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1/29/2007



Rail News: Rail Industry Trends

STB's new rule requires railroads to correlate fuel surcharges with shipments' diesel costs



Last week, the Surface Transportation Board (STB) issued a final rule on railroads’ fuel surcharge practices, a decision that brings “common sense and fairness” to how surcharges are implemented, the board said.

The rule prohibits railroads from assessing fuel surcharges as a percentage calculation of a shipper’s base rate — a manner that doesn’t correlate with actual fuel costs for specific rail shipments, the STB said. In addition, the rule prohibits “double dipping,” a practice through which railroads apply a fuel surcharge and rate increase to the same traffic based on a cost index with a fuel component.

The decision — which also calls for the STB to monitor fuel surcharge practices by imposing mandatory reporting requirements on all Class Is — takes into account 73 comments the board received after issuing a notice of proposed rulemaking in August 2006. The STB developed the rulemaking after conducting a hearing on rail industry fuel surcharges in May 2006.

“This new rule will preclude [railroads] from selectively imposing surcharges in a manner that bears little relationship to actual fuel use,” said STB Chairman Charles Nottingham in a prepared statement. “It will also remove the possibility that railroads will view fuel surcharges as a profit center.”

Not surprisingly, a rail shipper organization hailed the rule. Officials at the American Chemistry Council (ACC) — which represents chemical shippers’ interests — believe the rule affirms their position that current fuel surcharge practices are unreasonable. However, more needs to be done on Capitol Hill to provide rail shippers regulatory relief, said ACC Senior Director for Distribution Tom Schick.

“Unfortunately, fuel surcharges are just the tip of the iceberg when it comes to unfair railroad business practices,” he said. “We will continue to press Congress and all appropriate regulatory agencies for fairness in every aspect of our relationship with the railroads.”


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