CEI Leads Coalition Urging Surface Transportation Board to Withdraw Proposed Switching Rule

Today, the Competitive Enterprise Institute (CEI) led a coalition of 20 other free market organizations urging the Surface Transportation Board (STB) to withdraw a harmful proposed rule. The STB has been the U.S. economic regulator of railroads for more than two decades since the infamous Interstate Commerce Commission was disbanded.

While the STB has often exercised its authority in a conservative manner, in 2016 it decided to open a rulemaking proceeding to enact backdoor price controls—precisely the type of regulation Congress has repeatedly rejected. The proposed rule, referred to by the agency as “competitive switching,” most troublingly would eliminate a longstanding requirement that anticompetitive conduct on the part of rail carriers must be found before the STB could impose forced reciprocal switching arrangements on carriers.

The STB, with no economic analysis to support its proposal, ludicrously argued that the absence of anticompetitive conduct findings was itself evidence that the system was not working. Of course, as we pointed out, the absence of successful anticompetitive conduct claims could just as easily support the contention that no anticompetitive conduct exists and thus no relief was warranted.

See my 2016 blog post for more detail on this dangerous proposal. Our coalition letter can be found here. Relatedly, CEI recently submitted comments in support of a petition for rulemaking to require the benefit-cost analysis already required of most federal agencies, which aims to prevent sloppy regulatory proposals like the reciprocal switching rule from occurring in the future.