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On October 4, 2019, the Surface Transportation Board (STB or Board) issued three decisions addressing various aspects of rail carriers’ demurrage and accessorial rules and charges. The Board proposed a policy statement clarifying the principles it would consider in evaluating the reasonableness of demurrage and accessorial rules and charges, a rule imposing minimum demurrage billing requirements, and a rule that applies demurrage regulation to most exempt transportation. It seeks comments on the proposed policy statement and rules by November 6, 2019 and reply comments by December 6, 2019.

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The proposals follow the STB’s two-day oversight hearing on demurrage and accessorial charges in May and the submission of written testimony by numerous railroad customers who expressed significant concerns over Class I railroad demurrage practices. Several major railroads recently changed their demurrage and accessorial charges rules and practices while implementing a new operating plan known as precision scheduled railroading (PSR).

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In Docket No. EP 757, the Board proposed a policy statement (Policy Statement) to provide information and guidance on principles it would consider in evaluating the reasonableness of rail demurrage and accessorial rules and charges. The Policy Statement sets forth general principles, including that railroad demurrage rules and charges are not likely reasonable when they do not incentivize shippers and receivers to become more efficient in their use of rail assets (i.e., railcars and track) and that transparency and mutual accountability are important factors in establishing reasonable demurrage and accessorial rules and charges. The Board also identified several instances of demurrage charges that appear to be unreasonable, such as:

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The Policy Statement covers the following key issues regarding demurrage rules and practices:

In a separate order in Docket No. EP 759, the Board issued a notice of proposed rulemaking on demurrage billing requirements. Specifically, it proposed minimum information requirements for invoices and a requirement that when the shipper and warehousemen agree that the shipper is responsible for demurrage charges, Class I carriers, upon receiving notice of that agreement, must send invoices directly to the shipper and not require the warehousemen to guarantee the payment.

Finally, the Board issued a notice of proposed rulemaking in Docket No. EP 760 to clarify that demurrage is subject to Board regulation when it involves shipments of certain exempt commodities (e.g., lumber or wood products, pulp and paper products, and iron and steel scrap) and boxcar transportation. The Board also proposes to partially revoke the exemption for certain agricultural commodities to permit the regulation of demurrage related to the non-intermodal transportation of these commodities.

For additional information on the STB’s proposals and for assistance preparing responsive comments, please contact:

Karyn A. Booth 202.263.4108 <a href="mailto:Karyn.Booth@ThompsonHine.com">Karyn.Booth@ThompsonHine.com</a>

Sandra L. Brown 202.263.4101 <a href="mailto:Sandra.Brown@ThompsonHine.com">Sandra.Brown@ThompsonHine.com</a>

Jeff Moreno 202.263.4107 <a href="mailto:Jeff.Moreno@ThompsonHine.com">Jeff.Moreno@ThompsonHine.com</a>

David E. Benz 202.263.4116 <a href="mailto:David.Benz@ThompsonHine.com">David.Benz@ThompsonHine.com</a>

Jason D. Tutrone 202.263.4143 <a href="mailto:Jason.Tutrone@ThompsonHine.com">Jason.Tutrone@ThompsonHine.com</a>

This advisory bulletin may be reproduced, in whole or in part, with the prior permission of Thompson Hine LLP and acknowledgment of its source and copyright. This publication is intended to inform clients about legal matters of current interest. It is not intended as legal advice. Readers should not act upon the information contained in it without professional counsel. This document may be considered attorney advertising in some jurisdictions.

https://admin.thompsonhine.com/wp-content/uploads/2022/04/Transportation_Update_-_STB_Acts_on_Concerns_Over_Unreasonable_Rail_Demurrage_and_Accessorial_Rules_and_Charges.pdf

STB Acts on Concerns Over Unreasonable Rail Demurrage and Accessorial Rules and Charges

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