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Surface Transportation Board Issues Final Rule On Demurrage

The Surface Transportation Board (STB) is adopting a final rule that will clarify how it will regulate demurrage, which is the fee that the freight railroads assess when railcars are

Benzinga · 03/02/2020 14:54

The Surface Transportation Board (STB) is adopting a final rule that will clarify how it will regulate demurrage, which is the fee that the freight railroads assess when railcars are detained beyond a specified time to be loaded and unloaded.

The Board says the final rule amends the regulations that govern the class exemptions for certain miscellaneous commodities, such as paper products and steel scrap, as well as for boxcar transportation so that demurrage for these categories will also be subject to STB's regulation. The Board previously didn't regulate demurrage for these categories. 

The final rule also partially revokes the class exemption for certain agricultural commodities, resulting in making the agricultural commodities exemption consistent with similar class exemptions covering non-intermodal rail transportation. 

The final rule will be effective on April 3, 2020. The rule is part of STB proceeding Ex Parte 760.

The STB says the changes are in response to comments it received after it issued decisions regarding demurrage in October 2019. The Board expects to adopt the rule as proposed, but it will add language to express more clearly how exemptions for certain agricultural commodities don't apply to the regulation of demurrage.

The issue of demurrage has been a hot topic for shippers, who aired their concerns about the topic at a two-day public hearing last May. At the hearing, rail shippers expressed frustration over how the Class I railroads were levying demurrage and accessorial charges following their deployment of precision scheduled railroading, an operating model that seeks to streamline rail operations. The railroads have argued that the charges and demurrage encourage shippers to handle railcars in a timely fashion, but shippers have said the charges can unfairly penalize shippers when it's actually the railroads causing the inefficient railcar handling. 

The STB said its final rule addresses the concerns shippers raised in May. Those concerns are in the proceeding Ex Parte 754.

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