Issue Date: February 5, 2007
Board limits rail fuel surcharges
The chemical industry says it welcomes a decision by federal regulators banning excessive fuel surcharges by freight railroads and imposing strict rules on the extra fees rail carriers have been collecting in recent years to offset rising fuel costs. "We are pleased that the Surface Transportation Board (STB) affirmed our position about the need for fairness in rail fuel surcharge practices," says Thomas E. Schick, the American Chemistry Council's (ACC) senior director for distribution. On Jan. 26, STB issued a final rule declaring it an unreasonable practice for railroads to compute fuel surcharges in a manner that does not directly correlate with actual fuel costs for rail shipments. The rule prohibits the assessment of fuel surcharges according to a percentage calculation of the base rate charged to shippers. It also prohibits "double-dipping," which is the practice of applying to the same traffic both a fuel surcharge and a rate increase based on a cost index that includes a fuel component. ACC says rail fuel surcharges cost shippers—including the chemistry sector—roughly $1 billion in overcharges during 2005.
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