ISRI replies to Surface Transportation Board
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ISRI replies to Surface Transportation Board

The association has taken issue with the rail industry’s practice of reducing free time for loading and unloading and subsequent demurrage fees.

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December 13, 2019

The Institute of Scrap Recycling Industries (ISRI), Washington, has filed its reply comments in the demurrage proceedings at the Surface Transportation Board (STB). These comments are a result of hearings held in the spring to investigate the rail industry’s practice of reducing free time for loading and unloading and subsequent demurrage fees. They are preceded by ISRI’s initial comments, which were filed in November.

ISRI’s comments read in part, “ISRI strongly commends the board for addressing some of the major concerns of its members, as well as other industry stakeholders, regarding recent changes in demurrage and accessorial charges and practices as implemented by Class-I railroads as part of precision scheduled railroading (PSR). The Association of American Railroads (AAR) and various Class-I railroads (railroad parties) have asserted various points and arguments against these proposals in their opening comments.  ISRI respectfully submits its reply comments on various issues raised by the Railroad Parties. …

“The railroad parties paint an inaccurate picture of the law and favor a demurrage regime that would allow railroads to over-recover penal demurrage charges from their customers. … Second, although the railroads' comments focus on the compensatory objective of demurrage charges, they fail to acknowledge cases which conclude that where neither the carrier or the shipper is at fault, it is not reasonable for shippers to pay ‘the element in the demurrage charge which represents penalty.’ …

“Moreover, the board has broad discretion to interpret the ‘reasonableness’ standard which applies to demurrage 14 and retains the authority to develop enforcement principles and guidance that account for present-day circumstances in the rail industry, including the fact that railroad tariffs currently do not separate compensatory and penal demurrage charges. …

“The rail industry has undergone significant changes since 1982, including substantial consolidation of many railroads that drastically reduced competitive forces in the market. Thus, the commission's contention that increased competition would deem these rules unnecessary does not prove to be accurate in the modern rail industry. …

“Finally, ISRI provides its reply comments in connection with the board's proposal regarding regulations governing exemptions for certain commodities, including ferrous scrap and boxcar transportation. …”

More information on this issue is available in the December Recycling Today article “Tracking toward mutually beneficial solutions.”