SCDigest editorial staff

The News: The Surface Transportation Board (STB) announced it is extending the deadline for public commentary on the issue of rail fuel surcharges to October 2, 2006. The original deadline was Sept. 25, but the American Short Line and Regional Railroad Association, an industry trade group, requested more time to properly prepare its response.

The Impact: As with other modes, railroad carriers have been accused on using fuel surcharges to raise profits, not simply compensate for rising energy costs. The surcharges have been contributing to rapidly rising total spend on rail transport. Proposed new regulations from the STB could help reign those costs in for shippers and importers who use rail.

The Story: The STB announced first announced in May that it was going to consider tighter scrutiny of fuel surcharges used by railroads to cover rising energy costs – and perhaps to pad profit margins at the same time.

Then, in early August the STB announced proposed changes that would more highly regulate how rail carriers could assess such charges, under the “Ex Parte No. 661” requirements.

The public, including shippers and carriers, originally had until Sept. 25 to comment on the proposed regulations, but the STB has extended the deadline for one week, primarily due to the request from the American Short Line and Regional Railroad Association. The regulations would significantly impact the ability of the carriers to assess fuel surcharges.

The regulations would require railroads to more clearly and closely match any assessed fuel charges to actual costs.  Despite the belief by many that fuel surcharges improve profits above actual increases in energy spend, a group of rail carriers, including Union Pacific and Burlington Northern, stated in July that their fuel surcharges were in fact only covering about 80% of the increased energy costs.

The proposed regulations would also require carriers to file monthly reports on fuel expenses, fuel consumption and surcharge revenues, as well as to abandon the practice of setting the surcharges as a percent of the freight rates. Instead, it called on the industry to set surcharges based on mileage or a combination of weight and miles. Burlington Northern implemented a mileage based surcharges structure at the beginning of 2006 for some product categories, such as agriculture products and coal.

The new rules would also require carriers to use a single national index – “the U.S. No. 2 Diesel Retail Sales by All Sellers (Cents per Gallon)" data from the Energy Information Administration- as the basis for any surcharges.

The specific proposals, as well as the channels for commentary, can be found at

Surface Transportation Board Seeks Public Comment On Proposals Regarding Railroad Practices Involving Fuel Surcharges

What do you think of the proposed rail surcharge regulations? Are rail carriers – or other carriers – using surcharges to pad profits, or is the industry right that they aren’t covering costs? Let us know your thoughts.