STB Moves Ahead on Private Car Proceeding

Federal regulators moving ahead with a rule making case that will consider a proposal by private rail car owners to update the demurrage and accessorial rules governing use by railroads of these cars.

The owners sought the rule making process in July. After a public comment period, the U.S. Surface Transportation board has decided to open such a proceeding because, “Petitioners’ proposal and the responses to date raise important issues of interest to the Board.”

The car owners want the STB to adopt regulations that would allow car owners to assess a “private rail car 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 “constructively placed or actually placed” at the private rail car provider’s facility or designated location.

Since the car owners through their trade associations proposed the rule in July, the STB has received public comments from various shippers and railroads.

The latter oppose the rule with the Association of American Railroads arguing that the STB lacks legal authority under federal law to adopt the proposed rules.

AAR along with some of its members contend the proposed rule are unnecessary because carriers have sufficient incentives to move cars efficiently. Delayed cars hinder operations and reduce revenue.

The railroads have likewise argued that the proposed rules will result in inefficient operations as railroads are motivated to move private cars in order to avoid charges.

For their part, the rail car owners and their trade associations argue that the proposed rules will provide incentives for Class I railroads to make “efficient use of private rail cars 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.”

In seeking the rule changes, the rail car owners said approximately 73 percent of the rail cars in service – about 1.2 million cars – are no longer owned by railroads.

These cars are used by railroads at little or no cost to them, the car owners contend.

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