The Surface Transportation Board will consider a proposal by private railcar owners to adopt regulations updating the demurrage and accessorial rules governing the railroads’ use and handling of their equipment.
The North America Freight Car Association (NAFCA), National Grain and Feed Association (NGFA), Chlorine Institute (CI), and National Oilseed Processors Association (NOPA) on July 26 filed a petition for rulemaking. They proposed the STB’s adoption of “regulations, pursuant to its car service authority under 49 U.S.C. § 11122(a)(2), that would allow private railcar providers [shippers, receivers or other parties that own or lease private railcars] to assess a ‘private railcar delay charge’ when a private freight car does not move for more than 72 consecutive hours at any point between the time it is ‘released for transportation’ and the time it is ‘either constructively placed or actually placed at the private railcar provider’s facility or designated location,’” the STB explained in its Nov. 22 decision (download below).
The associations noted in their July filing that the “overall goal of this proposal … is to maximize the Class I railroads’ efficient use of private railcars without unduly infringing upon the railroads’ freight operations over their respective systems, recognizing that some level of service variability is inherent in any railroad’s operations.”
“[A]n update to the rules governing the railroads’ use of private railcars is long overdue,” the associations wrote, “because the railroad industry has evolved to the point that approximately 73% of the railcars in service today nationwide—approximately 1.2 million railcars—are no longer owned by railroads, but are … purchased, or leased, and maintained, by non-railroad entities at little or no cost to the railroads that use them.”
The STB received replies to the petition from the Association of American Railroads (AAR); CSX; Union Pacific (UP); Institute for Scrap Recycling Industries, Inc. (ISRI); a Joint Shippers group including the American Chemistry Council, The Fertilizer Institute, and National Industrial Transportation League; National Association of Chemical Distributors (NACD); National Coal Transportation Association (NCTA); Private Railcar Food and Beverage Association (PRFBA); American Fuel & Petrochemical Manufacturers (AFPM); Freight Rail Customer Alliance (FRCA); and the Canadian Oilseed Processors Association (COPA). NGFA and the American Short Line and Regional Railroad Association filed notices of intent to participate.
While many supported the petition (ISRI, Joint Shippers, NACD, NCTA, PRFBA, AFPM, FRCA and COPA), AAR, CSX and UP opposed it.
According to the STB, “UP and AAR claim that the Board lacks the statutory authority under § 11122(a)(2) to adopt the proposed regulations. … AAR, CSXT, and UP contend, moreover, that the proposed regulations are unnecessary because carriers have sufficient incentives to move cars efficiently, as delayed cars hinder operations and reduce revenue. … They also argue that the proposed regulations will have a negative impact on the overall efficiency of the rail network by incentivizing carriers to move private freight cars inefficiently to avoid the charges and by reducing cooperation between carriers during periods of network stress. …”
STB wrote that because the “Petitioners’ proposal and the responses to date raise important issues of interest to the Board,” it will open a proceeding. “Procedures for further public comment will be established in a subsequent decision.”