On October 7th, the Surface Transportation Board announced its highly anticipated proposals on how the agency would address demurrage and accessorial charges.

Over three decisions, the Board has said the STB will continue “its efforts to improve dispute resolution processes, promote transparency, and make the agency more accessible.”

STB Decisions

1. EP 757: Proposed Policy Statement on Demurrage and Accessorial Rules and Charges: provides information on principles the Board would consider in evaluating the reasonableness of demurrage and accessorial rules and charges. The proposed policy statement addresses a number of key areas of concern raised by stakeholders, including: free time, bunching, overlapping charges, invoicing and dispute resolution, credits, notice of major tariff changes, and warehouseman liability.

The Board expects this policy statement will:

• • Facilitate more effective problem solving between railroads, shippers, and receivers
  • Assist with prevention of unnecessary future issues
  • Enable more efficient and cost-effective resolution of issues when they do arise

2. EP 759: Notice of Proposed Rulemaking: Demurrage Billing Requirements: the Board is proposing to enhance the transparency and accuracy of demurrage invoices by requiring Class I railroads to include minimum information that would assist shippers and receivers with verifying charges, determining who is responsible for delays, and evaluating whether and how they can expedite their handling of cars. The Board also proposes a requirement that Class I railroads send demurrage invoices directly to the shipper instead of the warehouseman, if so agreed upon by the warehouseman and the shipper.

3. EP 760: Notice of Proposed Rulemaking: Exclusion of Demurrage Regulation from Certain Class Exemptions: the Board proposes to clarify its regulations governing exemptions for certain miscellaneous commodities, such as paper products and steel scrap, and boxcar transportation to ensure that they clearly reflect longstanding court and agency rulings that these exemptions do not apply to the regulation of demurrage. The Board also proposes to make the exemption for certain agricultural commodities consistent with those exemptions by revoking, in part, the exemption that currently covers certain agricultural commodities so that the exemption does not apply to the regulation of demurrage.

These decisions were in response to a May STB hearing where numerous parties, including NITL and many NITL members, shared concerns and challenges related to recent changes implemented by Class I railroads.

Comments to each of the proposals are due by November 6, 2019, and replies are due by December 6, 2019. NITL is reviewing the decisions and weighing how we will respond. We will provide further over the next few weeks.

More Reading:

Proposed Policy Statement on Demurrage and Accessorial Rules and Charges

NPRM Demurrage Billing Requirements

NPRM Exclusion of Demurrage from Certain Class Exemptions

NITL Testimony: May 2019 hearing on demurrage and accessorial charges

Proposed rules allow a shipper to gain access to another railroad if the shipper makes certain showings

 The National Industrial Transportation League (NITL) commends the Surface Transportation Board (STB) for issuing a decision on NITL’s proposal on competitive switching. The STB has proposed a substantial revision of its reciprocal switching rules, under which rail shippers can seek to obtain single-line pricing from railroads that do not directly serve their facilities. The STB’s proposal is in response to the Petition for Rulemaking filed by The National Industrial Transportation League on July 7, 2011.

“NITL is proud to advance the interests of our members and a diverse array of rail shippers across many industries. We applaud the STB’s decision to move forward on changes to competitive switching regulations. NITL appreciates the Board’s careful consideration of NITL’s proposal to provide this competitive, market-based rail transportation alternative,” said Jennifer Hedrick, Executive Director, NITL.

The STB explained that it is “appropriate to revisit” the existing reciprocal switching rules for two main reasons. First, the Board recognized that the lack of reciprocal switching requests in the past several decades demonstrates its existing rules are not adequately serving shippers’ interests. Second, the Board highlighted the improved financial health of the nation’s railroad industry since the current rules were adopted in the 1980’s, and their productivity and technological advances. With these changed circumstances, the requirement that shippers prove railroad “competitive abuse” in seeking a switch “makes less sense in today’s regulatory and economic environment.”

The STB found the NITL proposal to be a valuable starting point in revamping its rules. NITL had asked the Board to reverse the restrictive rules made by its predecessor agency, the Interstate Commerce Commission, which blocked shippers from seeking competitive switching. The Board agreed and has proposed two alternative pathways. The first path would require the proposed switching to “be practicable and in the public interest,” and the second path would require the proposed switching to be “necessary to provide competitive rail service.”

The proposed rules would only apply to Class I railroads. The STB also proposed two alternative methods by which the STB would set the access price that would be paid by the new competing railroad to the incumbent railroad, if the two railroads cannot reach agreement.

“I thank NITL for bringing their reciprocal switching proposal to the Board for consideration and I am pleased that today we are granting that petition in part,” STB Chairman Daniel R. Elliott III said in a statement. “I encourage all stakeholders to participate in the notice and comment process and I look forward to meeting with them to hear their views directly.”

The STB invited public comment in response to the proposed rules. Written comments are due September 26, 2016 and reply comments are due October 25, 2016. The STB has also issued a limited waiver of its ex parte prohibition for this proceeding. Interested persons may schedule ex parte meetings with STB members for the period October 25th through November 14th. Requests for ex parte meetings must be made by October 10th. Summaries of ex parte meetings will be publicly available.

“NITL is grateful that the Board is providing these forums for stakeholder comment,” said Hedrick. “We look forward to responding on behalf of our members following further analysis of the STB’s decision and discussion with our membership,” added Hedrick.

For more information and the latest updates on NITL’s position on competitive switching and the STB’s decision, visit the Legislative/Regulatory Activity page on www.nitl.org.

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