STB Seeks Comments on Proposed Demurrage Rules

The Surface Transportation Board (STB) published two notices of proposed rule-making (NPRM) related to demurrage in the Federal Register on Oct. 15. Both are in response to concerns from shippers and other stakeholders about increasing demurrage charges on commodities shipped by rail. Below, please find summaries of each NPRM and how to submit comments.

Demurrage billing requirements

STB has proposed changes to its regulations governing demurrage liability, in an effort to clarify demurrage billing practices and promote timely resolution of disputes. The proposal includes new requirements for information to be included in Class I rail carriers’ demurrage invoices, as well as a requirement that a Class I carrier directly bill the shipper if the shipper and intermediary (warehouseman) agree to that arrangement and notify the rail carrier. The changes follow concerns expressed by rail users and other stakeholders about their experiences with demurrage and accessorial charges and demurrage billing practices.

Specifically, the changes would establish minimum information to be included with invoices that would enable recipients (shippers or intermediaries) to verify the validity of the demurrage charges; permit shippers and intermediaries to properly allocate demurrage responsibility amongst themselves; and assist shippers and receivers in determining how to modify their behavior to avoid demurrage and encourage the efficient use of rail assets.

Additionally, if a shipper and intermediary agree that the shipper should be responsible for paying demurrage invoices and notify the rail carrier of that agreement, the rail carrier must send invoices directly to the shipper and not require the intermediary to guarantee payment.

Comments are due Nov. 6, 2019. Reference Docket No. EP 759. More information on submitting comments can be found here.

Exclusion of demurrage regulation from certain class exemptions

STB has also proposed changes that would empower the agency to conduct oversight of demurrage charges levied on certain kinds of commodities transported by rail. These changes come after agricultural shippers expressed concerns about new and increasing demurrage charges rail carriers have been implementing.

The new rule would clarify that regulatory exemptions for certain miscellaneous commodities and boxcar transportation do not include regulation of demurrage. Back in the 1980s, the Interstate Commerce Commission exempted several types of commodities, and all commodities transported in boxcars, from federal regulation – but this exemption was historically understood to allow the regulation of demurrage on those commodities. STB’s proposed rule would clarify that point.

STB also proposes revoking, in part, the regulatory exemption that currently covers certain agricultural commodities (excluding grain, soybeans, and sunflower seeds, which are already subject to STB regulation) so that the exemption would not apply to the regulation of demurrage. This would empower STB to conduct oversight of demurrage charges on those commodities to ensure they are reasonable and are being used to promote efficiency of the rail network.

Comments are due Nov. 6, 2019. Reference Docket No. EP 760. More information on submitting comments can be found here.

If you have any questions about either rulemaking, please contact TIA Advocacy at advocacy@tianet.org or 703.299.5700.