SURFACE TRANSPORTATION BOARD PROPOSES RULE CLARIFYING LIABILITY FOR RAILCAR DEMURRAGE

[STBNews@xxxxxxxxxxx]

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>From the Surface Transportation Board, Washington, D.C.
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The Surface Transportation Board announced today that it is proposing a
rule providing that any person receiving rail cars that detains those cars
beyond specified "free time" may be responsible for paying demurrage
charges, so long as that person accepts cars with actual notice of the
demurrage terms prior to the cars' delivery.


                                        Demurrage serves two primary
                                        functions.  First, it compensates
                                        railroads for the time their
                                        equipment is held out of the
                                        transportation network.  Second, it
                                        penalizes parties for detaining
                                        rail cars for too long, thereby
                                        encouraging prompt return of cars
                                        into the transportation network.


                                        Differences among recent court
                                        decisions highlight the need for
                                        uniformity on demurrage liability,
                                        particularly on the issue of which
                                        party—receiver or
                                        intermediary—should be liable when
                                        an intermediary detains rail cars
                                        for too long.


                                        In announcing the proposal, Board
                                        Chairman Daniel R. Elliott III
                                        said,

                                        "We expect this rule to bring
                                        clarity to what has become a murky
                                        legal area.  It should simplify the
                                        roles and responsibilities of all
                                        parties in the chain of rail car
                                        movements, realigning them with
                                        actual industry practices and
                                        enhancing efficiency of movements."


                                        The Board's Notice of Proposed
                                        Rulemaking in Demurrage Liability,
                                        EP 707
                                        ( http://www.stb.dot.gov/decisions/readingroom.nsf/WebDecisionID/42239?OpenDocument )

                                        , is available for viewing and
                                        downloading at the Board's website
                                        at www.stb.dot.gov .


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