Major Rail Service Issues Dominate 2019

The STB is considering a host of proceedings after more than two years without a quorum including the commodity exemptions revocation, demurrage (PSR), rate reforms, and reciprocal switching. While we don’t know when the STB will release any decisions, we expect at least some of them sometime this spring.


Precision Schedule Railroading - Late in 2018, the class 1 railroads notified shippers they were instituting precision schedule railroading (PSR) beginning in January 2019. This followed CSX implementing PSR two years earlier that resulted in significantly higher demurrage charges and lack of service. This same scenario occurred for the other class 1 railroads when they initiated PSR in 2019 with ISRI members reporting 600% to 1000% increases in their demurrage rates with no improved rail service.


The Surface transportation Board (STB) heard complaints from many shippers including ISRI. As a result, the STB held two days of hearings in Washington where they heard from shippers and railroads. ISRI had two panelists (Ben Abrams and Bobby Trisch) that bookended the two days of hearings. ISRI also arranged separate meetings with STB members and members of Congress to describe the increased demurrage charges and poor rail service including car bunching, missed switches.


Early in the fall, the STB released its statements for demurrage and rate reforms that largely followed ISRI’s comments at the hearings and the ex parte meetings. ISRI provided both its initial comments commending the STB for holding the hearings and issuing the statements. A month later, ISRI filed substantive reply comments with the STB arguing for the resumption of ‘free time’ and credit days to avert the significant demurrage charges being experienced. We also argued for (reciprocal) demurrage to be charged to the railroads when private railcars are not returned in a reasonable timeframe.


Another provision would prohibit the railroads from charging shippers a fee to contest inaccurate demurrage charges. These results of these challenges could also be brought to the STB for adjudication.


Ben Abrams (second from the right) testifying at the STB Demurrage Hearings in April

Commodity Exemption Revocation - In addition, ISRI re-started the commodity revocation proceedings (EP 704). The commodity exemption revocation proceedings had stalled after the lack of a quorum on the STB (and Anne Begeman declining to address them after voicing her objections). The 704 proceedings had been initiated several years. ISRI was successful in restarting the proceedings.

FerrousGroupPicFollowing the April STB demurrage hearings, the STB began our ex parte meetings with railroads and other commodity shippers to educate new STB Board members Marty Oberman and Patrick Fuchs. ISRI brought in ten member companies over a several day period representing small family-owned and operated companies to medium and large private and public scrap companies from each region of the country and who’s U.S. Senators belong to the Senate Commerce, Science and Transportation Committee (CST) with jurisdiction over the STB. Senate CST meetings were also scheduled for ISRI members. Later in the summer, many of the ISRI members again met with Senate CST Senators and staff to provide an update on the ex parte and demurrage proceedings.

Rate Reforms - Additionally, ISRI advocated for the rate reforms proposed by the STB’s staff using data from many ISRI members submitted (in confidence) directly to Thompson Hine where it was analyzed to determine whether we could claim ‘market domination’ arguing that tucks were not an option for movements over 200 miles. The rate reforms would allow small shippers such as ISRI members, whether exempt or not, to petition the STB without first passing the costly procedural hurdles. Under the rate reform proposal, the STB answer a claim with 90 days rather than the years and expenses it normally requires. Please see AAR Statement on Rate Reform.

STB Rail Shipper’s Advisory Council - We helped get Ben Abrams appointed to the STB’s rail shipper’s advisory council where he meets with the STB members four times per year to discuss important shipper’s concerns. We have initiated a rail survey of 17 questions to provide Ben with quantitative data to present at each meeting. We have at least 10 companies submitting the survey.

Cost Benefit Analysis - The railroads are also requesting the STB use cost benefit analysis before issuing their findings in rulemaking proceedings. ISRI and others have argued that cost benefit is good but the proceedings for demurrage, rate reform, and revoking the commodity exemptions are not applicable and the STB should move forward with these proceedings. ISRI joined forces with dozens of other rail shippers to oppose the cost benefit analysis proposal thus defraying our costs and enlisting the help of dozens of larger shippers.

The railroads have also tried to enlist the help of Congress to pressure the STB to proceed with requiring a cost benefit analysis for all rulemaking proceedings. This is an overt attempt to stymie the STB and stop progress on the various reform proceedings. ISRI and several other rail shippers have lobbied House Transportation & Infrastructure members to not sign the railroad’s letter. So far, we have kept most members off the letter and successfully delayed the letter three months from being sent. We expect the railroads will continue this effort to slow down the STB’s effort going into the 2020 Presidential Elections when the chairwoman will leave the board and new STB members will be nominated.

Conclusion – ISRI has made a lot of progress in just one year. While we cannot predict the outcome of all the proceedings, we have already achieved a clear statement from the STB that commodity exempt shippers may in fact bring demurrage cases to the STB without the procedural hurdles normal associated with challenging the railroads. This exercise has also educated and empowered ISRI members to notify the STB’s Office of Public Assistance about their rail problems.

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