers have
acknowledged that their service levels in recent years do not meet
customer expectations and must be addressed through carrier
improvement. See, e.g., BNSF Supp. Serv. Recovery Plan 1, June 23,
2022, Urgent Issues in Freight Rail Serv.--R.R. Reporting, EP 770 (Sub-
No. 1) (``[W]e note that BNSF's service has not been meeting our
customers' expectations for several months.''); CSXT Revised Serv.
Recovery Plan 2, June 23, 2022, Urgent Issues in Freight Rail Serv.--
R.R. Reporting, EP 770 (Sub-No. 1) (citing crew shortages as the cause
of ``ongoing congestion and delay on the CSXT network'' and discussing
recovery efforts); UP Revised Serv. Recovery Plan 4, June 23, 2022,
Urgent Issues in Freight Rail Serv.--R.R. Reporting, EP 770 (Sub-No. 1)
(describing an inability to maintain transit schedules and continued
efforts to achieving greater fluidity); NSR Revised Serv. Recovery Plan
2, June 23, 2022, Urgent Issues in Freight Rail Serv.--R.R. Reporting,
EP 770 (Sub-No. 1) (describing its ``aggressive efforts to
[[Page 63901]]
restore our service to what we and our customers expect'').
The proposed standards are intended to address (1) a rail carrier's
failure to meet its original estimated time of arrival (OETA), i.e., to
have adequate on-time performance; (2) a deterioration in the time it
takes a rail carrier to deliver a shipment (transit time); and (3) a
rail carrier's failure to provide adequate local (or FMLM) service, as
measured by the carrier's success in meeting an ``industry spot and
pull'' (ISP) standard. Each standard would provide an independent path
for a petitioner to obtain prescription of a reciprocal switching
agreement under part 1145.
That prescription would facilitate future line-haul service by an
alternate rail carrier but--of critical note--would not necessitate
that result. Under part 1145, the petitioner would not be required to
rely on the alternate carrier for any portion of the petitioner's
traffic during the term of the prescription. As a result, even upon
falling short of a performance standard in part 1145, resulting in an
award of reciprocal switching to the petitioner, the incumbent rail
carrier would have the opportunity (subject to contractual commitments
by the petitioner) to continue to compete for the petitioner's traffic.
Original Estimated Time of Arrival. To address poor performance in
timely delivery by a line-haul carrier, part 1145 would provide for the
prescription of a reciprocal switching agreement (and would facilitate
line-haul service by an alternate rail carrier) when the incumbent rail
carrier failed to meet an objective service reliability standard. The
Board finds that it is in the public interest to provide, by a more
easily administrable rule, for the prescription of a reciprocal
switching agreement when an incumbent carrier fails to provide reliable
service, both because a clearer and more objective rule would create an
incentive for rail carriers to provide adequate service in the first
instance and because, if a rail carrier did not do so, the affected
shippers and receivers would then have more certainty in their
opportunities to obtain line-haul service from an alternate carrier.
Rail carriers themselves recognized at the hearing in Docket No. EP 711
(Sub-No. 1) that prescribed access is an appropriate response to
inadequate service. (See Hr'g Tr. 938:12 to 939:21, Mar. 16, 2022.)
The new service reliability standard, based on the rail carrier's
OETA, would advance the public interest by establishing a reasonable
expectation that, after a Class I rail carrier provides an estimated
time of arrival for a line haul, the carrier will customarily meet that
estimated time of arrival. The proposed rule also recognizes that, in
some cases, delay may result from circumstances beyond the carrier's
control. The proposed rule would not require perfection in rail
carriers' operations, even in the absence of circumstances beyond the
carrier's control. But the degree and frequency of delays that have
recently characterized service by Class I rail carriers make clear that
the public interest would be better served by targeted regulatory
intervention that facilitates service by an alternate rail carrier when
service reliability has fallen below certain levels.
Transit Time. Part 1145 would provide for the prescription of a
reciprocal switching agreement to address deteriorating efficiency in
Class I carriers' movements, specifically when the incumbent rail
carrier failed to meet an objective standard for consistency, over
time, in the transit time for a line haul. This approach would promote
the public interest by providing an incentive for carriers to maintain
velocity through the rail system. This metric also helps to prevent the
possibility that a rail carrier would increase the OETA for a shipment
for the sole purpose of meeting the OETA performance standard--a
practice that could obscure inadequate service.
Industry Spot and Pull. Part 1145 would provide for the
prescription of a reciprocal switching agreement to address inadequate
local service, specifically when the incumbent rail carrier has failed
to meet an objective standard for completing the placement and removal
of shipment at a shipper's or receiver's facility during a planned
service window. As noted above, this local service is referred to as
industry spot and pull or ISP. Failures to complete local work as
scheduled impairs shippers' ability to conduct their business and
therefore impairs the public interest. (PRFBA Opening Comments 18, Dec.
17, 2021, First Mile/Last Mile Serv., EP 767; Sweetener User Assoc.
Comment 2, Apr. 18, 2022, Urgent Issues in Freight Rail Serv., EP 770
(noting that issues with local service have forced companies to reduce
production in key product lines and shut down manufacturing
facilities).) In addition, because some OETAs are calculated based on
constructive placement rather than actual placement, the ISP metric
also captures aspects of service adequacy that might otherwise be
missed.
Through reliance on these three performance standards (OETA,
transit time, and ISP), part 1145 would enhance implementation of
section 11102(c) and ultimately would help to advance the policies in
section 10101. As suggested above, the application of objective
performance standards for adequate rail service, as provided for in
part 1145, would promote predictability and efficiency in regulatory
proceedings thereunder, thereby reducing unnecessary regulatory costs
and ultimately strengthening rail carriers' incentive to provide
adequate service. Part 1145 therefore would advance the policies in
section 10101 of having a rail system that meets the public need, of
ensuring effective competition among rail carriers, of minimizing the
need for regulatory control, and of reaching regulatory decisions on a
fair and expeditious basis. See 49 U.S.C. 10101(1), (2), (4), (5),
(14).
Part 1145 would likewise enhance implementation of Sec. Sec.
11102(c) and 10101 by providing a minimum term for a prescribed
reciprocal switching agreement. By establishing a minimum term, part
1145 would allow for more effective planning and investment both by
rail customers and by alternate carriers, thereby encouraging their
voluntary participation in providing service and promoting more
workable opportunities for shippers. As discussed below, after the
minimum term, the Board could terminate the prescription if the
incumbent carrier demonstrates that it could meet the performance
standards, for example by demonstrating that it consistently has been
able to meet, over an appropriate period of time, the performance
standards for similar traffic to or from the relevant terminal area.
By more effectively addressing the public need for adequate rail
service, and by doing so specifically through a clearer and more
certain regulatory process, proposed part 1145 would appropriately
supplement other statutory provisions and regulations governing common
carriage and bills of lading. But the common carrier obligation and
laws governing bills of lading also have other implications. For
example, they provide for a private party to be compensated for losses
incurred by that party. See 49 U.S.C. 11101, 11706, 80111; 49 CFR part
1035, App. B. Thus, the common carrier obligation and laws governing
bills of lading are, to some extent, concerned with private remedies
against a railroad for past service failures. The Board recognizes that
regulations with objective standards, even those that recognize and
account for circumstances outside of a carrier's control, implicitly
value the benefits of certainty and
[[Page 63902]]
clarity over a process that provides for a more open-ended and case-
specific inquiry. Because of this trade-off, and the different and
oftentimes more severe or rigid form of liability and intervention that
would come with falling short under the common carrier obligation, the
Board does not view it as appropriate to apply, or draw from, these
proposed standards to regulate or enforce the common carrier
obligation. See, e.g., State of Montana v. BNSF Ry., NOR 42124, slip
op. at 7 (STB served Apr. 26, 2013); Granite State Concrete Co. v. STB,
417 F.3d 85, 92 (1st Cir. 2005).
As suggested above, the objective of part 1145 would be to
facilitate future service by an alternate rail carrier (without
mandating the use of alternate service) to help ensure that the
transportation system as a whole meets the public need. Part 1145 would
rely on evidence of past performance by the incumbent carrier to
identify patterns of deficient service that, due to the level and
duration of the deficiency, indicate the need for regulatory
intervention in the public interest. Due to the specific purpose and
form of regulatory intervention under part 1145, the performance
standards set forth in this NPRM as constituting the standard for
obtaining a reciprocal switching order from the Board are in no way to
be construed as constituting standards by which a railroad's compliance
with the common carrier obligation under section 11101(a) is to be
measured. In other words, a failure to comply with the performance
standards under the proposed part 1145 does not, standing alone,
establish a basis under other laws for seeking damages, or other
remedies related to the common carrier obligation, for service
problems. If the Board enacts part 1145, the Board does not intend the
performance standards therein to serve as a standard for performance by
rail carriers (whether as a baseline or as a cap) that would provide
the basis for relief under laws of common carriage, for relief under
laws that govern bills of lading, for prescribed access to an alternate
rail carrier under part 1147, for the prescription of emergency service
under part 1146, or for applying any other law.
Beyond the opportunity to seek prescription of a reciprocal
switching agreement under the proposed part 1145, a shipper or receiver
would continue to have the opportunity to seek prescription of a
reciprocal switching agreement (or other forms of prescribed access, as
applicable) under parts 1144 and 1147. Part 1144 provides for
prescribed access on a permanent basis when the competitive standards
therein are met. Part 1147 would accommodate temporary relief from
service issues that are not covered by the specific performance
standards in part 1145.
To implement part 1145, the Board would require Class I carriers to
make certain data available to customers. As such, within seven days of
a written request from a shipper or receiver, the incumbent rail
carrier would be required to provide that customer all relevant
individualized performance records necessary to bring a case at the
Board (i.e., the historical records necessary to ascertain whether a
carrier did not meet the OETA, transit time, and/or ISP standards). To
assist the Board with general oversight, the agency also proposes to
codify the collection of certain data concerning service, some of which
is currently being provided on a temporary basis in Docket No. EP 770
(Sub-No. 1). As a general matter, this material would also allow a
reciprocal switching petitioner to compare its service to that of the
industry or the incumbent carrier's service on a system and regional
level to see whether service problems are systemic and/or worsening.
Part I: Availability of Service-Related Reciprocal Switching Under
Proposed Part 1145
A reciprocal switching agreement provides for the transfer of a
rail shipment between Class I rail carriers or their affiliated
companies \9\ within the terminal area in which the shipment begins or
ends its journey on the rail system. Reciprocal switching is merely
incidental to a line haul.\10\ A terminal area is a commercially
cohesive area in which two or more rail carriers undertake the local
collection, classification, and distribution of shipments for purposes
of line-haul service.\11\ A terminal area is characterized by multiple
points of loading/unloading and yards for local collection,
classification, and distribution. Pa. Co., 236 U.S. at 359; Midtec, 3
I.C.C.2d at 179; Golden Cat, NOR 41550, slip op. at 7. In case of a
dispute under part 1145 over whether an area constituted a terminal
area, the Board would consider evidence that the area met the foregoing
description, including relevant evidence, such as whether the area was
listed as a normal revenue interchange point in the Official List of
Open and Prepay Stations issued by the Association of American
Railroads through Railinc.\12\ Subject to the foregoing definition, a
particular point of loading/unloading would not be the appropriate
subject of a prescribed reciprocal switching agreement under part 1145,
if the point is not, or using existing facilities reasonably could not
be, integrated into the terminal area operations. Further, if an
incumbent railroad and alternate railroad have an existing reciprocal
switching arrangement in a terminal area, and the petitioner's traffic
is currently served within that same terminal area, the proposed
operation would presumptively qualify for prescription of a reciprocal
switching agreement and the incumbent railroad would bear a heavy
burden of establishing why the proposed operation would not qualify,
assuming that other conditions to the prescription were met.
---------------------------------------------------------------------------
\9\ For purposes of this NPRM and the proposed regulatory text,
``affiliated companies'' has the same meaning as ``affiliated
companies'' in Definition 5 of the Uniform System of Accounts (49
CFR part 1201, subpart A). However, the Board seeks public comment
as to whether its definition should also include third-party agents
of a Class I carrier.
\10\ Investigation of Adequacy of R.R. Freight Car Ownership,
Car Utilization, Distrib. Rules & Pracs., 1 I.C.C.2d 700, 702-03
(1985); Pa. Co. v. United States, 236 U.S. 351, 355-57 (1915); Chi.,
Indianapolis & Louisville Ry. v. United States, 270 U.S. 287 (1926);
Port of Portland v. United States, 408 U.S. 811, 820 n.8 (1972);
Colo. River W. Ry. v. Tex. & New Orleans R.R., 283 S.W.2d 768, 774
(Tex. Civ. App. 1955); Del. & Hudson Ry. v. Consol. Rail Corp., 366
I.C.C. 845, 846-47 (1982); Cent. States Enter., Inc. v. Seaboard
Coast Line R.R., NOR 38891 (ICC served May 15, 1984), aff'd sub nom.
Cent. States Enter., Inc. v. I.C.C., 780 F.2d 664, 676 (7th Cir.
1985).
\11\ Rio Grande Indus., Inc.--Purchase & Related Trackage Rts.--
Soo Line R.R., FD 31505, slip op. at 10-11 (ICC served Nov. 15,
1989) (``A `terminal area' (as opposed to main line track) must
contain and cannot extend significantly beyond recognized terminal
facilities, such as freight or classification yards or team tracks,
and a cohesive commercial area immediately served by those
facilities''); see also Golden Cat v. St. Louis S.W. Ry., NOR 41550,
slip. op at 7 (STB served Apr. 25, 1996) (similar language).
\12\ The Board specifically seeks comment as to whether the
reciprocal switching tariff of an alternate carrier applicable to
shippers in the same area should be considered as evidence, and how
to reconcile inconsistencies in railroad tariffs (e.g., instances in
which one railroad lists a location as open to reciprocal switching
and another railroad does not).
---------------------------------------------------------------------------
As discussed below, the Board would prescribe a reciprocal
switching agreement under part 1145 when (1) the petitioner
demonstrates that the incumbent Class I carrier failed to meet one of
the performance standards in part 1145 for the petitioner's shipments
over that lane; \13\ (2) with respect to the lane of traffic that is
the subject of the petition, the petitioner (a shipper or receiver
\14\) has practical physical access
[[Page 63903]]
to only one Class I carrier that can serve that lane; (3) the carrier
fails to establish an affirmative defense; and (4) the prescription
would be practicable.\15\ A prescription under part 1145 would
facilitate a transfer within the terminal area as would enable an
alternate carrier to provide line-haul service on behalf of the
petitioner. The prescription would have a minimum term subject to
renewal as discussed below.
---------------------------------------------------------------------------
\13\ The Board describes these standards in Part I and provides
examples illustrating them in Appendix A.
\14\ Under the proposed part 1145, the petitioner would need to
be a shipper or receiver. Part 1147 of the Board's regulations also
allows other rail carriers to petition for prescription of
reciprocal switching agreement. Here, however, because application
of the performance standards pertains to customer specific
information, the Board proposes to limit eligible petitioners to
shippers and receivers.
\15\ The Board seeks public comment on whether such
prescriptions should include a minimum level of switching service
and, if so, whether the Board should establish a separate and
specific penalty structure to be imposed on carriers that do not
meet that level of service.
---------------------------------------------------------------------------
(1) Performance Standards
The following performance standards would measure certain aspects
of service by a Class I rail carrier or, for purposes of the industry
spot and pull standard, an affiliated company that serves the relevant
terminal area. These performance standards are to be uniform standards
that employ terms that are defined by the Board, for consistent
application across Class I rail carriers and their affiliated
companies.
(a) Service Reliability: Original Estimated Time of Arrival
The service reliability standard would measure a Class I rail
carrier's success in delivering a shipment near its OETA, i.e., the
estimated time of arrival that the rail carrier provided when the
shipper tendered the bill of lading for shipment.\16\ The original
estimated time of arrival would be compared to when the car was
delivered to the designated destination.\17\ Application of the service
reliability standard would be based on all shipments over a given lane
\18\ over 12 consecutive weeks. The service reliability standard would
thus promote the completion of line hauls near the original estimated
time of arrival.\19\ The on-time completion of line hauls allows the
shipper to conduct its operations on a timely basis while permitting
effective coordination between rail service and other modes of
transportation.
---------------------------------------------------------------------------
\16\ A shipper's tender of a bill of lading notifies the rail
carrier that a shipment is ready for service. It is at that point
that the rail carrier must provide the original estimated time of
arrival, regardless of whether the carrier has physical possession
of the shipment. Some rail carriers use the term ``original trip
plan'' instead of the term ``original estimated time of arrival.''
For the sake of consistency and clarity, we would use only the term
``original estimated time of arrival'' (or OETA), as defined herein,
for purposes of part 1145. In Docket No. EP 770 (Sub-No. 1), the
Board refers to this standard as ``trip plan compliance'' or TPC.
\17\ Delivery occurs when the shipment actually arrives at the
designated destination (meaning the final destination as specified
in the bill of lading or, in the case of a joint-line movement, the
interchange where the shipment is transferred to the interline
carrier or its affiliate) or is constructively placed (meaning
placed at a local yard that is convenient to the designated
destination). For purposes of part 1145, constructive placement of a
shipment at a local yard constitutes delivery only when (1) the
recipient has the option, by prior agreement between the rail
carrier and the customer, to have the rail carrier hold the shipment
pending the recipient's request for delivery to the designated
destination and the recipient has not yet requested delivery or (2)
the recipient is unable to accept delivery at the designated
destination.
\18\ For purposes of part 1145, a lane is determined by the
point of origin and the designated destination as well as by the
commodity. Shipments of the same commodity that have the same point
of origin and the same designated destination are deemed to travel
over the same lane. This is the case without regard to which
route(s) the rail carrier uses to move the shipments from origin to
destination. In the case of an interline movement, the designated
destination is the designated interchange.
\19\ The Board also discussed original estimated time of arrival
as part of a rulemaking on demurrage billing. There, the Board found
that use of original estimated time of arrival, as a means to
identify when a rail carrier provided inadequate spacing between
shipments, does not constitute a guarantee of delivery by the
original estimated time of arrival. See Demurrage Billing
Requirements, EP 759, slip op. at 18 (STB served Apr. 6, 2021).
Here, as well, use of original estimated time of arrival does not
constitute a guarantee. A guarantee might give a customer a cause of
action against the rail carrier, whereas the prescription of a
reciprocal switching agreement, based on a poor success rate
relative to the original estimated time of arrival, is directed
toward protecting the public interest in adequate rail service. Use
of the original estimated time of arrival, as the basis for
prescribing a reciprocal switching agreement, at the same time
reflects the reasonable expectation that, when a Class I rail
carrier or its affiliated company provides an original estimated
time of arrival for a line haul, the carrier will customarily
deliver freight in a manner consistent with that original estimated
time of arrival. As discussed below, the industry spot and pull
standard similarly reflects the reasonable expectation that a Class
I rail carrier or its affiliated company would perform local service
during the planned service window.
---------------------------------------------------------------------------
As a starting point for possible percentages in the service
reliability standard, the Board notes that in Docket No. EP 770 (Sub-
No. 1) it directed BNSF, CSXT, NSR, and UP to provide an indicator and
target for trip plan compliance (TPC) as well as weekly data measuring
manifest service, unit trains, and intermodal traffic placed at
destination 24 hours past OETA. Urgent Issues in Freight Rail Serv.--
R.R. Reporting, EP 770 (Sub-No. 1), slip op. at 4-6, item 7 (STB served
May 6, 2022).\20\ Although the carriers refer to the TPC indicator by
different names and measure performance in different ways, these four
carriers reported the below initial TPC metrics for manifest traffic
(the largest category of non-intermodal traffic), initial six-month
performance targets, and one-year performance targets.
---------------------------------------------------------------------------
\20\ The Board notes that PRFBA suggested in another docket that
the railroads should also provide on-time performance metrics based
on their car trip plans, allowing a 24-hour delivery window, PRFBA
Reply 4, Feb. 17, 2022, First Mile/Last Mile Serv., EP 767.
Table 1--Weekly Percentage of Manifest Service Railcars Placed Within 24 Hours of Original Arrival Estimate
----------------------------------------------------------------------------------------------------------------
Initial Initial 6-month 1-Year
Class I railroad performance (05/ performance performance
13/2022) \21\ (%) target \22\ (%) target \23\ (%)
----------------------------------------------------------------------------------------------------------------
BNSF..................................................... 54.1 63 65
CSXT..................................................... 69 80 82
NSR...................................................... 48 61 82
UP....................................................... 63 70 70
----------------------------------------------------------------------------------------------------------------
While the Board recognizes that these figures are system averages,
each of the four carriers required to submit service recovery plans has
acknowledged that their service fell short of public expectations or
needs during the time when the carriers reported their initial
performance levels. The Board finds that the carriers' performance
levels during this challenged time are a reasonable starting point for
setting standards for inadequate service and, as such, has used these
levels to formulate
[[Page 63904]]
proposals for potential performance standards under part 1145.
---------------------------------------------------------------------------
\21\ See NSR Performance Data at Row 163, May 18, 2022, Urgent
Issues in Freight Rail Serv.--R.R. Reporting, EP 770 (Sub-No. 1); UP
Performance Data at Row 182, May 18, 2022, Urgent Issues in Freight
Rail Serv.--R.R. Reporting, EP 770 (Sub-No. 1); BNSF Performance
Data at Row 163, May 18, 2022, Urgent Issues in Freight Rail Serv.--
R.R. Reporting, EP 770 (Sub-No. 1); CSXT Performance Data at Row
163, May 18, 2022, Urgent Issues in Freight Rail Serv.--R.R.
Reporting, EP 770 (Sub-No. 1).
\22\ See Urgent Issues in Freight Rail Serv.--R.R. Reporting, EP
770 (Sub-No. 1), slip op. at 5, 8, 11, 13 (STB served Oct. 28,
2022).
\23\ See Urgent Issues in Freight Rail Serv.--R.R. Reporting, EP
770 (Sub-No. 1), slip op. at 3-6 (STB served May 2, 2023).
---------------------------------------------------------------------------
One potential performance standard for part 1145 would be to ensure
that at least 60% of shipments arrive within 24 hours of the OETA. This
percentage falls near the average manifest traffic performance levels
that the largest carriers themselves regarded as not meeting public
expectations (among other problems) and thus would serve as a useful
indicator of adverse effects on the public interest.
Another approach would be to set the success rate at 60% in
delivering a shipment within 24 hours after the OETA during the first
year following the effective date of the proposed part 1145. After the
first year, the success rate would increase to 70% in delivering a
shipment within 24 hours after the OETA. The Board seeks comment on
whether, if it chooses this approach, the performance standard should
be increased to an even higher level after the second year. By phasing
in a higher success rate over time, the Board would be providing the
Class I carriers with time to increase their work forces and other
resources, as necessary, and/or modify their operations in order to
meet the performance standards--the primary cause for poor service
cited by the railroads during the Board's Urgent Issues proceeding was
staff shortages. Indeed, one of the principal purposes of this proposed
rule is to incentivize carriers to provide shippers with more reliable
service.
The Board seeks comment on which approach to adopt. Stakeholders
are also invited to comment more generally on the appropriate success
rate for service reliability, including whether the proposed success
rates would reflect the public need for adequate rail service and how
use of the proposed success rates would affect the rail network.
Shippers and receivers are further invited (1) to comment on how the
proposed success rates would affect both their business operations and
the likelihood that the shipper or receiver would file a petition under
part 1145, and (2) to submit estimates as to what percentage of
shippers (or traffic) overall is likely to be affected by the Board's
proposal. In particular, the Board seeks comment on whether the
standard should initially be higher than 60% and on whether it should
escalate the standard after an additional period of time to higher than
70%--e.g., to 75%--if it adopts an escalating standard for the success
rate. The Board also specifically seeks comment on the grace period
(i.e., the proposed 24-hour window past the OETA), whether that should
be increased or decreased (e.g., 0 or 48 hours), and--if it should
change--what is the appropriate success rate associated with the
suggested grace period.
Types of service. The Board proposes to apply the service
reliability (OETA) standard only to shipments that are moving in
manifest service, not to unit trains. In the Board's experience,
deliveries of unit trains do not give rise to the same type of concerns
with respect to meeting OETA. Nevertheless, the Board seeks comments on
whether the better approach would be to apply the same or similar
service reliability standard to unit trains as applied to manifest
traffic.\24\
---------------------------------------------------------------------------
\24\ It is the Board's understanding that unit trains run on
trip plans that are based strictly on the expected running times for
that type of train in each of the crew districts between origin and
destination. Trip plans for unit trains therefore are not
constructed in the same manner as trip plans for manifest traffic
(less-than-trainload shipments). Due to operational differences, the
arrival day or time of a unit train may not be the most critical
performance measure, and measuring a carrier's success in
maintaining the velocity of a unit train over time would be a more
effective measure than OETA. As indicated above, the Board seeks
comments on this issue.
---------------------------------------------------------------------------
For manifest traffic, the on-time success rate in the service
reliability (OETA) standard would refer to the percentage of shipments
delivered to the agreed-upon destination within the applicable number
of hours after the OETA. Upon request by the customer, to allow the
customer to calculate readily whether the incumbent rail carrier met
the service reliability standard, the incumbent carrier must give the
customer, in a machine-readable format, the OETA for each shipment and
a timestamp of when the shipment was delivered to the agreed-upon
destination.
For movements involving more than one rail carrier, the destination
for the originating rail carrier would be considered the interchange
location with the subsequent railroad. The reliability standard in part
1145 would measure the originating carrier's success in delivering the
shipment to that interchange location by the OETA that the originating
carrier provided when the shipper tendered the bill of lading. The
reliability standard in part 1145 would separately apply to a
subsequent rail carrier as to its portion of the trip, when the
subsequent carrier or its affiliated company moved the shipment to its
final destination in a terminal area. The subsequent carrier must issue
an OETA to the shipper when the carrier receives the shipment at the
interchange location, that is, when the subsequent carrier acknowledges
physical receipt and control of the shipment. The Board may look to
applicable interchange rules between carriers as to when this has
occurred.\25\
---------------------------------------------------------------------------
\25\ The Board would not expect for a gap to arise because the
time of interchange of a shipment, whether that time is immediately
accepted or agreed to by the receiving railroad or, rather, is
settled after a dispute between the carriers, is the same for both
carriers.
---------------------------------------------------------------------------
Lanes. The service reliability standard generally would apply
individually to each lane of traffic to/from the petitioner's facility.
Nonetheless, in certain circumstances, the Board would prescribe a
reciprocal switching agreement that governs multiple lanes of traffic
to/from the petitioner's facility, each of which has practical physical
access to only one Class I carrier that could serve that lane, when (1)
the average of the incumbent rail carrier's success rates for the
relevant lanes falls below the applicable performance standard, (2) the
Board determines that a prescription would be practical and efficient
only when the prescription governs all of those lanes; and (3) the
petition meets all other conditions to a prescription. The petitioner
could choose which lanes to/from its facility to include in determining
the incumbent rail carrier's average success rate.
For example, suppose that the Board adopts a minimum threshold of
OETA + 24 hours below 60% and a shipper has a lane to Destination A and
a lane to Destination B. During a 12-week period the 10-car shipment to
Destination A has an on-time success rate of 50% and the five-car
shipment to Destination B has an on-time success rate of 61%. The
average of the 15 cars falls below the on-time success rate threshold
of 60% during the 12-week period. If the switch would only be
practicable and efficient if all cars shipped to Destination A and B
were switched to the alternate carrier, and all other requirements were
satisfied, the shipper could argue that cars for both destinations
should be switched even though traffic moving to Destination B is above
the proposed service standard.
[[Page 63905]]
(b) Service Consistency: Transit Time
The service consistency standard would measure a rail carrier's
success in maintaining, over time, the carrier's efficiency in moving a
shipment through the rail system. As discussed below, the service
consistency standard would also apply separately to the return of empty
private and shipper-leased railcars. For a loaded car, the service
consistency standard would be based on the average transit time for
shipments over the relevant lane during a 12-week period, where transit
time is the time between the shipper's tender of the bill of lading and
the rail carrier's delivery of the shipment at the agreed-upon
destination. The relevant point of origin and destination and the
relevant time stamps would be the same as for purposes of the service
reliability (OETA) standard. Transit time would not include time spent
loading or unloading a shipment.
A rail carrier's compliance with the service consistency standard
would be determined by comparing (A) the average transit time for
shipment over a period of 12 consecutive weeks to (B) the average
transit time for the same shipment over the same 12-week period during
the previous year. As with the service reliability standard, the
Board's inquiry under the service consistency standard would extend to
any consecutive period of 12 weeks. Significant deteriorations in
transit time impair shippers' interests as well as the public interest
by creating longer lag times in getting products to market and/or in
businesses' receipt of needed resources and/or empty cars.
Based on its understanding of the rail network and available
data,\26\ the Board proposes that, for loaded manifest cars and loaded
unit trains, a petitioner would need to demonstrate that the average
transit time for a shipment increased by either 20 or 25% (to be
determined in the final rule) over the average transit time for the
same 12-week period during the previous year. Deliveries of empty
system cars and empty private cars could also result in the
prescription of a reciprocal switching agreement for the corresponding
outgoing traffic. The Board specifically seeks comment on what level of
increase in transit time should be the standard and whether the Board
should adopt a different standard that also captures prolonged transit
time problems, to the extent any such service inadequacy would not also
be identified by poor performance under the OETA or ISP metrics.
---------------------------------------------------------------------------
\26\ At the April 2022 hearing in Docket No. EP 770, several
shippers testified about the burdens associated with increased
transit times. See, e.g., Hr'g Tr. 73:7-13, Apr. 26, 2022, Urgent
Issues in Freight Rail Serv., EP 770 (Brock Lautenschlager
testifying that rail service deterioration since the fourth quarter
of 2021 resulted in a 15% increase in transit time for Cargill's
private fleet); Hr'g Tr. 364:18 to 367:15, Apr. 26, 2022, Urgent
Issues in Freight Rail Serv., EP 770 (David Burchett testifying that
increased transit days resulting from rail service issues ``has had
a huge financial impact'' on Molson Coors); Hr'g Tr. 551:6-8, Apr.
27, 2022, Urgent Issues in Freight Rail Serv., EP 770 (Ross Corthell
of the National Industrial Transportation League testifying that
``transit times in the first quarter this year have increased by 15
percent over pre-pandemic levels due to crew and power shortages'');
Hr'g Tr. 558:12-18, Apr. 27, 2022, Urgent Issues in Freight Rail
Serv., EP 770 (Julie Landry of Government Affairs for the American
Forest and Paper Association testifying that, since the fourth
quarter of 2020, one member company ``experienced significant
deterioration in rail service'' including transit times that
increased by six days and variability of transit that made it
``impossible for shippers to plan their business'').
---------------------------------------------------------------------------
Multi-Carrier Moves and Lanes. For the transit time standard,
multi-carrier movements and lanes would be treated the same as under
the service reliability standard. For multi-carrier movements, the
destination for the upstream carrier would be treated as the
interchange location with the subsequent railroad. In addition, as with
the service reliability standard, the Board could in certain
circumstances prescribe a reciprocal switching agreement for multiple
lanes based on the average success rates in maintaining transit times.
Empties. The Board proposes to apply the service consistency
standard to deliveries of empty private and shipper-leased railcars. If
a rail carrier failed to meet the service consistency standard in
delivering empty private and shipper-leased cars, and if all other
conditions to a prescription are met, the Board would prescribe a
reciprocal switching agreement that would govern the customer's
outgoing traffic from the point at which the cars were to be delivered.
While proposing to apply the service consistency standard to deliveries
of empty private and shipper-leased railcars, the Board seeks comment
on whether there would be data available to accommodate that
application.
(c) Inadequate Local Service: Industry Spot and Pull
The third performance standard--ISP--would measure a rail carrier's
success in performing local deliveries (``spots'') and pick-ups
(``pulls'') of loaded railcars and unloaded private or shipper-leased
railcars during the planned service window. As noted above, the need
for the industry spot and pull standard arises because, in many cases,
the arrival time for a line haul means that the shipment has been
constructively placed, without the shipment having actually arrived at
the designated destination. For this reason, ``last mile'' performance
would not necessarily be reflected in determining compliance with the
service reliability standard under part 1145. The ISP standard would
serve to determine the adequacy of rail service in those cases.\27\
---------------------------------------------------------------------------
\27\ The Board recognizes that, if it were to prescribe a
reciprocal switching agreement based on the incumbent rail carrier's
failure to meet the ISP standard, the incumbent rail carrier would
continue to provide local service to the petitioner; the
prescription of a reciprocal switching agreement would simply
facilitate alternate line-haul service to the petitioner. While that
remedy might serve as an incentive for the incumbent rail carrier to
provide adequate local service, the Board is considering whether the
prescription of terminal trackage rights under 49 U.S.C. 11102(a)
would be a more appropriate remedy for failure to meet the ISP
standard. Upon the prescription of terminal trackage rights, the
incumbent rail carrier would be replaced in providing local service,
whereas under a reciprocal switching agreement the carrier could be
replaced in providing line-haul service. The Board seeks comment on
whether it should provide for the prescription of terminal trackage
rights for failure to meet the ISP standard, either in place of a
separate path to a prescription of a reciprocal switching agreement
in those circumstances or as an additional path that would be open
to the petitioner.
---------------------------------------------------------------------------
Under part 1145, a rail carrier would fail the ISP standard if the
carrier had a success rate of less than 80%, over a period of 12
consecutive weeks, in performing local deliveries and pick-ups during
the planned service window. The success rate would compare (A) the
number of planned service windows during which the carrier successfully
completed the requested placements or pick ups to (B) the number of
planned service windows for which the shipper or receiver, by the
applicable cut-off time, requested a placement or pick-up. The carrier
would be deemed to have missed the planned service window if the
carrier did not pick up or place all of the cars requested by the
shipper or receiver by the applicable cut-off time. This would include
situations in which the carrier has ``embargoed'' the shipper or
receiver as a result of congestion or other fluidity issues on the
carrier's network, which results in reduced service to the shipper or
receiver.\28\ The Board proposes the 80% standard informed by data
submitted in Docket No. EP 770 (Sub-No. 1). Although the carriers refer
to industry spot and pull
[[Page 63906]]
indicators by different names (e.g., Local Operating Plan Adherence or
LOPA) and measure performance in different ways, these four carriers
first reported ISP metrics and interim targets for manifest traffic as
follows:
---------------------------------------------------------------------------
\28\ The Board notes that certain misses caused by embargoes
would be covered by various affirmative defensives, discussed infra
(e.g., extraordinary circumstances such as floods, a bridge
collapse, etc.). To be clear, as it pertains to the Board's other
authorities, the Board will not determine the legality of an embargo
based on whether a railroad qualifies for an affirmative defense.
Table 2--Industry Spot & Pull
----------------------------------------------------------------------------------------------------------------
Initial performance
Measure Class I railroad (system) 05/13/2022 Interim target 30
29 (%) (%)
----------------------------------------------------------------------------------------------------------------
Local Service Performance....... BNSF.............................. 88.2 91
FMLM............................ CSXT.............................. 83.0 87
Local Operating Plan Adherence.. NSR............................... 74.1 78
FMLM............................ UP................................ 91.0 91
----------------------------------------------------------------------------------------------------------------
While the Board recognizes that these figures are system averages,
each of the four carriers that were required to submit service recovery
plans have acknowledged that their service fell short of expectations
during the time when the carriers reported their initial performance
levels. As such, these averages are a reasonable starting point for
setting standards for poor or inadequate local service. Evidence from
Docket No. EP 767 also indicates that ISP around this level can
adversely affect a shipper.\31\ As with the service reliability
standard, however, the Board requests stakeholders and shippers/
receivers to provide evidence and comment on the appropriateness of
this percentage and whether it should be higher or lower.
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\29\ See NSR Performance Data at Row 78, May 18, 2022, Urgent
Issues in Freight Rail Serv.--R.R. Reporting, EP 770 (Sub-No. 1); UP
Performance Data at Row 97, May 18, 2022, Urgent Issues in Freight
Rail Serv.--R.R. Reporting, EP 770 (Sub-No. 1); BNSF Performance
Data at Row 78, May 18, 2022, Urgent Issues in Freight Rail Serv.--
R.R. Reporting, EP 770 (Sub-No. 1); CSXT Performance Data at Row 78,
May 18, 2022, Urgent Issues in Freight Rail Serv.--R.R. Reporting,
EP 770 (Sub-No. 1).
\30\ See NSR Interim Update, Dec. 2, 2022, Urgent Issues in
Freight Rail Serv.--R.R. Reporting, EP 770 (Sub-No. 1); UP Amended
Serv. Recovery Plan, June 3, 2022, Urgent Issues in Freight Rail
Serv.--R.R. Reporting, EP 770 (Sub-No. 1); BNSF Interim Updates, May
5, 2023, Urgent Issues in Freight Rail Serv.--R.R. Reporting, EP 770
(Sub-No. 1); CSXT Interim Update, Dec. 2, 2022, Urgent Issues in
Freight Rail Serv.--R.R. Reporting, EP 770 (Sub-No. 1).
\31\ As noted by one shipper in Docket No. EP 767:
By CSXT's own measure, it is performing at only a 76% switch
rate versus its schedule and 87% car accuracy. It starts to impact
the plant when the numbers get below 80% of switches performed.
Moreover, GMI has rarely received its Saturday switch over the last
six months. CSXT has explained this poor service is occurring due to
crew shortages. Like at the Ohio plant, this poor service has caused
production interruptions and labor utilization issues from the lack
of ingredients due to poor switching service. GMI estimates this
poor service can result in at least $200,000 per day in damages,
conservatively.
PRFBA Opening Comments 18, Dec. 17, 2021, First Mile/Last Mile
Serv., EP 767.
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For purposes of the ISP standard under part 1145, a rail carrier
would be deemed to provide local service during the planned service
window if (1) the shipper or receiver ordered a shipment to be placed
or picked up before the cut-off time for that service window, and (2)
the carrier provided the requested service during that window.
As an example, in the case where a rail carrier offers a service
window for a customer on Monday, Wednesday, and Friday, the ISP ratio
would be as follows during a twelve-week period, depending on the fact
pattern (i.e., type of misses):
(1) Customer requested service by the cut-off time for 36 service
windows over a 12-week period and received the requested service during
30 of those 36 windows. The resulting ISP ratio is 83.3% (30/36).
(2) Customer requested service by the cut-off time for 36 service
windows over a 12-week period, and for 28 of those windows, received
service during the requested window. On two occasions, the carrier
provided service during a different window, a day later than the
requested window. The resulting ISP ratio is 77.8% (28/36).
(3) Customer requested service by the cut-off time for 36 service
windows over a 12-week period and each time received service on the
same day as requested. But, on ten of those occasions, the service was
provided outside of the 12 hours that, for purpose of part 1145,
constitute a service window. The resulting ISP ratio is 72.2% (26/36).
(4) Customer requested service by the cut-off time for 36 service
windows over a 12-week period and received placements of the requested
shipments during each of those windows. But, during 10 of the 36
planned service windows, the carrier failed to pull cars as requested
by the customer. The resulting ISP ratio is again 72.2% (26/36).
In applying the ISP standard, the Board proposes to use a
standardized service window of 12 hours (the maximum duration that a
crew is allowed to work), starting from the relevant serving crew's
scheduled on-duty time. However, the Board is concerned that a carrier
could change the scheduled on-duty time on short notice and thereby
evade the impact of the ISP standard. The Board therefore seeks comment
from stakeholders on whether a carrier should be required to provide
notice before changing the serving crew's schedule on-duty time--at
least for the purposes of regulatory measurement--and, if so, how much
notice should be required. In addition, the Board seeks to avoid any
implication or encouragement that a carrier with a service window
shorter than 12 hours ought to expand its window. The carrier would
receive no regulatory advantage for doing so, and nothing in this
proposal would prohibit a carrier from maintaining one window for its
business purposes and another for the purposes of regulatory
measurement. Nonetheless, considering the administrative overlap, the
Board seeks comment on whether a standardized window would create
adverse regulatory incentives and, if so, how best to avoid or minimize
any adverse incentives.
As an alternative to using a standard, 12-hour service window, the
Board seeks comment on whether it should use the service window that
the rail carrier specified according to the carrier's established
protocol, subject to two considerations. As noted, the Board is
concerned that a carrier could change its service window on short
notice and thereby evade the impact of the ISP standard. The Board
therefore seeks comment from stakeholders on whether a carrier should
be required to provide notice before changing a service window and, if
so, how much notice should be required. The Board is also concerned
that a carrier could unreasonably expand the duration of a service
window as a means to evade meaningful measurement under the ISP
standard. Accordingly, under the alternative to using a standard, 12-
hour service window, the Board would use the window specified by the
carrier not to exceed 12 hours in duration; under
[[Page 63907]]
this approach, a carrier would be deemed to perform local service
within the relevant period only if the carrier performed the service
within the window specified by the carrier according to its customary
established protocol, provided that the window did not exceed 12 hours
(the maximum duration that a crew is allowed to work). Although this
approach would allow up to a 12-hour window for purposes of part 1145,
this approach would not constitute permission or encouragement for
carriers to adjust their service window operating protocols in the
ordinary course of business up to 12 hours, if their normal protocol
has been a shorter window.
A job that was canceled/annulled by the carrier would be counted as
a miss in calculating compliance with the ISP standard, as none of the
requested work would have been completed, unless another crew completed
the requested work within the original window. A placement would not be
considered completed if the customer does not have working access to
the placed shipment. A miss not caused by the incumbent railroad would
not be counted against it. The burden is on the carrier to provide the
reason for the miss and prove that the miss was not caused by the
carrier.
If a carrier unilaterally chooses to reduce the frequency of the
local work that it makes available to a customer, based on
considerations other than a commensurate drop in customer demand, then
the standard would become 90% for a period of one year.\32\ The test
for applying this increased standard would look at the number of
service windows that the carrier regularly makes available; the intent
is not to create disincentives for carriers to accommodate shippers'
needs by offering more frequent service windows during periods of
seasonal or unusual demand by the shipper. A party may bring evidence
and argument as to whether such circumstances invalidate use of the
higher 90% ISP standard. Stakeholders are invited to comment on this
exception and whether a reduction in the frequency of local work by the
carrier should provide the basis for prescribing a reciprocal switching
agreement regardless of the carrier's success rate in performing local
service.
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\32\ If a case were filed alleging a failure to meet the 90%
standard, the railroad would have the burden of showing that there
were shipper/receiver projections, sound economic reasoning, or
historical evidence that justify the expectation that there would be
a decrease in demand.
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(2) Practical Physical Access to Only One Class I Carrier
To obtain prescription of a reciprocal switching agreement under
part 1145, the petitioner would need to show that, for the lane of
traffic that is the subject of the petition, the shipper or receiver
has practical physical access to only one Class I rail carrier that
could serve that lane. Consistent with what the Board noted when
adopting parts 1146 and 1147, the Board expects, as a general rule,
that there would be little benefit from prescribing reciprocal
switching agreements for petitioners that have practical physical
access to another Class I carrier that is capable of handling their
service needs. Expedited Relief for Serv. Inadequacies, 3 S.T.B. at
978. Although the Board's regulations do not foreclose a prescription
under part 1146 or 1147 if the petitioner can already reach another
Class I carrier, in case neither of those carriers is providing
adequate service, the Board proposes here to require the petitioner to
show that, for the lane that is (or lanes that are) the subject of the
petition, the petitioner has practical physical access to only one
Class I carrier that could serve that lane. A clear standard provides
more certainty to a shipper or receiver considering whether to file a
petition for relief.
For purposes of part 1145, ``practical physical access'' refers to
a feasible shipping opportunity on a rail carrier, whether directly or
through that carrier's affiliated company. A petitioner could have
practical physical access to more than one Class I carrier (for the
lane of traffic that is the subject of the petition) by any of several
means. First, a petitioner could have practical physical access to more
than one Class I carrier if the petitioner's facility is served
directly by multiple Class I carriers or their affiliated companies,
each of which could serve the relevant lane of traffic. Second, a
petitioner could have practical physical access to more than one Class
I carrier by virtue of an existing reciprocal switching arrangement
that governs shipping to/from the shipper's facility. Third, a
petitioner could have practical physical access to more than one Class
I carrier by virtue of other types of arrangements, such as terminal
trackage rights or a contract between a local rail carrier and an
alternate rail carrier. The Board would consider these and other
circumstances on a case-by-case basis.
In assessing whether a petitioner has practical physical access to
more than one Class I carrier, the Board would consider independently
the lanes at issue in the shipper's or receiver's petition, even if
other lanes at the facility had practical physical access to another
carrier. For example, if an existing reciprocal switching arrangement
provides for switching for only one of several lanes at the shipper's
facility, the Board would not regard the shipper as having practical
physical access for the closed lanes. The shipper would be eligible to
seek a prescription for any of those closed lanes (or for multiple
closed lanes, as discussed above) notwithstanding that one lane at the
shipper's facility was open.
The Board would also consider limitations that are part of an
existing arrangement. For example, if an existing reciprocal switching
arrangement provides for the switching of shipments on behalf of a
shipper--but only for shipments between the shipper's facility and
another location that the incumbent carrier does not serve--the Board
would not regard the arrangement as establishing practical physical
access to more than one Class I carrier for purposes of a prescription
under part 1145. The shipper would be eligible to seek a prescription
under part 1145 notwithstanding that the shipper's facility was already
open to switching for purposes that were irrelevant to the shipper's
petition. The foregoing is just one example; there could be other
limitations that would preclude an existing arrangement from providing
practical physical access to more than one Class I carrier for purposes
of part 1145. The Board would evaluate limitations on a case-by-case
basis.
The Board proposes that a petitioner could establish a prima facie
showing by submitting a verified statement from an appropriate official
attesting that it does not have practical physical access to more than
one Class I carrier, taking into account the potential types of
practical physical access described above. See Mkt. Dominance
Streamlined Approach, EP 756, slip op. at 17 (STB served Aug. 3, 2020).
The Board proposes to limit prescriptions under part 1145 to
situations in which the incumbent carrier is a Class I carrier or, for
purposes of the industry spot and pull standard, an affiliated company
that serves the relevant terminal area. The service data the Board has
been examining in Docket No. EP 770 (Sub-No. 1) has been focused on
Class I carriers. The Board has not received as many informal or formal
complaints about smaller carriers. Moreover, data collection may be
more burdensome for Class II and Class III carriers, as they have not
been submitting service-related data to the Board under performance
metrics dockets, such as Docket Nos. EP
[[Page 63908]]
724 (Sub-No. 4) and EP 770 (Sub-No. 1). Nevertheless, the Board seeks
comment from stakeholders on whether its new part 1145 should be
broadened to include Class II and Class III carriers who are providing
inadequate service.
(3) Other Matters
(a) Negotiations
Similar to 49 CFR 1144.1, at least five business days prior to
seeking the prescription of a reciprocal switching agreement, the
petitioner that intends to initiate such action must first seek to
engage in good faith negotiations to resolve its dispute with the
incumbent carrier.
(b) Case Timeline and Alternate Carrier Service
Simultaneous with its petition for relief, a shipper or receiver
must file a motion for protective order. In its petition for relief, a
shipper or receiver must confirm that it attempted good faith
negotiations, identify the performance standard the railroad failed to
meet over the requisite period of time, and provide evidence supporting
its claim. The petitioner must also identify the potential alternate
carrier and include both carriers' reciprocal switching publications.
Additionally, it must serve its petition on the incumbent carrier, the
alternate carrier, and the Federal Railroad Administration.
A reply from the incumbent carrier is due 20 days after the
petition for relief is filed, and a rebuttal from the petitioner may be
filed 20 days after the incumbent carrier files its reply. The Board's
target for issuing an order addressing the petition is 90 days after
the petition is filed.
Under section 11102(c)(1), the affected rail carriers are
responsible for establishing the terms and conditions that apply to
prescribed reciprocal switching agreement, including compensation,
provided that the carriers establish those terms within a reasonable
period. Here, the Board expects that 30 days would be a reasonable
period for the carriers to reach agreement on compensation,
particularly in light of the Board's indication below of the possible
approaches to compensation that the Board would take. Part 1145
therefore would provide for the carriers to reach agreement and to
offer service under the prescribed agreement within 30 days of the
prescription. The relevant location would also need to be included in
the appropriate disclosure under 49 CFR part 1300. The carriers would
have an additional 10 days after offering service to notify the Board
that the agreement had taken effect. If the affected carriers could not
agree on compensation within 30 days of the service of the
prescription, then the affected rail carriers would be required (i) to
offer service and (ii) to petition the Board to set compensation. As is
the case with terminal trackage rights, a petition to the Board to set
compensation is sufficient to allow service to begin while the
compensation issues are pending. See S. Pac. Transp. Co. v. ICC, 736
F.2d 708, 723-24 (D.C. Cir. 1984).
(c) Affirmative Defenses
An incumbent rail carrier shall be deemed not to fail a performance
standard under (1)(a), (1)(b), or (1)(c), above, if the carrier
establishes an affirmative defense. If the incumbent carrier makes such
a showing, the Board would not prescribe a reciprocal switching
agreement. A carrier's intentional reduction or maintenance of its
workforce at a level that itself causes workforce shortage, or, in the
event of a workforce shortage, failure to use reasonable efforts to
increase its workforce, would not, on its own, be considered a defense
for failure to meet any performance standard. Similarly, a carrier's
intentional reduction or maintenance of its power or car supply, or
failure to use reasonable efforts to maintain its power or car supply,
that itself causes a failure of any performance standard would not, on
its own, be considered a defense. For any affirmative defense, the
carrier would have the burden of proof. Affirmative defenses that do
not fit within the categories below would be evaluated by the Board on
a case-by-case basis. The Board seeks comment on what other affirmative
defenses, if any, should be specified in the final rule.
Extraordinary Circumstances. The Board would not prescribe a
reciprocal switching agreement if the incumbent carrier demonstrates
that its service levels were significantly affected by extraordinary
circumstances beyond a carrier's control. The Board would consider
extraordinary circumstances to be the type of events that permit a
railroad to qualify for an emergency trackage rights exemption at 49
CFR 1180.2(d)(9). See Pet. for Rulemaking--R.R. Consol. Proc. Exemption
for Emergency Temp. Trackage Rts., EP 282 (Sub-No. 21) (STB served Nov.
30, 2021). As explained in Docket No. EP 282 (Sub-No. 21), these events
include unforeseen track outages stemming from natural disasters,
severe weather events, flooding, accidents, derailments, and washouts.
Id. at 6; Pet. for Rulemaking--R.R. Consol. Proc. Exemption for
Emergency Temp. Trackage Rts., EP 282 (Sub-No. 21), slip op. at 5 (STB
served May 28, 2021). The railroad must demonstrate that the event is
the principal cause precipitating the service issue; the event cannot
be non-causal (e.g., minor or tangential).
Surprise Surge. The Board would not prescribe a reciprocal
switching agreement if the incumbent rail carrier demonstrates that
there was a surprise surge in the petitioner's traffic, meaning a
significant increase in traffic to which the petitioner should have
alerted the carrier but did not do so. For non-seasonal traffic, a
surprise surge would occur when the shipper's traffic increased by 20%
or more in 12 weeks, compared to the 12 weeks before that, and the
shipper did not provide written notice to the railroad at least 12
weeks before the surge. For seasonal traffic, such as agricultural
shipments, applicable surges would be those where the petitioner's
traffic increased 20% or more as compared to the same 12-week period
during the previous year and where the shipper did not give written
notice to the railroad of the surge at least 12 weeks before the
increase occurred. The written notice shall clearly specify a
reasonable estimate of the anticipated traffic.\33\ The Board seeks
comment on whether 20% and the 12-week notice period are reasonable,
and whether (and, if so, how) the Board should consider any history of
the shipper notifying the carrier of surges that did not come to
fruition.
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\33\ A shipper's notification of an anticipated surge does not
necessarily entitle the shipper to receive that level of service.
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Highly Unusual Shipment Patterns. The Board would not prescribe a
reciprocal switching agreement if the incumbent carrier demonstrates
that the shipper's traffic during the relevant 12-week period exhibited
a pattern that, for that shipper, was highly unusual. For example, a
pattern might be considered highly unusual if a shipper projected
traffic of 120 cars in a month and 30 cars per week, but the shipper
had a plant outage for three weeks and then requested shipment of 120
cars in a single week. What constitutes ``highly unusual'' would vary
from case to case depending upon the characteristics of the traffic. A
pattern could be highly unusual for this purpose even in the absence of
a surprise surge as described above.
Delays Caused by Dispatching Choices of a Third Party. The Board
would not prescribe reciprocal switching if the incumbent carrier
demonstrates that its failure to meet the relevant performance standard
was caused by third-party dispatching. For
[[Page 63909]]
example, if a passenger rail entity controlling dispatching halted
freight traffic for an extended time, and that delay caused the
railroad to fail to meet the standard, the Board would not prescribe
reciprocal switching.
(d) Practicability
Because switching service (transfers between carriers) under a
prescribed reciprocal switching agreement would occur within a terminal
area, in the context of integrated operations or operations that could
reasonably become integrated, there is reason to believe that those
agreements would be practicable under section 11102(c). Should a
legitimate practicability concern arise, however, the Board would
consider whether the switching service could be provided without unduly
impairing the rail carriers' operations. The Board would also consider
an objection by the alternate rail carrier or incumbent rail carrier
that the alternate rail carrier's provision of line-haul service to the
petitioner would be infeasible or would unduly hamper the objecting
rail carrier's ability to serve its existing customers. The objecting
rail carrier would have the burden of proof of establishing
infeasibility or undue impairment.
(e) Exempt Traffic
The Board notes that some transportation that has been exempted
from Board regulation pursuant to 49 U.S.C. 10502 could be subject to
an order providing reciprocal switching under part 1145. The Board
retains full jurisdiction to deal with exempted transportation, which
includes considering whether service received by the petitioner prior
to filing the petition meets the performance standards under this
proposed part. This practice is consistent with Board precedent.
Further, it is well established that the Board can revoke the exemption
at any time, in whole or in part, under section 10502(d). Sanimax USA,
LLC v. Union Pac. R.R., NOR 42171, slip op. at 4 (STB served Feb. 25,
2022); Pyco Indus.--Alt. Rail Serv.--S. Plains Switching, FD 34889,
slip op. at 5-6 (STB served Nov. 21, 2006); G&T Terminal Packaging Co.
v. Consol. Rail Corp., 830 F.2d 1230, 1235 (3d Cir. 1987), cert.
denied, 485 U.S. 988 (1988). The Board would do so to the extent
required.
(f) Contract Traffic
As to traffic that is the subject of a rail transportation contract
under 49 U.S.C. 10709, section 10709(c)(1) generally prohibits
challenges to a valid contract between a rail carrier and a shipper, as
well as challenges to transportation performed pursuant to such a
contract. 49 U.S.C. 10709(c)(1); see also H.B. Fuller Co. v. S. Pac.
Transp. Co., 2 S.T.B. 550, 553 (1997) (the statute ``remove[s]
transportation under a rail contract from any subsequent regulatory
review''). The Board seeks comment on whether, and under what
circumstances, the Board has the authority to consider reciprocal
switching requests from shippers that have entered into a valid rail
transportation contract with the incumbent carrier. While the Board
welcomes comment on all legal and policy issues relevant to this
question, the Board also specifically seeks comment on two issues.
First, the Board seeks comment on whether the Board may consider
the performance data described above, based on service that a carrier
provided by contract, as the grounds for prescribing a reciprocal
switching agreement that would become effective after the contract
expired. The Board also seeks comment on whether the Board may require
a carrier to provide performance metrics to a rail customer during the
term of a contract upon that customer's request.
Second, the Board seeks comment on when, prior to the expiration of
a transportation contract between the shipper and the incumbent
carrier, the Board may prescribe a reciprocal switching agreement that
would not become effective until after the contract expires. The United
States Court of Appeals for the District of Columbia Circuit, in
applying statutory language in effect prior to the enactment of the ICC
Termination Act of 1995, held in 1996 that the Board was not authorized
to order a carrier to file a common carrier tariff ``more than a year
before contract service was expected to end.'' Burlington N. R.R. v.
STB (Burlington Northern), 75 F.3d 685, 687 (D.C. Cir. 1996) (examining
former 49 U.S.C. 10762, which required that rail carrier tariffs be
filed with the agency). The Board later indicated that it did not
interpret Burlington Northern as preventing the Board ``from ordering
the establishment of a rate that is needed within a matter of weeks''
rather than years. FMC Wyo. Corp. v. Union Pac. R.R., FD 33467, slip
op. at 3 n.7 (STB served Dec. 16, 1997). Although Burlington Northern
is not directly applicable here, given that it examined different
statutory language and pertained to a different form of (and basis for)
intervention, the Board seeks comment on what legal or policy issues
should similarly be considered regarding the prescription of reciprocal
switching prior to the expiration of a transportation contract that
governs the traffic that would be switched even if the prescription
would not become effective until after the expiration of the contract.
Specifically, must the Board wait until the contract has actually
expired before considering and ruling on a petition for prescription of
reciprocal switching, or may the Board, prior to contract expiration,
grant a prescription that would not go into effect until after
expiration? If the latter, should the Board specify a maximum time
period prior to contract expiration when petitions for prescription of
a reciprocal switching agreement would be entertained?
(g) Compensation
The Board seeks comments on two methodologies for setting fees
under a prescribed reciprocal switching agreement under part 1145, if
the affected rail carriers fail to reach agreement on compensation
within a reasonable time.\34\ Both methodologies would reimburse the
incumbent carrier for the cost of performing the switch, as determined
by the carrier's embedded and variable costs of service. Reciprocal
switching fees that allow the incumbent carrier to recover its cost of
service are consistent with longstanding practices concerning switching
fees. See, e.g., Increased Switching Charges at Kan. City, Mo.-Kan.,
344 I.C.C. 62 (1972). Because under this proposed part the Board would
be prescribing reciprocal switching as a remedy for service failures,
the Board finds it inappropriate to use a methodology that would allow
the incumbent carrier to recover any lost profits for the line-haul
portion of the movement being provided by the alternate carrier. Such a
compensation methodology would be tantamount to rewarding the incumbent
carrier for inadequate service.
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\34\ In seeking comments on compensation under part 1145 as
proposed herein, the Board notes that this iteration differs
substantially from the proposal in the 2016 NPRM. Due to the
substantial differences, many of the comments on compensation that
were provided in response to the 2016 NPRM do not apply here. The
Board seeks comments here only on compensation when (1) the
prescribed reciprocal switching agreement facilitates the transfer
of a shipment to an alternate rail carrier within a given terminal
area, for the purpose of allowing the alternate carrier to provide
line-haul service for that shipment; and (2) the basis for the
prescription is the incumbent rail carrier's failure to provide
adequate rail service. If comments on the 2016 NPRM are helpful in
that particular regard, then the commenting party is encouraged to
provide a brief summary of those comments.
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Cost of Service. One option is setting switching rates based on the
cost-of-service approach that has been used in past cases on switching
rates. Id. This approach could either use the ICC
[[Page 63910]]
Terminal Form F, 9-64, Formula for Use in Determining Rail Terminal
Freight Service Costs (Sept. 1964), or the Board's Uniform Rail Costing
System (URCS) to develop costs.
SSW Compensation. Another option to set compensation for the non-
line-haul portion of the movement is adapting the Board's ``SSW
Compensation'' methodology to reciprocal switching fees. See St. Louis
SW Ry.--Trackage Rts. over Mo. Pac. R.R.--Kan. City to St. Louis, 1
I.C.C.2d 776 (1984); St. Louis SW Ry.--Trackage Rts. over Mo. Pac.
R.R.--Kan. City to St. Louis, 4 I.C.C.2d 668 (1987). Although SSW
Compensation is used primarily in trackage rights cases where one rail
carrier is actually operating over another rail carrier's lines, many
of the principles that inform the methodology would apply in the
reciprocal switching fee context as well. Thus, what the Board calls
Rental Income in SSW Compensation would have an analogy in a directed
switch in the form of Imputed Rental Income. The application of such
methodology should not include any lost profit from the line-haul
beyond the switching location.
(h) Term and Termination
A prescription under part 1145 would ordinarily have a term of two
years from the date on which reciprocal switching operations thereunder
began; the incumbent rail carrier normally could seek a termination
date that would fall no earlier than the two-year anniversary of the
date on which reciprocal switching operations began.\35\ The Board
could prescribe a minimum term longer than two years and up to four
years if the petitioner demonstrated that the longer minimum term was
necessary for the prescription to be practical given the petitioner's
or alternate carrier's legitimate business needs.\36\ It is essential
that the duration of a reciprocal switching order is sufficiently long
to make alternative service feasible and reasonably attractive to
potential alternate carriers. In all cases, the minimum term of the
prescription would be stated in the Board's order granting the
prescription. The Board seeks comment on whether a minimum term longer
than two years and/or whether a maximum term longer than four years is
necessary, across all prescriptions under part 1145, to make the
proposed rule practicable and effective.
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\35\ The running of the two years is not tolled by disputes
about compensation.
\36\ For example, if the prescribed reciprocal switching
agreement would pertain to a substantial volume of traffic, and if
the alternate carrier needed to make investments to accept that
traffic, then a longer minimum term might be appropriate to give the
alternate carrier more opportunity to recover and earn a return on
that investment. Significant volumes of traffic might require
investment in physical plant, additional employees, and additional
locomotive maintenance capability. The ramp-up time for any of these
processes is approximately six months, after which, given a two-year
term, the alternate carrier would have only 18 months to earn a
return.
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The incumbent rail carrier may file a petition to terminate no more
than 180 days and no less than 120 days before the end of the
prescribed period.\37\ A reply to a petition to terminate shall be
filed within 15 days of the petition, and a rebuttal may be filed
within seven days after the reply. Subject to an appropriate protective
order, the shipper/receiver has the right to access and examine the
facts and data underlying a carrier's petition to terminate. If the
Board does not act within 90 days from the close of briefing, the
prescription automatically terminates at the end of the original term
of the prescription; provided that, if the Board is unable to act
within that time period due to extraordinary circumstances, the
prescription would be automatically renewed for an additional 30 days
from the end of the current term. In such cases, the Board would issue
an order alerting the parties to the extraordinary circumstances and
the renewal.
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\37\ Therefore, if the Board prescribed a four-year term, the
window for petitioning to terminate the prescription would fall
during the third year.
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The Board would grant a petition to terminate if the incumbent rail
carrier demonstrated that, at the time of the incumbent rail carrier's
petition, the incumbent rail carrier's service for similar traffic on
average met whichever performance standard served as the justification
for the prescription. ``Similar traffic'' is defined as the broad
category type (e.g., manifest traffic) to or from the terminal area
that is affected by the prescription.\38\ This requirement includes a
demonstration by the incumbent carrier that it consistently has been
able to meet, over the most recent 24-week period, the performance
standards for similar traffic to or from the relevant terminal
area.\39\ In addition to challenging a carrier's submitted performance
data, the shipper/receiver or alternate carrier--during the pendency of
the petition to terminate--may show that the petitioning carrier's
service degraded below the relevant performance standard.
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\38\ If a carrier has no such similar traffic, it may submit a
comparison group of the same broad traffic type in the same
geographic region.
\39\ The Board would consider whether a failure to meet the
performance standard for that 24-week period, or during the pendency
of the petition, was due to conditions that were beyond the
carrier's control and had been demonstrably resolved.
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For example, suppose the Board prescribes a reciprocal switching
agreement because the incumbent railroad's reliability standard for
certain manifest traffic from Yard X stood at 50%. During the period
when termination petitions are permitted, the incumbent railroad files
a petition to terminate in which it demonstrates that its average
service reliability standard for manifest traffic from Yard X during
the previous 24-week period is now 90%. Absent a successful reply by
the shipper/receiver or alternate carrier, such as a showing that the
incumbent railroad's service has deteriorated below the reliability
standard during the pendency of the petition, the petition to terminate
would be granted because the Board would have a basis to find that the
shipper/receiver's traffic would achieve an acceptable reliability
standard for the petitioner's traffic.
In the event the incumbent carrier does not file a petition for
termination no more than 180 days, and no less than 120 days before the
end of the prescription period, or files such a petition and fails to
sustain its burden of proof, the reciprocal switching prescription
would automatically renew for the same period as the initial
prescription. The Board seeks comment on whether, alternatively, the
renewal should be for only an additional one year. The Board also seeks
comment on whether a subsequent failure by the incumbent railroad
within a specified time period, such as one year, following the
termination of a prescribed reciprocal switching arrangement should
result in a permanent reciprocal switching order.
The Board emphasizes that the prescription of a reciprocal
switching agreement does not prevent an incumbent rail carrier from
competing to keep its traffic and attempting to win back the traffic by
voluntary agreement of the petitioner during the prescription period by
demonstrating that it will soon provide better service or offering the
petitioner more favorable terms and conditions to win its business.
Indeed, in addition to preventing service problems in the first place,
the proposed rule intends to spur carrier improvement if it falls below
these standards.
Part II: Data
The new part 1145 would require Class I carriers to make data
available to customers. Within seven days of a written request from a
shipper or receiver, the incumbent rail carrier would be required to
provide that
[[Page 63911]]
customer all relevant individualized performance records necessary to
bring a case at the Board.\40\
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\40\ The Board seeks comment whether it could require a carrier
to disclose data about past service to a shipper or receiver when a
different entity paid for the service. The Board likewise seeks
comment whether it should give the entity that paid for the service
the opportunity to seek confidential treatment of service data that
a carrier provides to a shipper or receiver upon request.
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Specifically, the railroad would be required to record and--upon
request by the shipper or receiver--provide to that customer all of the
customer's data on traffic that was assigned OETAs and local service
windows, along with the corresponding time stamps indicating
performance. As in Demurrage Billing Requirements, EP 759, slip op. at
3, the railroad must provide the petitioner with machine readable data,
meaning ``data in an open format that can be easily processed by
computer without human intervention while ensuring no semantic meaning
is lost.'' Id. at 3 n.9. Stakeholders are invited to comment on what
format and fields would be useful.
Additionally, to assist the Board with general oversight and to
facilitate implementation of part 1145, the Board proposes to make
permanent the collection of certain data that is relevant to service
reliability and inadequate local service and that is currently being
collected on a temporary basis in Docket No. EP 770 (Sub-No. 1). See
Urgent Issues in Freight Rail Serv.--R.R. Reporting, EP 770 (Sub-No.
1), slip op. at 6 (STB served May 6, 2022) (items 5 and 7). The Board
has found that this data is particularly helpful to understanding
conditions on the rail network.\41\ The Board's permanent collection of
this data under part 1145 would be adapted to the design of part 1145
as follows. The Class I carriers would be required to provide to the
Board on a weekly basis: (1) for shipments moving in manifest service,
the percentage of shipments for that week that were delivered to the
destination within 24 hours of OETA, out of all shipments in manifest
service on the carrier's system during that week; \42\ and (2) for each
of the carrier's operating divisions and for the carrier's overall
system, the percentage of planned service windows during which the
carrier successfully performed the requested local service, out of the
total number of planned service windows on the relevant division or
system for that week. Carriers would be required to collect and report
this data using the terms that are defined in part 1145 and the
associated provisions of 1145 on what constitutes a miss. As one
example, a railroad would need to count as a miss a shipment that was
not delivered within 24 hours of OETA as defined in part 1145. As a
second example, a railroad would need to count as a miss a failure to
provide local service on the planned-service window as defined in part
1145.
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\41\ Furthermore, many rail users indicated at the April 2022
hearing in Docket No. EP 770 that increased visibility into FMLM
service and TPC data would be particularly useful. Urgent Issues in
Freight Rail Serv.--R.R. Reporting, EP 770 (Sub-No. 1), slip op. at
3 (STB served May 6, 2022).
\42\ The Class I railroads would no longer need to report this
data for intermodal traffic.
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The Board finds that the collection of this data would not be
unduly burdensome, as carriers are already providing similar data to
the Board and use such data in the ordinary course of business. The
comments in Docket No. EP 767 indicate that some railroads already
provide dashboards showing shipment-specific data. For example, NSR
asserts that ``AccessNS and the Trax mobile application offer Norfolk
Southern's customers real-time, easy access to first-mile/last-mile
data regarding each of their shipments on the Norfolk Southern
system.'' NSR Opening Comments 2, Dec. 17, 2021, First Mile/Last Mile
Serv., EP 767.
If this data reporting requirement were to become permanent, there
would no longer be a need to collect that particular data on a
temporary basis in Docket No. EP 770 (Sub-No. 1). The Board will defer
any decisions on whether to extend the Docket No. EP 770 (Sub-No. 1)
collection as to other data until the conclusion of this proceeding.
Should the Board ultimately conclude that the data reporting that it
proposes to make permanent here is sufficient for regulatory purposes,
the Board expects that it would close Docket No. EP 770 (Sub-No. 1)
following the expiration of the current temporary collection.
Similarly, because the new part 1145 would address many first-mile/
last-mile issues, the Board will defer any further action in Docket No.
EP 767 until the conclusion of this proceeding. In Docket No. EP 767,
the Board sought comments exploring whether additional metrics to
measure first-mile/last-mile service would be useful and what the
associated burdens would be. The Board expects that comments in this
proceeding regarding the proposed part 1145 will address similar
issues, but with respect to the particular metrics proposed here.
Environmental Review
The proposal of part 1145 is categorically excluded from
environmental review under 49 CFR 1105.6(c).
Regulatory Flexibility Act
The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601-612,
generally requires a description and analysis of new rules that would
have a significant economic impact on a substantial number of small
entities. In drafting a rule, an agency is required to: (1) assess the
effect that its regulation will have on small entities; (2) analyze
effective alternatives that may minimize a regulation's impact; and (3)
make the analysis available for public comment. Sections 601-604. In
its notice of proposed rulemaking, the agency must either include an
initial regulatory flexibility analysis, section 603(a), or certify
that the proposed rule would not have a ``significant impact on a
substantial number of small entities,'' section 605(b). The impact must
be a direct impact on small entities ``whose conduct is circumscribed
or mandated'' by the proposed rule. White Eagle Coop. Ass'n v. Conner,
553 F.3d 467, 480 (7th Cir. 2009).
The regulations proposed here are directed at Class I railroads and
their affiliated companies. As such, the regulations would not impact a
substantial number of small entities.\43\ Accordingly, pursuant to 5
U.S.C. 605(b), the Board certifies that the regulations proposed herein
would not have a significant economic impact on a substantial number of
small entities within the meaning of the RFA. A copy of this decision
will be served upon the Chief Counsel for Advocacy, Office of Advocacy,
U.S. Small Business Administration.
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\43\ For the purpose of RFA analysis for rail carriers subject
to the Board's jurisdiction, the Board defines a ``small business''
as only including those rail carriers classified as Class III rail
carriers under 49 CFR 1201.1-1. See Small Entity Size Standards
Under the Regul. Flexibility Act, EP 719 (STB served June 30, 2016).
Class III rail carriers have annual operating revenues of $46.3
million or less in 2022 dollars. Class II rail carriers have annual
operating revenues of less than $1.03 billion but more than $46.3
million in 2022 dollars. The Board calculates the revenue deflator
factor annually and publishes the railroad revenue thresholds in
decisions and on its website. 49 CFR 1201.1-1; Indexing the Annual
Operating Revenues of R.Rs., EP 748 (STB served June 29, 2023).
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Paperwork Reduction Act
Pursuant to the Paperwork Reduction Act, 44 U.S.C. 3501-3521,
Office of Management and Budget (OMB) regulations at 5 CFR
1320.8(d)(3), and Appendix B, the Board seeks comments about the impact
of the proposed rules regarding: (1) whether the collection of
information, as set forth in the proposed rule and further described in
Appendix B, is necessary for the proper performance of the functions of
the
[[Page 63912]]
Board, including whether the collection has practical utility; (2) the
accuracy of the Board's burden estimates; (3) ways to enhance the
quality, utility, and clarity of the information collected; and (4)
ways to minimize the burden of the collection of information on the
respondents, including the use of automated collection techniques or
other forms of information technology, when appropriate.
The reporting of the data under 49 CFR part 1145 would be
standardized. The reporting requirement would require an initial hourly
burden for the initial programing as well as the weekly report output
and submission (section 1145.8(b)). The petition seeking prescription
of a reciprocal switching agreement (section 1145.5) and the petition
seeking termination (section 1145.7) would be necessary to implement
part 1145. Section 1145.8(a) will provide for Class I rail carriers to
provide individualized service data to terminal-area shippers or
receivers upon request.
The Board anticipates that the requirement for the Class I carriers
to make updates to their internal data collections methodology to
standardize and harmonize it with the Board's requirements for the
proposed reporting would add an estimated cumulative total one-time
hour burden of 480 hours across all six Class I railroads. The weekly
reports are estimated to require an annual hour burden of approximately
2,564 hours, and the petitions to initiate and terminate the process
are estimated to require approximately 800 hours. Requests for
individualized service data by terminal-area shippers or receivers are
estimated to require approximately 36 hours.
The Board welcomes comment on the estimates of actual time of its
proposed collections requirements for Class I carriers and petitioners
seeking reciprocal switching agreements, as detailed below in Appendix
B. The proposed rules will be submitted to OMB for review as required
under 44 U.S.C. 3507(d) and 5 CFR 1320.11. Comments received by the
Board regarding the information collection will also be forwarded to
OMB for its review when the final rule is published.
It is ordered.
1. The Board proposes to amend its regulations as set forth in this
decision. Notice of the proposed rule will be published in the Federal
Register.
2. Comments are due by October 23, 2023. Reply comments are due by
November 21, 2023.
3. A copy of this decision will be served upon the Chief Counsel
for Advocacy, Office of Advocacy, U.S. Small Business Administration.
4. Docket No. EP 711 (Sub-No. 1) is discontinued.
5. This decision is effective on its date of service.
Decided: September 5, 2023.
By the Board, Board Members Fuchs, Hedlund, Oberman, Primus, and
Schultz. Board Member Primus concurred with a separate expression.
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Board Member Primus, concurring:
Today's NPRM sets forth a promising new way to institute reciprocal
switching when it is ``practicable and in the public interest.'' 49
U.S.C. 11102(c). This proposal appears to be an improvement over the
2016 NPRM's application of the public interest prong, and I look
forward to the development of a comment record on it.
I also eagerly anticipate the Board's action to improve access to
the statute's other prong, addressing reciprocal switching that is
``necessary to provide competitive rail service.'' Id. Rail customers
have interpreted the standard in 49 CFR 1144.2--under which a
reciprocal switching order requires a determination that it is
``necessary to remedy or prevent an act that is contrary to the
competition policies of 49 U.S.C. 10101 or is otherwise
anticompetitive''--as setting an unrealistically high bar. See 2016
NPRM, EP 711 (Sub-No. 1) et al., slip op. at 8. As a result, no
petitions for reciprocal switching have been filed for many years,
despite rail customers' expressions of concern about competition. Id.
The Board should act soon to ensure that reciprocal switching is
available for competitive access to the extent authorized by the
language of the statute.
List of Subjects in 49 CFR 1145
Common carrier, Freight, Railroads, Rates and fares, Reporting and
recordkeeping requirements, and Shipping.
Jeffrey Herzig,
Clearance Clerk.
0
For the reasons set forth in the preamble, the Surface Transportation
Board proposes to amend title 49, chapter X, of the Code of Federal
Regulations by adding part 1145 to read as follows:
PART 1145--RECIPROCAL SWITCHING FOR INADEQUATE SERVICE
Sec.
1145.1 Definitions
1145.2 Performance standards
1145.3 Affirmative defenses
1145.4 Negotiations
1145.5 Procedures
1145.6 Prescription
1145.7 Termination
1145.8 Data
Authority: 49 U.S.C. 1321 and 11102.
Sec. 1145.1 Definitions.
The following definitions apply to part 1145:
Affiliated companies has the same meaning as ``affiliated
companies'' in Definition 5 of the Uniform System of Accounts (49 CFR
part 1201, subpart A).
Cut-off time means the deadline for requesting service during a
service window, as determined in accordance with the rail carrier's
established protocol.
Delivery means when a shipment is actually placed at a designated
destination or is constructively placed at a local yard that is
convenient to the designated destination. In the case of shipments at
interchange locations, a shipment is deemed to be delivered when the
receiving carrier acknowledges receipt of a shipment. For purposes
hereof, constructive placement of a shipment at a local yard
constitutes delivery only when:
(1) The recipient has the option, by prior agreement between the
rail carrier and the customer, to have the rail carrier hold the
shipment pending the recipient's request for delivery to the designated
destination and the recipient has not yet requested delivery; or
(2) The recipient is unable to accept delivery at the designated
destination.
Designated destination means the final destination as specified in
the bill of lading or, in the case of a joint-line movement, the
interchange where the shipment is transferred to the interline carrier,
its agent, or affiliated company.
Incumbent rail carrier means a Class I rail carrier that currently
provides line-haul service to the petitioner to or from the point of
origin or final destination that would be covered by the proposed
reciprocal switching agreement.
Lane means a shipment's point of origin and designated destination.
Shipments of the same commodity that have the same point of origin and
the same designated destination are deemed to travel over the same
lane, regardless of which route(s) the rail carrier uses to move the
shipments from origin to destination. In the case of an interline
movement, the designated destination is the designated interchange.
Manifest traffic means shipments that move in carload or non-unit
train service.
Original estimated time of arrival or OETA means the estimated time
of arrival that the incumbent rail carrier
[[Page 63913]]
provides when the shipper tenders the bill of lading or when the
incumbent rail carrier receives the shipment from an interline carrier.
Petitioner means a shipper or a receiver that files a petition
hereunder for prescription of a reciprocal switching agreement.
Planned service window means a service window for which the shipper
or receiver requested local service, provided that the shipper or
receiver made its request by the cut-off time for that window.
Practical physical access means a feasible line-haul option on a
rail carrier, including but not limited to: direct physical access to
that carrier or its affiliated company; an existing switching
arrangement between an incumbent rail carrier and another rail carrier;
terminal trackage rights; or contractual arrangement between a local
rail carrier and a line-haul carrier.
Receipt of a shipment means when the preceding rail carrier
provides a time stamp or rail tracking message that the shipment has
been delivered to the interchange.
Reciprocal switching agreement means an agreement for the transfer
of rail shipments between one Class I rail carrier or its affiliated
company and another Class I rail carrier or its affiliated company
within the terminal area in which the rail shipment begins or ends its
rail journey. Service under a reciprocal switching agreement may
involve one or more intermediate transfers to and from yards within the
terminal area.
Alternative 1-A
Service window means a window during which the incumbent rail
carrier offers to perform local service (placements and/or pick-ups of
rail shipments) at a shipper's or receiver's facility. A service window
must be made available by a rail carrier with reasonable advance notice
to the shipper or receiver and in accordance with the carrier's
established protocol. For purposes of this part, a service window is 12
hours in duration, beginning at the start of the work shift for the
crew that will perform the local service, without regard to whether the
incumbent rail carrier specified a longer or shorter service window.
Alternative 1-B
Service window means a window during which the incumbent rail
carrier offers to perform local service (placements and/or pick-ups of
rail shipments) at a shipper's or receiver's facility. A service window
must be made available by a rail carrier with reasonable advance notice
to the shipper or receiver and in accordance with the carrier's
established protocol. For purposes of this part, a service window is
the time specified according to the carrier's established protocol, not
to exceed 12 hours, in duration, beginning at the start of the work
shift for the crew that will perform the local service, without regard
to whether the incumbent rail carrier specified a longer or shorter
service window.
Shipment means a loaded railcar that is designated in a bill of
lading.
Similar traffic means traffic that is of the same broad type
(manifest traffic or unit train) as the traffic that is governed by a
prescribed reciprocal switching agreement, and is transported by the
incumbent rail carrier or its affiliated company to or from the
terminal area in which transfers occur under the prescribed reciprocal
switching agreement.
Terminal area means a commercially cohesive area in which two or
more railroads engage in the local collection, classification, and
distribution of rail shipments for purposes of line-haul service. A
terminal area is characterized by multiple points of loading/unloading
and yards for such local collection, classification, and distribution.
A terminal area (as opposed to main-line track) must contain and cannot
extend significantly beyond recognized terminal facilities, such as
freight or classification yards. A point of origin or final destination
on the rail system is not suitable for a prescribed switching
arrangement if the point is not integrated into or, using existing
facilities, reasonably cannot be integrated into the incumbent rail
carrier's terminal-area operation.
Time of arrival means the time that a shipment is delivered to the
designated destination.
Transit time means the time between a rail carrier's receipt of a
shipment, upon either the tender of the bill of lading to that rail
carrier or the rail carrier's receipt of the shipment from an interline
carrier and the rail carrier's delivery of that shipment to the agreed-
upon destination. Transit time does not include time spent loading and
unloading cars.
Sec. 1145.2 Performance standards.
The performance standards in this section apply only to petitions
for prescription of a reciprocal switching agreement under this part.
(a) Service reliability (original estimated time of arrival). The
service reliability standard applies to shipments that travel as
manifest traffic. The service reliability standard measures a rail
carrier's success in delivering a shipment from its original or
interchange location to the designated destination by the original
estimated time of arrival, accounting for the applicable grace period.
Determination of a rail carrier's compliance with the service
reliability standard is based on all shipments from the same original
or interchange location to the same designated destination over a
period of 12 consecutive weeks. A rail carrier meets the service
reliability standard when A/B ratio is greater than 60%, where A is the
number of shipments that are delivered within 24 hours of the original
estimated time of arrival, and B is the total number of shipments. This
ratio will increase to 70% after [DATE ONE YEAR AFTER EFFECTIVE DATE OF
FINAL RULE].
Alternative 2-A
(b) Service consistency (transit time). The service consistency
standard applies to shipments in the form of a unit train and to
shipments that travel as manifest traffic. The service consistency
standard measures a rail carrier's success over time in maintaining the
transit time for a shipment. A rail carrier meets the service
consistency standard when A is no more than 20% longer than B, where A
is the average transit time for all shipments from the same location to
the same designated destination over a period of 12 consecutive weeks,
and B is the average transit time for all shipments from the same
location to the same designated destination over the same 12-week
period during the previous year.
Alternative 2-B
(b) Service consistency (transit time). The service consistency
standard applies to shipments in the form of a unit train and to
shipments that travel as manifest traffic. The service consistency
standard measures a rail carrier's success over time in maintaining the
transit time for a shipment. A rail carrier meets the service
consistency standard when A is no more than 25% longer than B, where A
is the average transit time for all shipments from the same location to
the same designated destination over a period of 12 consecutive weeks,
and B is the average transit time for all shipments from the same
location to the same designated destination over the same 12-week
period during the previous year.
(c) Lanes. (1) Except as provided in paragraph (c)(2) of this
section, compliance with the performance standards in paragraphs (a)
and (b) of
[[Page 63914]]
this section is determined separately for each lane of traffic to or
from the petitioner's facility. Shipments of the same commodity from
the same point of origin to the same designated destination are deemed
to travel over the same lane, without regard to the route between the
point of origin and designated destination. In the case of an interline
movement, the designated destination is the designated interchange.
(2) The Board shall prescribe a reciprocal switching agreement that
governs shipments to or from multiple lanes to or from the petitioner's
facility if all the conditions in this paragraph (c)(2) are met.
(i) Each of the included lanes had practical physical access to
only one Class I carrier that could serve that lane.
(ii) The incumbent rail carrier's average success rate for those
lanes fails to meet a performance standard.
(iii) The Board determines that the prescribed agreement would be
practical and efficient only when the agreement governed shipments to
or from all of those lanes.
(iv) The petition meets other conditions to a prescription under
this part.
(3) For purposes of paragraph (c)(2) of this section, the
petitioner may choose which lanes of traffic to or from its facility to
include in demonstrating the incumbent rail carrier's average success
rate, including lanes of different commodities and/or lanes with
different points of origin or designated destination.
Alternative 3-A
(d) Empty railcars.
(1) For private or shipper-leased railcars, a rail carrier fails to
meet the service consistency standard in paragraph (b) of this section
if the rail carrier's average transit time for delivering empty cars to
a designated destination over a 12-week period increases by more than
20% compared to average transit time for delivering empty cars to the
same designated destination during the same 12-week period during the
previous year.
Alternative 3-B
(1) For private or shipper-leased railcars, a rail carrier fails to
meet the service consistency standard in paragraph (b) of this section
if the rail carrier's average transit time for delivering empty cars to
a designated destination over a 12-week period increases by more than
25% compared to average transit time for delivering empty cars to the
same designated destination during the same 12-week period during the
previous year.
(2) A rail carrier's failure to meet a performance standard as
provided in this paragraph (d) provides the basis for prescribing a
reciprocal switching agreement that governs both the delivery of the
empty cars and the delivery of the associated shipments of loaded cars.
(e) Industry spot and pull. The industry spot and pull standard
measures a rail carrier's success in performing local placements
(``spots'') and pick-ups (``pulls'') of loaded railcars and unloaded
private or shipper-leased railcars at a shipper's or receiver's
facility during the planned service window.
(1) A rail carrier meets the industry spot and pull standard if,
over a period of 12 consecutive weeks, the carrier has a success rate
of 80% or more in performing requested spots and pulls within the
planned service window, as determined based on the total number of
planned service windows during that 12-week period. If a rail carrier
cancels a service window other than at the shipper's or receiver's
request, that window is included as a failure in calculating compliance
with the industry spot and pull standard. Failure to spot
constructively placed cars that have been ordered in by the cut-off
time for a planned service window results in a missed service window.
(2) If a rail carrier reduces the frequency of its local service to
a shipper's or receiver's facility, and if that reduction is not based
on a commensurate reduction in customer demand, then the industry spot
and pull standard increases to a success rate of 90% for one year.
Sec. 1145.3 Affirmative defenses.
An incumbent rail carrier shall be deemed not to fail a performance
standard in Sec. 1145.2 if any of the conditions described in this
section is met. The Board will also consider, on a case-by-case basis,
affirmative defenses that are not specified in this section.
(a) The rail carrier experiences extraordinary circumstances beyond
the carrier's control, including but not limited to unforeseen track
outages stemming from natural disasters, severe weather events,
flooding, accidents, derailments, and washouts. A carrier's intentional
reduction or maintenance of its workforce at a level that itself causes
workforce shortage, or, in the event of a workforce shortage, failure
to use reasonable efforts to increase its workforce, would not, on its
own, be considered a defense for failure to meet any performance
standard. A carrier's intentional reduction or maintenance of its power
or car supply, or failure to use reasonable efforts to maintain its
power or car supply, that itself causes a failure of any performance
standard would not, on its own, be considered a defense.
(b) The petitioner's traffic increases by 20% or more during the
12-week period in question, as compared to the preceding 12 weeks (for
non-seasonal traffic) or the same 12 weeks during the previous year
(for seasonal traffic such as agricultural shipments), where the
petitioner failed to notify the incumbent rail carrier at least 12
weeks prior to the increase.
(c) There are highly unusual shipments by the shipper during any
week of the 12-week period in question. For example, a pattern might be
considered highly unusual if a shipper projected traffic of 120 cars in
a month and 30 cars per week, but the shipper had a plant outage for
three weeks and then requested shipment of 120 cars in a single week.
(d) The incumbent rail carrier's failure to meet the performance
standard is due to the dispatching choices of a third party.
Sec. 1145.4 Negotiations.
At least five days prior to petitioning for prescription of a
reciprocal switching agreement hereunder, the petitioner must seek to
engage in good faith negotiations to resolve its dispute with the
incumbent rail carrier.
Sec. 1145.5 Procedures.
(a) If a petitioner believes that a rail carrier providing it
service failed to meet a performance standard described in section
1145.2, it may file a petition for prescription of a reciprocal
switching agreement.
(b) The petition must include the information and documents
described in this paragraph (b).
(1) Confirmation that the petitioner attempted good faith
negotiations as required by Sec. 1145.4, identify the performance
standard the railroad failed to meet over the requisite period of time,
and provide evidence supporting its claim.
(2) Switching publications of the incumbent rail carrier and the
potential alternate carrier.
(3) A motion for a protective order that would govern the
disclosure of data that the rail carrier provided to the petitioner
under this part.
(c) The petition must have been served on the incumbent rail
carrier, the alternate rail carrier, and the Federal Railroad
Administration.
(d) A reply to a petition is due within 20 days of a completed
petition.
[[Page 63915]]
(e) A rebuttal may be filed within 20 days after a reply to a
petition.
(f) The Board will endeavor to issue a decision on a petition
within 90 days from the date of the completed petition.
Sec. 1145.6 Prescription.
(a) The Board will prescribe a reciprocal switching agreement under
this part if all the conditions in this paragraph (a) are met.
(1) For the lane of traffic that is the subject of the petition,
the petitioner has practical physical access to only one Class I
carrier that could serve that lane.
(2) The petitioner demonstrates that the incumbent rail carrier
failed to meet one or more of the performance standards in Sec. 1145.2
with regards to its shipment.
(3) The incumbent rail carrier fails to demonstrate an affirmative
defense as provided in Sec. 1145.3.
(b) Notwithstanding paragraph (a) of this section, the Board will
not prescribe a reciprocal switching agreement if the incumbent rail
carrier or alternate rail carrier demonstrates that: switching service
under the agreement, i.e., the process of transferring the shipment
between carriers within the terminal area, could not be provided
without unduly impairing either rail carrier's operations; or the
alternate rail carrier's provision of line-haul service to the
petitioner would be infeasible or would unduly hamper the incumbent
rail carrier or the alternate rail carrier's ability to serve its
existing customers. If the incumbent rail carrier and alternate rail
carrier have an existing reciprocal switching arrangement in a terminal
area in which the petitioner's traffic is currently served, the
proposed operation is presumed to be operationally feasible, and the
incumbent rail carrier will bear a heavy burden of establishing why the
proposed operation should not qualify for a reciprocal switching
agreement.
(c) In prescribing a reciprocal switching agreement, the Board
shall prescribe a term of service of two years, provided that the Board
may prescribe a longer term of service of up to four years if the
petitioner demonstrates that the longer minimum term is necessary for
the prescription to be practical given the petitioner's or alternate
carrier's legitimate business needs.
(d) Upon the Board's prescription of a reciprocal switching
agreement under this part, the affected rail carriers must: set the
terms of the agreement and offer service thereunder within 30 days of
service of the prescription; include, in the appropriate disclosure
under 49 CFR part 1300, the location of the petitioner's facility,
indicating that the location is open to reciprocal switching, and the
applicable terms and price; and notify the Board within 10 days of when
the carriers offered service that the agreement has taken effect.
(e) If the affected carriers cannot agree on compensation within 30
days of the service of the prescription, then the affected rail
carriers must offer service and petition the Board to set compensation.
Sec. 1145.7 Termination.
(a) A prescription hereunder automatically renews at the end of the
term established under Sec. 1145.6(c), unless the Board grants a
petition by the incumbent rail carrier to terminate the prescription.
Automatic renewal is for the same term as the original term of the
prescription.
(b) The Board will grant a petition to terminate a prescription if
the incumbent rail carrier demonstrates that, for a consecutive 24-week
period prior to the filing of the petition to terminate, the incumbent
rail carrier's service for similar traffic on average met the
performance standard that provided the basis for the prescription. This
requirement includes a demonstration by the incumbent carrier that it
consistently has been able to meet, over the most recent 24-week
period, the performance standards for similar traffic to or from the
relevant terminal area.
(c) The incumbent rail carrier may submit a petition to terminate a
prescription not more than 180 days and not less than 120 days before
the end of the current term of the prescription. In the event the
incumbent carrier does not file a petition for termination no more than
180 days, but no less than 120 days, before the end of the prescription
period or files such a petition and fails to sustain its burden of
proof, the reciprocal switching prescription would automatically renew
for the same period as the initial prescription.
(d) A reply to a petition to terminate is due within 15 days of the
petition.
(e) A rebuttal may be filed within seven days of the filing of the
reply.
(f) The Board will endeavor to issue a decision on a petition to
terminate within 90 days from the close of briefing. If the Board does
not act within 90 days, the prescription automatically terminates at
the end of the original term of the prescription; provided that, if the
Board does not issue a decision due to extraordinary circumstances, as
determined by the Board, the prescription is automatically renewed for
30 days from the end of the current term. When there are extraordinary
circumstances, the Board will issue an order alerting the parties that
it will not issue a decision within 90 days.
Sec. 1145.8 Data.
(a) Within seven days of a written request from a shipper or
receiver, the incumbent rail carrier shall provide that customer all
relevant individualized performance records necessary to file a
petition under Sec. 1145.5 with the Board.
(b) All Class I carriers shall report to the Board on a weekly
basis, in a manner and form determined by the Board, data that shows:
the percentage of shipments on the carrier's system that moved in
manifest service and that were delivered within 24 hours of OETA, out
of all shipments on the carrier's system that moved in manifest service
during that week; and, for each of the carrier's operating divisions
and for the carrier's overall system, the percentage of planned service
windows during which the carrier successfully performed the requested
local service, out of the total number of planned service windows on
the relevant division or system for that week, all within the meaning
of this part.
Note: The following appendices A and B will not appear in the
Code of Federal Regulations.
Appendix A
Tables and Illustrations
1. Overview of Part 1145
----------------------------------------------------------------------------------------------------------------
Performance standard Focus Measure of success Effect of prescription
----------------------------------------------------------------------------------------------------------------
Service Reliability (OETA) Sec. Success in [60] [70]% success Access to alternate line haul
1145.2(a). delivering in delivering carrier.
shipments near the shipments within
OETA. 24 hours after
OETA, measured
over a 12-week
period.
Service Consistency (Transit Success in Maintains velocity Access to alternate line haul
Time) Sec. 1145.2(b). maintaining the over a lane carrier.
average velocity of without a
shipments over a deterioration of
lane from one year more than [20]
to the next. [25]%, as measured
over a 12-week
period.
Industry Spot and Pull (ISP) Sec. Success in 80% success in Access to alternate line haul
1145.2(e). performing local performing local carrier.
service during the service during the
planned service planned service
window. window, measured
over a 12-week
period.
----------------------------------------------------------------------------------------------------------------
[[Page 63916]]
2. Service Reliability (Original Estimated Time of Arrival)--Sec.
1145.2(a)
Option 1
A rail carrier fails to meet the service reliability standard
when A/B is less than 60%, where:
A = the number of shipments over a lane during a 12-week period
that are delivered within 24 hours after the OETA and
B = the total number of shipments over the same lane during the
same 12-week period.
Option 2
The same as Option 1, except that A/B is less than 60% during
the first year after enactment of part 1145 and less than 70% after
the end of the first year.
Illustration
Over a 12-week period, a carrier moves a total of 23 shipments
(each a loaded car) over a given lane. The cars are shipped and
delivered in four groups as shown below, with each group delivered
on a different day during the summer. Here, A (successful shipments)
equals 12 and B (total shipments) equals 23, resulting in a service
reliability ratio (A/B) of 52%. The carrier fails to meet the
service reliability standard.
----------------------------------------------------------------------------------------------------------------
Difference
OETA Delivery from OETA Successful Total
(hours) shipments shipments
----------------------------------------------------------------------------------------------------------------
8/25/23, 20:24........................ 8/27/23, 8:24........... +36 0 5
7/25/23, 18:19........................ 7/27/23, 21:55.......... +51.6 0 6
6/25/23, 12:19........................ 6/26/23, 6:19........... +18 2 2
7/26/23, 7:01......................... 7/25/23, 6:01........... -25 10 10
A = 12 B = 23
----------------------------------------------------------------------------------------------------------------
3. Service Consistency (Transit Time)--Sec. 1145.2(b)
A rail carrier fails to meet the service consistency standard
when an increase from B to A is more than [20] [25]%, where:
A = the average transit time for all shipments over a lane
during a 12-week period and
B = the average transit time for all shipments over the same
lane during the same 12-week period during the prior calendar year.
Illustration 1
The average transit time during the period complained of is 13
days. The average transit time for the historical reference period
is 11 days. Here, A equals 13 and B equals 11. The increase from B
to A is two days, which is 18% of B. The carrier meets the service
consistency standard.
Illustration 2
The average transit time during the period complained is 13
days. The average transit time for the historical reference period
is 10 days. Here, A equals 13 and B equals 10. The increase from B
to A is three days, which is 30% of B. The carrier fails to meet the
service consistency standard.
4. Industry Spot and Pull (ISP)--Sec. 1145.2(e)
A rail carrier fails to meet the industry spot and pull standard
when A/B is less than 80%, where:
A = the number of planned service windows over a 12-week period
during which the carrier performed the requested local service and
B = the total number of planned service windows over the same
12-week period.
For this purpose, a ``planned service window'' is a day for
which the customer requested local service by the applicable cut-off
time. A planned service window is 12 hours from the start of the
work shift of the crew that is to perform the local service.
Illustration
The customer submits a timely request for local service on 14
occasions over a twelve-week period. On four of those occasions, the
carrier fails to perform all of the requested local service during
the planned service window, that is, within 12 hours of the start of
the relevant crew's work shift. Here, A equals 10 and B equals 14,
resulting in an ISP ratio (A/B) of 71%. The carrier fails to meet
the ISP standard.
Appendix B
Information Collection Under the Paperwork Reduction Act
Title: Reciprocal Switching Agreements.
OMB Control Number: 2140-00XX.
STB Form Number: None.
Type of Review: New Information Collection.
Summary: As part of its continuing effort to reduce paperwork
burdens, and as required by the Paperwork Reduction Act of 1995, 44
U.S.C. 3501-3521 (PRA), the Surface Transportation Board (Board)
gives notice that it is requesting from the Office of Management and
Budget (OMB) approval (1) to collect certain service data from Class
I rail carriers, (2) to provide for Class I rail carriers to provide
individualized service data to terminal-area shippers or receivers
upon request, (3) to provide for those shippers and receivers to
file petitions for the prescription of a reciprocal switching
agreement in a case of inadequate rail service, and (4) to provide
for the affected rail carrier to petition to terminate a
prescription.
Respondents: Class I railroads and terminal-area shippers and
receivers.
Number of Respondents: Six Class I railroads for weekly
reporting and one shipper, receiver, or carrier for each
individualized request or petition.
Estimated Time per Response: The estimated time is set forth in
the table below.
Frequency: Weekly and on occasion.
Total Burden Hours (annually including all respondents): The
total hour burdens are set forth in the table below.
Table--Total Estimated Burden Hours for Respondents
----------------------------------------------------------------------------------------------------------------
Estimated
Type of filing hours per Number of Estimated Total burden
response respondents frequency hours
----------------------------------------------------------------------------------------------------------------
One-time update to data collection software to 80 6 1 480
standardize with the Board's data definition for
service reliability and industry spot and pull.......
Weekly reporting on service reliability and industry 4 6 52 1,248
spot and pull (new 49 CFR 1145.8(b)).................
Occasional request and response to request for 3 12 1 36
individualized service data (new 49 CFR 1145.8(a))...
Petition for Prescription of a Reciprocal Switching 140 5 1 700
Agreement (new 49 CFR 1145.5)........................
Petition to Terminate Prescription of a Reciprocal 50 2 1 100
Switching Agreement (new 49 CFR 1145.7)..............
---------------------------------------------------------
[[Page 63917]]
Total Burden Hours................................ ........... .............. ........... 2,564
----------------------------------------------------------------------------------------------------------------
Total ``Non-Hour Burden'' Cost: There are no non-hourly burdens,
as the reports will be submitted electronically.
Needs and Uses: A reciprocal switching agreement provides for
the transfer of a rail shipment between Class I rail carriers or
their affiliated companies within the terminal area in which the
shipment begins or ends its journey on the rail system. An agreement
facilitates line-haul service by a rail carrier that serves the
terminal area, other than the rail carrier on whose tracks the
shipment begins or ends its journey. Several years ago, the Board
began to consider new regulations to require rail carriers to enter
into reciprocal switching agreements. Those proposed regulations
were never promulgated. Due to subsequent developments in the rail
sector, including the emergence of service problems as a critical
and ongoing issue, the Board is now considering a new set of
regulations to prescribe reciprocal switching agreements in cases of
inadequate rail service.
The newly proposed regulations would allow for terminal-area
shippers or receivers to seek the prescription of a reciprocal
switching agreement when service to them fails to meet certain
objective performance standards. The standards reflect what the
Board believes to be the minimal level of rail service that is
compatible with the public need, considering shippers and receivers'
need for reliable, predictable, and efficient rail service as well
as rail carriers' need for a certain degree of operating
flexibility. When an incumbent rail carrier's service fails to meet
the performance standards, and when other conditions to a
prescription are met (including the absence of a valid affirmative
defense), the Board will consider if it would be in the public
interest to allow access to an alternate rail carrier through
prescription of a reciprocal switching agreement. To facilitate
implementation of the new regulations, the Board proposes to require
weekly reporting of certain service data by Class I carriers and to
grant shippers and receivers the right to receive their own
individualized service data from a Class I carrier. The proposed
reporting and submissions are necessary to the purposes of the
proposed regulation and therefore to enable the Board to implement
its statutory authority in this important area.
[FR Doc. 2023-19543 Filed 9-15-23; 8:45 am]
BILLING CODE 4915-01-P