What does the common carrier obligation mean for US railroads?

Questions about the current language have arisen amid rail service issues

By Joanna Marsh for freightwaves.com

When a U.S. freight railroad engages with a rail shipper of bulk commodities to haul goods, the railroad must abide by terms expressed in federal code. That federal code is known as the common carrier obligation.

According to the definition for common carrier obligation, “a rail carrier providing transportation or service subject to the jurisdiction of the [Surface Transportation Board] under this part shall provide the transportation or service on reasonable request.”

In other words, the common carrier obligation binds railroads to transport any freight that has been properly tendered on reasonable terms and conditions, according to the Association of American Railroads.

But the recent service issues of the Class I railroads have called some — especially shippers and those representing shippers — to question whether the common carrier obligation needs to be redefined. They argue that clarifying what “reasonable” means could help ensure that the regulation compels adequate rail service. 

Currently, “reasonable” has been defined by precedent and by how STB has reviewed past cases. 

“At the very heart of the common carrier obligation is the belief that railroads are in a position of unique public trust. They are therefore held to higher standards of responsibility than other private enterprises,” Dan Elliott told FreightWaves for this AskWaves article. Elliott is a former STB chairman who recently served as legal counsel for rail shippers at STB hearings in March and April. 

“The common carrier obligation reflects a strong public policy that carriers should not unilaterally cease operations absent exigent circumstances,” he continued. “Many rail shippers completely depend on railroads for their transportation services. Without this common carrier obligation, these shippers would be at the mercy of railroads. This obligation to serve placed upon the railroads is thus important to these shippers and our economy.”

Rail shippers argue that because the question of whether railroads meet the common carrier obligation is based on a reasonableness standard, it gives rail shippers little information on what would be a violation of the standard. 

“I think this vagueness makes it more difficult for shippers to understand when a violation has occurred, which leads to a smaller likelihood of them bringing a case. A clearer definition would be helpful to all sides, allowing shippers and railroads to understand exactly what the standard is,” Elliott said.

However, the challenge in defining what standards the common carrier obligation should uphold isn’t an easy fix. One issue is making sure that the rulemaking language could be enforceable in court and could cover a variety of situations, according to STB Chairman Marty Oberman. Oberman told congressional leaders recently at a hearing that he and others are looking into redefining the common carrier obligation. 

For more information about the common carrier obligation, former STB Chairman Frank Mulvey and transportation attorney Michael McBride wrote a June 2020 report for the U.S. Department of Agriculture summarizing the issues. The full version by the two is available here.

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