Washington District of Columbia USA - In the latest twist in a long-running Chicago interchange dispute, federal regulators yesterday ruled that it's unreasonable for CN to unilaterally designate the Belt Railway of Chicago's Clearing Yard as the location where it will exchange traffic with rival CPKC.
 
It's the second time that the Surface Transportation Board has ruled against CN's selection of Clearing Yard as its interchange with CP.
 
CN appealed the STB's October 2020 ruling, however, and in 2021 a federal appeals court tossed the STB decision and sent the matter back to the board.
 
In a decision issued yesterday, the STB said it was not reasonable for CN to shift interchange from Spaulding, Illinois, to Clearing Yard while expecting CPKC to pick up the tab for switching costs.
 
CN in 2019 had sought to shift the interchange from Spaulding to its Kirk Yard in Gary, Indiana, but the railroads reached a temporary agreement designating Clearing as the interchange.
 
In April 2020 CN asked the board to rule that CN could designate Clearing as the interchange and that CPKC as delivering carrier is responsible for paying BRC's switching fees.
 
The board said it was not reasonable for CN to expect CPKC to pay switching fees when there's a direct interchange location available at Spaulding.
 
"No party in this proceeding has pointed to, and the Board is not aware of, any prior instance of a receiving carrier unilaterally designating an interchange point on a third-party's line and requiring the delivering carrier to exercise trackage rights and pay third-party fees where there is a viable free alternative available for direct interchange," the board said.
 
"Indeed, other Class I railroads indicate that CN's proposed interchange arrangement is contrary to industry expectations regarding what qualifies as reasonable."
 
"CN's proposed designation would depart from the parties' own past practice, industry practice, and CN's prior claims regarding the benefits of removing traffic from Clearing," the board said.
 
"It also attempts unfairly to shift significant costs associated with interchange facilities, which, under federal law CN is obligated to provide, to obtain a benefit for CN, while also setting a precedent that is likely to have detrimental effects on the national network."
 
The board said its decision "does not speak to the merits of any alternative arrangement for interchanging traffic at Clearing (e.g., one that involves a different percentage allocation of the BRC fees, a change that could affect the reasonableness of the proposed interchange location)."
 
Bill Stephens.