The Board is Seeking Public Comment on the Petition by Non-Railroad Entities to Adopt Rules Governing Use of Private Railcars by Railroads

On April 1, 2022, the Surface Transportation Board (Board) issued a decision seeking public comment on a petition for rulemaking filed on July 26, 2021 by the North America Freight Car Association, The National Grain and Feed Association, The Chlorine Institute, and The National Oilseed Processors Association (collectively, Petitioners), requesting that the Board exercise its authority under 49 U.S.C. § 11122(a)(2) to promulgate regulations governing the use of private railcars by railroads.  Petition for Rulemaking to Adopt Rules Governing Private Railcar Use by Railroads, EP 768 (STB served Apr. 1, 2022). 

The regulations proposed by Petitioners “would allow private railcar providers to assess a charge when a private freight car does not move for more than 72 hours at any point on a railroad’s system 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.’”  Id., slip op. at 2.  Under the proposal, “Car Location Message (CLM) Event Sighting Codes published by Railinc would be used to measure time, and charges would be assessed when the ‘CLM location city of CLM Sighting Code has not changed for more than [72] hours.’”  Id.  The amount of the charge would be equivalent to the greater of the carrier’s applicable demurrage or storage charge.  Id.  Charges would be assessed unless the carrier demonstrates that “it was not a cause of the allowable transit idle time being exceeded despite exercising due diligence.”  Id.  Additionally, carriers would be able to dispute the amount of the charge in an appropriate proceeding in which the carrier would bear the burden of proof to demonstrate that the charge is unreasonable and inappropriate.  Id.  Petitioners also argue that the Board should explore monetary penalties for noncompliance.  Id.

Petitioners claim that the proposed regulations are necessary “to encourage the efficient use of private freight cars because carriers do not presently have sufficient incentives to use private freight cars efficiently.”  Id.  Additionally, Petitioners argue that the proposed regulations are necessary “to compensate private railcar providers for the costs they incur when carriers use private freight cars inefficiently.”  Id.

The Board received numerous replies to the petition.  Non-railroad entities generally expressed support for the petition.  CSX Transportation, Inc. (CSXT), Union Pacific Railroad Company (UP), and the Association of American Railroads (AAR) urged the Board to reject the petition.  Id., slip op. at 3.  The Board issued a decision, served on November 23, 2021, opening a proceeding to consider the Petitioners’ proposal.  Petition for Rulemaking to Adopt Rules Governing Private Railcar Use by Railroads, EP 768 (STB served Nov. 23, 2021). 

In its decision served on April 1, 2022, the Board invited public comment on the issues raised in the petition, as well as on several specific questions, such as the following: 

  • UP asserts that Petitioners’ proposed regulations are unnecessary because private railcar providers have other avenues to pursue relief, such as through specific service commitments in contracts.  Do such contract service commitments include similar terms to the regulations proposed by Petitioners?
  • How would Petitioners’ proposed regulations affect rail users that do not use private freight cars?  For example, CSXT, UP, and AAR argue that Petitioners’ proposed regulations would create incentives for carriers to prioritize private freight cars to the disadvantage of rail users that use railroad-owned freight cars.
  • Petitioners suggest that the proposed regulations should apply only to Class I carriers. How, if at all, would Class II and Class III carriers be impacted by the proposed regulations, if limited to Class I carriers?

See Petition for Rulemaking to Adopt Rules Governing Private Railcar Use by Railroads, EP 768, slip op. at 5-8 (STB served Apr. 1, 2022).  Interested persons may file comments by June 30, 2022.  Replies will be due by August 1, 2022.  Id., slip op. at 8.

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