(SNL, October 27) – Coal mining advocates have spoken up in support of a proposed U.S. Surface Transportation Board rule change that they say would bring more competitive rail shipping rates.
“The proposed rule has the potential to introduce much needed competition in the shipment of mine products if properly implemented,” said Adam Eckman, associate general counsel of the National Mining Association. “To this end, any competitive switching framework adopted by STB should be predictable, reliable, and effective for shippers seeking competitive switching for cargo transit.”
The rule, called reciprocal switching, would basically give coal shippers the ability to sidestep rail monopolies by accessing other nearby companies.
The Western Coal Traffic League submitted comments together with Minnesota Power that also supported of the reciprocal switching rule change. The entities said that if the STB adopts changes that they suggest, “the proposals might prove to be beneficial for some coal shippers if the nation’s major railroads decide to aggressively compete for coal transportation business subject to board-ordered reciprocal switching agreements.”
Some railroads are against the proposal. BNSF Railway Co. said the STB must “must allow market forces to govern the commercial relationships between railroads and their shippers, and must not create standards that allow unnecessary board intervention in properly functioning markets.”
One concern BNSF has is that reciprocal switching could be used even when markets were functioning properly. The railway said the initiative and others “will adversely affect railroads’ ability to make the investments necessary to both address the major changes that are currently occurring in the rail transportation market, and enable the industry to handle future demand growth.”
The National Mining Association also had some reservations about the clarity of the new rule, especially with regard to language it said would limit the ability of shippers to take advantage of reciprocal switching. “NMA is concerned however with language that would appear to prevent the approval of competitive switching if a carrier can make a cursory showing of perceived impacts to its ability to serve existing shippers. NMA is concerned that such a broad exception would limit the utility of the proposal by nullifying otherwise viable requests for switching,” Eckman said.
The Western Coal Traffic League, Minnesota Power and National Mining Association all expressed desire to broaden the rule so it would not be limited to Class 1 railroads. “Many NMA members rely on single short line railroads for shipment in many cases. Competitive switching could produce increased access and competitive rates in these scenarios as well,” Eckman said.