The Surface Transportation Board (STB) on April 6 announced the adoption of a final rule in Demurrage Billing Requirements, which establishes certain minimum information requirements for demurrage bills from Class I railroads, including billing cycle, shipment, car placement, and credit and debit information, among other things.
The STB said the new rule will allow rail users to review and verify the accuracy of demurrage charges and facilitate the resolution of disputes between railroads and their customers. In addition, it establishes a machine-readable data requirement to ensure that rail users have access to relevant demurrage data.
STB said the final rules followed two rounds of public notice and comment with substantial input from Class I railroads and rail users. In issuing the final rule, the STB said it expects all carriers to take “reasonable actions to ensure the accuracy of their invoicing processes and that their demurrage charges are warranted.”
“Today’s rule, which the Board members adopted unanimously, represents a significant step toward ensuring basic transparency in demurrage bills and thereby helps to eliminate a source of unnecessary conflict between railroads and their customers,” said STB Chairman Martin J. Oberman. “In this regard, I anticipate that the rule will reduce the need for litigation or further regulatory intervention related to what should be fairly straightforward and routine commercial interactions. I further expect that the new rule will promote more productive dialogue between Class I railroads and rail users to either avoid unnecessary disputes over demurrage charges or hasten their resolution.”
The new rule stems from a two-day oversight hearing conducted by the STB in May 2019 in which rail users expressed concerns about how Class I railroads assess demurrage and accessorial charges (GM May 3, 2019), and urged the STB to consider setting basic standards for invoices to promote uniformity and transparency. Both The Fertilizer Institute (TFI) and the Agricultural Retailers Association (ARA) provided testimony at the hearing.
“ARA has worked on this issue for quite some time, and we are pleased that the STB has finally released the final rule and that it is sensible and practical,” said ARA President and CEO Daren Coppock in an April 8 statement. “Assuring that rail service is dependable and provides consistent delivery to agricultural retail operations plays a critical role in an efficient and complex distribution system due to the large volume of product, the distance it must travel to get to a location, and the restricted seasonal time frame this must occur. We are pleased that STB took our testimony and comments seriously and are hopeful they will continue to move other issues in the right direction for ag retailers to continue to serve their customers.”
The final rule issued by the STB will provide fertilizer shippers with greater transparency and fairness regarding railroad demurrage charges,” said TFI President and CEO Corey Rosenbusch in an April 9 statement. “Demurrage charges have increased dramatically – and often unfairly – following rail industry implementation of so-called Precision Scheduled Railroading (PSR). Shippers are entitled to have the information they need to determine the justification of these charges.”