The Surface Transportation Board (STB) on January 9, 2026, published a notice of proposed rulemaking in the Federal Register, seeking to repeal 49 CFR Part 1144, its regulations on intramodal rail competition. This action would eliminate restrictions that narrow the agency's discretion to prescribe reciprocal switching agreements, through routes, and through rates, allowing the STB to evaluate such requests on a case-by-case basis under the statutory standards of 49 U.S.C. 10705 and 11102. The proposal responds to decades of shipper complaints that the existing rules impose an unrealistically high bar for obtaining competitive access, amid significant changes in the rail industry's structure and financial health since the regulations were adopted in 1985. Comments are due by March 10, 2026, with replies by April 24, 2026, potentially reshaping how the STB promotes competition in freight rail transportation.
Statutory History and Background
The Interstate Commerce Act, amended by the Railroad Revitalization and Regulatory Reform Act of 1976 and the Staggers Rail Act of 1980, governs freight rail regulation. Prior to these reforms, practices like open routing and rate equalization often led to inefficient routes and financial strain on railroads, contributing to industry crises in the 1970s. As the Federal Register entry notes, Congress responded by easing cancellations of through routes and joint rates, while retaining the agency's authority to prescribe them when 'desirable in the public interest' under 49 U.S.C. 10705(a)(1). For reciprocal switching, 49 U.S.C. 11102(c) allows prescriptions where 'practicable and in the public interest' or 'necessary to provide competitive rail service.' The entry cites the Staggers Act's legislative history, emphasizing competition as a safeguard against inadequate service or high prices, quoting the Senate Report: 'Competition among railroads, or at least the realistic threat of competition, can serve as an important safeguard against inadequate service or unreasonably high prices.'
The ICC Termination Act of 1995 further streamlined regulations, repealing provisions on joint rate cancellations. However, the STB's predecessor, the Interstate Commerce Commission (ICC), adopted Part 1144 in 1985 following a joint proposal from the National Industrial Transportation League (NITL) and the Association of American Railroads (AAR). This rule narrowed the agency's discretion, requiring evidence of anticompetitive conduct for prescriptions, as affirmed in cases like Midtec Paper Corp. v. Chicago & North Western Transportation Co., where the ICC explained it would examine whether a carrier 'used its market power to extract unreasonable terms' or showed 'disregard for the shipper's needs.'
Development and Adoption of Part 1144
Part 1144 emerged from post-Staggers efforts to balance deregulation with competition. The entry details how NITL and AAR proposed the regulations to address cancellations of routes and rates, with the ICC adopting them to align with statutory requirements and marketplace consensus. Key provisions included a requirement for anticompetitive conduct, a 'standing' threshold for petitioners to show significant use of the route or switch, and restrictions on considering product or geographic competition. The D.C. Circuit upheld the rule in Baltimore Gas & Electric Co. v. United States, finding it a 'reasonable accommodation' of conflicting policies in 49 U.S.C. 10101, though it noted the ICC had permissibly narrowed its discretion.
Subsequent changes, including the 2002 removal of joint rate cancellation provisions after the ICC Termination Act, left Part 1144 focused on prescriptions. The entry highlights that the rule was intended to prevent unremunerative routes while protecting shippers, but it has been invoked rarely, with no successful prescriptions in 40 years.
Criticisms and Evolving Industry Context
Shippers and groups like NITL have long argued that Part 1144's anticompetitive conduct standard sets an 'unrealistically high bar,' as summarized in the STB's 2016 notice of proposed rulemaking on reciprocal switching. The entry notes a 'dearth of cases' despite ongoing concerns about service and options, attributing this to the rule's constraints. For instance, NITL's recent comments to the Department of Justice's Anticompetitive Regulations Task Force described the standard as an 'insuperable barrier' that has led to no filings in 30 years.
The rail industry has transformed since 1985, with consolidations reducing Class I carriers to six, improved revenue adequacy (five carriers achieved it in recent years), and extensive line rationalizations. The entry contrasts this with the 1980s era of bankruptcies and inefficiencies, arguing that rigid restrictions are obsolete. Shipper groups, including the American Chemistry Council and The Fertilizer Institute, support repeal to foster competition without new regulations.
The Proposed Repeal and Alternatives
The STB proposes repealing Part 1144 entirely, restoring full statutory discretion to consider prescriptions case-by-case. This would eliminate the anticompetitive conduct and standing requirements, allowing evaluations based on public interest or competitive needs. The entry justifies this as consistent with agency authority, citing Encino Motorcars, LLC v. Navarro, which permits policy changes with reasoned explanations. An alternative seeks comments on partial repeal limited to reciprocal switching, leaving through routes intact, as suggested by NITL.
The proposal aligns with Executive Order 14192 on deregulation, potentially increasing filings but promoting efficient outcomes through negotiation or adjudication. The STB certifies no significant impact on small entities under the Regulatory Flexibility Act and finds the action categorically excluded from environmental review.
Forward-Looking Implications
Repealing Part 1144 could enhance rail competition by lowering barriers for shippers, potentially leading to better service and rates. However, it may initially increase administrative burdens through more adjudications, requiring the STB to develop standards via case law. Ongoing debates include balancing carrier investments with shipper needs, with potential for judicial review shaping outcomes.
