Demurrage Billing Requirements, 55114-55120 [2019-22202]
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Federal Register / Vol. 84, No. 199 / Tuesday, October 15, 2019 / Proposed Rules
§ 1039.14 Boxcar transportation
exemptions and rules.
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(d) Carriers must continue to comply
with Board accounting and reporting
requirements. Railroad tariffs pertaining
to the exempted transportation of
commodities in boxcars will no longer
apply. Consistent with the exemptions
in § 1039.10 and § 1039.11, this
exemption shall not apply to the
regulation of demurrage, except the
regulation of demurrage related to
transportation that is subject to
§ 1039.13. This exemption shall remain
in effect, unless modified or revoked by
a subsequent order of the Board.
[FR Doc. 2019–22201 Filed 10–11–19; 8:45 am]
BILLING CODE 4915–01–P
SURFACE TRANSPORTATION BOARD
49 CFR Part 1333
[Docket No. FD EP 759]
Demurrage Billing Requirements
Surface Transportation Board.
Notice of proposed rulemaking.
AGENCY:
ACTION:
The Surface Transportation
Board (STB or Board) proposes changes
to the Board’s regulations governing
demurrage liability. Specifically, the
Board proposes certain requirements
regarding Class I carriers’ demurrage
invoices, as well as a requirement that
a Class I carrier directly bill the shipper
if the shipper and warehouseman agree
to that arrangement and have so notified
the rail carrier.
DATES: Comments are due by November
6, 2019. Reply comments are due by
December 6, 2019.
ADDRESSES: Comments and replies may
be filed with the Board either via efiling or in writing addressed to: Surface
Transportation Board, Attn: Docket No.
EP 759, 395 E Street SW, Washington,
DC 20423–0001. Written comments and
replies will be posted to the Board’s
website at www.stb.gov.
FOR FURTHER INFORMATION CONTACT:
Sarah Fancher at (202) 245–0355.
Assistance for the hearing impaired is
available through the Federal Relay
Service at (800) 877–8339.
SUPPLEMENTARY INFORMATION: This
notice of proposed rulemaking (NPRM)
arises, in part, as a result of the
testimony and comments submitted in
Oversight Hearing on Demurrage &
Accessorial Charges, Docket No. EP 754.
The Board commenced that docket by
notice served on April 8, 2019,
following concerns expressed by users
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SUMMARY:
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of the freight rail network (rail users) 1
and other stakeholders about recent
changes to demurrage and accessorial
tariffs administered by Class I carriers,
which the Board was actively
monitoring. Specifically, in Oversight
Hearing on Demurrage & Accessorial
Charges (April 2019 Notice), EP 754,
slip op. at 2 (STB served Apr. 8, 2019),
the Board announced a May 22, 2019
public hearing, which was later
extended to include a second day; 2
directed Class I carriers to appear at the
hearing; and invited shippers, receivers,
third-party logistics providers, and other
interested parties to participate. The
notice also directed Class I carriers to
provide specific information on their
demurrage and accessorial rules and
charges and required all hearing
participants to submit written
testimony, both in advance of the
hearing. April 2019 Notice, EP 754, slip
op. at 2–4. Comments were also
accepted from interested persons who
would not be appearing at the hearing.
The Board received over 90 pre-hearing
submissions from interested parties;
heard testimony over a two-day period
from 12 panels composed of,
collectively, over 50 participants; and
received 36 post-hearing comments.
The purpose of the hearing was ‘‘to
receive information from railroads,
shippers, receivers, third-party logistics
providers, and other interested parties
about their recent experiences with
demurrage and accessorial charges,
including matters such as reciprocity,
commercial fairness, the impact of
operational changes on such charges,
capacity issues, and effects on network
fluidity.’’ April 2019 Notice, EP 754,
slip op. at 2. The April 2019 Notice
invited stakeholders to comment on,
among other things, whether the tools
available to manage demurrage and
accessorial charges provide adequate
data for shippers and receivers to
evaluate whether charges are being
properly assessed and to dispute the
charges when necessary. Id. at 3.
Participants in the hearing included
railroads and rail users. Among the
participants were third-party
intermediaries, commonly known as
warehousemen or terminal operators,3
which accept freight cars for loading
and unloading but have no property
1 As used in this proposed rule, the term ‘‘rail
users’’ broadly means any person that receives rail
cars for loading or unloading, regardless of whether
that person has a property interest in the freight
being transported.
2 Oversight Hearing on Demurrage & Accessorial
Charges, EP 754, slip op. at 1 (STB served May 3,
2019).
3 This NPRM uses the terms ‘‘warehousemen’’ or
‘‘third-party intermediaries’’ to refer to these
entities.
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interest in the freight being transported.
In oral testimony at the hearing and
written submissions before and after the
hearing, shippers and warehousemen
(or their representatives) expressed
dissatisfaction with their recent
experiences with demurrage and
accessorial charges. As is pertinent to
this NPRM, parties from a broad range
of industries raised concerns about
demurrage billing practices, including
issues with the receipt of invoices with
insufficient information and issues
arising from the experiences of
warehousemen following the Board’s
adoption of the final rule in Demurrage
Liability (Demurrage Liability Final
Rule), EP 707 (STB served April 11,
2014), codified at 49 CFR part 1333.
The Board now proposes rules
intended to address several issues with
demurrage billing practices raised by
many stakeholders. Specifically, the
Board proposes: (1) Certain
requirements regarding Class I carriers’
demurrage invoices, such as minimum
information to be included on or with
those invoices, and (2) a requirement
that Class I carriers send any demurrage
invoice related to transportation
involving a warehouseman to the
shipper if the shipper and
warehouseman have agreed to that
arrangement and have so notified the
rail carrier. The Board also invites
comments on this proposal and any
other measures that might be
appropriate to help further clarify
demurrage billing practices; to ensure
that the party responsible for causing
the delays that result in demurrage
charges is the party that pays for such
charges; and to promote timely
resolution of related disputes.
Background
Demurrage is subject to Board
regulation under 49 U.S.C. 10702,
which requires railroads to establish
reasonable rates and transportationrelated rules and practices, and under
49 U.S.C. 10746, which requires
railroads to compute demurrage charges,
and establish rules related to those
charges, in a way that will fulfill
national needs related to freight car use
and distribution and maintenance of an
adequate car supply.4 Demurrage is a
charge that both compensates rail
carriers for the expense incurred when
rail cars are detained beyond a specified
period of time (i.e., ‘‘free time’’) for
loading and unloading and serves as a
4 In Demurrage Liability Final Rule, EP 707, slip
op. at 15–16, the Board clarified that private car
storage is included in the definition of demurrage
for purposes of the demurrage rules established in
that decision. The Board uses the same definition
of demurrage for purposes of this NPRM.
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penalty for undue car detention to
encourage the efficient use of rail cars
in the rail network. See 49 CFR 1333.1;
see also 49 CFR pt. 1201, category 106.5
In the simplest demurrage case, a
railroad assesses demurrage on the
consignor (the shipper of the goods) for
delays in loading cars at origin and on
the consignee (the receiver of the goods)
for delays in unloading cars and
returning them to the rail carrier at
destination.6 Demurrage can also,
however, involve warehousemen that
accept freight cars for loading and
unloading but have no property interest
in the freight being transported.
Warehousemen are not typically owners
of property being shipped (even though,
by accepting the cars, they could be in
a position to facilitate or impede car
supply).
In addition to the concerns the Board
heard about the adequacy of railroad
demurrage invoices generally, the Board
also heard—before, during, and after the
hearing in Docket No. EP 754—concerns
specific to warehousemen involving
application of the Board’s regulations at
49 CFR part 1333, which were adopted
in 2014 in Demurrage Liability, Docket
No. EP 707. Below, the Board provides
a brief background of the rules at part
1333, summarizes pertinent comments
relating to invoice issues, and proposes
new regulations addressing these issues.
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Overview of Docket No. EP 707
Before 2014, agency precedent had
held that a tariff could not lawfully
impose demurrage charges on a
warehouseman that was not the owner
of the freight, that was not named as a
consignor or consignee in the bill of
lading, and that was not otherwise party
to the contract of transportation.7 In the
5 Accessorial charges are not specifically defined
by statute or regulation but are generally
understood to include charges other than line-haul
and demurrage charges. See Revisions to Arbitration
Procedures, EP 730, slip op. at 7–8 (STB served
Sept. 30, 2016) (describing a variety of charges that
are considered accessorial charges).
6 As the Board noted in Demurrage Liability Final
Rule, EP 707, slip op. at 2 n.2, the Interstate
Commerce Act, as amended by the ICC Termination
Act of 1995 (ICCTA), Pub. L. 104–88, 109 Stat. 803
(1995), does not define ‘‘consignor’’ or ‘‘consignee,’’
though both terms are commonly used in the
demurrage context. Black’s Law Dictionary defines
‘‘consignor’’ as ‘‘[o]ne who dispatches goods to
another on consignment,’’ and ‘‘consignee’’ ‘‘as
[o]ne to whom goods are consigned.’’ Id. (citing
Black’s Law Dictionary 327 (8th ed. 2004)). The
Federal Bills of Lading Act defines these terms in
a similar manner. Demurrage Liability Final Rule,
EP 707, slip op. at 2 n.2 (citing 49 U.S.C. 80101(1)
& (2)).
7 See Responsibility for Payment of Detention
Charges, E. Cent. States (Eastern Central), 335 I.C.C.
537, 541 (1969) (involving liability for detention,
the motor carrier equivalent of demurrage), aff’d,
Middle Atl. Conference v. United States (Middle
Atlantic), 353 F. Supp. 1109, 1114–15 (D.D.C.
1972).
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years prior to the Board instituting the
proceeding in Docket No. EP 707,
questions arose in the courts as to who
should bear liability for demurrage
charges when a warehouseman that
detains rail cars for too long is named
as consignee in the bill of lading, but
asserts either that it did not know of its
consignee status or that it affirmatively
asked the shipper not to name it
consignee. In instituting the proceeding
in Docket No. EP 707, the Board noted
that there was a split among the U.S.
courts of appeals regarding that issue.8
The Board reviewed those court
decisions and determined that it needed
to reexamine its policies to assist in
providing clarification.
After reviewing the comments
responding to an advance notice of
proposed rulemaking and an NPRM, the
Board issued its final rule in 2014.
Demurrage Liability Final Rule, EP 707.
Consistent with the NPRM, the final
rule established that a person receiving
rail cars for loading or unloading that
detains the cars beyond the free time
provided in the rail carrier’s governing
tariff may be held liable for demurrage
if that person had actual notice, prior to
rail car placement, of the demurrage
tariff establishing such liability. Id. at 1,
17, 25.9 Under the final rule, the
identification of a party in the bill of
lading no longer controls; as the Board
explained, it was ‘‘adopting a conductbased approach to demurrage in lieu of
one based on the bill of lading.’’ Id. at
15. The Board explained that its rule
was ‘‘based on the theory that
responsibility for demurrage should be
placed on the party in the best position
to expedite the loading or unloading of
rail cars at origin or destination.’’ Id. at
8. In response to comments asserting
that ‘‘warehousemen have no control
over car movement as a result of
railroad actions at the time of delivery
or release,’’ the Board said that
‘‘warehousemen are free to bring a
complaint to the Board if they believe
that they have been unfairly charged
demurrage.’’ Id. at 8–9. In response to
comments asserting that the actions of
shippers might also deprive
warehousemen of control over car
movement, the Board said that ‘‘these
rules should encourage warehousemen
and shippers to address demurrage
8 Demurrage Liability, EP 707, slip op. at 4–5
(STB served Dec. 6, 2010) (citing CSX Transp. Co.
v. Novolog Bucks Cty., 502 F.3d 247 (3d Cir. 2007)
& Norfolk S. Ry. v. Groves, 586 F.3d 1273 (11th Cir.
2009)).
9 The Board also clarified that the provisions of
49 U.S.C. 10743, titled ‘‘Liability for payment of
rates,’’ apply to rail carriers’ line-haul rates but not
to rail carriers’ charges for demurrage. Demurrage
Liability Final Rule, EP 707, slip op. at 10.
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55115
liability in their commercial
arrangements.’’ Id. at 9.
Overview of Comments in Docket No. EP
754 Regarding Adequacy of Demurrage
Invoices
Shippers, warehousemen, and
railroads provided comments and/or
testimony in Docket No. EP 754
regarding the adequacy of demurrage
invoices generated by Class I carriers.
Shippers (or their representatives)
stated repeatedly that invoices from
some rail carriers often lack information
needed to assess the validity of
demurrage charges. For example, the
National Coal Transportation
Association (NCTA) said that ‘‘invoices
contain woefully inadequate
documentation specific to the charges to
allow assessment and evaluation of [the]
validity of the charges,’’ which
‘‘increases the burden on the [s]hipper
to document and track any remotely
possible situation that might result in
charges to allow a means for identifying
and disputing charges applied.’’ NCTA
Comments 8–9, May 8, 2019, Oversight
Hearing on Demurrage & Accessorial
Charges, EP 754. The National
Industrial Transportation League (NITL)
said that ‘‘some railroads have failed to
include both the date and time that a car
was constructively placed in demurrage
or storage invoices, which also hinders
efficient dispute resolution.’’ NITL
Comments 8, May 8, 2019, Oversight
Hearing on Demurrage & Accessorial
Charges, EP 754. The American
Chemistry Council (ACC) asked the
Board to ‘‘establish minimum
information requirements that enable
shippers to audit demurrage and storage
charges.’’ ACC Comments 9, May 8,
2019, Oversight Hearing on Demurrage
& Accessorial Charges, EP 754.
Likewise, several warehousemen (or
their representatives) expressed
dissatisfaction with the adequacy of
demurrage invoices. Kinder Morgan
Terminals (Kinder Morgan), a terminal
operator, and the International Liquid
Terminals Association (ILTA), an
organization representing third-party
intermediary liquid terminal operators,
said in their written submissions and
oral testimony that the demurrage
invoices received from rail carriers do
not include sufficient detail or
information, making it difficult to
challenge the charges or seek
compensation from shippers when
appropriate.
For example, in its May 8, 2019 written
testimony, ILTA stated: Most terminals
include clauses in their contracts requiring
shippers to pay any demurrage fees that were
incurred by no fault of the terminal
operators. However, terminal operators now
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often find they are unable to verify the basic
validity of demurrage charges levied on them
by the railroad, making it impractical to
compel shippers to reimburse them for the
charges.
The demurrage invoices provided by the
railroads to terminals include railcars related
to numerous shippers. The limited detail
provided makes it difficult or even
impossible to determine which specific
railcars and shippers were at issue in each
case of demurrage. The individual shippers
are often not listed, and the railcars and
commodities are frequently in error. While
the railroads have access to the appropriate
information related to the demurrage charges,
the terminal—lacking a contractual
relationship with the railroad—has no access
to information it would need to confirm or
dispute the charges.
ILTA Comments 1–2, May 8, 2019,
Oversight Hearing on Demurrage &
Accessorial Charges, EP 754; see also
Oral Test. of Kathryn Clay, Tr. of
Oversight Hr’g on Demurrage &
Accessorial Charges (Hr’g Tr.) 792, May
23, 2019, Oversight Hearing on
Demurrage & Accessorial Charges, EP
754 (‘‘in practice, . . . we lack the
detailed information to make clear that
that charge belongs to that shipper, of
the many shippers that might be on the
terminal.’’).
Similarly, Kinder Morgan stated that
demurrage invoices issued to
warehousemen are inadequate to allow
warehousemen to allocate costs to
shippers:
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The railroads send numerous pages of
computer-generated invoices each month.
The invoices are not separated by railroad
customer, and in fact do not identify the
individual shippers associated with the
shipment, significantly impeding Kinder
Morgan’s ability to orderly review and
attempt to pass through charges to our
responsible customers. Reviewing each of the
numerous line items for billing and car errors
imposes significant costs and burdens on
receivers for tariff compliance, review, and
objection. Moreover, to adequately review the
invoices, a party receiving the bills needs
additional train movement and other traffic
data which the railroads do not make public.
Kinder Morgan Comments 17–18, May
8, 2019, Oversight Hearing on
Demurrage & Accessorial Charges, EP
754.
Rail carriers generally asserted that
their customers have access to the
information they need to assess the
basis of demurrage charges, either in the
invoices or in other tools that the rail
carriers offer. For example, CSX
Transportation, Inc. (CSXT), stated that
it ‘‘does not have the current technology
in place’’ to provide the date and time
of constructive placement on individual
invoices but instead makes the
information available through its
ShipCSX tool. CSXT Suppl. 12, June 6,
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2019, Oversight Hearing on Demurrage
& Accessorial Charges, EP 754. CSXT
added, however, that it ‘‘recognizes the
value of providing this information on
invoices’’ and is ‘‘actively exploring the
feasibility of adding placement times to
invoices.’’ Id. at 12–13. Similarly, BNSF
Railway Company (BNSF) said that its
Customer Demurrage Management Tool
permits customers to see ‘‘underlying
operational details’’ of demurrage
charges ‘‘such as time of actual and
constructive placement.’’ BNSF
Comments 6, May 8, 2019, Oversight
Hearing on Demurrage & Accessorial
Charges, EP 754.
Overview of Comments Regarding
Issuance of Demurrage Invoices Directly
to Shippers Instead of Warehousemen
The warehousemen (or their
representatives) also addressed the
circumstances under which, in their
view, a rail carrier should bill shippers
directly for demurrage without requiring
warehousemen to assume responsibility
for any charges left unpaid by the
shipper. Some cited the regulations
previously adopted by the Board in
Docket No. EP 707 as the source of their
inability to effectively address the
problems described in their
submissions.
Kinder Morgan asked the Board to
clarify that, if requested by a shipper
and warehouseman, a rail carrier ‘‘shall
agree to bill the shipper directly for
demurrage, and without requiring the
[warehouseman] to assume
responsibility for any unpaid demurrage
assessments as a condition of such
agreement.’’ Kinder Morgan Comments
4, 19, May 8, 2019, Oversight Hearing
on Demurrage & Accessorial Charges,
EP 754. Kinder Morgan characterizes
this as ‘‘an important matter that has
effectively gridlocked reasonable
discussion and resolution of individual
disputes.’’ Id. at 4. After the hearing,
Kinder Morgan sent letters to each of the
Class I carriers asking them to agree
voluntarily ‘‘that, if requested by a
shipper and Kinder Morgan, the railroad
will (i) provide separate invoices for
each shipper that controls a railcar on
which a demurrage charge is sought to
be assessed, and (ii) agree to bill the
shipper directly for demurrage, without
requiring Kinder Morgan to assume
responsibility for any unpaid demurrage
assessments as a condition of such
agreement.’’ Kinder Morgan Comments
2, Attach. 2, June 6, 2019, Oversight
Hearing on Demurrage & Accessorial
Charges, EP 754.
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In response to Kinder Morgan’s
letters,10 some of the rail carriers
expressed a willingness to bill the
shipper directly, but none said that they
would do so without requiring Kinder
Morgan to assume responsibility for
unpaid amounts. For example, BNSF
said that it already honors Kinder
Morgan’s request to bill shippers
directly, but it ‘‘looks to Kinder Morgan
as the receiving facility for payment.’’
Kinder Morgan Comments, Attach. 3 at
1–2, June 6, 2019, Oversight Hearing on
Demurrage & Accessorial Charges, EP
754.11 Similarly, CN explained that it
has been working with Kinder Morgan
to explore whether such agreements
were ‘‘feasible,’’ but in the ‘‘few
instances where Kinder Morgan’s
smaller customers express interest,
Kinder Morgan refused CN’s request
that Kinder Morgan be responsible in
the event its customer did not pay the
demurrage invoice.’’ Id., Attach. 3 at 13.
Moreover, several of the rail carriers
indicated that there are downsides to
Kinder Morgan’s proposal. For example,
BNSF said that ‘‘[p]arsing out which
bills go to which shippers/Kinder
Morgan facilities is a highly manual job
for BNSF personnel’’ that BNSF has
‘‘undertaken in good faith and in an
effort to work with Kinder Morgan and
Kinder Morgan’s customers.’’ Id.,
Attach. 3 at 1. KCS said that Kinder
Morgan’s ‘‘requested change involves
multiple parties and may result in
complications to other parties beyond a
specific shipper and Kinder Morgan.’’
Id., Attach. 3 at 17. CN cast doubt on the
willingness of most shippers to agree to
direct billing, noting that it had
explored this option with Kinder
Morgan and its shippers, but ‘‘[d]espite
the efforts of the parties, most of Kinder
Morgan’s customers either refused or
did not respond.’’ Id., Attach. 3 at 13.
ILTA also argued that direct billing of
shippers is a possible solution, but it
said that terminal operators, shippers,
10 Responses from BNSF, Canadian National
Railway Company (CN), Canadian Pacific, CSXT,
and Kansas City Southern Railway Company (KCS)
are attached, as Attachment 3, to Kinder Morgan’s
comment dated June 6, 2019 in Docket No. EP 754.
Union Pacific Railroad Company (UP) filed its
response to Kinder Morgan in Docket No. EP 754
on June 6, 2019 (filing ID 247898).
11 BNSF’s letter added:
From February 2016 to May 2019, at Kinder
Morgan’s request, BNSF billed Kinder Morgan
shippers approximately $3.4M out of a total of
approximately $5.4M in demurrage charges
incurred at Kinder Morgan terminals; the remaining
$2M in charges were invoiced directly to Kinder
Morgan entities who presumably own the receiving
locations, and those Kinder Morgan entities paid
$1.96M of the charges.
Kinder Morgan Comments, Attach. 3 at 1, June 6,
2019, Oversight Hearing on Demurrage &
Accessorial Charges, EP 754.
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and railroads had been unable to reach
an agreement along these lines:
In other cases, terminal operators have
joined with shipping customers in asking the
railroads to return to the previous practice of
assessing demurrage charges to the shipping
customer, with whom they have a direct
contractual relationship. Unfortunately, to
our knowledge, none of these negotiations
have met with success.
ILTA Comments 2, May 8, 2019,
Oversight Hearing on Demurrage &
Accessorial Charges, EP 754. At the
hearing, ILTA expressed the view that
‘‘the shipping community would
welcome a return’’ to direct billing of
shippers, adding: ‘‘I know that our
terminal members that have gone to
their shippers and have asked them,
would you go with us to the railroad
and ask them to return to the practice
of billing directly, when asked [the
shippers] have been willing to do that.’’
Oral Test. of Kathryn Clay, Hr’g Tr. 800,
May 23, 2019, Oversight Hearing on
Demurrage & Accessorial Charges, EP
754.
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Proposed Changes
The Board proposes two changes to its
existing demurrage regulations. First,
the Board proposes certain requirements
regarding Class I carriers’ demurrage
invoices, such as minimum information
to be included on or with those
invoices, that would enable invoice
recipients to verify the validity of the
demurrage charges; that would permit
shippers and warehousemen to properly
allocate demurrage responsibility
amongst themselves; and that would
assist shippers and receivers in
determining how to modify their
behavior to encourage the efficient use
of rail assets, thereby fulfilling the
purpose of demurrage. Second, the
Board proposes a requirement for Class
I carriers that if a shipper and
warehouseman agree that the shipper
should be responsible for paying
demurrage invoices, the rail carrier
must, upon receiving notice of that
agreement, send the invoices directly to
the shipper, and not require the
warehouseman to guarantee payment.
A. Requirements for Demurrage Invoices
The overarching purpose of
demurrage is to encourage the efficient
use of rail assets (both equipment and
track) by holding rail users accountable
when their actions or operations use
those resources beyond a specified
period of time. See, e.g., Pa. R.R. v.
Kittanning Iron & Steel Mfg. Co., 253
U.S. 319, 323 (1920) (‘‘The purpose of
demurrage charges is to promote car
efficiency by penalizing undue
detention of cars.’’). If demurrage
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invoices are so vague that they
effectively preclude shippers from
determining what happened, then
shippers are unable to challenge the
invoices if they believe the demurrage
charges were improper or to take
appropriate actions to avoid future
demurrage charges if they were
responsible for the delays.
The same holds true for
warehousemen. Warehousemen, which
typically work with multiple shippers,
argued in Docket Nos. EP 707 and EP
754 that they should be able to pass the
costs on to shippers (without resorting
to litigation) when the shippers were the
cause of the delay.12 In issuing the final
rule in EP 707, the Board encouraged
warehousemen and shippers to address
demurrage liability in their commercial
arrangements (which, the Board notes,
would enable the party responsible for
the delay to modify its actions).
Demurrage Liability Final Rule, EP 707,
slip op. at 9 (‘‘[w]ith respect to actions
by shippers, these rules should
encourage warehousemen and shippers
to address demurrage liability in their
commercial arrangements’’). Yet, if
railroad billing practices effectively
preclude the warehouseman from
knowing which rail cars were involved
or otherwise determining the cause for
the demurrage charge, the responsible
party may not be incentivized to modify
its actions, and the demurrage charges
may not achieve their purpose.
Accordingly, the Board proposes a
requirement applicable to Class I
carriers that the following minimum
information be provided on or with any
demurrage invoices: 13
• The unique identifying information
(e.g., reporting marks and number) of
each car involved;
• The following shipment
information, where applicable:
12 See, e.g., Kinder Morgan Comments 9, Aug. 24,
2012, Demurrage Liability, EP 707 (arguing that the
rule would make railroads more likely to bill
warehousemen for demurrage ‘‘even when the
shipper is the party at fault’’); ILTA Comments 4,
Aug. 24, 2012, Demurrage Liability, EP 707 (arguing
that the rule would be inconsistent with the
principle that ‘‘[t]he party that causes the delay
should be the party that is held liable for payment
of the demurrage charge’’); Kinder Morgan
Comments 11–12, May 8, 2019, Oversight Hearing
on Demurrage & Accessorial Charges, EP 754
(providing an example of a railroad billing Kinder
Morgan even though, according to Kinder Morgan,
the shipper was responsible for the delay); ILTA
Comments 1, May 8, 2019, Oversight Hearing on
Demurrage & Accessorial Charges, EP 754 (arguing
that the rule makes it ‘‘impractical to compel
shippers to reimburse’’ warehousemen for
demurrage charges).
13 The Board invites comment on the extent to
which other billing or supply chain visibility tools
or platforms (other than an invoice or
documentation accompanying an invoice) that
provide rail users with access to this information
would satisfy this requirement.
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55117
Æ The date the waybill was created;
Æ The status of each car as loaded or
empty;
Æ The commodity being shipped (if
the car is loaded);
Æ The identity of the shipper,
consignee, and/or care-of party, as
applicable;
Æ The origin station and state of the
shipment;
• The dates and times of (1) actual
placement of each car, (2) constructive
placement of each car (if applicable and
different from actual placement), (3)
notification of constructive placement to
the shipper, consignee, or third-party
intermediary (if applicable), and (4)
release of each car; and
• The number of credits and debits
attributable to each car (if applicable). In
addition, the Board proposes that prior
to sending a demurrage invoice, Class I
carriers shall take appropriate action to
ensure that the demurrage charges are
accurate and warranted,14 consistent
with the purpose of demurrage.
These proposed requirements are
intended to ensure that the recipients of
demurrage invoices will be provided
sufficient information to readily assess
the validity of those charges without
having to undertake an unreasonable
effort to gather information that can be
provided by the railroad in the first
instance, to properly allocate demurrage
responsibility, and to modify their
behavior if their own actions led to the
demurrage charges.15 The Board expects
that rail carriers have access to this
information because it is used in the
ordinary course of business.
The Board does not propose at this
time to require Class II or Class III
14 Shippers and receivers have raised concerns
about demurrage charges that are difficult, timeconsuming, and costly to dispute; invoices that
include inaccurate information; and erroneous
invoices that are issued even when the tariff
expressly provides for relief or the rail carrier has
acknowledged its responsibility for the problem.
See, e.g., NCTA Comments 8–9, May 8, 2019,
Oversight Hearing on Demurrage & Accessorial
Charges, EP 754; NITL Comments 8, May 8, 2019,
Oversight Hearing on Demurrage & Accessorial
Charges, EP 754; Packaging Corporation of America
Comments 4–5,7–8, May 8, 2019, Oversight Hearing
on Demurrage & Accessorial Charges, EP 754;
Brainerd Chemical Company Comments 4, May 8,
2019, Oversight Hearing on Demurrage &
Accessorial Charges, EP 754; International Paper
Comments 4, May 7, 2019, Oversight Hearing on
Demurrage & Accessorial Charges, EP 754.
15 The Board notes that ‘‘[w]here a railroad has
initiated a proceeding to collect assessed demurrage
charges, it has the burden of proof and therefore
must provide evidence to establish actual or
constructive dates of car placement and release and
to show how the assessed charges were computed.’’
Utah Cent. Ry.—Pet. for Declaratory Order—Kenco
Logistic Servs., LLC, FD 36131, slip op. at 6 n.13
(STB served Mar. 20, 2019) (citing R.R. Salvage &
Restoration, Inc. —Pet. for Declaratory Order—
Reasonableness of Demurrage Charges, NOR 42102
et al., slip op. at 6 (STB served July 20, 2010)).
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carriers to comply with the
requirements for demurrage invoices
described above, as the issues identified
before, during, and after the hearing
predominantly pertained to Class I
carriers, and given that any compliance
costs may be more difficult for some
smaller rail carriers. Should the rule be
adopted, the Board would strongly
encourage Class II and Class III carriers
to comply with these requirements to
the extent they are capable of doing so.
The Board invites comment on this
proposal, including the exclusion of
Class II and Class III carriers. The Board
also specifically invites comment on
whether there is additional information
that rail carriers could reasonably
provide on or with demurrage invoices
and that would enable recipients to
more effectively evaluate those invoices.
khammond on DSKJM1Z7X2PROD with PROPOSALS
B. Issuing Demurrage Invoices Directly
to Shippers Instead of Warehousemen
The Board also proposes a
requirement that serving Class I carriers
send demurrage invoices directly to the
shipper instead of the warehouseman if
the shipper and warehouseman agree to
such an arrangement and notify the rail
carrier of the agreement. As noted
above, the Board’s rules at part 1333,
adopted in Demurrage Liability Final
Rule, EP 707, reflect the view that
demurrage charges should be borne by
the party responsible for the delay,
which, in some cases, may be the
shipper rather than the warehouseman,
as the Board was informed during the
EP 754 proceeding. But the Board also
notes that warehousemen and shippers
are in the best position to determine
which party should bear responsibility
for demurrage charges, and they should
be able to make agreements for payment
of demurrage charges that reflect this
determination. Imposing the charges on
the responsible party would incentivize
that party to modify its actions in a way
that promotes the efficient use of rail
assets, thereby fulfilling the purpose of
demurrage. Because such arrangements
better effectuate the purpose of
demurrage, the Board proposes a
requirement that Class I carriers send
demurrage invoices to the shipper when
the shipper and warehouseman agree to
such an arrangement and inform the rail
carrier of the agreement. When an
invoice is sent to the shipper rather than
the warehouseman, the railroad may not
require the warehouseman to guarantee
payment.16
16 The shipper is, after all, the party shown on the
bill of lading, and indeed the one that was
historically responsible for demurrage. The claim
that someone else should guarantee that shippers
pay their bills is unsound in law and policy.
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Although this proposed rule would
amend the Board’s current regulations
to require Class I carriers to issue
invoices to shippers and to treat
shippers as the ultimate guarantors of
payment (when the shipper and
warehouseman agree to that
arrangement and have so notified the
rail carrier), the Board points out that
rail carriers are already permitted to do
so under the current rule. Neither the
letter nor the purpose of the rules at part
1333 is inconsistent with a rail carrier
billing the shipper directly without
requiring the warehouseman to assume
responsibility for any unpaid
demurrage. The rule adopted in Docket
No. EP 707 states, in permissive terms,
that parties who receive cars ‘‘may be
held liable for demurrage,’’ see 49 CFR
1333.3 (emphasis added), and the Board
expressly stated in the final rule that the
demurrage liability rules promulgated in
that docket ‘‘are default rules only,
meant to govern demurrage in the
absence of a privately negotiated
contract.’’ Demurrage Liability Final
Rule, EP 707, slip op. at 25.
For the same reasons described above
regarding the requirements for
demurrage invoices, the Board does not
propose at this time to require Class II
or Class III carriers to comply with the
requirement that the rail carrier must
bill the shipper when the shipper and
warehouseman have agreed to that
arrangement and have so notified the
rail carrier. The Board invites comment
on this proposal, including the
exclusion of Class II and Class III
carriers.
Regulatory Flexibility Act
The Regulatory Flexibility Act of 1980
(RFA), 5 U.S.C. 601–612, generally
requires a description and analysis of
new rules that would have a significant
economic impact on a substantial
number of small entities. In drafting a
rule, an agency is required to: (1) Assess
the effect that its regulation will have on
small entities, (2) analyze effective
alternatives that may minimize a
regulation’s impact, and (3) make the
analysis available for public comment.
Sections 601–604. In its notice of
proposed rulemaking, the agency must
either include an initial regulatory
flexibility analysis, section 603(a), or
certify that the proposed rule would not
have a ‘‘significant impact on a
substantial number of small entities,’’
section 605(b). Because the goal of the
RFA is to reduce the cost to small
entities of complying with federal
regulations, the RFA requires an agency
to perform a regulatory flexibility
analysis of small entity impacts only
when a rule directly regulates those
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Fmt 4702
Sfmt 4702
entities. The impact must be a direct
impact on small entities ‘‘whose
conduct is circumscribed or mandated’’
by the proposed rule. White Eagle Coop.
v. Conner, 553 F.3d 467, 480 (7th Cir.
2009).
The proposed rule would not have a
significant impact on a substantial
number of small entities within the
meaning of the RFA.17 The Board’s
proposal is limited to Class I carriers.
Accordingly, the Board certifies under 5
U.S.C. 605(b) that this rule would not
have a significant economic impact on
a substantial number of small entities as
defined by the RFA. A copy of this
decision will be served upon the Chief
Counsel for Advocacy, Office of
Advocacy, U.S. Small Business
Administration, Washington, DC 20416.
Paperwork Reduction Act
Pursuant to the Paperwork Reduction
Act, 44 U.S.C. 3501–3521, Office of
Management and Budget (OMB)
regulations at 5 CFR 1320.8(d)(3), and
the Appendix, the Board seeks
comments about the impact of the
revisions in the proposed rules to the
currently approved collection of the
Demurrage Liability Disclosure
Requirements (OMB Control No. 2140–
0021) regarding: (1) Whether the
collection of information, as modified in
the proposed rule and further described
below, is necessary for the proper
performance of the functions of the
Board, including whether the collection
has practical utility; (2) the accuracy of
the Board’s burden estimates; (3) ways
to enhance the quality, utility, and
clarity of the information collected; and
(4) ways to minimize the burden of the
collection of information on the
respondents, including the use of
automated collection techniques or
other forms of information technology,
when appropriate.
The proposed rules would modify the
hourly burden in the existing, approved
information collection in three ways.
First, the Board estimates that the
proposed invoicing requirements for
Class I carriers would add a total one17 For the purpose of RFA analysis, the Board
defines a ‘‘small business’’ as only including those
rail carriers classified as Class III carriers under 49
CFR 1201.1–1. See Small Entity Size Standards
Under the Regulatory Flexibility Act, EP 719 (STB
served June 30, 2016) (with Board Member
Begeman dissenting). Class III carriers have annual
operating revenues of $20 million or less in 1991
dollars ($39,194,876 or less when adjusted for
inflation using 2018 data). Class II carriers have
annual operating revenues of less than $250 million
in 1991 dollars ($489,935,956 when adjusted for
inflation using 2018 data). The Board calculates the
revenue deflator factor annually and publishes the
railroad revenue thresholds on its website. 49 CFR
1201.1–1; Indexing the Annual Operating Revenues
of R.Rs., EP 748 (STB served June 14, 2019).
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khammond on DSKJM1Z7X2PROD with PROPOSALS
time hour burden of 280 hours (or 93.3
hours per year as amortized over three
years) for Class I carriers because, in
most cases, those carriers would likely
need to modify their billing systems to
implement some or all of these changes.
Second, the requirement that Class I
carriers take appropriate action to
ensure that demurrage charges are
accurate and warranted would likely
require Class I carriers to establish or
modify appropriate demurrage invoicing
protocols and procedures and would
add an estimated total one-time hour
burden of 560 hours (or 186.7 hours per
year as amortized over three years).
Third, the Board estimates that the
proposed invoicing requirement that
Class I carriers invoice demurrage
involving a warehouseman to the
shipper if the shipper and
warehouseman have agreed to that
arrangement and have so notified the
rail carrier would add an annual hour
burden of 35 hours. All other hour
burdens would remain the same as
before this modification (except for an
update to the number of non-Class I
carriers and to the estimate of how
frequently Class I carriers choose to
update their demurrage tariffs, as
reflected in the Appendix). The Board
welcomes comment on the estimates of
actual time and costs of its proposed
invoicing requirements for Class I
carriers, as detailed below in the
Appendix. The proposed rules will be
submitted to OMB for review as
required under 44 U.S.C. 3507(d) and 5
CFR 1320.11. Comments received by the
Board regarding the information
collection will also be forwarded to
OMB for its review when the final rule
is published.
List of Subjects in 49 CFR Part 1333
Penalties, Railroads.
It is ordered:
1. The Board proposes to amend its
rules as set forth in this decision. Notice
of the proposed rules will be published
in the Federal Register.
2. Comments are due by November 6,
2019. Reply comments are due by
December 6, 2019.
3. A copy of this decision will be
served upon the Chief Counsel for
Advocacy, Office of Advocacy, U.S.
Small Business Administration.
4. This decision is effective on its
service date.
Decided: October 4, 2019.
By the Board, Board Members Begeman,
Fuchs, and Oberman.
Kenyatta Clay,
Clearance Clerk.
For the reasons set forth in the
preamble, the Surface Transportation
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16:07 Oct 11, 2019
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55119
Board proposes to amend part 1333 of
title 49, chapter X, of the Code of
Federal Regulations as follows:
Note: The following appendix will not
appear in the Code of Federal Regulations.
PART 1333—DEMURRAGE LIABILITY
Information Collection
1. The authority citation for part 1333
continues to read as follows:
Title: Demurrage Liability Disclosure
Requirements.
OMB Control Number: 2140–0021.
Form Number: None.
Type of Review: Revision of a
currently approved collection.
Summary: As part of its continuing
effort to reduce paperwork burdens, and
as required by the Paperwork Reduction
Act of 1995 (PRA), the Surface
Transportation Board (Board) gives
notice that it is requesting from the
Office of Management and Budget
(OMB) approval for the revision of the
currently approved information
collection, Demurrage Liability
Disclosure Requirements, OMB Control
No. 2140–0021. The requested revision
to the currently approved collection is
necessitated by this NPRM, which
proposes to add certain requirements
regarding Class I carriers’ demurrage
invoices, as well as to require that Class
I carriers directly bill the shipper if the
shipper and warehouseman agree to that
arrangement and have so notified the
rail carrier. All other information
collected by the Board in the currently
approved collection is without change
from its approval, except for an update
to the number of non-Class I carriers
(currently expiring on June 30, 2020).
Respondents: Freight railroads subject
to the Board’s jurisdiction.
Number of Respondents: 684
(including seven Class I [i.e., large]
carriers).
Estimated Time per Response: The
estimated hour burden for demurrage
liability notices for new customers
remains one hour per notice. The
modification to Class I carriers’
invoicing requirements sought here is
an estimated annualized one-time hour
burden—resulting from an adjustment
to the seven Class I carriers’ billing
systems—of 40 hours per railroad. The
modification requiring Class I carriers to
take appropriate action to ensure that
the demurrage invoices are accurate and
warranted is an estimated annualized
one-time hour burden of 80 hours. The
modification requiring Class I carriers to
invoice the shipper when the
warehouseman and the shipper reach
agreement for the serving Class I carrier
to invoice the shipper is an estimated
annual hour burden of five minutes per
agreement.
Frequency: On occasion. The existing
demurrage liability disclosure
requirement is triggered in two
circumstances: (1) When a shipper
■
Authority: 49 U.S.C. 1321
2. In § 1333.3, redesignate the existing
text as paragraph (a) and add paragraph
(b) to read as follows:
■
§ 1333.3
Who Is Subject to Demurrage
(a) * * *
(b) If the rail cars are delivered to a
third-party intermediary that has
reached an agreement with a shipper (or
consignee) that the shipper (or
consignee) shall be liable for demurrage,
then the serving Class I carrier shall,
after being notified of the agreement by
the shipper, consignee, or third-party
intermediary, bill the shipper (or
consignee) for demurrage charges
without requiring the third-party
intermediary to act as a guarantor,
unless and until a party to the
agreement notifies the serving Class I
carrier that the agreement is no longer
in force.
■ 3. Add § 1333.4 to read as follows:
§ 1333.4 Requirements for Demurrage
Invoices
(a) The following information shall be
provided on or with any demurrage
invoices issued by Class I carriers:
(1) The unique identifying
information (e.g., reporting marks and
number) of each car involved;
(2) The following information, where
applicable:
(i) The date the waybill was created;
(ii) The status of each car as loaded or
empty;
(iii) The commodity being shipped (if
the car is loaded);
(iv) The identity of the shipper,
consignee, and/or care-of party, as
applicable; and
(v) The origin station and state of the
shipment;
(3) The dates and times of:
(i) Actual placement of each car,
(ii) Constructive placement of each
car (if applicable and different from
actual placement),
(iii) Notification of constructive
placement to the shipper or third-party
intermediary (if applicable); and
(iv) Release of each car; and
(4) The number of credits and debits
attributable to each car (if applicable).
(b) Prior to sending a demurrage
invoice, Class I carriers shall take
appropriate action to ensure that the
demurrage charges are accurate and
warranted.
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Appendix
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Federal Register / Vol. 84, No. 199 / Tuesday, October 15, 2019 / Proposed Rules
initially arranges with a railroad for
transportation of freight pursuant to the
rail carrier’s tariff; or (2) when a rail
carrier changes the terms of its
demurrage tariff. The modification
sought here makes three changes to the
existing collection, as follows: (1) Onetime adjustments to the Class I railroads’
billing systems to (a) include
information on demurrage invoices, (b)
to take appropriate action to ensure that
the demurrage invoices are accurate and
warranted, and (2) make an annual
adjustment to the Class I carriers’
invoicing practices to invoice the
shipper when the warehouseman and
the shipper reach agreement for the
serving Class I carrier to invoice the
shipper (estimated 60 agreements).
Total Burden Hours (annually
including all respondents): 1,329.7
hours. Consistent with the existing,
approved information collection, Board
staff estimates that: (1) Seven Class I
carriers would each take on 15 new
customers each year (105 hours); (2)
each of the seven Class I carriers would
update its demurrage tariffs annually (7
hours); (3) 677 non-Class I carriers
would each take on one new customer
a year (677 hours); and (4) each of the
non-Class I carriers would update its
demurrage tariffs every three years
(225.7 hours annualized). For the
modification to Class I carriers’
invoicing requirements, Board staff
estimates that, on average, each Class I
rail carrier would have a one-time
burden of 40 hours (280 total hours).
Amortized over three years, this onetime burden equals 93.3 hours per year.
For the modification requiring each
Class I carrier to ensure that the
demurrage charges are accurate and
warranted, Board staff estimates that, on
average, each Class I carrier would have
a one-time burden of 80 hours (560 total
hours) to establish or modify
appropriate protocols and procedures.
Amortized over three years, this onetime burden equals 186.7 hours per
year. For the modification adding a
shipper invoicing requirement when a
warehouseman and shipper have agreed
and notified the Class I carrier, Board
staff estimates that annually seven Class
I carriers would each receive 60 requests
per year for additional shipper invoices
at five minutes per invoice (35 hours).
The total hour burdens are also set
forth in the table below.
TABLE—TOTAL BURDEN HOURS
[per year]
Existing
annual
burden
(hours)
khammond on DSKJM1Z7X2PROD with PROPOSALS
Respondents
Existing
annual
update burden
(hours)
Estimated
one-time
burden for
additional
data
(hours)
Estimated
one-time
burden for
appropriate
protocols
(hours)
Estimated
annual burden
for invoicing
agreement
(hours)
Total yearly
burden hours
7 Class I Carriers .....................................
677 Non-Class I Carriers .........................
105
677
7
225.7
93.3
........................
186.7
........................
35
........................
427
902.7
Totals ................................................
782
232.7
93.3
186.7
35
1,329.7
Total ‘‘Non-hour Burden’’ Cost: There
are no other costs identified because
filings are submitted electronically to
the Board.
Needs and Uses: Demurrage is a
charge that railroads assess their
customers for detaining rail cars beyond
a specified amount of time. It both
compensates railroads for expenses
incurred for that rail car and serves as
a penalty for undue car detention to
promote efficiency. Demurrage is
subject to the Board’s jurisdiction under
49 U.S.C. 10702 and section 10746.
A railroad and its customers may
enter into demurrage contracts without
providing notice, but, in the absence of
such contracts, demurrage will be
governed by the railroad’s demurrage
tariff. Under 49 CFR 1333.3, a railroad’s
ability to charge demurrage pursuant to
its tariff is conditional on its having
given, prior to rail car placement, actual
notice of the demurrage tariff to the
person receiving rail cars for loading
and unloading. Once a shipper receives
a notice as to a particular tariff,
additional notices are required only
when the tariff changes materially. The
parties rely on the information in the
demurrage tariffs to avoid demurrage
disputes, and the Board uses the tariffs
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16:07 Oct 11, 2019
Jkt 250001
to adjudicate demurrage disputes that
come before the agency.
As described in more detail above in
the NPRM, the Board is amending the
rules that apply to this collection of
demurrage disclosure requirements to
require the inclusion of additional
information in the billing invoices
issued by Class I carriers, to require
Class I carriers to ensure that demurrage
charges are accurate and warranted, and
to require Class I carriers to invoice the
shipper when the warehouseman and
the shipper reach agreement for the
Class I carrier to do so. The collection
by the Board of this information, and
the agency’s use of this information,
enables the Board to meet its statutory
duties.
[FR Doc. 2019–22202 Filed 10–11–19; 8:45 am]
BILLING CODE 4915–01–P
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DEPARTMENT OF THE INTERIOR
Fish and Wildlife Service
50 CFR Part 20
[Docket No. FWS–HQ–MB–2019–0004;
FF09M21200–189–FXMB1231099BPP0]
RIN 1018–BD89
Migratory Bird Hunting; Proposed
2020–21 Migratory Game Bird Hunting
Regulations (Preliminary) With
Requests for Indian Tribal Proposals;
Notice of Meetings
Fish and Wildlife Service,
Interior.
ACTION: Proposed rule; availability of
supplemental information.
AGENCY:
The U.S. Fish and Wildlife
Service (hereinafter the Service or we)
proposes to establish annual hunting
regulations for certain migratory game
birds for the 2020–21 hunting season.
We annually prescribe outside limits
(frameworks) within which States may
select hunting seasons. This proposed
rule provides the regulatory schedule,
announces the Service Migratory Bird
Regulations Committee (SRC) meetings,
describes the proposed regulatory
SUMMARY:
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Agencies
[Federal Register Volume 84, Number 199 (Tuesday, October 15, 2019)]
[Proposed Rules]
[Pages 55114-55120]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-22202]
-----------------------------------------------------------------------
SURFACE TRANSPORTATION BOARD
49 CFR Part 1333
[Docket No. FD EP 759]
Demurrage Billing Requirements
AGENCY: Surface Transportation Board.
ACTION: Notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: The Surface Transportation Board (STB or Board) proposes
changes to the Board's regulations governing demurrage liability.
Specifically, the Board proposes certain requirements regarding Class I
carriers' demurrage invoices, as well as a requirement that a Class I
carrier directly bill the shipper if the shipper and warehouseman agree
to that arrangement and have so notified the rail carrier.
DATES: Comments are due by November 6, 2019. Reply comments are due by
December 6, 2019.
ADDRESSES: Comments and replies may be filed with the Board either via
e-filing or in writing addressed to: Surface Transportation Board,
Attn: Docket No. EP 759, 395 E Street SW, Washington, DC 20423-0001.
Written comments and replies will be posted to the Board's website at
www.stb.gov.
FOR FURTHER INFORMATION CONTACT: Sarah Fancher at (202) 245-0355.
Assistance for the hearing impaired is available through the Federal
Relay Service at (800) 877-8339.
SUPPLEMENTARY INFORMATION: This notice of proposed rulemaking (NPRM)
arises, in part, as a result of the testimony and comments submitted in
Oversight Hearing on Demurrage & Accessorial Charges, Docket No. EP
754. The Board commenced that docket by notice served on April 8, 2019,
following concerns expressed by users of the freight rail network (rail
users) \1\ and other stakeholders about recent changes to demurrage and
accessorial tariffs administered by Class I carriers, which the Board
was actively monitoring. Specifically, in Oversight Hearing on
Demurrage & Accessorial Charges (April 2019 Notice), EP 754, slip op.
at 2 (STB served Apr. 8, 2019), the Board announced a May 22, 2019
public hearing, which was later extended to include a second day; \2\
directed Class I carriers to appear at the hearing; and invited
shippers, receivers, third-party logistics providers, and other
interested parties to participate. The notice also directed Class I
carriers to provide specific information on their demurrage and
accessorial rules and charges and required all hearing participants to
submit written testimony, both in advance of the hearing. April 2019
Notice, EP 754, slip op. at 2-4. Comments were also accepted from
interested persons who would not be appearing at the hearing. The Board
received over 90 pre-hearing submissions from interested parties; heard
testimony over a two-day period from 12 panels composed of,
collectively, over 50 participants; and received 36 post-hearing
comments.
---------------------------------------------------------------------------
\1\ As used in this proposed rule, the term ``rail users''
broadly means any person that receives rail cars for loading or
unloading, regardless of whether that person has a property interest
in the freight being transported.
\2\ Oversight Hearing on Demurrage & Accessorial Charges, EP
754, slip op. at 1 (STB served May 3, 2019).
---------------------------------------------------------------------------
The purpose of the hearing was ``to receive information from
railroads, shippers, receivers, third-party logistics providers, and
other interested parties about their recent experiences with demurrage
and accessorial charges, including matters such as reciprocity,
commercial fairness, the impact of operational changes on such charges,
capacity issues, and effects on network fluidity.'' April 2019 Notice,
EP 754, slip op. at 2. The April 2019 Notice invited stakeholders to
comment on, among other things, whether the tools available to manage
demurrage and accessorial charges provide adequate data for shippers
and receivers to evaluate whether charges are being properly assessed
and to dispute the charges when necessary. Id. at 3. Participants in
the hearing included railroads and rail users. Among the participants
were third-party intermediaries, commonly known as warehousemen or
terminal operators,\3\ which accept freight cars for loading and
unloading but have no property interest in the freight being
transported. In oral testimony at the hearing and written submissions
before and after the hearing, shippers and warehousemen (or their
representatives) expressed dissatisfaction with their recent
experiences with demurrage and accessorial charges. As is pertinent to
this NPRM, parties from a broad range of industries raised concerns
about demurrage billing practices, including issues with the receipt of
invoices with insufficient information and issues arising from the
experiences of warehousemen following the Board's adoption of the final
rule in Demurrage Liability (Demurrage Liability Final Rule), EP 707
(STB served April 11, 2014), codified at 49 CFR part 1333.
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\3\ This NPRM uses the terms ``warehousemen'' or ``third-party
intermediaries'' to refer to these entities.
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The Board now proposes rules intended to address several issues
with demurrage billing practices raised by many stakeholders.
Specifically, the Board proposes: (1) Certain requirements regarding
Class I carriers' demurrage invoices, such as minimum information to be
included on or with those invoices, and (2) a requirement that Class I
carriers send any demurrage invoice related to transportation involving
a warehouseman to the shipper if the shipper and warehouseman have
agreed to that arrangement and have so notified the rail carrier. The
Board also invites comments on this proposal and any other measures
that might be appropriate to help further clarify demurrage billing
practices; to ensure that the party responsible for causing the delays
that result in demurrage charges is the party that pays for such
charges; and to promote timely resolution of related disputes.
Background
Demurrage is subject to Board regulation under 49 U.S.C. 10702,
which requires railroads to establish reasonable rates and
transportation-related rules and practices, and under 49 U.S.C. 10746,
which requires railroads to compute demurrage charges, and establish
rules related to those charges, in a way that will fulfill national
needs related to freight car use and distribution and maintenance of an
adequate car supply.\4\ Demurrage is a charge that both compensates
rail carriers for the expense incurred when rail cars are detained
beyond a specified period of time (i.e., ``free time'') for loading and
unloading and serves as a
[[Page 55115]]
penalty for undue car detention to encourage the efficient use of rail
cars in the rail network. See 49 CFR 1333.1; see also 49 CFR pt. 1201,
category 106.\5\
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\4\ In Demurrage Liability Final Rule, EP 707, slip op. at 15-
16, the Board clarified that private car storage is included in the
definition of demurrage for purposes of the demurrage rules
established in that decision. The Board uses the same definition of
demurrage for purposes of this NPRM.
\5\ Accessorial charges are not specifically defined by statute
or regulation but are generally understood to include charges other
than line-haul and demurrage charges. See Revisions to Arbitration
Procedures, EP 730, slip op. at 7-8 (STB served Sept. 30, 2016)
(describing a variety of charges that are considered accessorial
charges).
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In the simplest demurrage case, a railroad assesses demurrage on
the consignor (the shipper of the goods) for delays in loading cars at
origin and on the consignee (the receiver of the goods) for delays in
unloading cars and returning them to the rail carrier at
destination.\6\ Demurrage can also, however, involve warehousemen that
accept freight cars for loading and unloading but have no property
interest in the freight being transported. Warehousemen are not
typically owners of property being shipped (even though, by accepting
the cars, they could be in a position to facilitate or impede car
supply).
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\6\ As the Board noted in Demurrage Liability Final Rule, EP
707, slip op. at 2 n.2, the Interstate Commerce Act, as amended by
the ICC Termination Act of 1995 (ICCTA), Pub. L. 104-88, 109 Stat.
803 (1995), does not define ``consignor'' or ``consignee,'' though
both terms are commonly used in the demurrage context. Black's Law
Dictionary defines ``consignor'' as ``[o]ne who dispatches goods to
another on consignment,'' and ``consignee'' ``as [o]ne to whom goods
are consigned.'' Id. (citing Black's Law Dictionary 327 (8th ed.
2004)). The Federal Bills of Lading Act defines these terms in a
similar manner. Demurrage Liability Final Rule, EP 707, slip op. at
2 n.2 (citing 49 U.S.C. 80101(1) & (2)).
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In addition to the concerns the Board heard about the adequacy of
railroad demurrage invoices generally, the Board also heard--before,
during, and after the hearing in Docket No. EP 754--concerns specific
to warehousemen involving application of the Board's regulations at 49
CFR part 1333, which were adopted in 2014 in Demurrage Liability,
Docket No. EP 707. Below, the Board provides a brief background of the
rules at part 1333, summarizes pertinent comments relating to invoice
issues, and proposes new regulations addressing these issues.
Overview of Docket No. EP 707
Before 2014, agency precedent had held that a tariff could not
lawfully impose demurrage charges on a warehouseman that was not the
owner of the freight, that was not named as a consignor or consignee in
the bill of lading, and that was not otherwise party to the contract of
transportation.\7\ In the years prior to the Board instituting the
proceeding in Docket No. EP 707, questions arose in the courts as to
who should bear liability for demurrage charges when a warehouseman
that detains rail cars for too long is named as consignee in the bill
of lading, but asserts either that it did not know of its consignee
status or that it affirmatively asked the shipper not to name it
consignee. In instituting the proceeding in Docket No. EP 707, the
Board noted that there was a split among the U.S. courts of appeals
regarding that issue.\8\ The Board reviewed those court decisions and
determined that it needed to reexamine its policies to assist in
providing clarification.
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\7\ See Responsibility for Payment of Detention Charges, E.
Cent. States (Eastern Central), 335 I.C.C. 537, 541 (1969)
(involving liability for detention, the motor carrier equivalent of
demurrage), aff'd, Middle Atl. Conference v. United States (Middle
Atlantic), 353 F. Supp. 1109, 1114-15 (D.D.C. 1972).
\8\ Demurrage Liability, EP 707, slip op. at 4-5 (STB served
Dec. 6, 2010) (citing CSX Transp. Co. v. Novolog Bucks Cty., 502
F.3d 247 (3d Cir. 2007) & Norfolk S. Ry. v. Groves, 586 F.3d 1273
(11th Cir. 2009)).
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After reviewing the comments responding to an advance notice of
proposed rulemaking and an NPRM, the Board issued its final rule in
2014. Demurrage Liability Final Rule, EP 707. Consistent with the NPRM,
the final rule established that a person receiving rail cars for
loading or unloading that detains the cars beyond the free time
provided in the rail carrier's governing tariff may be held liable for
demurrage if that person had actual notice, prior to rail car
placement, of the demurrage tariff establishing such liability. Id. at
1, 17, 25.\9\ Under the final rule, the identification of a party in
the bill of lading no longer controls; as the Board explained, it was
``adopting a conduct-based approach to demurrage in lieu of one based
on the bill of lading.'' Id. at 15. The Board explained that its rule
was ``based on the theory that responsibility for demurrage should be
placed on the party in the best position to expedite the loading or
unloading of rail cars at origin or destination.'' Id. at 8. In
response to comments asserting that ``warehousemen have no control over
car movement as a result of railroad actions at the time of delivery or
release,'' the Board said that ``warehousemen are free to bring a
complaint to the Board if they believe that they have been unfairly
charged demurrage.'' Id. at 8-9. In response to comments asserting that
the actions of shippers might also deprive warehousemen of control over
car movement, the Board said that ``these rules should encourage
warehousemen and shippers to address demurrage liability in their
commercial arrangements.'' Id. at 9.
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\9\ The Board also clarified that the provisions of 49 U.S.C.
10743, titled ``Liability for payment of rates,'' apply to rail
carriers' line-haul rates but not to rail carriers' charges for
demurrage. Demurrage Liability Final Rule, EP 707, slip op. at 10.
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Overview of Comments in Docket No. EP 754 Regarding Adequacy of
Demurrage Invoices
Shippers, warehousemen, and railroads provided comments and/or
testimony in Docket No. EP 754 regarding the adequacy of demurrage
invoices generated by Class I carriers.
Shippers (or their representatives) stated repeatedly that invoices
from some rail carriers often lack information needed to assess the
validity of demurrage charges. For example, the National Coal
Transportation Association (NCTA) said that ``invoices contain woefully
inadequate documentation specific to the charges to allow assessment
and evaluation of [the] validity of the charges,'' which ``increases
the burden on the [s]hipper to document and track any remotely possible
situation that might result in charges to allow a means for identifying
and disputing charges applied.'' NCTA Comments 8-9, May 8, 2019,
Oversight Hearing on Demurrage & Accessorial Charges, EP 754. The
National Industrial Transportation League (NITL) said that ``some
railroads have failed to include both the date and time that a car was
constructively placed in demurrage or storage invoices, which also
hinders efficient dispute resolution.'' NITL Comments 8, May 8, 2019,
Oversight Hearing on Demurrage & Accessorial Charges, EP 754. The
American Chemistry Council (ACC) asked the Board to ``establish minimum
information requirements that enable shippers to audit demurrage and
storage charges.'' ACC Comments 9, May 8, 2019, Oversight Hearing on
Demurrage & Accessorial Charges, EP 754.
Likewise, several warehousemen (or their representatives) expressed
dissatisfaction with the adequacy of demurrage invoices. Kinder Morgan
Terminals (Kinder Morgan), a terminal operator, and the International
Liquid Terminals Association (ILTA), an organization representing
third-party intermediary liquid terminal operators, said in their
written submissions and oral testimony that the demurrage invoices
received from rail carriers do not include sufficient detail or
information, making it difficult to challenge the charges or seek
compensation from shippers when appropriate.
For example, in its May 8, 2019 written testimony, ILTA stated:
Most terminals include clauses in their contracts requiring shippers
to pay any demurrage fees that were incurred by no fault of the
terminal operators. However, terminal operators now
[[Page 55116]]
often find they are unable to verify the basic validity of demurrage
charges levied on them by the railroad, making it impractical to
compel shippers to reimburse them for the charges.
The demurrage invoices provided by the railroads to terminals
include railcars related to numerous shippers. The limited detail
provided makes it difficult or even impossible to determine which
specific railcars and shippers were at issue in each case of
demurrage. The individual shippers are often not listed, and the
railcars and commodities are frequently in error. While the
railroads have access to the appropriate information related to the
demurrage charges, the terminal--lacking a contractual relationship
with the railroad--has no access to information it would need to
confirm or dispute the charges.
ILTA Comments 1-2, May 8, 2019, Oversight Hearing on Demurrage &
Accessorial Charges, EP 754; see also Oral Test. of Kathryn Clay, Tr.
of Oversight Hr'g on Demurrage & Accessorial Charges (Hr'g Tr.) 792,
May 23, 2019, Oversight Hearing on Demurrage & Accessorial Charges, EP
754 (``in practice, . . . we lack the detailed information to make
clear that that charge belongs to that shipper, of the many shippers
that might be on the terminal.'').
Similarly, Kinder Morgan stated that demurrage invoices issued to
warehousemen are inadequate to allow warehousemen to allocate costs to
shippers:
The railroads send numerous pages of computer-generated invoices
each month. The invoices are not separated by railroad customer, and
in fact do not identify the individual shippers associated with the
shipment, significantly impeding Kinder Morgan's ability to orderly
review and attempt to pass through charges to our responsible
customers. Reviewing each of the numerous line items for billing and
car errors imposes significant costs and burdens on receivers for
tariff compliance, review, and objection. Moreover, to adequately
review the invoices, a party receiving the bills needs additional
train movement and other traffic data which the railroads do not
make public.
Kinder Morgan Comments 17-18, May 8, 2019, Oversight Hearing on
Demurrage & Accessorial Charges, EP 754.
Rail carriers generally asserted that their customers have access
to the information they need to assess the basis of demurrage charges,
either in the invoices or in other tools that the rail carriers offer.
For example, CSX Transportation, Inc. (CSXT), stated that it ``does not
have the current technology in place'' to provide the date and time of
constructive placement on individual invoices but instead makes the
information available through its ShipCSX tool. CSXT Suppl. 12, June 6,
2019, Oversight Hearing on Demurrage & Accessorial Charges, EP 754.
CSXT added, however, that it ``recognizes the value of providing this
information on invoices'' and is ``actively exploring the feasibility
of adding placement times to invoices.'' Id. at 12-13. Similarly, BNSF
Railway Company (BNSF) said that its Customer Demurrage Management Tool
permits customers to see ``underlying operational details'' of
demurrage charges ``such as time of actual and constructive
placement.'' BNSF Comments 6, May 8, 2019, Oversight Hearing on
Demurrage & Accessorial Charges, EP 754.
Overview of Comments Regarding Issuance of Demurrage Invoices Directly
to Shippers Instead of Warehousemen
The warehousemen (or their representatives) also addressed the
circumstances under which, in their view, a rail carrier should bill
shippers directly for demurrage without requiring warehousemen to
assume responsibility for any charges left unpaid by the shipper. Some
cited the regulations previously adopted by the Board in Docket No. EP
707 as the source of their inability to effectively address the
problems described in their submissions.
Kinder Morgan asked the Board to clarify that, if requested by a
shipper and warehouseman, a rail carrier ``shall agree to bill the
shipper directly for demurrage, and without requiring the
[warehouseman] to assume responsibility for any unpaid demurrage
assessments as a condition of such agreement.'' Kinder Morgan Comments
4, 19, May 8, 2019, Oversight Hearing on Demurrage & Accessorial
Charges, EP 754. Kinder Morgan characterizes this as ``an important
matter that has effectively gridlocked reasonable discussion and
resolution of individual disputes.'' Id. at 4. After the hearing,
Kinder Morgan sent letters to each of the Class I carriers asking them
to agree voluntarily ``that, if requested by a shipper and Kinder
Morgan, the railroad will (i) provide separate invoices for each
shipper that controls a railcar on which a demurrage charge is sought
to be assessed, and (ii) agree to bill the shipper directly for
demurrage, without requiring Kinder Morgan to assume responsibility for
any unpaid demurrage assessments as a condition of such agreement.''
Kinder Morgan Comments 2, Attach. 2, June 6, 2019, Oversight Hearing on
Demurrage & Accessorial Charges, EP 754.
In response to Kinder Morgan's letters,\10\ some of the rail
carriers expressed a willingness to bill the shipper directly, but none
said that they would do so without requiring Kinder Morgan to assume
responsibility for unpaid amounts. For example, BNSF said that it
already honors Kinder Morgan's request to bill shippers directly, but
it ``looks to Kinder Morgan as the receiving facility for payment.''
Kinder Morgan Comments, Attach. 3 at 1-2, June 6, 2019, Oversight
Hearing on Demurrage & Accessorial Charges, EP 754.\11\ Similarly, CN
explained that it has been working with Kinder Morgan to explore
whether such agreements were ``feasible,'' but in the ``few instances
where Kinder Morgan's smaller customers express interest, Kinder Morgan
refused CN's request that Kinder Morgan be responsible in the event its
customer did not pay the demurrage invoice.'' Id., Attach. 3 at 13.
Moreover, several of the rail carriers indicated that there are
downsides to Kinder Morgan's proposal. For example, BNSF said that
``[p]arsing out which bills go to which shippers/Kinder Morgan
facilities is a highly manual job for BNSF personnel'' that BNSF has
``undertaken in good faith and in an effort to work with Kinder Morgan
and Kinder Morgan's customers.'' Id., Attach. 3 at 1. KCS said that
Kinder Morgan's ``requested change involves multiple parties and may
result in complications to other parties beyond a specific shipper and
Kinder Morgan.'' Id., Attach. 3 at 17. CN cast doubt on the willingness
of most shippers to agree to direct billing, noting that it had
explored this option with Kinder Morgan and its shippers, but
``[d]espite the efforts of the parties, most of Kinder Morgan's
customers either refused or did not respond.'' Id., Attach. 3 at 13.
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\10\ Responses from BNSF, Canadian National Railway Company
(CN), Canadian Pacific, CSXT, and Kansas City Southern Railway
Company (KCS) are attached, as Attachment 3, to Kinder Morgan's
comment dated June 6, 2019 in Docket No. EP 754. Union Pacific
Railroad Company (UP) filed its response to Kinder Morgan in Docket
No. EP 754 on June 6, 2019 (filing ID 247898).
\11\ BNSF's letter added:
From February 2016 to May 2019, at Kinder Morgan's request, BNSF
billed Kinder Morgan shippers approximately $3.4M out of a total of
approximately $5.4M in demurrage charges incurred at Kinder Morgan
terminals; the remaining $2M in charges were invoiced directly to
Kinder Morgan entities who presumably own the receiving locations,
and those Kinder Morgan entities paid $1.96M of the charges.
Kinder Morgan Comments, Attach. 3 at 1, June 6, 2019, Oversight
Hearing on Demurrage & Accessorial Charges, EP 754.
---------------------------------------------------------------------------
ILTA also argued that direct billing of shippers is a possible
solution, but it said that terminal operators, shippers,
[[Page 55117]]
---------------------------------------------------------------------------
and railroads had been unable to reach an agreement along these lines:
In other cases, terminal operators have joined with shipping
customers in asking the railroads to return to the previous practice
of assessing demurrage charges to the shipping customer, with whom
they have a direct contractual relationship. Unfortunately, to our
knowledge, none of these negotiations have met with success.
ILTA Comments 2, May 8, 2019, Oversight Hearing on Demurrage &
Accessorial Charges, EP 754. At the hearing, ILTA expressed the view
that ``the shipping community would welcome a return'' to direct
billing of shippers, adding: ``I know that our terminal members that
have gone to their shippers and have asked them, would you go with us
to the railroad and ask them to return to the practice of billing
directly, when asked [the shippers] have been willing to do that.''
Oral Test. of Kathryn Clay, Hr'g Tr. 800, May 23, 2019, Oversight
Hearing on Demurrage & Accessorial Charges, EP 754.
Proposed Changes
The Board proposes two changes to its existing demurrage
regulations. First, the Board proposes certain requirements regarding
Class I carriers' demurrage invoices, such as minimum information to be
included on or with those invoices, that would enable invoice
recipients to verify the validity of the demurrage charges; that would
permit shippers and warehousemen to properly allocate demurrage
responsibility amongst themselves; and that would assist shippers and
receivers in determining how to modify their behavior to encourage the
efficient use of rail assets, thereby fulfilling the purpose of
demurrage. Second, the Board proposes a requirement for Class I
carriers that if a shipper and warehouseman agree that the shipper
should be responsible for paying demurrage invoices, the rail carrier
must, upon receiving notice of that agreement, send the invoices
directly to the shipper, and not require the warehouseman to guarantee
payment.
A. Requirements for Demurrage Invoices
The overarching purpose of demurrage is to encourage the efficient
use of rail assets (both equipment and track) by holding rail users
accountable when their actions or operations use those resources beyond
a specified period of time. See, e.g., Pa. R.R. v. Kittanning Iron &
Steel Mfg. Co., 253 U.S. 319, 323 (1920) (``The purpose of demurrage
charges is to promote car efficiency by penalizing undue detention of
cars.''). If demurrage invoices are so vague that they effectively
preclude shippers from determining what happened, then shippers are
unable to challenge the invoices if they believe the demurrage charges
were improper or to take appropriate actions to avoid future demurrage
charges if they were responsible for the delays.
The same holds true for warehousemen. Warehousemen, which typically
work with multiple shippers, argued in Docket Nos. EP 707 and EP 754
that they should be able to pass the costs on to shippers (without
resorting to litigation) when the shippers were the cause of the
delay.\12\ In issuing the final rule in EP 707, the Board encouraged
warehousemen and shippers to address demurrage liability in their
commercial arrangements (which, the Board notes, would enable the party
responsible for the delay to modify its actions). Demurrage Liability
Final Rule, EP 707, slip op. at 9 (``[w]ith respect to actions by
shippers, these rules should encourage warehousemen and shippers to
address demurrage liability in their commercial arrangements''). Yet,
if railroad billing practices effectively preclude the warehouseman
from knowing which rail cars were involved or otherwise determining the
cause for the demurrage charge, the responsible party may not be
incentivized to modify its actions, and the demurrage charges may not
achieve their purpose.
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\12\ See, e.g., Kinder Morgan Comments 9, Aug. 24, 2012,
Demurrage Liability, EP 707 (arguing that the rule would make
railroads more likely to bill warehousemen for demurrage ``even when
the shipper is the party at fault''); ILTA Comments 4, Aug. 24,
2012, Demurrage Liability, EP 707 (arguing that the rule would be
inconsistent with the principle that ``[t]he party that causes the
delay should be the party that is held liable for payment of the
demurrage charge''); Kinder Morgan Comments 11-12, May 8, 2019,
Oversight Hearing on Demurrage & Accessorial Charges, EP 754
(providing an example of a railroad billing Kinder Morgan even
though, according to Kinder Morgan, the shipper was responsible for
the delay); ILTA Comments 1, May 8, 2019, Oversight Hearing on
Demurrage & Accessorial Charges, EP 754 (arguing that the rule makes
it ``impractical to compel shippers to reimburse'' warehousemen for
demurrage charges).
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Accordingly, the Board proposes a requirement applicable to Class I
carriers that the following minimum information be provided on or with
any demurrage invoices: \13\
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\13\ The Board invites comment on the extent to which other
billing or supply chain visibility tools or platforms (other than an
invoice or documentation accompanying an invoice) that provide rail
users with access to this information would satisfy this
requirement.
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The unique identifying information (e.g., reporting marks
and number) of each car involved;
The following shipment information, where applicable:
[cir] The date the waybill was created;
[cir] The status of each car as loaded or empty;
[cir] The commodity being shipped (if the car is loaded);
[cir] The identity of the shipper, consignee, and/or care-of party,
as applicable;
[cir] The origin station and state of the shipment;
The dates and times of (1) actual placement of each car,
(2) constructive placement of each car (if applicable and different
from actual placement), (3) notification of constructive placement to
the shipper, consignee, or third-party intermediary (if applicable),
and (4) release of each car; and
The number of credits and debits attributable to each car
(if applicable). In addition, the Board proposes that prior to sending
a demurrage invoice, Class I carriers shall take appropriate action to
ensure that the demurrage charges are accurate and warranted,\14\
consistent with the purpose of demurrage.
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\14\ Shippers and receivers have raised concerns about demurrage
charges that are difficult, time-consuming, and costly to dispute;
invoices that include inaccurate information; and erroneous invoices
that are issued even when the tariff expressly provides for relief
or the rail carrier has acknowledged its responsibility for the
problem. See, e.g., NCTA Comments 8-9, May 8, 2019, Oversight
Hearing on Demurrage & Accessorial Charges, EP 754; NITL Comments 8,
May 8, 2019, Oversight Hearing on Demurrage & Accessorial Charges,
EP 754; Packaging Corporation of America Comments 4-5,7-8, May 8,
2019, Oversight Hearing on Demurrage & Accessorial Charges, EP 754;
Brainerd Chemical Company Comments 4, May 8, 2019, Oversight Hearing
on Demurrage & Accessorial Charges, EP 754; International Paper
Comments 4, May 7, 2019, Oversight Hearing on Demurrage &
Accessorial Charges, EP 754.
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These proposed requirements are intended to ensure that the
recipients of demurrage invoices will be provided sufficient
information to readily assess the validity of those charges without
having to undertake an unreasonable effort to gather information that
can be provided by the railroad in the first instance, to properly
allocate demurrage responsibility, and to modify their behavior if
their own actions led to the demurrage charges.\15\ The Board expects
that rail carriers have access to this information because it is used
in the ordinary course of business.
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\15\ The Board notes that ``[w]here a railroad has initiated a
proceeding to collect assessed demurrage charges, it has the burden
of proof and therefore must provide evidence to establish actual or
constructive dates of car placement and release and to show how the
assessed charges were computed.'' Utah Cent. Ry.--Pet. for
Declaratory Order--Kenco Logistic Servs., LLC, FD 36131, slip op. at
6 n.13 (STB served Mar. 20, 2019) (citing R.R. Salvage &
Restoration, Inc. --Pet. for Declaratory Order--Reasonableness of
Demurrage Charges, NOR 42102 et al., slip op. at 6 (STB served July
20, 2010)).
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The Board does not propose at this time to require Class II or
Class III
[[Page 55118]]
carriers to comply with the requirements for demurrage invoices
described above, as the issues identified before, during, and after the
hearing predominantly pertained to Class I carriers, and given that any
compliance costs may be more difficult for some smaller rail carriers.
Should the rule be adopted, the Board would strongly encourage Class II
and Class III carriers to comply with these requirements to the extent
they are capable of doing so.
The Board invites comment on this proposal, including the exclusion
of Class II and Class III carriers. The Board also specifically invites
comment on whether there is additional information that rail carriers
could reasonably provide on or with demurrage invoices and that would
enable recipients to more effectively evaluate those invoices.
B. Issuing Demurrage Invoices Directly to Shippers Instead of
Warehousemen
The Board also proposes a requirement that serving Class I carriers
send demurrage invoices directly to the shipper instead of the
warehouseman if the shipper and warehouseman agree to such an
arrangement and notify the rail carrier of the agreement. As noted
above, the Board's rules at part 1333, adopted in Demurrage Liability
Final Rule, EP 707, reflect the view that demurrage charges should be
borne by the party responsible for the delay, which, in some cases, may
be the shipper rather than the warehouseman, as the Board was informed
during the EP 754 proceeding. But the Board also notes that
warehousemen and shippers are in the best position to determine which
party should bear responsibility for demurrage charges, and they should
be able to make agreements for payment of demurrage charges that
reflect this determination. Imposing the charges on the responsible
party would incentivize that party to modify its actions in a way that
promotes the efficient use of rail assets, thereby fulfilling the
purpose of demurrage. Because such arrangements better effectuate the
purpose of demurrage, the Board proposes a requirement that Class I
carriers send demurrage invoices to the shipper when the shipper and
warehouseman agree to such an arrangement and inform the rail carrier
of the agreement. When an invoice is sent to the shipper rather than
the warehouseman, the railroad may not require the warehouseman to
guarantee payment.\16\
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\16\ The shipper is, after all, the party shown on the bill of
lading, and indeed the one that was historically responsible for
demurrage. The claim that someone else should guarantee that
shippers pay their bills is unsound in law and policy.
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Although this proposed rule would amend the Board's current
regulations to require Class I carriers to issue invoices to shippers
and to treat shippers as the ultimate guarantors of payment (when the
shipper and warehouseman agree to that arrangement and have so notified
the rail carrier), the Board points out that rail carriers are already
permitted to do so under the current rule. Neither the letter nor the
purpose of the rules at part 1333 is inconsistent with a rail carrier
billing the shipper directly without requiring the warehouseman to
assume responsibility for any unpaid demurrage. The rule adopted in
Docket No. EP 707 states, in permissive terms, that parties who receive
cars ``may be held liable for demurrage,'' see 49 CFR 1333.3 (emphasis
added), and the Board expressly stated in the final rule that the
demurrage liability rules promulgated in that docket ``are default
rules only, meant to govern demurrage in the absence of a privately
negotiated contract.'' Demurrage Liability Final Rule, EP 707, slip op.
at 25.
For the same reasons described above regarding the requirements for
demurrage invoices, the Board does not propose at this time to require
Class II or Class III carriers to comply with the requirement that the
rail carrier must bill the shipper when the shipper and warehouseman
have agreed to that arrangement and have so notified the rail carrier.
The Board invites comment on this proposal, including the exclusion of
Class II and Class III carriers.
Regulatory Flexibility Act
The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601-612,
generally requires a description and analysis of new rules that would
have a significant economic impact on a substantial number of small
entities. In drafting a rule, an agency is required to: (1) Assess the
effect that its regulation will have on small entities, (2) analyze
effective alternatives that may minimize a regulation's impact, and (3)
make the analysis available for public comment. Sections 601-604. In
its notice of proposed rulemaking, the agency must either include an
initial regulatory flexibility analysis, section 603(a), or certify
that the proposed rule would not have a ``significant impact on a
substantial number of small entities,'' section 605(b). Because the
goal of the RFA is to reduce the cost to small entities of complying
with federal regulations, the RFA requires an agency to perform a
regulatory flexibility analysis of small entity impacts only when a
rule directly regulates those entities. The impact must be a direct
impact on small entities ``whose conduct is circumscribed or mandated''
by the proposed rule. White Eagle Coop. v. Conner, 553 F.3d 467, 480
(7th Cir. 2009).
The proposed rule would not have a significant impact on a
substantial number of small entities within the meaning of the RFA.\17\
The Board's proposal is limited to Class I carriers. Accordingly, the
Board certifies under 5 U.S.C. 605(b) that this rule would not have a
significant economic impact on a substantial number of small entities
as defined by the RFA. A copy of this decision will be served upon the
Chief Counsel for Advocacy, Office of Advocacy, U.S. Small Business
Administration, Washington, DC 20416.
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\17\ For the purpose of RFA analysis, the Board defines a
``small business'' as only including those rail carriers classified
as Class III carriers under 49 CFR 1201.1-1. See Small Entity Size
Standards Under the Regulatory Flexibility Act, EP 719 (STB served
June 30, 2016) (with Board Member Begeman dissenting). Class III
carriers have annual operating revenues of $20 million or less in
1991 dollars ($39,194,876 or less when adjusted for inflation using
2018 data). Class II carriers have annual operating revenues of less
than $250 million in 1991 dollars ($489,935,956 when adjusted for
inflation using 2018 data). The Board calculates the revenue
deflator factor annually and publishes the railroad revenue
thresholds on its website. 49 CFR 1201.1-1; Indexing the Annual
Operating Revenues of R.Rs., EP 748 (STB served June 14, 2019).
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Paperwork Reduction Act
Pursuant to the Paperwork Reduction Act, 44 U.S.C. 3501-3521,
Office of Management and Budget (OMB) regulations at 5 CFR
1320.8(d)(3), and the Appendix, the Board seeks comments about the
impact of the revisions in the proposed rules to the currently approved
collection of the Demurrage Liability Disclosure Requirements (OMB
Control No. 2140-0021) regarding: (1) Whether the collection of
information, as modified in the proposed rule and further described
below, is necessary for the proper performance of the functions of the
Board, including whether the collection has practical utility; (2) the
accuracy of the Board's burden estimates; (3) ways to enhance the
quality, utility, and clarity of the information collected; and (4)
ways to minimize the burden of the collection of information on the
respondents, including the use of automated collection techniques or
other forms of information technology, when appropriate.
The proposed rules would modify the hourly burden in the existing,
approved information collection in three ways. First, the Board
estimates that the proposed invoicing requirements for Class I carriers
would add a total one-
[[Page 55119]]
time hour burden of 280 hours (or 93.3 hours per year as amortized over
three years) for Class I carriers because, in most cases, those
carriers would likely need to modify their billing systems to implement
some or all of these changes. Second, the requirement that Class I
carriers take appropriate action to ensure that demurrage charges are
accurate and warranted would likely require Class I carriers to
establish or modify appropriate demurrage invoicing protocols and
procedures and would add an estimated total one-time hour burden of 560
hours (or 186.7 hours per year as amortized over three years). Third,
the Board estimates that the proposed invoicing requirement that Class
I carriers invoice demurrage involving a warehouseman to the shipper if
the shipper and warehouseman have agreed to that arrangement and have
so notified the rail carrier would add an annual hour burden of 35
hours. All other hour burdens would remain the same as before this
modification (except for an update to the number of non-Class I
carriers and to the estimate of how frequently Class I carriers choose
to update their demurrage tariffs, as reflected in the Appendix). The
Board welcomes comment on the estimates of actual time and costs of its
proposed invoicing requirements for Class I carriers, as detailed below
in the Appendix. The proposed rules will be submitted to OMB for review
as required under 44 U.S.C. 3507(d) and 5 CFR 1320.11. Comments
received by the Board regarding the information collection will also be
forwarded to OMB for its review when the final rule is published.
List of Subjects in 49 CFR Part 1333
Penalties, Railroads.
It is ordered:
1. The Board proposes to amend its rules as set forth in this
decision. Notice of the proposed rules will be published in the Federal
Register.
2. Comments are due by November 6, 2019. Reply comments are due by
December 6, 2019.
3. A copy of this decision will be served upon the Chief Counsel
for Advocacy, Office of Advocacy, U.S. Small Business Administration.
4. This decision is effective on its service date.
Decided: October 4, 2019.
By the Board, Board Members Begeman, Fuchs, and Oberman.
Kenyatta Clay,
Clearance Clerk.
For the reasons set forth in the preamble, the Surface
Transportation Board proposes to amend part 1333 of title 49, chapter
X, of the Code of Federal Regulations as follows:
PART 1333--DEMURRAGE LIABILITY
0
1. The authority citation for part 1333 continues to read as follows:
Authority: 49 U.S.C. 1321
0
2. In Sec. 1333.3, redesignate the existing text as paragraph (a) and
add paragraph (b) to read as follows:
Sec. 1333.3 Who Is Subject to Demurrage
(a) * * *
(b) If the rail cars are delivered to a third-party intermediary
that has reached an agreement with a shipper (or consignee) that the
shipper (or consignee) shall be liable for demurrage, then the serving
Class I carrier shall, after being notified of the agreement by the
shipper, consignee, or third-party intermediary, bill the shipper (or
consignee) for demurrage charges without requiring the third-party
intermediary to act as a guarantor, unless and until a party to the
agreement notifies the serving Class I carrier that the agreement is no
longer in force.
0
3. Add Sec. 1333.4 to read as follows:
Sec. 1333.4 Requirements for Demurrage Invoices
(a) The following information shall be provided on or with any
demurrage invoices issued by Class I carriers:
(1) The unique identifying information (e.g., reporting marks and
number) of each car involved;
(2) The following information, where applicable:
(i) The date the waybill was created;
(ii) The status of each car as loaded or empty;
(iii) The commodity being shipped (if the car is loaded);
(iv) The identity of the shipper, consignee, and/or care-of party,
as applicable; and
(v) The origin station and state of the shipment;
(3) The dates and times of:
(i) Actual placement of each car,
(ii) Constructive placement of each car (if applicable and
different from actual placement),
(iii) Notification of constructive placement to the shipper or
third-party intermediary (if applicable); and
(iv) Release of each car; and
(4) The number of credits and debits attributable to each car (if
applicable).
(b) Prior to sending a demurrage invoice, Class I carriers shall
take appropriate action to ensure that the demurrage charges are
accurate and warranted.
Note: The following appendix will not appear in the Code of
Federal Regulations.
Appendix
Information Collection
Title: Demurrage Liability Disclosure Requirements.
OMB Control Number: 2140-0021.
Form Number: None.
Type of Review: Revision of a currently approved collection.
Summary: As part of its continuing effort to reduce paperwork
burdens, and as required by the Paperwork Reduction Act of 1995 (PRA),
the Surface Transportation Board (Board) gives notice that it is
requesting from the Office of Management and Budget (OMB) approval for
the revision of the currently approved information collection,
Demurrage Liability Disclosure Requirements, OMB Control No. 2140-0021.
The requested revision to the currently approved collection is
necessitated by this NPRM, which proposes to add certain requirements
regarding Class I carriers' demurrage invoices, as well as to require
that Class I carriers directly bill the shipper if the shipper and
warehouseman agree to that arrangement and have so notified the rail
carrier. All other information collected by the Board in the currently
approved collection is without change from its approval, except for an
update to the number of non-Class I carriers (currently expiring on
June 30, 2020).
Respondents: Freight railroads subject to the Board's jurisdiction.
Number of Respondents: 684 (including seven Class I [i.e., large]
carriers).
Estimated Time per Response: The estimated hour burden for
demurrage liability notices for new customers remains one hour per
notice. The modification to Class I carriers' invoicing requirements
sought here is an estimated annualized one-time hour burden--resulting
from an adjustment to the seven Class I carriers' billing systems--of
40 hours per railroad. The modification requiring Class I carriers to
take appropriate action to ensure that the demurrage invoices are
accurate and warranted is an estimated annualized one-time hour burden
of 80 hours. The modification requiring Class I carriers to invoice the
shipper when the warehouseman and the shipper reach agreement for the
serving Class I carrier to invoice the shipper is an estimated annual
hour burden of five minutes per agreement.
Frequency: On occasion. The existing demurrage liability disclosure
requirement is triggered in two circumstances: (1) When a shipper
[[Page 55120]]
initially arranges with a railroad for transportation of freight
pursuant to the rail carrier's tariff; or (2) when a rail carrier
changes the terms of its demurrage tariff. The modification sought here
makes three changes to the existing collection, as follows: (1) One-
time adjustments to the Class I railroads' billing systems to (a)
include information on demurrage invoices, (b) to take appropriate
action to ensure that the demurrage invoices are accurate and
warranted, and (2) make an annual adjustment to the Class I carriers'
invoicing practices to invoice the shipper when the warehouseman and
the shipper reach agreement for the serving Class I carrier to invoice
the shipper (estimated 60 agreements).
Total Burden Hours (annually including all respondents): 1,329.7
hours. Consistent with the existing, approved information collection,
Board staff estimates that: (1) Seven Class I carriers would each take
on 15 new customers each year (105 hours); (2) each of the seven Class
I carriers would update its demurrage tariffs annually (7 hours); (3)
677 non-Class I carriers would each take on one new customer a year
(677 hours); and (4) each of the non-Class I carriers would update its
demurrage tariffs every three years (225.7 hours annualized). For the
modification to Class I carriers' invoicing requirements, Board staff
estimates that, on average, each Class I rail carrier would have a one-
time burden of 40 hours (280 total hours). Amortized over three years,
this one-time burden equals 93.3 hours per year. For the modification
requiring each Class I carrier to ensure that the demurrage charges are
accurate and warranted, Board staff estimates that, on average, each
Class I carrier would have a one-time burden of 80 hours (560 total
hours) to establish or modify appropriate protocols and procedures.
Amortized over three years, this one-time burden equals 186.7 hours per
year. For the modification adding a shipper invoicing requirement when
a warehouseman and shipper have agreed and notified the Class I
carrier, Board staff estimates that annually seven Class I carriers
would each receive 60 requests per year for additional shipper invoices
at five minutes per invoice (35 hours).
The total hour burdens are also set forth in the table below.
Table--Total Burden Hours
[per year]
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Estimated one-
Existing Estimated one- time burden Estimated
Existing annual update time burden for annual burden Total yearly
Respondents annual burden burden for appropriate for invoicing burden hours
(hours) (hours) additional protocols agreement
data (hours) (hours) (hours)
--------------------------------------------------------------------------------------------------------------------------------------------------------
7 Class I Carriers...................................... 105 7 93.3 186.7 35 427
677 Non-Class I Carriers................................ 677 225.7 .............. .............. .............. 902.7
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Totals.............................................. 782 232.7 93.3 186.7 35 1,329.7
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Total ``Non-hour Burden'' Cost: There are no other costs identified
because filings are submitted electronically to the Board.
Needs and Uses: Demurrage is a charge that railroads assess their
customers for detaining rail cars beyond a specified amount of time. It
both compensates railroads for expenses incurred for that rail car and
serves as a penalty for undue car detention to promote efficiency.
Demurrage is subject to the Board's jurisdiction under 49 U.S.C. 10702
and section 10746.
A railroad and its customers may enter into demurrage contracts
without providing notice, but, in the absence of such contracts,
demurrage will be governed by the railroad's demurrage tariff. Under 49
CFR 1333.3, a railroad's ability to charge demurrage pursuant to its
tariff is conditional on its having given, prior to rail car placement,
actual notice of the demurrage tariff to the person receiving rail cars
for loading and unloading. Once a shipper receives a notice as to a
particular tariff, additional notices are required only when the tariff
changes materially. The parties rely on the information in the
demurrage tariffs to avoid demurrage disputes, and the Board uses the
tariffs to adjudicate demurrage disputes that come before the agency.
As described in more detail above in the NPRM, the Board is
amending the rules that apply to this collection of demurrage
disclosure requirements to require the inclusion of additional
information in the billing invoices issued by Class I carriers, to
require Class I carriers to ensure that demurrage charges are accurate
and warranted, and to require Class I carriers to invoice the shipper
when the warehouseman and the shipper reach agreement for the Class I
carrier to do so. The collection by the Board of this information, and
the agency's use of this information, enables the Board to meet its
statutory duties.
[FR Doc. 2019-22202 Filed 10-11-19; 8:45 am]
BILLING CODE 4915-01-P