Surface Transportation Board — Freight Rail Rate Regulation & Railroad Mergers

The Surface Transportation Board (STB) is the federal agency that sets the rules for one of the most consequential but least visible economic relationships in the U.S. economy: the power that freight railroads hold over industries that have no alternative to rail transport. For railroad safety regulation distinct from rate and merger oversight, see railroad safety regulation. Created by the ICC Termination Act of 1995 and authorized at 49 U.S.C. §§ 1301–1327, the STB inherited the railroad and motor carrier jurisdiction of the Interstate Commerce Commission — the oldest federal regulatory agency, abolished after more than a century of operation. The STB regulates freight railroad rates, approves or blocks railroad mergers and acquisitions, authorizes or denies line abandonments, and resolves disputes over access to rail infrastructure. Its most significant function is protecting captive shippers — agricultural, energy, and industrial companies served by only one railroad with no practical alternative — from monopoly pricing. The STB is small (5 presidentially appointed members, ~150 staff), has a large docket, and operates through formal adjudicative proceedings that can take years. Its decisions affect the cost of moving coal, grain, potash, chemicals, automobiles, and intermodal containers across the country — and through those freight costs, ultimately the prices consumers pay for food, energy, and manufactured goods.

Current Law (2026)

Legal Authority

• 49 U.S.C. § 1301 — Establishment (STB established as an independent adjudicatory body within DOT; functions independently of the Secretary of Transportation)
• 49 U.S.C. § 1302 — Functions (STB succeeds to all functions of the ICC with respect to rail transportation and certain motor/water carrier functions; operates as an independent agency with its own appropriation)
• 49 U.S.C. § 10101 — Rail transportation policy (Congress's statement of policy: rail transportation should be financially self-sustaining; railroads should have freedom to set rates through competition; ICC/STB regulation should occur only where competition is inadequate; regulation should avoid undue concentration of market power)
• 49 U.S.C. § 10501 — Jurisdiction (STB has exclusive jurisdiction over transportation by rail carriers and certain related activities; state regulation of rail transportation is generally preempted)
• 49 U.S.C. § 10701 — Standards for rates (reasonable rates required; rates may not discriminate unreasonably; maximum rate limits apply when a shipper is captive and lacks competitive alternatives)
• 49 U.S.C. § 10704 — Authority over maximum rates (STB may prescribe the maximum rate a railroad may charge a captive shipper; rate must not exceed a "reasonable maximum"; the Constrained Market Pricing methodology is used to determine reasonableness)
• 49 U.S.C. § 10903 — Filing and procedure for abandonment (railroad must file application with STB to abandon any line; STB weighs railroad's financial need against public interest in maintaining service; can impose conditions, require continued operation, or authorize interim trail use under Trails Act)
• 49 U.S.C. § 11324 — Consolidations, mergers, and acquisitions of control (Class I railroad mergers require STB approval; STB must find the transaction is consistent with the public interest; must consider competitive effects, employees, communities, and national transportation policy)

How It Works

The STB exists because the freight railroad industry has a structural characteristic that makes competition difficult or impossible in many markets: rail lines are fixed assets that cost billions of dollars to build, and many industries and communities are served by only one railroad. A coal mine accessible only by Norfolk Southern, a grain elevator served only by BNSF, a factory reachable only by CSX — these "captive shippers" have no leverage. Without regulation, a monopoly railroad can charge whatever the market will bear. The STB is the check on that power.

STB rate regulation only triggers for captive shippers when two conditions are met: the railroad is "revenue adequate" (earning at least its cost of capital) and the rate exceeds 180% of the railroad's variable cost for that specific shipment. As railroad profits have soared under precision scheduled railroading, more Class I railroads have been revenue adequate, making more captive shippers potentially eligible for rate relief — but maximum rate cases remain complex, expensive, and slow. Approximately 30% of rail shipments move without realistic truck or water transport alternatives, making those shippers effectively captive to one railroad. Industries most affected include coal (power plants at the end of a single rail line), grain (elevators far from highways or rivers), potash and fertilizer, and certain intermodal corridors. The 2024 reciprocal switching rule established conditions under which captive shippers can access competing railroads by requiring the serving railroad to interchange cars with a competing railroad at specified interchange points — shippers or receivers can petition the STB for such an order when they lack adequate service or face unreasonable rates. Railroad opponents argued the rule undermines investment incentives; shipper advocates called it a breakthrough.

Class I railroad mergers require full STB approval after considering effects on competition, service to shippers, railroad employees (severance, job security), communities on the merged system, and national rail policy. The 2023 approval of the Canadian Pacific–Kansas City Southern merger — creating the first single-line railroad connecting the U.S., Mexico, and Canada — was the STB's largest and most complex proceeding in decades. Railroads cannot stop operating a line without petitioning the STB for abandonment authority; the STB weighs the financial burden of continued operation against public interest in maintaining service, and can approve abandonment, impose conditions, or deny it. Even when abandonment is approved, the National Trails System Act allows local governments and trail organizations to preserve the corridor through an "interim trail use" arrangement — the source of many converted rail trails. STB jurisdiction over rail transportation is largely exclusive: states cannot regulate railroad rates, routes, or service terms in ways that conflict with STB authority — state public utility commissions cannot set rail rates, and state courts cannot hear certain disputes about railroad operations.

How It Affects You

If you're a farmer or agricultural cooperative: Grain, fertilizer, and agricultural chemicals move primarily by rail in many parts of the country. If your elevator is served by only one Class I railroad, you're potentially a captive shipper subject to monopoly pricing. The STB's rate reasonableness procedures — though slow and expensive — exist for you. The 2024 reciprocal switching rule may provide additional leverage. The STB's annual revenue adequacy determination signals whether your railroad is eligible for maximum rate proceedings.

If you work in coal, energy, or chemicals: Rail is often the only economically viable transport for bulk commodities to power plants and chemical facilities. Captive shipper rate cases before the STB have involved coal rates that single coal-fired power plants challenged as excessive. Maximum rate relief cases have produced hundreds of millions of dollars in refunds for captive energy shippers.

If you're concerned about railroad consolidation: The STB's merger review process is where the public interest in railroad competition is weighed. Major mergers — CSX/NS split of Conrail, CP/KCS — go through STB with public comment periods. Shipper organizations, state governments, labor unions, and competing railroads can all appear as parties. The outcome shapes what the freight rail map looks like for decades.

If your community is losing rail service: Line abandonment proceedings are STB cases where communities and shippers can intervene. Local governments, state transportation agencies, and regional planning organizations can oppose abandonment, purchase the line to operate as a short line, or negotiate trail conversion agreements that preserve the corridor.

State Variations

STB jurisdiction largely preempts state rail regulation. However, states play several important roles: state transportation agencies participate in abandonment proceedings and sometimes purchase rail lines to preserve service; state economic development agencies negotiate with railroads over service to economic development projects; and states fund short-line railroad programs (capital grants, tax credits) that help preserve rail service the Class I railroads have abandoned.

Implementing Regulations

The STB's 2024 reciprocal switching rule is codified at 49 CFR Part 1145 — Reciprocal Switching for Inadequate Service. Key provisions:

• § 1145.2 — Performance standards: a captive shipper can petition for reciprocal switching if the incumbent Class I carrier fails either (1) the service reliability standard — measuring whether manifest (scheduled) traffic is delivered within the original estimated time of arrival; or (2) the transit time standard — measuring whether the carrier's actual transit times are consistent with its published or committed service standards; both standards are measured over specified performance windows with prescribed thresholds
• § 1145.3 — Affirmative defenses: the incumbent carrier is not deemed to have failed a performance standard if it can demonstrate extraordinary circumstances beyond its control (natural disasters, severe weather, labor strikes, government actions, third-party infrastructure failures); the Board also considers case-by-case defenses not enumerated in the rule; affirmative defenses prevent the rule from penalizing carriers for service failures outside their control
• § 1145.4 — Mandatory pre-petition negotiations: at least 5 days before filing a petition, the shipper or receiver must seek to engage in good-faith negotiations to resolve the service dispute with the incumbent carrier; this cooling-off period encourages private resolution and limits STB's docket to genuine service failures that parties cannot negotiate away
• § 1145.5 — Petition filing: a shipper or receiver may petition the STB if it has practical physical access to only one Class I carrier and believes that carrier failed a performance standard; the petition must include confirmation of pre-petition negotiation, performance data demonstrating the failure, identification of the competing carrier that would receive the switching traffic, and a description of the operational feasibility of switching at the relevant interchange point
• § 1145.6 — Prescription: the STB prescribes a reciprocal switching agreement when (1) the petitioner has practical physical access to only one Class I carrier for the lane; (2) the incumbent carrier failed a performance standard; and (3) switching is operationally feasible; prescribed agreements are time-limited (the STB sets the term) and may be renewed; the incumbent carrier is required to provide switching service to the competing carrier at a rate determined by the STB if the parties cannot agree
• § 1145.7 — Termination and renewal: prescribed switching agreements automatically renew at the end of their term unless the incumbent carrier petitions for termination and demonstrates its service has improved to meet performance standards; the automatic renewal prevents carriers from improving service temporarily to get out of the order and then reverting
• § 1145.8 — Pre-petition data requests: before filing a petition, an eligible shipper may submit a written request to the incumbent carrier for individualized performance records; the carrier must respond within 20 days; this data access right gives shippers the evidence needed to determine whether to file a petition without having to rely solely on their own records

The reciprocal switching rule is the STB's first major expansion of competitive access rights in decades. "Reciprocal switching" means the incumbent carrier physically moves cars to an interchange point where the competing carrier picks them up — effectively giving captive shippers access to a second railroad's rates and service even when their facility is physically served by only one railroad. Class I railroads challenged the rule in the D.C. Circuit Court of Appeals (filed 2024), arguing it exceeds the STB's statutory authority. The rule is targeted at captive shippers — primarily grain elevators, power plants, and manufacturing facilities that cannot practically access truck, water, or a competing railroad's track — who historically had limited leverage against railroad rate increases or service degradation. Trump STB appointees have signaled interest in revisiting the rule's implementation.

The STB's commodity and transportation exemption regulations are at 49 CFR Part 1039 — Exemptions from Regulation. Under 49 U.S.C. § 10502, the STB may exempt rail transportation from the full scope of its economic regulatory jurisdiction when the exemption is consistent with the public interest and the statutory goals of 49 U.S.C. § 10101. Part 1039 implements the major categorical exemptions that Congress and the STB have determined competitive markets adequately govern without rate or service regulation. Key provisions:

• § 1039.10 — Agricultural commodity exemption: transportation of most agricultural commodities by rail is exempt from STB economic regulation; the exemption does not cover grain, soybeans, or sunflower seeds — those bulk commodities, often moved from captive grain elevator facilities by a single railroad, remain subject to STB rate jurisdiction as their shippers lack adequate market alternatives; railroads transporting exempt agricultural commodities must file annual reports with the STB
• § 1039.11 — Miscellaneous commodity exemptions: additional commodity categories identified by Standard Transportation Commodity Code (STCC) numbers are exempt by STB order; the STCC-based exemption mechanism allows the STB to grant relief commodity-by-commodity based on competitive market findings
• § 1039.13 — Intermodal exemption: rail transportation in trailers on flatcars (TOFC) and containers on flatcars (COFC) is exempt from rate regulation; the full intermodal framework is at 49 CFR Part 1090; intermodal exemption reflects that truck competition disciplines intermodal pricing in a way that is absent from purely rail-served captive markets
• § 1039.14 — Boxcar transportation: transportation in boxcars is exempt from rate and service regulation, except that the STB retains jurisdiction over car hire, reciprocal switching, and equipment interchange obligations; the carve-outs preserve STB authority over the infrastructure access and equipment-sharing rules that support network interconnection even for exempt traffic types
• § 1039.16 — New highway trailers and containers: transportation of new (not previously used) highway trailers and containers is exempt from STB regulation; the exemption reflects competitive trucking market alternatives for new equipment manufacturers
• § 1039.17 — Protective service contracts: contracts for protective services (temperature-controlled rail service for perishables — refrigerated, heated, or humidity-controlled shipments) are exempt from the service requirements of 49 U.S.C. § 11105; carriers and shippers may negotiate protective service terms privately
• § 1039.20 — Equipment storage leases: leases of railroad equipment for storage purposes are exempt from economic regulation, except that 49 U.S.C. § 11123 (emergency service requirements during rail carrier abandonment or cessation) continues to apply
• § 1039.22 — Industrial development payments: payments made as part of industrial development programs — where a railroad or third party offers future transportation commitments or rate incentives to attract new rail-dependent facilities — are exempt from the Elkins Act (which generally prohibits rebates and discriminatory payments) when the arrangement is not otherwise eligible for inclusion in a rail transportation contract under 49 U.S.C. § 10709; this exemption facilitates economic development deals where railroads offer incentives to attract new shippers to build facilities on their lines

The Part 1039 exemptions significantly define which freight movements operate under market competition versus STB oversight. The pattern is consistent: where truck or other competition disciplines pricing, exemptions apply; where a shipper is physically captive to one railroad with no practical alternative — particularly grain, potash, coal, and chemical facilities — STB rate jurisdiction is preserved. The continuing exclusion of grain, soybeans, and sunflower seeds from the § 1039.10 agricultural exemption reflects a deliberate policy judgment that rural grain elevator operators remain uniquely vulnerable to captive-shipper pricing power and require the backstop of STB maximum rate authority.

• 49 CFR Part 1150 — Certificate to Construct, Acquire, or Operate a Railroad Line (the STB's rules governing when a rail carrier must obtain prior authorization before building new rail lines, acquiring control of existing lines, or assuming operations — implementing the public convenience and necessity standard of 49 U.S.C. § 10901):

  • § 1150.3 — Who must apply: any person or entity seeking to construct a new railroad line, acquire all or part of a rail line's assets, or commence operations over a line where no service currently exists must file an application for a certificate of public convenience and necessity; minor extensions (less than a specified mileage threshold) and certain yard construction may qualify for expedited treatment or exemption
  • § 1150.4 — Pre-filing consultations: applicants may request a pre-filing conference with STB staff before submitting a formal application to clarify filing requirements, discuss potential issues, and develop a procedural schedule; the pre-filing process reduces the risk of deficient applications that trigger procedural delays
  • § 1150.5 — Application contents: a certificate application must include a description of the proposed construction or acquisition; an environmental and historical report (or documentation supporting categorical exclusion); traffic and revenue projections; financing arrangements; and evidence of fitness to operate (operational competence and financial capacity); for acquisitions, the applicant must address competitive effects and shipper impacts — the STB applies public interest analysis, not a bright-line competition screen
  • § 1150.6 — Notice and protest procedures: the STB publishes notice of certificate applications in the Federal Register; affected rail carriers, shippers, and communities may file protests or petitions for conditions within 45 days; conditions may include service quality commitments, interchange obligations, or environmental mitigation
  • § 1150.8 — Designated operator certificates: where a rail line faces potential abandonment and a new operator proposes to assume service, the STB may issue a designated operator certificate allowing the new carrier to operate without completing the full Section 10901 review; designated operator proceedings move on an expedited schedule to prevent service gaps

  The certificate requirement is the STB's primary gateway for new rail infrastructure and line transfers. In practice, most certificate applications involve line acquisitions and short-line takeovers from Class I railroads divesting branch lines, rather than new construction (which is economically rare). Short-line carriers and regional railroads frequently use Part 1150 when acquiring Class I segments; the proceedings evaluate whether the acquiring carrier has sufficient capitalization, operational capacity, and a viable business plan to sustain service over the acquired line. The public convenience and necessity standard means the STB weighs shipper access, competitive effects, environmental impacts, and community benefit — not just financial feasibility.

• 49 CFR Part 1152 — Abandonment and Discontinuance of Rail Lines and Rail Transportation under 49 U.S.C. 10903 (the STB's rules for when a rail carrier seeks to abandon a line or discontinue service — the companion authority to Part 1150's construction/acquisition rules; implementing 49 U.S.C. § 10903). Rail line abandonment is permanent removal from the national rail network; STB authorization is required before any mile of track is removed from a carrier's system:

  • § 1152.10 — System diagram maps: every rail carrier must maintain and file with the STB a color-coded system diagram map categorizing all lines on its network; lines are classified into three categories: Category 1 (proposed for abandonment within three years — shown in red), Category 2 (not currently proposed for abandonment but under study — shown in yellow), and Category 3 (not proposed and not under study — shown in green); the map must be updated annually, filed with the STB, and made available for public inspection; the system diagram map requirement is the STB's early-warning system — it flags potential abandonments to state agencies, shippers, and communities years before a formal application is filed, giving stakeholders time to assess impacts and line up alternatives or acquisition financing
  • § 1152.11 — Description of lines: with the annual system diagram map, carriers must file a description of each line, including mileage, traffic density (carloads per mile per year), connecting carriers, major shippers, and the carrier's assessment of the line's prospects; lines showing sustained traffic below 3 million gross ton-miles per mile per year are subject to heightened STB scrutiny when abandonment is proposed; the data disclosed under § 1152.11 is the primary information base for state rail planning agencies evaluating whether to acquire or subsidize threatened lines
  • § 1152.14 — Availability to state agencies: state transportation agencies may request the detailed data underlying the system diagram map — traffic density data, revenue attributions, and operating cost data — to evaluate the economics of potential line acquisition or subsidy; the STB may withhold commercially sensitive data from public release but must provide it to state agencies under confidentiality protections; this provision directly enables states to exercise their authority under 49 U.S.C. § 10904 (the subsidy offer right) and § 10905 (the offer to sell) before a line is abandoned
  • §§ 1152.20–1152.26 — Abandonment application requirements: a formal abandonment application must include: (a) a verified statement of the carrier's financial position and the line's operating losses; (b) traffic and revenue data for the five preceding years; (c) a statement of efforts made to develop traffic; (d) an environmental and historic preservation report; and (e) a draft notice to be published in affected local newspapers; the STB applies a balancing test: the carrier's financial need for relief from the line versus the public interest in continued service to dependent shippers, communities, and passengers; the STB weighs whether operating losses are genuine and whether service can be continued under subsidy or by sale to another carrier
  • § 1152.27 — Interim trail use / railbanking: under Section 8(d) of the National Trails System Act (16 U.S.C. § 1247(d)), when a rail carrier seeks abandonment, trail-use interests (governments, nonprofit trail organizations) may negotiate an Interim Trail Use (ITU) agreement with the carrier to preserve the railroad corridor for potential future rail reactivation while allowing interim recreational trail use; the STB issues an NITU (Notice of Interim Trail Use) that stays the abandonment — keeping the right-of-way intact — for up to 180 days while the carrier and trail interests negotiate a use agreement; if agreement is reached, the corridor is "railbanked" — preserved under an easement that can be reclaimed for rail service if commercial demand returns; railbanking is a taking under the Fifth Amendment in some circuits (the corridor is converted from rail to recreational use, extinguishing the adjacent landowners' reversionary interest) — this has generated extensive litigation under the Federal Circuit's Preseault line of decisions determining when and how much compensation adjacent landowners are entitled to

  The Part 1152 abandonment process is one of the most consequential STB proceedings for rural communities. A railroad line serves as the backbone for grain elevators, fertilizer dealers, and industrial facilities that cannot economically use truck transport for high-volume shipments; the loss of rail service can eliminate an entire export corridor for an agricultural region. The system diagram map requirement is intentionally designed to give communities 2-3 years of advance notice before a formal application, allowing state rail planning agencies to apply for FRA grants, identify potential short-line buyers, or negotiate subsidy arrangements. In practice, many threatened rural lines are acquired by short-line operators under Part 1150 certificates before a formal Part 1152 abandonment application is filed — the system diagram map triggers the market for line sales.

• 49 CFR Part 1242 — Separation of Common Operating Expenses Between Freight Service and Passenger Service for Railroads (85 sections): the STB accounting rule that requires every railroad operating both freight and passenger services to allocate its "common" operating expenses — costs shared between the two services, such as track maintenance, signals, bridges, stations, and locomotive shops — between freight and passenger using prescribed allocation methods. The rule implements the STB's record-keeping authority under 49 U.S.C. § 1321, which mandates that all railroad carriers maintain accounts and records in the form and for the periods prescribed by the Board. The Part consists of 85 sections, each specifying the exact allocation basis for a distinct expense account category within the Uniform System of Accounts for Railroads (49 CFR Part 1200). Key provisions:

  • § 1242.00 — Separation of common operating expenses: common expenses — those that cannot be directly attributed to freight or passenger service — must be separated beginning with the 1978 annual reporting year; the separation must be made by accounting divisions where the carrier maintains such divisions, and then aggregated nationally
  • § 1242.04 — Special tests: where standard allocation formulas would produce a distorted result for a particular carrier (e.g., a railroad with atypical operations), the carrier may apply a special test allocation with STB approval; this provision allows deviation from the formula-driven defaults when formula results are demonstrably unreliable
  • § 1242.10 — Administration–track: track administration costs are separated by train-miles ratio (freight train-miles to total train-miles); the train-mile ratio is the dominant allocation basis across most infrastructure categories — it reflects the fact that track wears in proportion to use
  • § 1242.15 — Roadway, ties, rails, ballast: allocated by ratio of freight gross ton-miles to total gross ton-miles; gross ton-miles (not just train-miles) is used because heavier freight trains impose more wear on roadway infrastructure than lighter passenger equipment
  • § 1242.17 — Signals and interlockers: allocated by total train-miles ratio; signals serve both service types in proportion to train operations
  • § 1242.21 — Station and office buildings: stations where both freight express and passenger receipts are collected are allocated by percentage of freight express receipts to total receipts; wholly passenger stations are allocated 100% to passenger; freight-only stations are allocated 100% to freight
  • § 1242.22 — Shop buildings–locomotives: allocated in proportion to common locomotive expense distribution determined elsewhere in the separation

  The Amtrak access pricing context is the primary policy significance of Part 1242. Under 49 U.S.C. § 24705, Amtrak must compensate host freight railroads (primarily BNSF and Union Pacific in the West; CSX and Norfolk Southern in the East) for use of their tracks at avoidable cost — the cost the railroad avoids if Amtrak service is removed. Part 1242's separation methodology informs how avoidable (incremental) passenger costs are distinguished from costs the freight railroad would incur regardless of Amtrak operations. Disputes over Amtrak access charges — including landmark arbitrations before the STB — turn partly on the allocation formulas in Part 1242 to establish what fraction of shared infrastructure costs Amtrak's trains are responsible for generating.

• 49 CFR Part 1108 — Arbitration of Disputes Subject to STB Jurisdiction (STB, 26 sections): the Surface Transportation Board's implementing regulations for two distinct arbitration programs that allow parties to resolve freight rail disputes outside of formal Board proceedings. The STB strongly favors mediation and arbitration over formal proceedings (§ 1108.2), and Part 1108 creates a structured framework for both programs:

  Subpart A — General STB Arbitration (§§ 1108.1–1108.13): applies to any dispute within STB's statutory jurisdiction — rate cases, service disputes, switching disputes, and access challenges. The program is voluntary for both parties; either party may request arbitration and the other must agree to participate. Key features:

  • § 1108.10 — Non-precedential decisions: arbitration awards under Subpart A have no precedential value in future Board proceedings — a critical design feature ensuring parties can use arbitration without conceding that the outcome would have been the same in formal proceedings; this encourages parties to use arbitration for difficult cases without fear of creating binding precedent
  • § 1108.11 — Enforcement and appeal: a party may petition the Board to modify or vacate an arbitral award within 20 days of service; grounds for modification or vacatur include corruption or fraud by the arbitrator, failure to hear evidence that should have been considered, or awards that exceed the arbitrator's authority; the Board's review is deferential — arbitral awards are not re-litigated on the merits
  • § 1108.12 — Fees: parties pay filing fees consistent with the Board's standard fee schedule; arbitrator compensation is borne by the parties equally unless they agree otherwise

  Subpart B — Small Rate Case Arbitration Program (§§ 1108.21–1108.29): specifically designed for small shippers — typically agricultural shippers, utilities, and industrial facilities with captive shipper disputes — who cannot afford the cost of full STB rate proceedings. A carrier may voluntarily opt into this program by filing an opt-in notice (§ 1108.23); opting in means all eligible shipper disputes must be arbitrated rather than litigated at the Board. Key features:

  • § 1108.24 — Eligible matters: the program covers rate disputes involving shippers whose annual freight charges with the carrier are below a specified threshold (set by Board regulation); it does not apply to contract disputes, mergers, or other non-rate matters
  • § 1108.26 — Three-arbitrator panel: all Small Rate Case disputes are resolved by a panel of three arbitrators — one appointed by each party, and the third (neutral) selected by the two party-appointed arbitrators within 2 business days; if the party-appointed arbitrators cannot agree, the Board appoints the neutral
  • § 1108.28 — Relief: the arbitration panel may award monetary damages and prospective rate relief; total relief is capped at a maximum amount set by Board regulation, a ceiling that ensures the program remains accessible to small shippers without creating unlimited liability for carriers that opt in
  • § 1108.29 — Decisions: the panel must issue a written decision containing findings of fact and conclusions of law; the decision is binding on the parties, subject to the limited appeal right in § 1108.11; there is no right to a formal Board hearing after a Small Rate Case decision

  The Small Rate Case Arbitration Program addresses a persistent access problem: formal STB rate proceedings are so expensive — commonly $500,000 to $2 million in litigation costs — that captive shippers with modest traffic volumes cannot economically challenge even obviously unreasonable rates. The arbitration program was designed as an affordable alternative. Recent rulemakings: the current framework was established in 2021 (86 FR 39321), implementing the STB's authority under 49 U.S.C. § 11708 (added by the FAST Act of 2015 and subsequently amended) to create the Small Rate Case program; the 2021 rule set the initial eligibility threshold and cap on arbitral relief.

• 49 CFR Part 1313 — Railroad Contracts for the Transportation of Agricultural Products (10 sections — the STB's implementing regulations for 49 U.S.C. § 10709, which allows rail carriers to enter confidential contracts for agricultural transportation while preserving shipper rights to challenge those contracts):

  Under 49 U.S.C. § 10709, rail carriers may enter into contracts with shippers for agricultural transportation outside the STB's normal rate regulation framework. These contracts set specific rates and conditions between the carrier and one or more shippers, and are exempt from the common carrier obligations that would otherwise apply. But Congress recognized that confidential contract rates could harm shippers who are not party to the contract — particularly competing grain elevators, ports, and shippers who face higher tariff rates while their competitors enjoy contract discounts. Part 1313 creates the transparency and challenge mechanism that balances these interests.

  • § 1313.1 — Scope: covers all rail carrier contracts for transportation of agricultural products, including grain (as defined in 7 U.S.C. § 75) and grain products; contracts must be filed with the STB as a summary; the part does not apply to transportation exempted from STB jurisdiction under 49 U.S.C. § 10502; each amendment to a contract is treated as a new contract, reviving complaint rights
  • § 1313.2 — Contract summary filing: rail carriers must file a summary of each agricultural transportation contract with the STB within 7 days of the contract date; summaries not in compliance may be rejected; rejected summaries are treated as not filed until a corrected version is submitted
  • § 1313.3 — Board review and contract disapproval: within 30 days of summary filing, the STB may begin a review proceeding on complaint; once a proceeding begins, the Board must determine within 30 days whether the contract violates 49 U.S.C. § 10709; if the Board finds a violation, it may (a) disapprove the contract entirely, or (b) where unreasonable discrimination is found, order the contracting carrier to provide the complainant with substantially similar rates and service
  • §§ 1313.6–1313.8 — Summary formats: summaries must contain specific commodity identification (vague descriptions like "grain" are not permitted), shipper identity, specific origin and destination points (broad geographic descriptions are only allowed where actually used in the contract), contract duration, and the existence (but not the terms or amounts) of rate escalation provisions and volume commitments; this granular disclosure requirement allows potential complainants to assess whether the contract affects their competitive position
  • § 1313.9 — Grounds for complaints: a complaint may be filed by (a) any shipper harmed because the contract unduly impairs the carrier's ability to meet common carrier obligations to the complainant; (b) a port harmed by unreasonable discrimination; or (c) a shipper of agricultural commodities harmed because the carrier unreasonably refused to offer a substantially similar contract, or because the contract constitutes a destructive competitive practice; unreasonable discrimination requires showing the complainant was similarly situated, ready, and willing to contract at the same time
  • § 1313.10 — Complaint procedures: complaints must be filed within 18 days after the contract summary is filed — an extremely short window designed to front-load contract challenges before the contract is performed; discovery petitions must accompany the complaint; the Board processes complaints on an expedited schedule consistent with the 30-day review deadline

  Part 1313 reflects a core tension in agricultural railroad policy: large grain shippers and cooperatives can negotiate favorable confidential contract rates that may undercut tariff rates available to smaller competitors. The complaint mechanism exists to prevent carriers from using contract pricing to engage in unreasonable discrimination that distorts the grain market. In practice, complaints under Part 1313 are relatively rare because: (1) the 18-day filing window requires rapid response to contract summaries; (2) the summary discloses only limited information about contract terms; and (3) shippers who file complaints risk damaging their relationship with the carrier. The mechanism is most commonly used by competing ports (e.g., Gulf vs. Pacific Northwest grain export terminals) challenging contracts that route grain traffic to competing routes through rate structures the port believes are discriminatory. Recent rulemakings: 84 FR 12946 (April 2019) — updated filing procedures and electronic submission requirements; 61 FR 68669 (December 1996) — original Part 1313 regulations implementing the ICC Termination Act of 1995's agricultural contract provisions.

• 49 CFR Part 1182 — Purchase, Merger, and Control of Motor Passenger Carriers (9 sections — the STB's application procedures for transactions requiring authority under 49 U.S.C. § 14303 to consolidate, merge, purchase, lease, or control the properties or franchises of motor carriers of passengers — primarily intercity bus carriers):

  While the STB is best known for railroad regulation, Congress also gave it residual jurisdiction over the acquisition and control of intercity motor passenger carriers (interstate bus companies). Under 49 U.S.C. § 14303, a transaction that involves consolidation, merger, purchase, lease, or control of motor carrier passenger properties with aggregate gross revenues exceeding $2 million requires prior STB authorization. Part 1182 governs the application and review process for these transactions.

  • § 1182.1 — Scope: covers applications for authority under 49 U.S.C. § 14303; there is no standard application form; applicants file a pleading containing the information specified in § 1182.2; the $2M aggregate gross revenue threshold (measured over a consecutive 12-month period chosen by the applicant) determines whether STB jurisdiction applies
  • § 1182.2 — Application contents: must include: (1) names and addresses of all parties; (2) copies or descriptions of existing operating authorities; (3) description of the proposed transaction; (4) identification of affiliated carriers and intercorporate structure; (5) the jurisdictional revenue statement; and (6) a description of the transaction's effect on competition; for Mexican-domiciled or Mexican-owned carriers, copies of the actual operating authorities must be submitted
  • § 1182.4 — Board review: all applications are reviewed for completeness; applicants may correct minor deficiencies; the Board publishes notice of the application including a tentative approval that automatically becomes effective if no opposing comments are filed by the 45-day deadline
  • § 1182.5 — Comments: any party may submit comments opposing the application within 45 days of publication; failure to file a timely comment waives further participation; if no opposing comments are filed, the tentative grant of authority takes effect automatically
  • § 1182.6 — Opposed applications: if timely opposing comments are filed, the tentative grant is void; the applicant may file a reply within 60 days of the publication date; the Board then determines whether to hold a hearing or decide on the written record; opposed applications are decided under the public interest standard of 49 U.S.C. § 14303(b), which requires the Board to consider effects on competition, service quality, and the public interest
  • § 1182.7 — Interim approval: a party may request up to 180 days of interim approval to operate the acquired properties while the full application is pending; this prevents service disruption during multi-month regulatory proceedings
  • § 1182.9 — Notices of exemption: transactions within a motor passenger corporate family — between a parent and its subsidiaries or affiliates — that do not result in adverse service changes, significant operational changes, or competitive imbalance with outside carriers are exempt from full 49 U.S.C. § 14303 review; the exemption is claimed by filing a notice of exemption with the STB rather than a full application

  The STB's motor passenger carrier merger authority has reduced practical significance compared to its freight railroad role — the deregulation of intercity bus services under the Bus Regulatory Reform Act of 1982 substantially reduced the regulatory framework for bus carriers, and the explosive growth of fixed-route intercity bus services (Megabus, FlixBus, Greyhound) has occurred outside this regulatory structure. The Part 1182 framework most commonly applies to acquisitions of legacy interstate bus carriers that hold federal operating authorities predating deregulation, or to Mexican carrier control arrangements where bus companies with Mexican ownership seek to acquire U.S. motor carrier authorities. Recent rulemakings: 83 FR 15080 (April 2018) and 84 FR 12945 (April 2019) — updated filing fees and formatting requirements.

• 49 CFR Part 1333 — Demurrage Liability (5 sections — the STB's regulatory framework governing railroad demurrage charges — the fees railroads assess when shippers or receivers detain rail cars beyond the allowed "free time" for loading or unloading):

  Demurrage is one of the most contested areas of railroad-shipper relations. When a rail car arrives at a grain elevator, chemical plant, or automotive factory and sits on the receiving track for more days than the tariff allows, the railroad charges the shipper or receiver a daily demurrage fee. Demurrage serves two functions: it compensates the railroad for the costs of a non-moving car that is not generating revenue, and it provides a financial incentive for shippers and receivers to move cars promptly — keeping the national car fleet circulating efficiently. The STB's Part 1333 governs who can charge demurrage, who is subject to it, and what information must accompany demurrage invoices.

  • § 1333.1 — Demurrage defined: demurrage compensates rail carriers for car detention beyond the specified free time for loading or unloading and serves as a penalty for undue car detention to encourage the efficient use of rail cars; this dual character — compensation plus incentive — is what makes demurrage a regulatory and not just a commercial matter; demurrage tariffs (published by the carrier under Part 1300) specify the free time allowance (typically 24–48 hours) and the daily charge after free time expires

  • § 1333.2 — Who may charge and contract: a serving carrier and its customers (including recipients at origin or destination) may enter into demurrage contracts; third-party intermediaries (transportation brokers, logistics companies) may also enter into demurrage contracts with carriers — creating a complex chain of liability when an intermediary books the car movement but a consignee detains it

  • § 1333.3 — Who is subject to demurrage: any person receiving rail cars from a carrier for loading or unloading who detains the cars beyond free time is subject to demurrage, provided the carrier gave the person actual notice that the car had arrived and was available; the notice requirement is critical — a shipper cannot be held liable for demurrage on a car that the railroad "placed" constructively but never actually made accessible for unloading; disputes over constructive placement (whether the railroad can charge demurrage even when the car was blocked from physical access by the railroad's own congestion) have been a major source of STB complaint proceedings

  • § 1333.4 — Demurrage invoice information requirements: Class I carriers must include on every demurrage invoice: (a) the billing cycle covered; (b) unique identifying information for each car (reporting marks and number); (c) the specific location where the car was placed; (d) actual date and time of placement; (e) date and time of release; (f) any events that toll the free-time clock (e.g., carrier-caused delays); the detailed invoice requirement was adopted to address widespread shipper complaints that demurrage invoices were incomprehensible — listing only a total amount due with no itemized basis

  • § 1333.5 — Machine-readable access: Class I carriers must also provide machine-readable access to all the invoice information required under § 1333.4; the machine-readable requirement allows large shippers (automotive manufacturers, chemical companies, grain handlers) to integrate demurrage data into their supply chain management systems, enabling automated verification of charges and identification of errors without manual review of paper invoices

  Demurrage reform has been a major STB priority since the 2021–2022 Class I railroad service crisis. During the PSR service deterioration period, shippers reported receiving large demurrage invoices for cars that were delayed by railroad congestion — not shipper inaction. Class I railroads collected hundreds of millions in demurrage annually while simultaneously failing to meet service commitments. The STB issued a demurrage and accessorial charges policy statement in 2020 clarifying that demurrage tariffs may not be used to charge shippers for delays caused by the carrier's own failures. Part 1333's invoice transparency requirements (finalized in the same proceeding) were directly aimed at giving shippers the data they need to dispute invalid charges. The ongoing political fight over demurrage reflects a fundamental tension: railroads view it as an essential tool for car fleet efficiency; shippers view it as a source of arbitrary charges that extract revenue without improving service. Recent rulemakings: 85 FR 35134 (June 2020) — adopted §§ 1333.4 and 1333.5 invoice transparency requirements.

• 49 CFR Part 1300 — Disclosure, Publication, and Notice of Change of Rates for Rail Common Carriage: Part 1300 implements 49 U.S.C. § 11101's shipper transparency requirements, governing how Class I railroads must disclose rates and service terms in common carriage (non-contract) transportation. Key provisions:

  • § 1300.2 — Disclosure of existing rates: a shipper (or prospective shipper) may formally request any rate and all applicable service terms; the railroad must respond immediately (expected same day or next business day) in written or electronic form; a "formal request" is defined as one that specifically asks for both current rate information and notification of any future increases — locking in the 20-day advance notice requirement going forward

  • § 1300.3 — New rate establishment: where no rate exists for a particular movement, the carrier must establish and provide a rate within 10 business days of the request; if additional information is needed, the railroad must notify the shipper within 10 business days and reset the clock upon receipt of the required information

  • § 1300.4 — Advance notice of rate increases: before increasing any rate or changing any service term (other than reductions), the railroad must give 20 days written or electronic notice to any person who (1) formally requested the affected rate within the prior 12 months, or (2) has an arrangement for future shipment subject to the change; the 20-day notice requirement is the core protection — without it, shippers could receive invoice surprises on committed traffic

  • § 1300.5 — Agricultural products and fertilizer special rule: for grain, all grain products, and fertilizer, railroads must also publicly publish all currently effective rates and any scheduled changes in a form that allows exact rate determination for any shipment; the publication must highlight increases, reductions, and other changes; this extra transparency layer reflects Congress's longstanding concern about shipper bargaining power in agricultural rail markets

  Part 1300 does not apply to contract transportation authorized under 49 U.S.C. § 10709 (rail shipper contracts) or to movements exempted by STB order under 49 U.S.C. § 10502. As a practical matter, most Class I traffic today moves under contract — making Part 1300 primarily relevant for smaller shippers who lack the volume to negotiate private contracts and must depend on common carriage rates. Recent rulemakings: 82 FR 31277 (July 2017) — minor procedural update.

• 49 CFR Part 1250 — Railroad Performance Data Reporting: Part 1250 requires Class I railroads to submit weekly operating metrics to the STB, creating a public transparency regime for railroad service quality. The rule grew out of the 2014 Polar Vortex service crisis when rail capacity constraints caused grain embargo situations across the Midwest and Congress demanded real-time visibility into railroad performance. Key provisions:

  • § 1250.2 — Weekly data elements: each Class I railroad must report system-average train speed broken out by eight train types (intermodal, grain unit, coal unit, automotive unit, crude oil unit, ethanol unit, manifest, and overall system); average terminal dwell time for the top 10 terminals; total cars on line by commodity type; trains holding for connections; on-time performance for scheduled service; and a locomotive productivity metric

  • § 1250.3 — Chicago terminal reporting: each Class I operating through Chicago must jointly (via AAR) report average daily car volumes at 11 named Chicago-area yards (Barr, Bensenville, Blue Island, Calumet, Cicero, Clearing, Corwith, Gibson, Kirk, Markham, Proviso) and average daily trains held for delivery to Chicago sorted by receiving carrier; the Chicago-specific requirement reflects the gateway's unique role as the largest single chokepoint in the U.S. rail network

  • § 1250.4 — Annual infrastructure projects report: Class I railroads must annually report significant rail infrastructure projects (defined as $75M+ anticipated expenditure over project life) expected to begin construction in the coming year, with a 6-month progress update; annual reports are due by March 1 and updates by September 1

  All performance data must be submitted to STB's OPAGAC office by 5 p.m. Eastern each Wednesday. The STB publishes the data publicly, allowing shippers, analysts, and journalists to track service trends. The 2021–2022 service crisis — when PSR-driven crew and locomotive cuts caused widespread service deterioration — demonstrated both the value of Part 1250 data (enabling STB to quantify the service collapse) and its limits (the data is reported weekly, not real-time). Recent rulemakings: 81 FR 87484 (December 2016) — initial rule; 85 FR 30851 (May 2020) — added locomotive productivity metric.

Pending Legislation

The STB Reauthorization Act — reauthorizing the Board's functions and appropriations — is periodically renewed by Congress. Proposals for more robust rate regulation and easier access to maximum rate proceedings for small shippers have been perennial issues. The 2024 reciprocal switching rule addressed some of these concerns through regulation. Congressional proposals to restrict railroad share buybacks during periods of service inadequacy were introduced following widespread Class I service problems in 2021–2022.

Recent Developments

The CP-KCS merger (approved 2023) created a new rail map connecting Canada, the U.S., and Mexico, significantly affecting grain, automotive, and intermodal markets. The STB's 2021–2022 rail service emergency — when multiple Class I railroads experienced significant service deterioration following their adoption of Precision Scheduled Railroading (PSR) — led to STB emergency proceedings, service recovery orders, and new performance reporting requirements. The 2024 reciprocal switching rule was the first major expansion of STB pro-competition regulation in decades and is being challenged by Class I railroads in court.

• Trump STB appointments shifted board balance in 2025: Trump appointed two new Republican STB members, creating a majority skeptical of the Biden-era competitive access rules; the new majority signaled it would revisit the 2024 reciprocal switching rule and potentially narrow the circumstances under which shippers can demand competitive access to rivals' rail lines.
• DOGE transportation agency reviews: the STB — a small independent agency with ~150 staff — was scrutinized for potential consolidation with DOT under DOGE's broader agency rationalization effort; while no final action was taken, the uncertainty affected the agency's ability to attract senior staff for pending merger and rate proceedings.
• Class I railroad consolidation pressure: Canadian Pacific Kansas City (CPKC) completed its 2023 merger and filed for new interchange and service territory arrangements; the STB opened proceedings in 2024-2025 to assess whether CPKC's network integration was reducing competition for grain shippers in the Midwest, with shipper groups arguing the Trump board would be less aggressive in imposing access remedies.