WATCHING WASHINGTON, RAILWAY AGE, JULY 2025 ISSUE: What is more delightfully amusing than a paradox—that we park on driveways and drive on parkways; that foul is fair when batted baseballs collide with a foul pole; and that more regulation is less regulation?
The “more is less” paradox was advanced by rail shippers in late May following invitation by the Department of Justice (DOJ) Antitrust Division to comment on how federal laws and regulations “undermine free-market competition.” A DOJ task force of attorneys, economists and policy wonks will review the comments and make recommendations to the independent Surface Transportation Board (STB), which is under no obligation to comply.
Among commentators was the National Industrial Transportation League (NITL), the largest and most diverse of shipper organizations. Woven into the submission’s tapestry is a masterful gambit that if embraced by DOJ would have trustbusters advocating for more economic regulation while paradoxically claiming to bolster a free-market approach. The question is whether this aligns with the POTUS 47 Administration focus on rolling back regulations. DOJ’s trustbusters have previously favored what railroads consider to be reregulation. So, we shall see.
In urging repeal of an STB rule requiring prerequisites ahead of mandating second-railroad access to a one-railroad-served shipper facility (reciprocal switching), NITL seeks a snap-back to ambiguous statutory language in the 1980 Staggers Rail Act, which partially deregulated railroads and gave birth to the very STB rule NITL wishes repealed.
That statute contains a competitive access provision for shippers lacking effective transportation alternatives to rail. It says regulators “may require rail carriers to enter into reciprocal switching agreements where it finds such agreements to be practical and in the public interest, or where such agreements are necessary to provide competitive rail service.”
Congress excels at creating skeletons to which regulatory agencies apply flesh and sinew. So it was that regulators read the Staggers Rail Act’s words, “may,” “practical,” “public interest” and “necessary,” with trepidation, recalling dogmatic predecessors who relied on similar ambiguities to regulate excessively. It is the resulting narrow interpretation in the reciprocal switching rule that so upsets NITL.
The antipathy dates to 1985 when STB predecessor Interstate Commerce Commission (ICC) decided a case known as Midtec Paper, a bloody shirt that captive shippers still wave. It held that reciprocal switching is reserved for proven situations of market power abuse, and not “mere preference for the opportunity to obtain lower rates.”
Meeting that standard, said NITL, is a too-difficult antitrust-type inquiry into allegations of monopolization and predation. Two court decisions involving Midtec and Baltimore Gas & Electric held that the ICC had sufficient interpretive discretion to do as it had.
Captive shipper animus also is directed at a recent STB interpretation of the statute limiting reciprocal switching mandates to findings of inadequate service. NITL calls the limitations “insuperable standards.”
Should STB scrap its inadequate service standard, which would send the Midtec precedent to the dust bin, NITL advocates “case-by-case adjudications” of petitions for reciprocal switching. Presumably, each would be investigated and decided on its own merits. NITL wants “specific facts and circumstances” considered.
Conspicuous is NITL’s silence on details. What are the junction points to be used and their maximum allowable distance? What if the second railroad is unwilling to make a competitive offer? How are maximum switching charges to be calculated? Is the incumbent railroad entitled to other compensation?
STB efforts to answer these questions with finality, following judicial appeals, could outdate generations of NITL leaders.
At the STB, Chairperson Patrick J. Fuchs has pledged transparency in setting his agenda. His actions and public comments suggest he strongly favors market forces over command-and-control regulation. He also hand-picked advisers possessing extensive shipper, railroad and governmental backgrounds.
Sources asking not to be identified told Railway Age that Fuchs “has directed his team to engage in policy review with a wide range of stakeholders to deep-dive on issues of competition, deregulation and energy.” If successful, Fuchs would create another paradox—listening to resolve the talked-about reciprocal switching debate.
Railway Age Capitol Hill Contributing Editor Frank N. Wilner held managerial posts at two Class I railroads, was Assistant Vice President for Policy at the Association of American Railroads, Director of Public Relations for the United Transportation Union and its SMART-TD successor, and a White House appointed chief of staff at the STB. He is author of “Railroads & Economic Regulation,” available from Simmons-Boardman Books, https://www.railwayeducationalbureau.com, 800-228-9670.
