The Railroad Clearinghouse (RCH) was established by the Association of American Railroads (AAR) Treasury Division to transfer funds on a net/net basis between participating carriers. These rules relate to the settlement of Car Hire accounts among railroads through one Bank Clearinghouse (BCH) utilizing the Car Hire Data Exchange (CHDX) system. A railroad’s non-participation in Car Hire Data Exchange system (and consequently the RCH) in no way negates the obligations of participating railroads to make settlements of Car Hire obligations with non-participating railroads.
Section 1
Interface with BCH and RCH
1.1 InterfaceBCH RCH
For US Dollars:
Wells Fargo Bank N. A. San Francisco CA 94104
For Canadian Dollars:
Bank of Montreal Toronto Ontario Canada
Railroad Clearinghouse
Association of American Railroads 7001 Weston Parkway
Cary NC 27513
Phone - (919) 651-5001 Fax - (919) 651-5409 1.2 Maintenance of Bank Accounts
Each member may establish a demand deposit account at the BCH. Each member will be solely responsible for fees and service charges associated with its individual account.
RCH Members will deposit funds to an account known as the RCH Clearing Account, maintained by the RCH. Notice to the Administrator that a member wishes to become an RCH Account Member must be received no later than five business days prior to Funds Transfer. RCH Account Members will be assessed a periodic fee for use of the facility as described in Section 9.
1.3 Reliance Upon Communication from RCH Administrator
The BCH will rely solely on communications with the RCH Administrator in effecting cash transfers in support of settlements among RCH members.
Section 2
Funds Transfer
2.1 AAR Railway Accounting Rules and AAR Circular OT-10 Dictate Funds Transfer Date
The RCH will execute funds transfer in accordance with the dates prescribed by Association of American Railroads (AAR), Railway Accounting Rules and the Code of Car Hire Rules contained in AAR Circular
OT-10.
2.2 Settlement Amount Notification
one business day prior to funds transfer, the RCH Administrator will deliver the Funds Transfer Notification Reports providing the Net/Net position for each participating member to a secured internet site and members will retrieve their Funds Transfer Notification Report.
2.2.1 In the event changes to the CHDX settlement amounts are required, The RCH Administrator will make adjustments to the Net/Net positions and Funds Transfer Notification Report to determine the revised Net/Net position of each member as a debtor (payor) or a creditor (receiver) involved in the settlement. After making changes as necessitated by subsequent sections of these regulations, the RCH will then transmit the revised Net/Net Position Report to the BCH as well as those member roads affected by these changes by 1:30 p.m., Eastern Time, one business day prior to funds transfer.
2.3 Debtor Funding BCH
Each debtor member will make funds available and subject to disposition of the BCH equal to its net/net position amount by 11:30 a.m. Eastern Time, on the funds transfer date.
2.3.1 The debtor will cause its bank to transmit funds to the RCH account through execution of a Federal Funds Wire Transfer or otherwise provide immediately available funds by 11:30 a.m., Eastern Time, on the funds transfer date. If funds are not received by the BCH, then evidence of such a transfer must be provided by the debtor member or its bank to the RCH by 11:30 a.m., Eastern Time, on funds transfer day, by furnishing the sending bank’s Federal Funds Input Message Acknowledgment Number (IMA No.) by phone or facsimile.
2.3.2 When the regulations described in 2.3 and 2.3.1 have been complied with by all debtor members, the BCH will, on the date specified, and on instructions from the RCH Administrator, effect funds transfer by crediting the accounts of creditor members. Funds will be disbursed to the creditor members by 2:00 p.m., Eastern Time.
2.4 Funds Not Made Available by Debtor Member
When a debtor member has reason to believe that it will not be able to comply with regulations 2.3 and
2.3.1 above, it will so notify the RCH Administrator by 3:00 p.m., Eastern Time, at least four (4) business days prior to the funds transfer date. After such notification, the member will have the right to withdraw the notice and to participate in the funds transfer to which the notice relates only if the RCH
Administrator agrees this action would not delay the funds transfer.
2.4.1 The RCH Administrator will determine by 1:00 p.m. Eastern Time on the second business day those debtor members who have failed to comply with regulations 2.3 and 2.3.1, and have failed to notify the RCH Administrator. The RCH Administrator will contact the debtor members to investigate and proceed with a short settlement or recast as needed.
2.4.2 If (1) a member fails to render full payment and the shortfall exceeds $500,000 or (2) this is the second occasion within the eleven preceding calendar months in which the Member failed to make funds available in a timely fashion at the Clearing Bank, then, upon notification to the Member by the RCH Administrator, the Member will be required to make funds available at the Clearing Bank for deposit into the RCH Clearing Account in future funds transfers in which it is a debtor Member not later than 11:00 a.m., Eastern Time, on the second business day preceding the funds transfer dates. The funds to be deposited will be based on the total settled revenue figures from the beginning of the settlement period through the third business day preceding the funds transfer date, plus the projected settlement numbers for final days preceding funds transfer. RCH will hold such funds only as agent for the benefit
amount the member is a net debtor in such funds transfer. The Debtor Member will fund any additional funds required by the final Net/Net Position Report on Funds Transfer Day in accordance with Regulation
3.2. Any excess funds will be returned to the debtor member on Funds Transfer Day. Any interest accumulated in the BCH account due to a member’s prepayment will be retained by the Clearinghouse. This requirement will remain in effect for one year from notification by the RCH Administrator unless earlier rescinded by the RCH Governing Board (as identified in the Treasury Division “Rules of Order”). 2.4.3 If a member fails to make funds available for the third time in a period, including the eleven prior calendar months in which the member failed to make funds available, then the member will be referred to the RCH Governing Board for suspension or termination from the RCH.
2.5 Funds Not Available - $500,000 Or Less - Short Settlement
If the debtor member fails to render full payment and the short fall is $500,000 or less, the RCH Administrator will contact one or more creditor members to voluntarily accept a delay in funds transfer from the debtor member. If a creditor member(s) agrees, the RCH Administrator will notify the debtor member and instruct the BCH to short settle the creditor member(s). The RCH Administrator will also advise any other creditor member who may be affected. If the creditor member(s) will not accept the short fall, the RCH Administrator will prepare a recast. A shortfall greater than $500,000 may be handled in the same manner as one under $500,000 if the RCH Administrator and the Chairman of the RCH Board of Directors conclude that it would be in the best interest of the Railroad Clearinghouse to do so. See Regulation 2.6.
2.5.1 The debtor member will make available all short fall amounts due the creditor member(s) plus interest amounts due as required by the RCH Administrator on or before 11:00 a.m., Eastern Time, of the second business day following the day in which the short settlement occurred. The RCH
Administrator will confirm the amount and distribution of funds with the BCH, debtor member, and creditor member(s). Funds will be disbursed by the BCH to the creditor member(s) by 2:00 p.m., Eastern Time on the second business day following the day in which the short settlement occurred.
2.5.2 If the debtor member does not comply with regulations 2.5 and 2.5.1 above, the RCH Administrator will notify the member(s) who absorbed the shortfall. If those members do not agree to continue to extend credit, the RCH Administrator will reallocate the shortfall amount on a pro rata basis and so notify the affected members. Those members now owing will make funds available to the BCH on or before 11:00 a.m., Eastern Time, of the second business day following the day of notification. Funds will be disbursed upon release by the RCH Administrator no later than 2:00 p.m., Eastern Time that day. 2.6 Funds Not Available - Over $500,000 - Recast
When a debtor member fails to render full payment and the shortfall is greater than $500,000 and the shortfall is not handled in accordance with section 2.5 then the RCH Administrator will prepare a recast, deleting each member’s transaction, both debit and credit, in which the debtor member is involved, and all credits due the defaulter will be reallocated on a pro rata basis to creditors of the defaulter based upon net amounts due the affected creditor roads by the debtor member.
2.6.1 The RCH Administrator will notify all members of the new funds transfer date established, taking into account (1) the anticipated completion of notice to the number of new or increased debtor members involved, and (2) the increased funds needed. The RCH Administrator will furnish all the revised amounts one business day prior to the new settlement date.
2.6.3 The debtor member will make available all short fall amounts due the creditor member(s) plus interest and penalty amounts as detailed in Section 4 on or before 11:00 a.m., Eastern Time, of the second business day following the day in which the short settlement occurred. The RCH Administrator will confirm the amount and distribution of funds with the BCH, debtor member and creditor member(s). Funds will be disbursed to the creditor member(s) upon release by the RCH Administrator no later than 2:00 p.m., Eastern Time.
2.7 Funds Transfer in Other Than U.S. Dollars
The Funds Transfer Notification Report will provide separate net creditor/debtor totals for each currency in which a funds transfer is to be affected. Payments and distribution of funds will be in the currency so designated.
A member’s settlement in two separate currencies will be considered two separate settlements. A member’s separate settlement will not be combined when deciding whether the over $500,000 recast amount has been reached.
2.8 Protest of Improper Billing
The RCH Administrator will rely upon the total in the Funds Transfer Notification Report in directing the Clearing Bank to make settlement. Any disputes or contest of those figures will be made through those procedures defined in the AAR Railway Accounting Rules.
If, however, after reviewing the Net/Net Position Report, a member determines its creditor or debtor status is incorrect due to incorrect application of the Funds Transfer Notification Report, Settlement Agreements, or clerical errors, it will have the right to protest the billing by notification to the RCH Administrator. The Administrator will endeavor to resolve the protest. If the Administrator is unable to resolve the issue to the satisfaction of the member, the Administrator will proceed with the funds transfer as prescribed in these regulations and refer the matter to the RCH Board of Directors.
A member will accept the RCH Administrator’s decision insofar as it affects its net positions in the settlement. If additional sums are due from another member as a result of errors confirmed by the RCH Administrator, such funds will be made available to the Clearing Bank immediately upon notice. A member adversely affected by the RCH Administrator’s decision may continue to resolve the protest through written appeal to the RCH Board of Directors. Final decision of the RCH Board of Directors will be provided to the member before the next settlement.
If a protested balance has been granted by the RCH Administrator, and subsequent to the settlement the RCH Administrator, in concurrence with the protesting member(s), determines the protest and adjustment were unjustified, the billed member will be required to remit immediately to the RCH the protested amount.
2.8.1 A protesting member still dissatisfied with the final Board of Directors recommendation may proceed to have its dispute settled under Mandatory Arbitration Procedures as specified in the AAR Railway Accounting Rules.
Section 3
Settlement Agreements and Members Right of Offset
3.1 Settlement Agreements PermittedIn order to facilitate timely settlements between members, individual settlement agreements relating to modifications in the settlement amounts due will be permitted.
3.2 Requirements of Settlement Agreements
Settlement agreements must be in writing and signed by all parties to the agreement and communicated to the RCH Administrator by 3:00 p.m., Eastern Time, at least four business days prior to the funds transfer date. The RCH Administrator retains the right to reject a settlement agreement if, in the judgment of the administrator, the settlement agreement terms are unclear or unworkable to the settlement.
3.3 RCH Activity Related to Settlement Agreement will be Limited to Prescribed Funds Transfer Date
The RCH’s responsibility with respect to a settlement agreement will be limited to adjusting net balances due the participating members on the funds transfer date. The RCH will not be responsible for effecting delayed transfers of funds between the participating members.
3.4 Treatment of Settlement Agreements in Event of a Recast or Short Settlement with Subsequent Reallocation of Funds
In the event a member defaults in payments due following a short settlement or a recast settlement, the reallocation of funds will take place without giving effect to any settlement agreements. The
Administrator will then apply settlement agreements that do not involve the defaulting member. 3.5 Members Right of Offset - AAR General Mandatory Rule 1
A member will have the right to invoke AAR General Mandatory “Rule 1” and so notify the affected member and the RCH Administrator of the amount of offset, in writing and detailing respective services, amounts, and dates, by 3:00 p.m., Eastern Time, four days prior to the funds transfer date, that the amounts owed that member are stricken from the settlement.