By Randy Gordon, President and CEO
The NGFA on Nov. 6 submitted a detailed 22-page statement to the federal Surface Transportation Board (STB) urging that it make significant changes to its Oct. 7 proposed policy statement that is designed to encourage Class I rail carriers to amend their demurrage and accessorial practices and charges to make them commercial fair, as well as reciprocal if they are the cause of delays that trigger such charges.
While commending the agency for developing the draft policy statement and conducting an exhaustive May 22-23 public hearing that demonstrated rail carriers’ egregious demurrage and accessorial practices, the NGFA said its “strong preference” was that the STB utilize its statutory authority and precedent to determine proactively that specific railroad practices are unlawful and direct that they amend their tariffs accordingly. The NGFA’s preferred approach would allow rail customers to submit “show-cause” filings or petitions to the STB calling on the agency to declare that a given carrier had not complied and order that the railroad take corrective action. “We believe, this would be a much more accessible, cost-effective and timely approach than the STB issuing general policy guidelines (which it has opted to propose instead) to be fleshed out only through formal complaint proceedings,” the NGFA wrote.
“The NGFA is disappointed by the (STB’s) proposal not to establish bright-line rules to govern the commercial fairness, commercial achievability and reciprocity of rail carriers’ demurrage and accessorial tariffs,” the statement read. “As has been amply demonstrated, the Class I railroads have little interest or incentive to be forthcoming or altruistic in amending their demurrage and accessorial policies voluntarily to conform with even the best principles and guidance developed by the agency….[T]here is very little prospect that the current situation will improve in any demonstrable way unless significant improvements are made to the (STB’s) proposed approach.”
If the STB retains its current proposed approach of issuing policy guidelines, the NGFA urged that it make the following specific improvements:
- Propose rules or otherwise adopt a streamlined and abbreviated procedural schedule for resolving demurrage and accessorial complaints brought by shippers and receivers so that a decision is rendered in no more than 45 days, with a separate 15-day timeline for deciding disputes involving incorrect invoicing and dispute-resolution tariff terms, conditions and practices.
- Establish an advisory committee to provide input to the STB on implementing the agency’s general principles on demurrage and accessorial practices. Such an advisory committee would help enable continued monitoring of changes made by railroads to their demurrage and accessorial rules, practices and charges that may warrant modification or updating of the STB’s general principles.
The NGFA also recommended that the STB make the following significant refinements of its proposed policy guidance to address railroad practices that are not commercially fair, reciprocal or achievable by agricultural facilities:
- Free Time: Change its policy guidance to state that rail carriers generally should provide a minimum of 24 to 48 hours of free time for a shipper or receiver to load or unload agricultural products after actual placement of the railcars at the facility during normal business hours. The policy statement also should state that railroads providing zero free time for loading or unloading cars is unreasonable. “Without some policy yardstick for assessing whether the allowance of free time is reasonable, this guidance principle will have limited meaning or utility,” the NGFA said. The NGFA also urged the STB to add a provision to its policy that carriers should make their tariffs reciprocal by providing compensation to rail customers if railroads fail to provide service in accordance with the train’s trip plan.
- Bunching of Cars at Rail Customers’ Facilities: The NGFA urged the STB to more clearly state that when railroads are responsible for so-called “bunching” of cars at customers’ facilities as a result of disruptions and variations in service, demurrage and accessorial charges generally are not justified. From a reciprocity standpoint, if railroads don’t perform predictably because of service disruptions or missed switches at either origin or destination, shippers and receivers should have a remedy (such as reparations) when bunching results, the NGFA said.
- Overlapping Charges: The NGFA commended the STB for including in its policy guidance that railroads should not assess separate congestion or other fees that are duplicative with demurrage and accessorial charges, and to not permit such charges when the railroad is responsible for the congestion or delay. But the NGFA recommended that the STB also expand its policy guidance to include provisions that: 1) rail carriers’ imposition of private car storage charges and embargoes to address congestion issues also will be considered by the agency when determining whether congestion and demurrage charges are commercially fair; and 2) include monetarily comparable provisions in railroad tariffs if the carrier causes private cars to dwell while in the railroad’s custody.
- Invoicing of Demurrage and Accessorial Charges: The NGFA urged the STB to be more specific in directing appropriate actions that carriers should take to ensure that their invoices for demurrage and accessorial charges are accurate and commercially fair before they are sent to rail customers.
- Dispute-Resolution: The NGFA recommended that the Board require railroads to clearly articulate in tariffs their specific dispute-resolution process, including indicating whether they are willing to arbitrate such disputes and through which forum (such as NGFA’s or the STB’s rail arbitration process).
- Railroad Credits: The NGFA commended the STB for including in its proposed policy statement the principle that it will evaluate how railroads’ credit rules and practices are administered when determining whether demurrage rules and charges are reasonable. The NGFA also strongly supported the STB’s policy statement that concerns over rail carriers’ credit policies would be allayed if shippers and receivers were compensated for the value of unused credits at the end of each month, rather than having time-limited credits unilaterally expire.
- Notification of Major Tariff Changes: The NGFA reiterated its previously stated concerns over railroads making major tariff changes, often by changing their operating plans to implement the so-called “precision scheduled railroad” model, and the impact that has in devaluating significant investments made by rail customers in enhancing their facilities’ rail loading and unloading capacity, sidetrack and other improvements. The NGFA urged the STB to add a reciprocity policy statement that railroads, at a minimum, should phase-in tariff changes or a lengthy period in recognition of these deleterious monetary impacts on rail customers’ investments.
- Application to Accessorial Practices and Charges: The NGFA urged the agency to insert an additional policy statement to clarify that its general principles apply to accessorial practices and charges, not just to demurrage.
- Prohibiting Intimidating Legal Language in Tariffs or Other Railroad Documents: The NGFA urged the STB to prohibit the use of intimidating language in railroad tariffs, contracts of carriage or other documents designed to deter shippers and receivers from exercising their lawful right to challenge erroneous demurrage and accessorial invoices and charges.
- Applicability to Shortline Railroads: The NGFA encouraged the STB to apply the same demurrage and accessorial commercial fairness and reciprocity principles to Class II and III railroads. “Even though (shortline) carriers were not a principal focus of complaints brought by rail shippers and receivers, advising them that they are subject to the same general guidance as the Class I carriers should serve as a future deterrent and avoid creating a potential loophole,” the NGFA said. “Class II and III carriers that are operating based upon the principles of commercial fairness, commercial practicability and reciprocity have nothing to fear from the STB’s policy principles.”
The NGFA’s statement was supported by four other national agricultural organizations: the Agricultural Retailers Association, National Oilseed Processors Association, North American Millers’ Association and Pet Food Institute.