STB Issues Demurrage Rules
Date: April 15, 2014
On April 11, 2014, the Surface Transportation Board issued new rules on liability for rail demurrage charges in Docket No. EP 707, Demurrage Liability. These new rules are intended to clarify which parties to the rail transportation transaction are responsible for demurrage charges, and when those charges apply. Such clarification was considered desirable to address the liability of third parties who are not always in contractual privity with the railroad that is assessing demurrage charges.
Demurrage is a charge for detaining rail cars for loading or unloading beyond a specified amount of time, called “free time.” Demurrage serves the dual purpose of compensating rail carriers for the use of railroad equipment and assets, and penalizing those who detain rail cars for too long to encourage the prompt return of those cars into transportation service.
According to the new rule, anyone who detains rail cars beyond the “free time” provided in the carrier’s demurrage tariff may be held liable for demurrage if the person received a written or electronic notice of the demurrage tariff prior to the placement of the rail cars. A one-time “blanket notice” will suffice until the carrier makes material changes to its demurrage tariff, at which time a subsequent notice is required. This rule will apply to both railroad-owned and privately owned rail cars when private cars are held on railroad property.
The foregoing demurrage rules may be altered by contract. They are merely the default rules that will apply in the absence of a contractual arrangement between the railroad and the party that would be liable for demurrage under these rules.
FOR MORE INFORMATION
For more information, please contact:
Karyn A. Booth
Sandra L. Brown
Jeffrey O. Moreno
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