Demurrage Billing Requirements, 55114-55120 [2019-22202]

Agencies

• Surface Transportation Board

[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]


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SURFACE TRANSPORTATION BOARD

49 CFR Part 1333

[Docket No. FD EP 759]


Demurrage Billing Requirements

AGENCY: Surface Transportation Board.

ACTION: Notice of proposed rulemaking.

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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.
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    \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).
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    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.
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    ILTA also argued that direct billing of shippers is a possible 
solution, but it said that terminal operators, shippers,

[[Page 55117]]

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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.

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\
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

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]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                          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
                                                         -----------------------------------------------------------------------------------------------
    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 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