Regulators seek comment on issues surrounding CP-CN Chicago interchange dispute

A Canadian Pacific manifest freight heads through Deerfield, Ill., on July 3, 2022. David Lassen

WASHINGTON — The long-running Chicago interchange dispute between Canadian National and Canadian Pacific is back in the spotlight again.

The Surface Transportation Board last month said the case raises broad issues regarding interchange practices. And so it’s seeking input from railroads and other interested parties regarding a laundry list of interchange matters.

The case dates to 2019, when CN unilaterally sought to shift its Chicago-area CP interchange from Spaulding, Ill., near CP’s Bensenville Yard, to CN’s Kirk Yard in Gary, Ind.

CP objected and asked the STB to intervene. CN and CP ultimately reached an interim agreement to move Spaulding interchange to the Belt Railway of Chicago’s Clearing Yard. CN later asked the STB to declare that CN could designate Clearing as the point to receive interchange traffic from CP and that each railroad must bear the costs related to the interchange, including the BRC’s switching fees.

The STB in October 2020 decided that CN could not unilaterally designate Clearing as the interchange point because BRC was a third party, and therefore it wasn’t necessary for the board to sort out whether CN and CP should bear their own interchange costs.

CN filed suit over the decision. A federal appeals court sided with CN, tossed out the STB’s decision, and sent the matter back to the board. In a February 2022 brief, CN argued that the sole remaining issue in the case was whether CP should pick up the tab for BRC’s switching fees for interchange traffic delivered to Clearing Yard.

The STB now says that a decision resolving the dispute has the potential to significantly alter board “precedent and practices” regarding interchanges, which could have “wide reaching consequences for the rail industry.”

“Accordingly, the Board invites interested parties to comment on the broader legal issues presented by this declaratory order proceeding,” the STB said in an Oct. 18 decision.

Among the issues on which the board is seeking input:

• How a railroad’s obligations to provide “reasonable, proper, and equal facilities” should be understood in light of the U.S. Court of Appeals decision, as well as the impact of STB and Interstate Commerce Commission precedent.
• Whether the STB can “consider the costs to each railroad of using a particular interchange location designated by one carrier when determining whether interchange facilities are ‘reasonable’ … and, if so, whether the Board can allocate such costs between delivering and receiving railroads.”
• Whether the STB has the authority under any other statutory authority provision to resolve interchange cost disputes.
• How the interests of delivering and receiving carriers should be balanced in the selection of interchange locations.
• What factors should apply when railroads can’t agree on an interchange location.

“The Board recognizes that CN and CP have an interest in resolving their dispute in a timely manner. However, in light of the court’s decision, because resolution of their dispute could potentially have a significant impact on the rail industry at large and because the industry will likely have insight regarding how any particular standard for designating interchange locations will impact rail operations, the Board believes that the delay necessary to obtain input from other stakeholders is warranted,” the board said in its decision.

Responses are due by Dec. 19, with reply comments due by Jan. 17.