On February 28th, the US Department of Justice Antitrust Division filed comments with the Surface Transportation Board regarding the proposed rulemaking that would require reciprocal switching by railroads. This proposed rule would require a railroad that serves an industry (with no competing railroad accessing the site) must be willing to switch a railcar out and deliver it to a competing railroad for transportation to a destination. STB would then establish a fee that the receiving railroad would pay to the railroad with sole physical access.

The Justice Department commended STB on the proposed rule noting it would improve competitive options for captive shippers. Further, the Justice Department “encourages the Board to take additional steps, including robust enforcement, to address consolidation and anticompetitive conduct in the rail industry.” Further, Justice noted: “The Board’s reciprocal switching proposal is a well-tailored first step to provide captive shippers the benefit of some competition while reducing the need for complex rate regulation.” Justice also dismissed as exaggerated claims by the railroads that the proposed rule would decrease incentives for investment, but also stated that the potential benefits of the new rule would outweigh the costs of the rule (presumably in investment incentive.)

The stakes are high to railroads and possibly to shippers as well; expect to see some sparks as this new rule is considered by STB.