Policy Statement on Demurrage and Accessorial Rules and Charges, 26866-26874 [2020-09682]
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Federal Register / Vol. 85, No. 88 / Wednesday, May 6, 2020 / Rules and Regulations
SURFACE TRANSPORTATION BOARD
49 CFR Part 1333
[Docket No. EP 757]
Policy Statement on Demurrage and
Accessorial Rules and Charges
Surface Transportation Board.
Statement of Board policy.
AGENCY:
ACTION:
The Surface Transportation
Board (STB or Board) is issuing this
policy statement, following public
notice and comment, to provide the
public with information on principles
the Board would consider in evaluating
the reasonableness of demurrage and
accessorial rules and charges.
DATES: This policy statement is effective
on May 30, 2020.
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:
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 the national needs related to
freight car use and distribution and
maintenance of an adequate car supply.1
Demurrage is a charge that serves
principally as an incentive to prevent
undue car detention and thereby
encourage the efficient use of rail cars
in the rail network, while also providing
compensation to rail carriers for the
expense incurred when rail cars are
unduly detained beyond a specified
period of time (i.e., ‘‘free time’’) for
loading and unloading. See Pa. R.R. v.
Kittaning 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.’’); 49 CFR 1333.1; see
SUMMARY:
1 The Board’s authority to regulate demurrage
includes, among other things, transportation under
the exemptions set forth in 49 CFR 1039.11
(miscellaneous commodities exemptions) and
section 1039.14 (boxcar transportation exemptions).
The Board recently amended those regulations to
state more clearly that the exemptions do not apply
to the regulation of demurrage. It also revoked, in
part, the class exemption for the rail transportation
of certain agricultural commodities at 49 CFR
1039.10 so that the exemption does not apply to the
regulation of demurrage, making it consistent with
similar class exemptions covering non-intermodal
rail transportation. Exclusion of Demurrage
Regulation from Certain Class Exemptions
(Demurrage Exclusion Final Rule), EP 760 (STB
served Feb. 28, 2020).
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also 49 CFR pt. 1201, category 106.2
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). As discussed
below, this policy statement pertains to
accessorial charges that, like demurrage
charges, are designed or intended to
encourage the efficient use of rail assets.
On October 7, 2019, the Board issued,
for public comment, a notice of
proposed statement of Board policy
providing information with respect to
certain principles it would consider in
evaluating the reasonableness of
demurrage and accessorial rules and
charges. See Policy Statement on
Demurrage & Accessorial Rules &
Charges (NPPS), EP 757 (STB served
Oct. 7, 2019).3 As described in the
NPPS, EP 757, slip op. at 2–3, that
action arose, in part, as a result of the
testimony and comments submitted in
Oversight Hearing on Demurrage &
Accessorial Charges (Oversight
Proceeding), Docket No. EP 754. The
Board commenced the Oversight
Proceeding by notice served on April 8,
2019 (April 2019 Notice), following
concerns expressed by users of the
freight rail network (rail users) 4 and
other stakeholders about recent changes
to demurrage and accessorial tariffs
administered by Class I carriers, which
the Board was actively monitoring.5
2 In Demurrage Liability (Demurrage Liability
Final Rule), EP 707, slip op. at 15–16 (STB served
Apr. 11, 2014), the Board clarified that private car
storage is included in the definition of demurrage
for purposes of the demurrage regulations
established in that decision. The Board uses the
same definition for purposes of this policy
statement.
3 Notice was published in the Federal Register,
84 FR 54,717 (Oct. 10, 2019).
4 As used in this policy statement, the term ‘‘rail
users’’ broadly means any person or business that
receives rail cars for loading or unloading,
regardless of whether that person or business has
a property interest in the freight being transported.
This policy statement uses the terms
‘‘warehousemen’’ or ‘‘third-party intermediaries’’ to
refer more specifically to those entities with no
property interest in the freight.
5 The April 2019 Notice announced a public
hearing, at which Class I carriers were directed to
appear, and shippers, receivers, third-party logistics
providers, and other interested parties were invited
to participate. The notice also directed Class I
carriers to provide specific information on their
demurrage and accessorial rules and charges;
required all hearing participants to submit written
testimony (both in advance of the hearing); and
permitted comments from interested parties who
did not appear. The Board received over 90 prehearing submissions; heard testimony over a twoday period from 12 panels composed of,
collectively, over 50 participants; and received 36
post-hearing comments. That record, which is
detailed in the NPPS and summarized below, is
available in Docket No. EP 754. See NPPS, EP 757,
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In response to the NPPS, the Board
received 44 comments and 13 replies.6
After considering the comments
received, along with the record in the
Oversight Proceeding, the Board is
issuing this statement of Board policy.
Through this policy statement, the
Board expects to facilitate more effective
private negotiations and problem
solving between rail carriers and
shippers and receivers on issues
concerning demurrage and accessorial
rules and charges; to help prevent
unnecessary future issues and related
disputes from arising; and, when they
do arise, to help resolve them more
efficiently and cost-effectively. The
Board is not, however, making any
binding determinations by this policy
statement. Nor is the Board promoting
complete uniformity across rail carriers’
demurrage and accessorial rules and
charges; the principles discussed in this
policy statement recognize that there
may be different ways to implement and
administer reasonable rules and charges.
slip op. at 22–25 (Appendix listing the parties who
provided comments or testimony in the
proceeding).
6 The Board received comments and/or reply
comments from: The American Chemistry Council
(ACC); the American Forest & Paper Association
(AF&PA); American Fuel & Petrochemical
Manufacturers (AFPM); the American Iron and
Steel Institute (AISI); the American Short Line and
Regional Railroad Association (ASLRRA);
ArcelorMittal USA LLC (AM); Archer Daniels
Midland Company; the Association of American
Railroads (AAR); Auriga Polymers, Inc. a wholly
owned subsidiary of Indorama, NA, on behalf of
Indorama Ventures affiliates (Auriga/Indorama); the
Automobile Carriers Conference; Barilla America,
Inc. (Barilla); BNSF Railway Company (BNSF);
Canadian National Railway Company (CN);
Canadian Pacific Railway Company (CP); The
Chlorine Institute (CI); The Corn Refiners
Association (CRA); CSX Transportation, Inc.
(CSXT); Diversified CPC International, Inc.
(Diversified CPC); Dow, Inc. (Dow); The Fertilizer
Institute (TFI); the Freight Rail Customer Alliance
(FRCA); Growth Energy; the Industrial Minerals
Association—North America (IMA–NA); the
Institute of Scrap Recycling Industries, Inc. (ISRI);
International Paper; the International Warehouse
Logistics Association (IWLA); The Kansas City
Southern Railway Company (KCS); Kinder Morgan
Terminals (Kinder Morgan); the National
Association of Chemical Distributors (NACD); the
National Coal Transportation Association (NCTA);
the National Grain and Feed Association (NGFA)
(supported by the Agricultural Retailers
Association; the Pet Food Institute; the National
Oilseed Processors Association and the North
American Millers’ Association); The National
Industrial Transportation League (NITL); the
National Mining Association; the North American
Freight Car Association (NAFCA); Omaha Public
Power District (OPPD); Peabody Energy
Corporation; Plastic Express/PX Services (Plastic
Express); the Portland Cement Association (PCA);
the Private Railcar Food and Beverage Association,
Inc. (PRFBA); Union Pacific Railroad Company
(UP); and the Western Coal Traffic League and
Seminole Electric Cooperative, Inc. (WCTL/SEC).
Two comments were filed after the comment
deadline of November 6, 2019. In the interest of a
more complete record, the late-filed comments are
accepted into the record.
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When adjudicating specific cases, the
Board will consider all facts and
arguments presented in such cases.
The Board encourages all carriers, and
all shippers and receivers, to work
toward collaborative, mutually
beneficial solutions to resolve disputes
on matters such as those raised in the
Oversight Proceeding 7 and intends for
this policy statement to provide useful
guidance to all stakeholders.
Historical Overview and General
Principles
The NPPS, EP 757, slip op. at 4–7,
provides a detailed historical overview
and summary of general principles
related to demurrage. The Board here
addresses some of the more general
comments raised by commenters before
turning to comments about the specific
issues addressed in the policy
statement.
Rail users generally support the
proposed policy statement and endorse
its key principles. Many rail carrier
commenters also either generally
support or do not take exception to the
general principles discussed in the
proposed policy statement. In
particular, several Class I carriers voiced
support for two key principles: That
there may be different ways to
implement and administer reasonable
demurrage rules and practices, and that
disputes pertaining to demurrage are
best resolved on a case-specific basis
that considers all pertinent facts. (See
BNSF Comments 2–3; CSXT Comments
3; UP Comments 2; CN Reply Comments
3.) AAR, however, raises objections,
which are shared by some carriers, to
certain language in the proposed policy
statement related to compensation and
the imposition of demurrage charges for
delays beyond a rail user’s reasonable
control. (See AAR Comments 1–6; CSXT
Comments 1–2; CP Comments 15–16;
KCS Comments 3, 5.)
In its discussion of general principles,
the Board stated that the overarching
purpose of demurrage is to incentivize
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. NPPS, EP 757,
slip op. at 6–7 (citing Kittaning, 253 U.S.
at 323).8 That period of time must be
7 For example, KCS reportedly forgave significant
demurrage bills because the shipper had agreed to
spend at least an equal amount to build capacity to
store its own cars. KCS Comments 5, May 8, 2019,
Oversight Proceeding, EP 754.
8 Accord Increased Demurrage Charges, 1956, 300
I.C.C. 577, 585 (1957) (‘‘The primary purpose of
demurrage regulations is to promote equipment
efficiency by penalizing the undue detention of
cars.’’ (citation omitted)).
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reasonable,9 and further, it is
unreasonable to charge demurrage for
delays attributable to the rail carrier.
See, e.g., R.R. Salvage & Restoration,
Inc., NOR 42102 et al., slip op. at 4 (‘‘a
shipper is not required to compensate a
railroad for delay in returning the asset
if the railroad and not the shipper is
responsible for the delay’’). The Board
also reiterated its concerns about
demurrage charges for delays that a
shipper or receiver did not cause. NPPS,
EP 757, slip op. at 7 (citing Utah Cent.
Ry.—Pet. for Declaratory Order—Kenco
Logistic Servs., LLC, FD 36131, slip op.
at 12 n.38 (STB served Mar. 20, 2019);
Exemption of Demurrage from
Regulation, EP 462, slip op. at 4 (STB
served Mar. 29, 1996)). The Board stated
that where demurrage charges are
imposed for circumstances beyond the
shipper’s or receiver’s reasonable
control, they do not accomplish their
purpose to incentivize behavior to
encourage efficiency—the stated
rationale for and objective of the rail
carriers’ demurrage rules and charges.10
In its comments, AAR claims that the
proposed policy statement ‘‘ignore[s]
the compensation function of
demurrage.’’ (AAR Comments 4.) But
the Board’s regulations and the NPPS
recognize this dual role, see NPPS, EP
757, slip op. at 2 (citing 49 CFR 1333.1),
and the Board recognizes and reaffirms
here that carriers should be
compensated when a rail user unduly
detains rail assets. As noted by one rail
carrier in the Oversight Proceeding,
‘‘Congress framed the purposes of
demurrage not in terms of cost recovery
. . ., but rather in terms of incentives.’’
CN Comments 8, June 6, 2019, Oversight
Proceeding, EP 754. In other words,
under the operative statutory
framework, demurrage rules and charges
must serve an incentivizing function.
And, as AAR itself recognized in the
Oversight Proceeding, demurrage and
storage charges have long been
considered ‘‘primarily a penalty to deter
undue car detention, and to a lesser
extent, compensation to the railroad for
expenses incurred.’’ AAR Comments 4,
June 6, 2019, Oversight Proceeding, EP
754 (quoting R.Rs. Per Diem, Mileage,
Demurrage & Storage—Agreement, 1
I.C.C.2d 924, 933 (1985)).11 When
9 See, e.g., Kittaning, 253 U.S. at 323 (‘‘[T]he
shipper or consignee . . . is entitled to detain the
car a reasonable time . . . .’’); R.R. Salvage &
Restoration, Inc.—Pet. for Declaratory Order—
Reasonableness of Demurrage Charges, NOR 42102
et al., slip op. at 4 (STB served July 20, 2010) (time
period must be reasonable).
10 See, e.g., citations infra note 23.
11 As the Interstate Commerce Commission also
explained in that decision, ‘‘[d]emurrage and
storage charges are assessed by railroads against
shippers or receivers for undue detention of
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26867
carriers established individualized
demurrage programs in the postStaggers Act 12 era, they stopped
breaking out demurrage charges into
incentivizing (punitive) and
compensatory (per diem) components.
Cases involving disputed charges are no
longer decided on that basis, and, in the
Oversight Proceeding, AAR eschewed a
return to the former system.13 The
compensatory function of demurrage is
achieved, along with its incentivizing
function, by permitting the delivering
carrier to retain the charges assessed for
a rail user’s undue detention of rail
assets.
AAR also argues that ‘‘[t]he law is
well settled that assessment of
demurrage charges in no way depends
upon a finding of shipper or consignee
fault.’’ (AAR Comments 6 (quoting
Foreston Coal Int’l v. Balt. & Ohio R.R.,
349 I.C.C. 495, 500 (1975).) AAR’s
argument, however, fails to take full
account of the caselaw on this issue. As
an initial matter, AAR overlooks that
each case stands on its own facts, as the
agency retains broad discretion to
determine whether demurrage charges,
under all the circumstances of a
particular case (including fault), are
reasonable under section 10702 and
comport with the statutory requirements
specified in section 10746.14 Also
overlooked is the fact that, as AAR
acknowledged in the Oversight
Proceeding, historically under
‘‘straight’’ demurrage programs,15 ‘‘the
equipment.’’ 1 I.C.C.2d at 933. ‘‘Unlike per diem
and allowances, the primary purpose of demurrage
and storage charges is not to compensate the owner
of the car, but to enhance efficient car use by
ensuring the prompt turnaround of equipment.’’ Id.
at 934.
12 Staggers Rail Act of 1980, Public Law 96–448,
94 Stat. 1895.
13 See AAR Comments 8, June 6, 2019, Oversight
Proceeding, EP 754 (stating that ‘‘[a]fter Staggers, it
was no longer necessary or appropriate to require
railroads to use uniform demurrage tariffs that
included prescribed terms, compensatory and
penalty elements, and regulated rates’’).
14 See, e.g., N. Am. Freight Car Ass’n v. BNSF Ry.,
NOR 42060 (Sub-No. 1), slip op. at 8 (STB served
Jan. 26, 2007) (stating that Congress ‘‘gave the Board
‘broad discretion to conduct case-by-case factspecific inquiries to give meaning to [section
10702’s statutory] terms, which are not selfdefining’ ’’ and explaining that ‘‘[t]his broad
discretion is necessary to permit the Board to tailor
its analysis to the evidence proffered and arguments
asserted under a particular set of facts’’ (citing
Granite State Concrete Co. v. STB, 417 F.3d 85, 92
(1st Cir. 2005))); N. Am. Freight Car Ass’n v. STB,
529 F.3d 1166, 1170–71 (DC Cir. 2008) (agency has
‘‘wide discretion in formulating appropriate
solutions’’ when dealing with complex matters
within its expertise, including claims involving
statutory obligations under section 10702 and
section 10746 (citation omitted)).
15 Historically, the detention of freight rail cars
was governed by a uniform code of demurrage rules
and charges, which offered shippers and receivers
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Federal Register / Vol. 85, No. 88 / Wednesday, May 6, 2020 / Rules and Regulations
shipper or receiver was not assessed
demurrage if severe weather or other
circumstances beyond their control
prevent[ed] them from returning cars on
time.’’ AAR Comments 5, June 6, 2019,
Oversight Proceeding, EP 754. AAR also
overlooks more recent Board decisions,
discussed in the NPPS, EP 757, slip op.
at 6–7, expressing concern about
holding a rail user liable for demurrage
attributable to delays beyond its
reasonable control. Several carriers
acknowledged at the oversight hearing
various circumstances in which it
would not be appropriate to charge a
customer for delays the customer did
not cause,16 and UP and ASLRRA
affirmatively state that demurrage
should not be charged to rail users for
delays beyond their reasonable
control.17
In sum, the Board finds that AAR’s
arguments are misplaced, as there have
been long-standing concerns about rail
users being held responsible for
circumstances beyond their reasonable
control. The proposed policy statement
properly focused on the foundational
questions that arise in determining
whether demurrage rules and charges
are reasonable and designed to fulfill
national needs related to freight car use
and distribution, and to maintenance of
an adequate car supply, under 49 U.S.C.
10746.18
two alternative methods for computing demurrage:
Straight demurrage and average demurrage. Under
the straight demurrage plan, which historically
applied in the absence of any other arrangement
with the rail carrier, charges were applied and
billed on individual cars at daily rates when cars
were detained beyond the allowable free time. See
NPPS, EP 757, slip op. at 4. The Board mentions
straight demurrage programs here not to suggest a
return to the former system but rather to give a more
complete account of the law and history on the
issue.
16 See, e.g., UP Comments 10–11, 14, 23, June 6,
2019 (filing ID 247892), Oversight Proceeding, EP
754; Hr’g Tr. 146:11 to 147:1, May 22, 2019,
Oversight Proceeding, EP 754 (CSXT agreeing that
demurrage should not be assessed where charges
penalize a shipper who is powerless to avoid or
abate the detention); Hr’g Tr. 923:8 to 924:16, May
23, 2019, Oversight Proceeding, EP 754 (BNSF
agreeing that ‘‘it’s not a strict liability standard in
the law or in practice’’ and noting language in its
tariffs excusing demurrage for force majeure events
beyond the control of a shipper).
17 See UP Comments 3 (also endorsing same
principle for accessorial charges); ASLRRA
Comments 4.
18 In response to AAR’s assertion that a policy
statement cannot be used to change the law, (see
AAR Comments 5), the Board reiterates that this
policy statement articulates what the Board may
consider in future decisions and does not constitute
a binding determination by the Board or seek to
change the law. See NPPS, EP 757, slip op. at 3–
4. The general principles and non-binding
considerations discussed in a statement of Board
policy—particularly one that was published for
public comment—are well within the bounds of
appropriate agency action.
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As noted above, rail users generally
support the proposed policy statement,
and several agree with the Board that
the principles outlined in the NPPS
would help prevent disputes from
arising, and, when they do arise, help
resolve them more efficiently and costeffectively.19 Some voiced concern that
carriers would not voluntarily change
certain rules and practices and called
for further prescriptive actions.20 Such
prescriptive actions are not appropriate
for inclusion in a policy statement, and
the Board declines at this time to take
further regulatory action beyond the
actions taken in Demurrage Exclusion
Final Rule, Docket No. EP 760, and the
actions under consideration in
Demurrage Billing Requirements, Docket
No. EP 759. However, the Board will
remain open to argument that these
concerns and suggestions should be
considered in future proceedings in
assessing the reasonableness of
demurrage rules and charges and
whether they comport with the
objectives specified in section 10746.
Further, carriers are encouraged to
thoughtfully consider rail users’
concerns and suggestions—along with
the principles discussed below—as
potential solutions that would promote
the goals of transparency, timeliness,
and mutual accountability stakeholders
broadly profess to embrace.
Free Time
In the NPPS, EP 757, slip op. at 7–10,
the Board described the background and
current issues surrounding free time—
the period of time allowed for a rail user
to finish using rail assets and return
19 See, e.g., ACC Comments 3; ISRI Comments 8,
12 (also noting that the policy statement
appropriately ‘‘provid[es] flexibility to account for
differing factual circumstances inherent in the
receipt and shipment of goods by rail’’); Barilla
Comments 2–3 (principles will ‘‘establish a
foundation for the railroads and their customers to
recognize one another as partners when addressing
issues and potential [rule] changes in the future’’;
also noting that some rules discussed at the
oversight hearing have since been removed);
AF&PA Comments 3 (principles in the policy
statement provide ‘‘provide valuable guidance for
the future administration of demurrage and
accessorial charges’’); IMA–NA Comments 2 (same);
CI Comments 1 (policy statement ‘‘should assist in
resolving many of the problems with demurrage
and accessorial rules and charges’’).
20 Several parties state that the Board should
require railroads to comply with and incorporate
the policy statement into their tariffs. (See, e.g.,
Kinder Morgan Comments 2, 11–12; AISI
Comments 6–7; PCA Comments 3–4; WCTL/SEC
Comments 5. See also AM Comments 5; NCTA
Comments 4–5; NGFA Comments 3, 21–22 (arguing
that the Board should adopt binding rules or final
guidelines and direct railroads to conform within
specified time); FRCA Comments 5 (arguing that
‘‘the Board should require carriers to certify that
their rules and practices comply with Board’s
standards’’ and impose penalties if noncompliance
is demonstrated).)
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them to the railroad before demurrage
charges are assessed.21 The Board
explained that free time, which
railroads may set within reasonable
limits, helps temper adverse impacts to
rail users of delays arising from service
variability, and plays a role in the credit
and debit rules and practices of many
rail carriers. NPPS, EP 757, slip op. at
8.
The NPPS also explained that, until
recently, rail carriers typically provided
at least 24 hours of free time (or one
credit day) to load rail cars and at least
48 hours of free time (or two credit
days) to unload cars.22 NPPS, EP 757,
slip op. at 8 (citing Portland & W. R.R.—
Pet. for Declaratory Order—RK Storage
& Warehousing, Inc., FD 35406, slip op.
at 5 (STB served July 27, 2011).) Some
Class I carriers use alternative rules and
practices for private cars in which no
credit days are given as a proxy for free
time. NPPS, EP 757, slip op. at 8–9.
Recent reductions in free time
implemented by several Class I carriers
were a major focal point of the Oversight
Proceeding. At least one rail carrier
reduced the number of credit days for
loading and unloading private cars, in
some circumstances, from two to zero.
Some other rail carriers reduced free
time for unloading from 48 to 24 hours
(or two credit days to one) for both
private and railroad-owned cars. In its
April 2019 Notice, the Board directed
the Class I carriers to submit
information on a list of specified
subjects, including all tariff changes
since January 2016 pertaining to the
amount of free time allowed for loading
and unloading rail cars and the
reason(s) for the change. April 2019
Notice, EP 754, slip op. at 2–3.
Rail carriers that reduced free time
identified similar objectives and
rationales for doing so: to better align
the behavior of shippers and receivers
in order to promote network fluidity for
the benefit of all rail users through
improved service reliability and
reduced cycle times. These carriers
21 As the Supreme Court has noted, ‘‘the duty of
loading and of unloading carload shipments rests
upon the shipper or consignee. To this end he is
entitled to detain the car a reasonable time without
any payment in addition to the published freight
rate.’’ Kittaning, 253 U.S. at 323.
22 Tariff provisions typically define the amount of
free time provided in terms of 24-hour periods or
‘‘credit days,’’ which commonly begin to run at
12:01 a.m. the day following actual or constructive
placement (a status assigned when a rail car is
available for delivery but cannot actually be placed
at the receiver’s destination because of a condition
attributable to the receiver such as lack of room on
the tracks in the receiver’s facility, see Savannah
Port Terminal R.R.—Pet. for Declaratory Order—
Certain Rates & Practices as Applied to Capital
Cargo, Inc., FD 34920, slip op. at 3 n.6 (STB served
May 30, 2008)).
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stated that the reductions were made to
enable them to optimize network
efficiencies and provide better, more
reliable service; that the changes were
not made to generate revenue; and that
their hope is that recent revenue
increases generated from demurrage
charges will be temporary as shippers
and receivers adapt and respond
because, in the words of one rail carrier,
‘‘the intention is to improve service, not
drive cost increases for our
customers.’’ 23 Rail carriers’ post-hearing
submissions largely reiterated these
points and expressed willingness to
work with customers to help them align
their behavior to better meet the
reductions in free time. While the Board
recognizes that some changes and rail
carrier outreach occurred following the
hearing, it is apparent that many issues
related to free time remain.
In the Oversight Proceeding,
interested parties from many industries
expressed multiple concerns about the
recent reductions in free time. Several
stated that they lacked the physical
capacity or capital needed to expand
facilities to meet the reduced free-time
periods. Many reported that bunching or
otherwise unreliable service is a major
obstacle to meeting the reduced freetime periods, and that the recent
reductions have made it more difficult
and costly to deal with unreliable
service because the free time that has
been eliminated had served as an
important buffer against unpredictable
railroad performance. Rail users that
rely on private rail cars expressed
additional objections and concerns and
noted that there has been a significant
industry shift from rail carrier
ownership of rail cars to private car
ownership since the enactment of
section 10746. See NPPS, EP 757, slip
op. at 9–10 (describing comments
submitted in Docket No. EP 754).
Although rail carriers presented data in
the Oversight Proceeding, generally on a
system-wide basis, reflecting recent
improvements in some metrics, they
presented limited data on the extent to
which changes to their demurrage rules
and charges succeeded in reducing
loading and unloading times, as
compared to the times prior to the
changes. See NPPS, EP 757, slip op. at
11.
Comments from rail users on the
NPPS broadly reiterate these concerns
and suggest that the Board should take
more binding action.24 Comments from
rail carriers on the NPPS were largely
silent about its discussion of free time.
CP states that its customers adapted to
free-time reductions implemented in
2013 by adding track capacity, using CP
tools to better manage their pipeline,
and adjusting labor schedules, and that
CP is moving more cars while
demurrage charges have decreased. (CP
Comments 7.) UP states that it has
worked collaboratively with customers
over the past year and that ‘‘the vast
majority’’ have successfully adapted to
a reduction in free time from 48 hours
to 24 hours. (UP Reply 2.)
Demurrage serves a valuable purpose
to encourage the efficient use of rail
assets (both equipment and track) by
holding rail users accountable when
their actions or operations use those
assets beyond a specified period of time.
That period of time must be reasonable
and consistent with the overarching
purpose of demurrage. The Board
continues to have serious concerns
about the adverse impacts of reductions
in free time to rail users, including the
potentially negative consequences of
providing no credit days for private cars
if rail carriers do not have reasonable
rules and practices for dealing with,
among other things, variability in
service and carrier-caused bunching,
and for ensuring that rail users have a
reasonable opportunity to evaluate their
circumstances and order incoming cars
before demurrage begins to accrue.
Some of these reductions to free time or
credit days may make it more difficult
for rail users to contend with variations
in rail service and therefore may not
serve to incentivize their behavior to
encourage the efficient use of rail
assets.25 In some circumstances, which
would need to be examined in
individual cases, such reductions may
not be reasonable or consistent with rail
carriers’ statutory charge to compute
demurrage and establish related rules in
a way that fulfills the national needs
specified in section 10746. Where, for
23 UP Comments 2, May 8, 2019, Oversight
Proceeding, EP 754; see generally id. at 1–2; UP
Comments 3, June 6, 2019 (filing ID 247876),
Oversight Proceeding, EP 754; Norfolk Southern
Railway Company (NSR) Comments 2–3, May 8,
2019, Oversight Proceeding, EP 754; CSXT
Comments 3–5, May 8, 2019, Oversight Proceeding,
EP 754. BNSF stated that it ‘‘puts a tremendous
amount of energy and resources into the area of
demurrage and storage for the express purpose of
collecting less demurrage revenue.’’ BNSF
Comments 5, May 8, 2019, Oversight Proceeding, EP
754.
24 See, e.g., TFI Comments 4–5; NITL Comments
4–5; CRA Comments 5–6; AF&PA Comments 4–5;
AISI Comments 7–8; Dow Comments 3–4;
Diversified CPC Comments 3; NGFA Comments 11–
12; ISRI Comments 4–5; Joint Reply (ACC, CRA,
TFI, NITL) 8–9.
25 Parties are, of course, free to negotiate and enter
into contracts that provide for any period of free
time (including zero credit days) to which the
parties agree. 49 CFR 1333.2; Demurrage Liability
Final Rule, EP 707, slip op. at 25 (noting that the
Board’s rules specifically allow parties to enter into
contracts pertaining to demurrage).
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example, carrier-caused circumstances
give rise to a situation in which it is
beyond the rail user’s reasonable control
to avoid charges, the overarching
purpose of demurrage is not fulfilled.
As stated in the NPPS, EP 757, slip
op. at 12, such circumstances might
include, for example, charging
demurrage that accrues as a result of a
missed switch (both cars scheduled to
be switched and incoming cars
impacted by the missed switch);
charging demurrage for transit days to
move cars from constructive placement
in remote locations; or charging
demurrage that arises from bunched
deliveries substantially in excess of the
number of cars ordered until the rail
user has had a reasonable opportunity to
process the excess volume of incoming
cars. Changes in historical practices on
which the rail user has long relied (e.g.,
regarding switching frequency or
delivery methods that deviate from prior
arrangements made by the parties) may
also be taken into account.26
Lastly, the Board remains concerned
that, in some circumstances, such
reductions in free time may jeopardize
important goals of the nation’s rail
transportation policy by rendering
freight rail service less likely to meet the
needs of the public and, if other modes
are even effectively an option for a rail
user, less competitive with other
transportation modes.27
The Board recognizes that reductions
in free time might be justified if there
were evidence to show, by way of
example, that (1) advances in
technology or productivity have made
compliance with the shorter time frames
reasonably achievable; (2) service
improvements resulting from more
efficient use of rail assets would
facilitate the ability of shippers and
receivers to adjust to the reductions; (3)
reductions are necessary to address
systemic problems with inefficient
behavior or practices by shippers or
receivers; or (4) rail carriers have
implemented tariff provisions or
program features—such as credits for
26 On the other hand, circumstances within a rail
user’s reasonable control might include, for
example, taking reasonable steps to: Ensure that its
facility is right-sized for its expected volume of
incoming traffic when it receives reliable,
consistent service; manage its pipeline to mitigate
incoming car volumes that exceed its capacity; and
order and release cars in the manner specified by
reasonable tariff requirements.
27 See 49 U.S.C. 10101 (stating, in pertinent part,
‘‘[i]n regulating the railroad industry, it is the policy
of the United States Government . . . (4) to ensure
the development and continuation of a sound rail
transportation system with effective competition
among rail carriers and with other modes, to meet
the needs of the public and the national defense;
. . . [and] (14) to encourage and promote energy
conservation’’).
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bunching, service variabilities, and
certain capacity constraints—that place
the avoidance of demurrage charges
within the reasonable control of the rail
user.
The Board also recognizes an
important goal of demurrage in
incentivizing the behavior of rail users
to encourage the efficient use of rail
assets, which benefits rail carriers and
users alike. Rail carriers and users have
a shared responsibility in this
endeavor—rail carriers to implement
and administer reasonable rules and
charges designed to accomplish this
goal, and rail users to recognize and
accept responsibility for promoting
efficiencies within their reasonable
control.
Although the Board will not, as
certain commenters suggest, take more
binding action pertaining to free time,28
it will closely scrutinize demurrage
rules and charges where free time has
been reduced, or where no credit days
have been provided. The Board
encourages all stakeholders to take the
principles and considerations discussed
above into account going forward. The
Board will do likewise in future
proceedings, along with all evidence
and argument the parties present.
Bunching
Bunching-related issues were
identified as a common problem by rail
users across a broad range of industries
in the Oversight Proceeding. Some rail
carriers in that proceeding stated that
they award credits for bunching in some
instances but did not describe with
specificity how these credits are
awarded or did not otherwise address
the concerns expressed by rail users.
See NPPS, EP 757, slip op. at 13–14
(describing comments submitted in
Docket No. EP 754).
In response to the NPPS, rail users
reiterate that bunching is a significant
problem that has increased following
changes to rail carriers’ operating
plans,29 has become even more difficult
28 See, e.g., TFI Comments 4–5; NITL Comments
4–5; CRA Comments 5–6; AF&PA Comments 4–5;
AISI Comments 7–8; Dow Comments 3–4;
Diversified CPC Comments 3; NGFA Comments 11–
12; ISRI Comments 4–5; Joint Reply (ACC, CRA,
TFI, NITL) 8–9.
29 See, e.g., CRA Comments 7 (stating that
bunching has increased amid changes implemented
by some railroads, despite members’ best efforts to
spread out car deliveries, resulting in demurrage
charges that are not within their reasonable
control); NGFA Comments 13 (stating that bunching
of empty return cars has increased due to
‘‘unilaterally imposed reductions in service
frequency as an outgrowth of carriers’
implementation of the so-called precision schedule
railroad [(PSR)] operating model’’); AFPM
Comments 8 (stating that ‘‘[b]unched deliveries
increased in frequency following changes to rail
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to contend with due to free-time
reductions,30 and often is not
sufficiently addressed in either carrier
tariffs or the initial invoices.31 Some
commenters request the Board to
elaborate on what it would consider
‘‘reasonable rules and practices for
dealing with . . . variability in service
and carrier-caused bunching’’; 32 two
propose mechanisms keyed to trip-plan
compliance; 33 and some state that
upstream bunching is an issue best
resolved among the railroads
participating in the movement without
involving the rail user.34
Certain rail carriers and ASLRRA
express concerns about addressing
upstream bunching in the policy
statement. CP argues that any attempt by
the Board to address upstream bunching
is contrary to law insofar as past
decisions have held rail users
responsible for demurrage unless the
delivering carrier is at fault. (CP
Comments 10 (citing Chrysler Corp. v.
N.Y. Cent. R.R., 234 I.C.C. 755, 758
(1939).) In addition, these commenters
note that because the delivering carrier
may have no knowledge of or ability to
control upstream events, it should not
be forced to bear the costs of delays
arising from off-line events. (CP
Comments 10–12; KCS Comments 3 n.2;
ASLRRA Reply 4–5.)
The types of factual scenarios
described by CP, KCS, and ASLRRA are
among the reasons why bunching
should be addressed on a case-by-case
basis in order to permit the Board to
properly consider all relevant
circumstances pertaining to an
assessment of demurrage. Further, it is
the Board’s view that carriers should
consider the actions of upstream carriers
when administering their demurrage
rules and charges. CP’s claim that Board
consideration of upstream bunching
would be contrary to law overlooks the
carriers’ operating plans’’); NCTA Comments 6–7
(stating that PSR has disrupted and undermined
service and created problems such as bunched rail
cars and insufficient locomotive availability).
30 See, e.g., AF&PA Comments 4–5 (stating that
challenges of contending with free time reductions
are aggravated by erratic service); TFI Comments 5
(same); NITL Comments 4 (same); CRA Comments
5–6 (same); Auriga/Indorama Comments 2 (same).
See also ACC Comments 2 (stating that free time is
necessary to account for carrier-caused bunching
and service variability); Dow Comments 3–4
(proposing minimum free time be keyed to service
variability).
31 See, e.g., AISI Comments 8–9 (stating that
carriers’ tariffs and billing practices do not properly
address railcar bunching); PCA Comments 5 (stating
that tariffs often fail to address bunching); Kinder
Morgan Comments 9–10 (same).
32 NAFCA Comments 7; see also OPPD Comments
5–6; WCTL/SEC Comments 5.
33 AFPM Comments 9; NGFA Comments 12–13.
34 ISRI Reply 5–6; Joint Reply (ACC, CRA, TFI,
NITL) 4.
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points discussed above and in the NPPS
explaining that demurrage rules and
charges must be designed to incentivize
rail users’ behavior.35 Where rail
carriers’ operating decisions or actions
result in bunched deliveries and
demurrage charges that are not within
the reasonable control of the rail user to
avoid, the overarching purpose of
demurrage is not fulfilled.36 When
analyzing the appropriateness of
demurrage charges, rail carriers should
consider these principles both when
cars originate with the serving carrier
and when cars originate on an upstream
carrier—as at least one carrier professes
to do.37 The Board encourages all rail
carriers to take these considerations into
account in their administration of
demurrage rules and charges,
particularly in evaluating whether their
automatic billing processes sufficiently
account for carrier-caused bunching
(especially for cars that originate on
their network 38 or bunching attributable
to missed switches), and in resolving
bunching disputes. In any future
proceeding, the Board expects to take
these considerations into account as
well, along with any additional
evidence and argument the parties may
choose to present.
Accessorial Charges
Some commenters request that the
Board clarify the definition of
accessorial charges for purposes of the
policy statement,39 and ask that the
policy statement include a more robust
35 The Board also notes that relief for upstream
bunching was available under the former uniform
code for rail users that chose the straight demurrage
plan. See NPPS, EP 757, slip op. at 4–5 & n.13.
36 As noted above, such circumstances might
include, for example, charging demurrage that
arises from bunched deliveries substantially in
excess of the number of cars ordered until the rail
user has had a reasonable opportunity to process
the excess volume of incoming cars. Other
circumstances that could bear on an assessment of
bunching include the considerations described in
note 26, above.
37 UP reportedly employs ‘‘a case-by-case process
within which customers are credited for carriercaused bunching.’’ UP Comments 10, June 6, 2019
(filing ID 247892), Oversight Proceeding, EP 754
(explaining that UP ‘‘takes into account customer
choices and actions, the actions of [UP’s] interline
partners, and [UP’s] own actions in determining
whether a customer should be charged for
bunching-related demurrage’’ and reiterating that
‘‘[UP] does not charge the customer for bunching
that is beyond the customer’s reasonable control’’).
38 The Board recognizes that carriers may lack
information needed to take upstream bunching into
account in their initial invoices, but encourages
them to do so when resolving bunching-related
disputes. The Board further encourages carriers to
seek to reconcile any costs incurred as a result of
actions by the upstream carrier with that carrier.
39 See NAFCA Comments 4; OPPD Comments 3.
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discussion of how its general principles
apply to accessorial charges.40
As stated in the April 2019 Notice, EP
754, slip op. at 2 n.1, and the NPPS, EP
757, slip op. at 2 & n.3, accessorial
charges are generally understood to
include anything other than line-haul or
demurrage charges. Upon further
consideration, however, the Board notes
that many accessorial charges do not
serve the same efficiency-enhancing
purpose as demurrage or implicate
issues raised in the Docket No. EP 754
Oversight Proceeding. 41 The Board
therefore clarifies that, insofar as the
purpose of an accessorial charge is to
enhance the efficient use of rail assets
in the same way as demurrage, the
principles discussed in the policy
statement would generally apply. The
Board further clarifies that references to
accessorial charges in the policy
statement are intended to encompass
only such types of charges.42
Overlapping Charges
Many participants in the Oversight
Proceeding voiced concerns about
additional charges that had recently
been instituted by two Class I carriers
for claimed customer-caused congestion
or delay. See NPPS, EP 757, slip op. at
15 (describing comments submitted in
Docket No. EP 754 relating to a so-called
‘‘congestion’’ charge imposed by NSR
and a ‘‘not prepared for service’’ charge
imposed by UP).
As noted in the NPPS, both rail
carriers have since responded to these
specific concerns. See NPPS, EP 757,
slip op. at 15 (noting announcements
that NSR would discontinue the
‘‘congestion’’ charge and that UP had
clarified and limited the application of
the ‘‘not prepared for service’’ charge).
The Board was encouraged by these
actions but nevertheless found it
important to provide forward-looking
guidance indicating that it would have
concerns about such overlapping
demurrage-type charges. See id.
Commenters generally either broadly
supported or did not address the
Board’s proposed guidance. ACC,
however, argues that the discussion in
the NPPS did not fully capture the
40 See NGFA Comments 6–7, 19; NAFCA
Comments 5; OPPD Comments 3–4.
41 For example, some types of accessorial charges
are imposed for services such as weighing rail cars
or requests for special trains.
42 Such charges would include, by way of
example, the types of overlapping charges
discussed below. The Board notes that, based on the
descriptions given by the rail carriers, many of the
accessorial charges identified in the May 1, 2019
Class I data submissions in Docket No. EP 754
would appear to meet this criterion, including the
UP ‘‘deadhead’’ charge referenced by commenters
in both that docket and this proceeding.
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concerns about overlapping charges,
which may arise even when one of the
charges might be considered reasonable.
(ACC Comments 3.) The Board clarifies
that, when adjudicating specific cases, it
would have significant concerns about
the reasonableness of a tariff provision
that sought to impose an overlapping
charge intended to serve the same
purpose as demurrage, or a charge
arising from the assessment of
demurrage for congestion or delay that
is not within the reasonable control of
the rail user to avoid.43 In an individual
proceeding, the Board remains open to
evidence and argument that such a
charge could in some instance be
reasonable, but no such information was
presented in Docket No. EP 754 or in
this proceeding.
Invoicing and Dispute Resolution
In the Oversight Proceeding, the
Board heard repeatedly that demurrage
charges are difficult, time-consuming,
and costly to dispute and that invoices
are often inaccurate or lack information
needed to assess the validity of the
charges. Commenters also stated that,
under some carriers’ rules and practices,
charges must be disputed within limited
time frames, while carriers are often
slow to respond and disputes are often
denied. Some tariffs have imposed costs
or charges that serve as a deterrent to
pursuing a dispute or a formal claim.
See NPPS, EP 757, slip op. at 16
(describing comments submitted in
Docket No. EP 754). Rail users reiterate
these points in comments on the
proposed policy statement,44 and in
Demurrage Billing Requirements, Docket
No. EP 759, where the Board has
proposed to specify certain information
that Class I carriers must provide on or
with demurrage invoices to enable
recipients to, among other things, more
readily verify the validity of the
demurrage charges.45 Two commenters
43 The Board also notes that one commenter
continues to express concerns about the
‘‘deadhead’’ charge assessed by UP. (See NGFA
Reply 8–12.) Although not specifically addressed in
the NPPS, it appears these charges could similarly
raise issues related to overlapping charges or lack
of control but, consistent with the guidance in this
policy statement, such charges would need to be
examined on a case-by-case basis.
44 See, e.g., NACD Comments 4; OPPD Comments
6–7; AFPM Comments 10–11; NGFA Comments 16–
17; CRA Comments 8; NITL Comments 6–7.
45 Comments submitted by Class I carriers in
Docket No. EP 759 generally state that a substantial
amount of information is already provided with the
invoice or available through online platforms, while
ASLRRA claims that small carriers lack the
resources needed to provide detailed information to
invoice recipients. Rail carriers largely did not
address, in either this docket or Docket No. EP 759,
other concerns voiced by rail users about the billing
and dispute resolution process.
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also express concerns about untimely
billing.46
While the Board recognizes that some
rail carriers may already employ billing
and dispute resolution rules and
practices consistent with the principles
discussed in this policy statement, the
Board remains deeply troubled by these
reports, which come from rail users in
a broad range of industries that are
highly dependent on rail service. If rail
carrier rules and practices effectively
preclude a rail user from determining
what occurred with respect to a
particular demurrage charge, then the
user would not be able to determine
whether it was responsible for the delay;
the responsible party would not be
incentivized to modify its behavior; and
the demurrage charges would not
achieve their purpose. Transparency,
timeliness, and mutual accountability
are important factors in the
establishment and administration of
reasonable rules and charges for
demurrage.47 Rail users should be able
to review and, if necessary, dispute
charges without the need to engage a
forensic accountant or expend
‘‘countless hours and extra overhead’’ to
research charges and seek to resolve
disputes.48
As indicated in the NPPS, the Board
encourages all Class I carriers (and Class
II and Class III carriers to the extent they
are capable of doing so), taking into
account the principles discussed here,
to provide, at a minimum and on a carspecific basis: The unique identifying
information of each car; the waybill
date; the status of each car as loaded or
empty; the commodity being shipped;
the identity of the shipper, consignee,
and/or care-of party; the origin station
and state of the shipment; the dates and
times of actual placement, constructive
placement (if applicable), notification of
constructive placement (if applicable),
and release; and the number of credits
and debits issued for the shipment (if
applicable).49 The Board also expects
46 See NCTA Comments 3–4 (reporting that
shippers have experienced delays up to six months
in receiving demurrage bills and suggesting that ‘‘a
three month or 90-day time frame limit would be
more appropriate’’); FRCA Comments 5 (requesting
that carriers be required to make all invoice
information available on a monthly basis to avoid
the undisclosed accumulation of potential charges).
47 These general principles are also important
factors in assessing the reasonableness of rules and
practices pertaining to the assessment of accessorial
charges.
48 See International Paper Comments 4, May 7,
2019, Oversight Proceeding, EP 754; accord
Packaging Corporation of America Comments 4–5,
7–8, May 8, 2019, Oversight Proceeding, EP 754
(describing process that is ‘‘hugely time and
resource consuming’’).
49 In response to comments received in
Demurrage Billing Requirements, Docket No. EP
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rail carriers to bill for demurrage only
when the charges are accurate and
warranted, consistent with the purpose
of demurrage, and to send invoices on
a regular and timely basis.50
With respect to the dispute resolution
process more broadly, several
commenters request elaboration or
prescriptive action pertaining to the
Board’s initial guidance that shippers
and receivers should be given a
reasonable time period to request
further information and to dispute
charges, and the rail carrier likewise
should respond within a reasonable
time period.51 The Board will not take
prescriptive action at this time.
However, the Board emphasizes that the
time frames in question should be both
reasonable and balanced. By way of
example, the Board would have serious
concerns about a process that imposed
a short deadline to dispute charges or a
process that placed no meaningful
restrictions on the time carriers can take
to respond. Similarly, the Board would
have serious concerns about the
reasonableness of costs or charges that
could deter shippers and receivers from
pursuing a disputed claim. Although the
Board remains open to argument and
evidence in individual proceedings, no
apparent justification for imposing such
costs or charges was provided in the
record in the Oversight Proceeding or in
this proceeding.
Finally, some commenters call for the
Board to establish more streamlined
formal dispute resolution procedures.52
The Board notes that a variety of formal
mechanisms already exist, both within
and outside the Board’s purview, for
aggrieved parties to resolve demurrage
and accessorial charge disputes in an
efficient, cost-effective manner. For
example, three Class I carriers have
agreed to arbitrate certain demurrage
disputes under the binding, voluntary
program set forth in 49 CFR part 1108.53
In addition, BNSF was commended by
one commenter for including an
arbitration provision in its tariffs, see
NGFA Comments 28, May 8, 2019,
Oversight Proceeding, EP 754, and UP
reported that it has also agreed to
arbitrate contested demurrage and
accessorial charges using various
external programs, see UP Response to
Data Request 3 (pdf page 8), May 1,
2019, Oversight Proceeding, EP 754
(listing NGFA’s Rail Arbitration Rules
and AAR’s Interchange Rules).54
The Board commends rail carrier
commitments to address disputes about
demurrage and accessorial rules and
charges through arbitration or other
streamlined dispute resolution
procedures and strongly encourages all
rail carriers to commit to doing so.55
Likewise, the Board also strongly
encourages rail users to make use of
these procedures to resolve disputes
that they are unable to resolve
informally, and to keep the Board
apprised of their endeavors to do so.56
The Board hopes that such
commitments by all stakeholders to
make use of these procedures will make
it unnecessary for the Board to revisit
these issues. However, the Board
remains open to doing so if stakeholders
encounter obstacles to the effective use
of the mechanisms already in place. The
Board also expresses its commitment to
resolve disputes brought before it in an
expeditious manner. See 49 U.S.C.
10101(2) (‘‘it is the policy of the United
States government . . . to require fair
and expeditious regulatory decisions
when regulation is required’’).
759, the Board is serving today a supplemental
notice inviting parties to comment on certain
modifications and additions to the notice of
proposed rulemaking’s proposal regarding
information that Class I carriers would be required
to provide on or with demurrage invoices to
promote transparency and accountability.
50 The Board declines to discuss specific time
periods but notes that it would have significant
concerns if (absent extenuating circumstances) a
carrier permitted demurrage or accessorial charges
to accrue over several months without invoicing the
customer. The Board also notes that, according to
information contained in the record in Docket No.
EP 754 and various demurrage cases, carriers often
appear to bill on a monthly cycle.
51 See, e.g., WCTL/SEC Comments 8 (asserting
that carriers should be required to ‘‘respond
meaningfully’’ to disputed charges within 30 days);
NGFA Comments 17 (requesting greater specificity;
recommending a minimum of 30 days for rail user
to request additional information and dispute an
erroneous charge); NAFCA Comments 8–9
(requesting greater specificity and more definitive
Board position that carriers’ dispute resolution
processes should be expedited); OPPD Comments 7
(requesting greater specificity).
52 AFPM Comments 14; PRFBA Comments 1;
NGFA Comments 3, 7–8, 21–22; see also NGFA
Comments 17 (stating that tariffs should clearly
articulate the carrier’s dispute resolution process,
including whether it is willing to arbitrate disputes
and if so, in which forum).
53 See UP Notice (June 21, 2013), CSXT Notice
(June 28, 2019), and CN Notice (July 1, 2019),
Assessment of Mediation & Arbitration Procedures,
EP 699.
54 The Board also notes that, in addition to
binding arbitration, parties can make use of the
informal mediation process conducted by the
Board’s Rail Customer and Public Assistance
(RCPA) program or formal mediation under 49 CFR
part 1109 to attempt to negotiate an agreement
resolving some or all of the issues involved in a
dispute.
55 The Board also encourages carriers to specify
their dispute resolution procedures in their tariffs,
consistent with their broadly expressed
commitment to transparency in the Docket No. EP
754 Oversight Proceeding.
56 The Board notes that its RCPA program (202–
245–0238; rcpa@stb.gov) is available to assist with
informal resolution of disputes. In addition, rail
users have several avenues available to them to
keep the Board apprised of demurrage-related
problems that they encounter, such as the RailroadShipper Transportation Advisory Council, the
National Grain Car Council, and the Rail Energy
Transportation Advisory Committee, all of which
meet regularly to provide guidance and advice to
Board members on rail transportation issues and
areas of concern. The Board therefore finds it
unnecessary to establish an advisory committee or
task force on demurrage as proposed by some
commenters. (See NGFA Comments 9–10; CRA
Comments 10–11.)
57 See, e.g., AF&PA Comments 7–8; TFI
Comments 8–9; WCTL/SEC Comments 7–8; ISRI
Comments 7; NGFA Comments 18; ISRI Reply 7–
8; Joint Reply (ACC, CRA, TFI, NITL) 7–8; WCTL/
SEC Reply 8.
58 See, e.g., AF&PA Comments 8 (arguing that the
Board should clarify that railroads must offer
credits for delays beyond the control of the shipper
or receiver and should identify credits on the
invoice); Kinder Morgan Comments 10–11
(asserting that credits that expire should be deemed
presumptively unreasonable unless the railroad
provides appropriate compensation); AISI
Comments 8 (same); ACC Comments 2 (stating that
the Board should adopt a policy calling for credits
to be issued for cars delivered more than a specific
time early or late from the original estimated time
of arrival); NGFA Comments 12–13 (stating that
carriers should be required to make tariffs
reciprocal and provide remuneration if rail cars are
not placed in accordance with the trip plan within
the same amount of free time allowed by the
carrier).
The Board acknowledges rail users’ claims that
providing such reciprocity may also promote more
efficient car supply, and that the shift in rail car
ownership from railroad-owned to private cars
documented in the record of the Oversight
Proceeding, see NPPS, EP 757, slip op. at 9–10,
raises issues from the perspective of private car
users. The Board remains open to argument and
evidence in future cases in which these issues may
be raised.
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Credits
A common concern voiced by rail
users in the Oversight Proceeding is that
various limitations imposed by rail
carriers diminish the utility of credits as
a means of offsetting debits that are
incurred, while carriers’ charges (i.e.,
debits) do not ‘‘expire’’ until they are
paid. See NPPS, EP 757, slip op. at 18
(describing comments submitted in
Docket No. EP 754). In the NPPS, the
Board provided preliminary guidance as
to how it would expect to evaluate
credit rules and practices when
adjudicating specific cases. In response,
rail users reiterate the concerns about
credits and broadly endorse the Board’s
suggestion that its concerns would be
allayed if rail users were compensated
for the value of unused credits at the
end of each month (rather than the
credits expiring).57 Some rail users call
for further action or guidance from the
Board.58 Some rail carriers state that
credits are intended to address specific
problems associated with carrier-caused
delay, and that allowing customers to
keep credits long after that delay would
undermine the purpose of the credit,
encourage inefficient use of rail assets,
and create operational and accounting
complexities. (CSXT Comments 3–4; CP
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Comments 12–14 (also claiming that
‘‘allowing [rail users] to monetize such
credits penalizes the carrier’’ and
‘‘raises similar concerns as banked
credits’’ about disincentivizing
efficiency); UP Comments 5–6 n.7.) UP
also states that its system is consistent
with agency precedent that favorably
discusses monthly reconciliation of
credits and debits and the expiration of
unused credits, and suggests that the
Board modify the policy statement to be
consistent with that precedent. (UP
Comments 5 (citing Red Ash Coal Co. v.
Central R.R. of N.J., 37 I.C.C. 460, 462
(1916).)
The Board remains troubled by the
lack of reciprocity between demurrage
credits and charges, particularly where
the expiration date of a credit, in effect,
undermines the value of credits
allocated for a problem or delay that
was not within the reasonable control of
a rail user. The Board also recognizes
that credits issued for carrier-caused
problems and delays serve a different
purpose than credits that function as a
proxy for free time, and that different
types of credits might have different
application methods or expiration time
frames. As stated in the NPPS, the Board
remains open to argument and evidence
in future cases that involve these issues.
However, the Board disagrees with the
concerns raised by the rail carriers on
this issue. The primary concern in the
NPPS was ‘‘whether the shipper or
receiver has been afforded a reasonable
opportunity to make use of the credits,’’
and, contrary to the claims of some
carriers, (see CSXT Comments 3; CP
Comments 13; UP Comments 6 n.7), the
Board did not suggest that credits
should never expire. The Board’s
concerns about this issue would be
allayed if rail users were compensated
for the value of unused credits at the
end of each month. Compensating rail
users for the value of unused credits at
the end of each month could hold rail
carriers more accountable for service
failures that undermine network
efficiency and make rail users less likely
to incur future demurrage charges that
could be offset by the credits; 59 it would
also be consistent with the conventional
calendar month-end accounting practice
discussed in Red Ash.60
The Board reiterates its initial
guidance and declines to take further
59 Conversely, the Board notes that CP’s claim
that monetizing credits would ‘‘raise[] similar
concerns as banked credits’’ about disincentivizing
efficiency, (see CP Comments 14), is neither
explained nor persuasive as a matter of policy.
60 The Board also notes that the Red Ash case
involved credits issued under an average demurrage
plan to incentivize faster loading and unloading,
not credits issued for service failures.
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16:33 May 05, 2020
Jkt 250001
regulatory action related to credits at
this time. The Board intends to evaluate
how credit rules and practices are
administered in determining the
reasonableness of demurrage rules and
charges when adjudicating specific
cases, including, in particular, whether
the rail user has been afforded a
reasonable opportunity to make use of
the credits in question, before any
expiration date imposed by the rail
carrier. The Board reiterates that it
would also take into account the
purpose and function of the credits in
question and that these concerns would
be allayed if rail users were
compensated for the value of unused
credits at the end of each month (rather
than the credits expiring). The Board
remains open to argument and evidence
on all credit issues, including those
involving reciprocity.
Notice of Major Tariff Changes
Some commenters in the Oversight
Proceeding indicated that carriers
provided insufficient notice of major
changes to demurrage and accessorial
tariff provisions, particularly with
respect to changes involving reductions
in free time. Among other things, rail
users commented that they were
suddenly forced to try to redesign, on
short notice, operations and
infrastructure that had been designed
around a 48-hour free-time provision,
and noted that rail carriers had many
months to adjust their operations to
implement new operating plans but
often expected customers to comply
with their new rules and practices in 45
days. See NPPS, EP 757, slip op. at 19
(describing comments submitted in
Docket No. EP 754). Rail users reiterate
these points in this proceeding. Some
comments call for prescriptive guidance
that is not appropriate for inclusion in
a policy statement; 61 others either tend
to support or do not address the
principles discussed in the NPPS.62 UP
states that it will continue to provide
customers with ‘‘reasonable notice of
accessorial and demurrage tariff changes
but not less than 60 days’ notice.’’ (UP
Comments 3.)
The Board reiterates the guidance it
provided in the NPPS. As a matter of
commercial fairness, and consistent
with the principles discussed in this
policy statement, railroads should
provide sufficient notice of major
changes to demurrage and accessorial
tariffs to enable shippers and receivers
61 See NGFA Comments 19; CRA Comments 10;
AFPM Comments 12–13.
62 See, e.g., AF&PA Comments 8 (stating that it
‘‘strongly agrees with the Board’s views’’); NITL
Comments 8 (stating that it ‘‘strongly supports the
Board’s proposed principles’’).
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26873
to evaluate, plan, and undertake any
feasible, reasonable actions to avoid or
mitigate new resulting charges. The
Board recognizes that a 20-day notice
period is statutorily prescribed for
changes to common carrier rates and
service terms. 49 U.S.C. 11101(c).
However, in the Docket No. EP 754
Oversight Proceeding, rail carriers
themselves recognized that 20 days was
not sufficient lead time in many cases,
and noted that they generally provided
between 45 and 60 days, periods that
other commenters found were still
insufficient. Rail carriers also described
various other actions taken to help
shippers and receivers adapt, such as
delayed billing and working with those
that needed more flexibility. See NPPS,
EP 757, slip op. at 19.
The Board continues to encourage rail
carriers to take these and other
initiatives to support all rail users facing
the financial, operational, or other
challenges of adjusting to major tariff
changes, to thoughtfully consider the
amount of advance notice that should be
given, and to be especially cognizant of
and accommodating to any unique
obstacles a shipper or receiver may face
in adapting to demurrage and
accessorial tariff changes.
Demurrage Billing to Shippers Instead
of Warehousemen
In the Oversight Proceeding, several
participants expressed concerns about
the impact of demurrage on third-party
intermediaries who handle goods
shipped by rail but have no property
interest in them (also commonly known
as warehousemen, as noted above)
following the Board’s adoption of the
final rule in Demurrage Liability, Docket
No. EP 707 (codified at 49 CFR part
1333). The NPPS addressed these issues
and noted that the Board had initiated
a rulemaking on this subject. See NPPS,
EP 757, slip op. at 20–21. The Board
refers stakeholders to the decision being
issued concurrently herewith in
Demurrage Billing Requirements, Docket
No. 759, for further direction and
guidance pertaining to this issue.
General Concluding Considerations
The Board concludes by restating two
fundamental principles that all rail
carriers, and all shippers and receivers,
are encouraged to keep in mind. First,
demurrage rules and charges may be
unreasonable when they do not serve to
incentivize the behavior of shippers and
receivers to encourage the efficient use
of rail assets. In other words, charges
generally should not be assessed in
circumstances beyond the shipper’s or
receiver’s reasonable control. It follows,
then, that revenue from demurrage
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Federal Register / Vol. 85, No. 88 / Wednesday, May 6, 2020 / Rules and Regulations
charges should reflect reasonable
financial incentives to advance the
overarching purpose of demurrage and
that revenue is not itself the purpose.
Second, transparency, timeliness, and
mutual accountability by both rail
carriers and the shippers and receivers
they serve are important factors in the
establishment and administration of
reasonable demurrage and accessorial
rules and charges. Just as this policy
statement recognizes that there may be
different ways to implement and
administer reasonable rules and charges,
carriers are encouraged to recognize the
importance of working with rail users to
develop reasonable solutions to unique
situations those shippers and receivers
may face.
The Board expects to take all of the
principles discussed in this policy
statement into consideration, together
with all of the evidence and argument
that is before it, in evaluating the
reasonableness of demurrage and
accessorial rules and charges in future
cases.
Congressional Review Act. Pursuant
to the Congressional Review Act, 5
U.S.C. 801–808, the Office of
Information and Regulatory Affairs has
designated this policy statement as nonmajor, as defined by 5 U.S.C. 804(2).
Decided: April 30, 2020.
By the Board, Board Members Begeman,
Oberman, and Fuchs.
Jeffrey Herzig,
Clearance Clerk.
[FR Doc. 2020–09682 Filed 5–5–20; 8:45 am]
BILLING CODE 4915–01–P
DEPARTMENT OF COMMERCE
National Oceanic and Atmospheric
Administration
50 CFR Part 648
[Docket No. 200428–0122]
RIN 0648–BJ13
Magnuson-Stevens Act Provisions;
Fisheries of the Northeastern United
States; Atlantic Herring Fishery;
Framework Adjustment 6 and the
2019–2021 Atlantic Herring Fishery
Specifications
National Marine Fisheries
Service (NMFS), National Oceanic and
Atmospheric Administration (NOAA),
Commerce.
ACTION: Final rule.
AGENCY:
We are approving regulations
to implement Framework Adjustment 6
to the Atlantic Herring Fishery
SUMMARY:
VerDate Sep<11>2014
16:33 May 05, 2020
Jkt 250001
Management Plan, including the 2019–
2021 fishery specifications and
management measures, as
recommended by the New England
Fishery Management Council. This
action is intended to establish the
allowable 2020–2021 herring harvest
levels and river herring and shad catch
caps, consistent with the Atlantic
Herring Fishery Management Plan. The
specifications and management
measures are necessary to meet
conservation objectives while providing
sustainable levels of access to the
fishery.
DATES: Effective May 5, 2020.
ADDRESSES: Copies of this action,
including the Environmental
Assessment and the Regulatory Impact
Review/Initial Regulatory Flexibility
Analysis (EA/RIR/IRFA) prepared in
support of this action, are available at:
https://s3.amazonaws.com/nefmc.org/
Herring-FW6-DRAFT-finalsubmission.pdfr from Thomas A. Nies,
Executive Director, New England
Fishery Management Council, 50 Water
Street, Mill 2, Newburyport, MA 01950.
The supporting documents are also
accessible via the internet at: https://
www.regulations.gov.
FOR FURTHER INFORMATION CONTACT:
Allison Murphy, Fishery Policy Analyst,
978–281–9122.
SUPPLEMENTARY INFORMATION:
Background
Regulations implementing the
Atlantic Herring Fishery Management
Plan (FMP) for herring are located at 50
CFR part 648, subpart K. Regulations at
§ 648.200 require the Council to
recommend herring specifications for
NMFS’ review and publish in the
Federal Register, including: The
overfishing limit (OFL); acceptable
biological catch (ABC); annual catch
limit (ACL); optimum yield (OY);
domestic annual harvest; domestic
annual processing; U.S. at-sea
processing; border transfer; the sub-ACL
for each management area, including
seasonal periods as specified at
§ 648.201(d) and modifications to subACLs as specified at § 648.201(f); and
research set-aside (RSA) (up to 3 percent
of the sub-ACL from any management
area) for 3 years. These regulations also
allow the Council to recommend river
herring and shad catch caps as part of
the specifications.
Under the Magnuson-Stevens Fishery
Conservation and Management Act,
NMFS is required to publish proposed
rules for comment after preliminarily
determining whether they are consistent
with applicable law. The MagnusonStevens Act permits NMFS to approve,
PO 00000
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Fmt 4700
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partially approve, or disapprove
framework adjustment measures
proposed by the Council based only on
whether the measures are consistent
with the fishery management plan, plan
amendment, the Magnuson-Stevens Act
and its National Standards, and other
applicable law. Otherwise, NMFS must
defer to the Council’s policy choices.
Under the regulations guiding the
herring specifications process, NMFS
must review the Council’s
recommended specifications and
publish notice proposing specifications,
clearly noting the reasons for any
differences from the Council’s
recommendations. NMFS must then
publish a notice approving,
disapproving, or partially approving
these measures. NMFS is approving
measures to implement Framework 6 as
well as specifications and river herring/
shad catch caps for the herring fishery,
consistent with the Council’s
recommendations.
A new stock assessment for herring
was completed in June 2018. The
assessment concluded that although
herring were not overfished and
overfishing was not occurring in 2017,
poor recruitment would likely result in
a substantial decline in herring biomass
over the next several years. The stock
assessment estimated that recruitment
was at historic lows during the most
recent five years (2013–2017), but
projected that biomass could increase
after reaching a low in 2019 if
recruitment returns to average levels.
The final stock assessment summary
report is available on the Center’s
website (www.nefsc.noaa.gov/
publications/). The Magnuson-Stevens
Act requires NMFS to notify the Council
if a fishery has become overfished or is
approaching the condition of being
overfished. According to the Act, ‘‘a
fishery shall be classified as
approaching a condition of being
overfished if, based on trends in fishing
effort, fishery resource size, and other
appropriate factors, the Secretary
estimates that the fishery will become
overfished within two years.’’ In
February 2019, we notified the Council
that herring was approaching an
overfished condition.
Based on the stock assessment and at
the request of the Council, we reduced
the 2018 ACL in August 2018 (83 FR
42450) (from 104,800 mt to 49,900 mt)
and the 2019 ACL in February 2019 (84
FR 2760) (from 49,900 mt to 15,065 mt)
through inseason adjustments to prevent
overfishing and lower the risk of the
stock becoming overfished. The ACL
reduction for 2018 ensured at least a 50percent probability of preventing
overfishing, while the ACL reduction for
E:\FR\FM\06MYR1.SGM
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]]>Agencies
[Federal Register Volume 85, Number 88 (Wednesday, May 6, 2020)]
[Rules and Regulations]
[Pages 26866-26874]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-09682]
[[Page 26866]]
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SURFACE TRANSPORTATION BOARD
49 CFR Part 1333
[Docket No. EP 757]
Policy Statement on Demurrage and Accessorial Rules and Charges
AGENCY: Surface Transportation Board.
ACTION: Statement of Board policy.
-----------------------------------------------------------------------
SUMMARY: The Surface Transportation Board (STB or Board) is issuing
this policy statement, following public notice and comment, to provide
the public with information on principles the Board would consider in
evaluating the reasonableness of demurrage and accessorial rules and
charges.
DATES: This policy statement is effective on May 30, 2020.
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: 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 the national needs related to freight car use and distribution
and maintenance of an adequate car supply.\1\ Demurrage is a charge
that serves principally as an incentive to prevent undue car detention
and thereby encourage the efficient use of rail cars in the rail
network, while also providing compensation to rail carriers for the
expense incurred when rail cars are unduly detained beyond a specified
period of time (i.e., ``free time'') for loading and unloading. See Pa.
R.R. v. Kittaning 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.''); 49 CFR 1333.1; see also 49 CFR
pt. 1201, category 106.\2\ 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). As discussed below, this policy statement
pertains to accessorial charges that, like demurrage charges, are
designed or intended to encourage the efficient use of rail assets.
---------------------------------------------------------------------------
\1\ The Board's authority to regulate demurrage includes, among
other things, transportation under the exemptions set forth in 49
CFR 1039.11 (miscellaneous commodities exemptions) and section
1039.14 (boxcar transportation exemptions). The Board recently
amended those regulations to state more clearly that the exemptions
do not apply to the regulation of demurrage. It also revoked, in
part, the class exemption for the rail transportation of certain
agricultural commodities at 49 CFR 1039.10 so that the exemption
does not apply to the regulation of demurrage, making it consistent
with similar class exemptions covering non-intermodal rail
transportation. Exclusion of Demurrage Regulation from Certain Class
Exemptions (Demurrage Exclusion Final Rule), EP 760 (STB served Feb.
28, 2020).
\2\ In Demurrage Liability (Demurrage Liability Final Rule), EP
707, slip op. at 15-16 (STB served Apr. 11, 2014), the Board
clarified that private car storage is included in the definition of
demurrage for purposes of the demurrage regulations established in
that decision. The Board uses the same definition for purposes of
this policy statement.
---------------------------------------------------------------------------
On October 7, 2019, the Board issued, for public comment, a notice
of proposed statement of Board policy providing information with
respect to certain principles it would consider in evaluating the
reasonableness of demurrage and accessorial rules and charges. See
Policy Statement on Demurrage & Accessorial Rules & Charges (NPPS), EP
757 (STB served Oct. 7, 2019).\3\ As described in the NPPS, EP 757,
slip op. at 2-3, that action arose, in part, as a result of the
testimony and comments submitted in Oversight Hearing on Demurrage &
Accessorial Charges (Oversight Proceeding), Docket No. EP 754. The
Board commenced the Oversight Proceeding by notice served on April 8,
2019 (April 2019 Notice), following concerns expressed by users of the
freight rail network (rail users) \4\ and other stakeholders about
recent changes to demurrage and accessorial tariffs administered by
Class I carriers, which the Board was actively monitoring.\5\
---------------------------------------------------------------------------
\3\ Notice was published in the Federal Register, 84 FR 54,717
(Oct. 10, 2019).
\4\ As used in this policy statement, the term ``rail users''
broadly means any person or business that receives rail cars for
loading or unloading, regardless of whether that person or business
has a property interest in the freight being transported. This
policy statement uses the terms ``warehousemen'' or ``third-party
intermediaries'' to refer more specifically to those entities with
no property interest in the freight.
\5\ The April 2019 Notice announced a public hearing, at which
Class I carriers were directed to appear, and shippers, receivers,
third-party logistics providers, and other interested parties were
invited to participate. The notice also directed Class I carriers to
provide specific information on their demurrage and accessorial
rules and charges; required all hearing participants to submit
written testimony (both in advance of the hearing); and permitted
comments from interested parties who did not appear. The Board
received over 90 pre-hearing submissions; heard testimony over a
two-day period from 12 panels composed of, collectively, over 50
participants; and received 36 post-hearing comments. That record,
which is detailed in the NPPS and summarized below, is available in
Docket No. EP 754. See NPPS, EP 757, slip op. at 22-25 (Appendix
listing the parties who provided comments or testimony in the
proceeding).
---------------------------------------------------------------------------
In response to the NPPS, the Board received 44 comments and 13
replies.\6\ After considering the comments received, along with the
record in the Oversight Proceeding, the Board is issuing this statement
of Board policy. Through this policy statement, the Board expects to
facilitate more effective private negotiations and problem solving
between rail carriers and shippers and receivers on issues concerning
demurrage and accessorial rules and charges; to help prevent
unnecessary future issues and related disputes from arising; and, when
they do arise, to help resolve them more efficiently and cost-
effectively. The Board is not, however, making any binding
determinations by this policy statement. Nor is the Board promoting
complete uniformity across rail carriers' demurrage and accessorial
rules and charges; the principles discussed in this policy statement
recognize that there may be different ways to implement and administer
reasonable rules and charges.
[[Page 26867]]
When adjudicating specific cases, the Board will consider all facts and
arguments presented in such cases.
---------------------------------------------------------------------------
\6\ The Board received comments and/or reply comments from: The
American Chemistry Council (ACC); the American Forest & Paper
Association (AF&PA); American Fuel & Petrochemical Manufacturers
(AFPM); the American Iron and Steel Institute (AISI); the American
Short Line and Regional Railroad Association (ASLRRA); ArcelorMittal
USA LLC (AM); Archer Daniels Midland Company; the Association of
American Railroads (AAR); Auriga Polymers, Inc. a wholly owned
subsidiary of Indorama, NA, on behalf of Indorama Ventures
affiliates (Auriga/Indorama); the Automobile Carriers Conference;
Barilla America, Inc. (Barilla); BNSF Railway Company (BNSF);
Canadian National Railway Company (CN); Canadian Pacific Railway
Company (CP); The Chlorine Institute (CI); The Corn Refiners
Association (CRA); CSX Transportation, Inc. (CSXT); Diversified CPC
International, Inc. (Diversified CPC); Dow, Inc. (Dow); The
Fertilizer Institute (TFI); the Freight Rail Customer Alliance
(FRCA); Growth Energy; the Industrial Minerals Association--North
America (IMA-NA); the Institute of Scrap Recycling Industries, Inc.
(ISRI); International Paper; the International Warehouse Logistics
Association (IWLA); The Kansas City Southern Railway Company (KCS);
Kinder Morgan Terminals (Kinder Morgan); the National Association of
Chemical Distributors (NACD); the National Coal Transportation
Association (NCTA); the National Grain and Feed Association (NGFA)
(supported by the Agricultural Retailers Association; the Pet Food
Institute; the National Oilseed Processors Association and the North
American Millers' Association); The National Industrial
Transportation League (NITL); the National Mining Association; the
North American Freight Car Association (NAFCA); Omaha Public Power
District (OPPD); Peabody Energy Corporation; Plastic Express/PX
Services (Plastic Express); the Portland Cement Association (PCA);
the Private Railcar Food and Beverage Association, Inc. (PRFBA);
Union Pacific Railroad Company (UP); and the Western Coal Traffic
League and Seminole Electric Cooperative, Inc. (WCTL/SEC). Two
comments were filed after the comment deadline of November 6, 2019.
In the interest of a more complete record, the late-filed comments
are accepted into the record.
---------------------------------------------------------------------------
The Board encourages all carriers, and all shippers and receivers,
to work toward collaborative, mutually beneficial solutions to resolve
disputes on matters such as those raised in the Oversight Proceeding
\7\ and intends for this policy statement to provide useful guidance to
all stakeholders.
---------------------------------------------------------------------------
\7\ For example, KCS reportedly forgave significant demurrage
bills because the shipper had agreed to spend at least an equal
amount to build capacity to store its own cars. KCS Comments 5, May
8, 2019, Oversight Proceeding, EP 754.
---------------------------------------------------------------------------
Historical Overview and General Principles
The NPPS, EP 757, slip op. at 4-7, provides a detailed historical
overview and summary of general principles related to demurrage. The
Board here addresses some of the more general comments raised by
commenters before turning to comments about the specific issues
addressed in the policy statement.
Rail users generally support the proposed policy statement and
endorse its key principles. Many rail carrier commenters also either
generally support or do not take exception to the general principles
discussed in the proposed policy statement. In particular, several
Class I carriers voiced support for two key principles: That there may
be different ways to implement and administer reasonable demurrage
rules and practices, and that disputes pertaining to demurrage are best
resolved on a case-specific basis that considers all pertinent facts.
(See BNSF Comments 2-3; CSXT Comments 3; UP Comments 2; CN Reply
Comments 3.) AAR, however, raises objections, which are shared by some
carriers, to certain language in the proposed policy statement related
to compensation and the imposition of demurrage charges for delays
beyond a rail user's reasonable control. (See AAR Comments 1-6; CSXT
Comments 1-2; CP Comments 15-16; KCS Comments 3, 5.)
In its discussion of general principles, the Board stated that the
overarching purpose of demurrage is to incentivize 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. NPPS, EP 757, slip op. at 6-7 (citing
Kittaning, 253 U.S. at 323).\8\ That period of time must be
reasonable,\9\ and further, it is unreasonable to charge demurrage for
delays attributable to the rail carrier. See, e.g., R.R. Salvage &
Restoration, Inc., NOR 42102 et al., slip op. at 4 (``a shipper is not
required to compensate a railroad for delay in returning the asset if
the railroad and not the shipper is responsible for the delay''). The
Board also reiterated its concerns about demurrage charges for delays
that a shipper or receiver did not cause. NPPS, EP 757, slip op. at 7
(citing Utah Cent. Ry.--Pet. for Declaratory Order--Kenco Logistic
Servs., LLC, FD 36131, slip op. at 12 n.38 (STB served Mar. 20, 2019);
Exemption of Demurrage from Regulation, EP 462, slip op. at 4 (STB
served Mar. 29, 1996)). The Board stated that where demurrage charges
are imposed for circumstances beyond the shipper's or receiver's
reasonable control, they do not accomplish their purpose to incentivize
behavior to encourage efficiency--the stated rationale for and
objective of the rail carriers' demurrage rules and charges.\10\
---------------------------------------------------------------------------
\8\ Accord Increased Demurrage Charges, 1956, 300 I.C.C. 577,
585 (1957) (``The primary purpose of demurrage regulations is to
promote equipment efficiency by penalizing the undue detention of
cars.'' (citation omitted)).
\9\ See, e.g., Kittaning, 253 U.S. at 323 (``[T]he shipper or
consignee . . . is entitled to detain the car a reasonable time . .
. .''); R.R. Salvage & Restoration, Inc.--Pet. for Declaratory
Order--Reasonableness of Demurrage Charges, NOR 42102 et al., slip
op. at 4 (STB served July 20, 2010) (time period must be
reasonable).
\10\ See, e.g., citations infra note 23.
---------------------------------------------------------------------------
In its comments, AAR claims that the proposed policy statement
``ignore[s] the compensation function of demurrage.'' (AAR Comments 4.)
But the Board's regulations and the NPPS recognize this dual role, see
NPPS, EP 757, slip op. at 2 (citing 49 CFR 1333.1), and the Board
recognizes and reaffirms here that carriers should be compensated when
a rail user unduly detains rail assets. As noted by one rail carrier in
the Oversight Proceeding, ``Congress framed the purposes of demurrage
not in terms of cost recovery . . ., but rather in terms of
incentives.'' CN Comments 8, June 6, 2019, Oversight Proceeding, EP
754. In other words, under the operative statutory framework, demurrage
rules and charges must serve an incentivizing function. And, as AAR
itself recognized in the Oversight Proceeding, demurrage and storage
charges have long been considered ``primarily a penalty to deter undue
car detention, and to a lesser extent, compensation to the railroad for
expenses incurred.'' AAR Comments 4, June 6, 2019, Oversight
Proceeding, EP 754 (quoting R.Rs. Per Diem, Mileage, Demurrage &
Storage--Agreement, 1 I.C.C.2d 924, 933 (1985)).\11\ When carriers
established individualized demurrage programs in the post-Staggers Act
\12\ era, they stopped breaking out demurrage charges into
incentivizing (punitive) and compensatory (per diem) components. Cases
involving disputed charges are no longer decided on that basis, and, in
the Oversight Proceeding, AAR eschewed a return to the former
system.\13\ The compensatory function of demurrage is achieved, along
with its incentivizing function, by permitting the delivering carrier
to retain the charges assessed for a rail user's undue detention of
rail assets.
---------------------------------------------------------------------------
\11\ As the Interstate Commerce Commission also explained in
that decision, ``[d]emurrage and storage charges are assessed by
railroads against shippers or receivers for undue detention of
equipment.'' 1 I.C.C.2d at 933. ``Unlike per diem and allowances,
the primary purpose of demurrage and storage charges is not to
compensate the owner of the car, but to enhance efficient car use by
ensuring the prompt turnaround of equipment.'' Id. at 934.
\12\ Staggers Rail Act of 1980, Public Law 96-448, 94 Stat.
1895.
\13\ See AAR Comments 8, June 6, 2019, Oversight Proceeding, EP
754 (stating that ``[a]fter Staggers, it was no longer necessary or
appropriate to require railroads to use uniform demurrage tariffs
that included prescribed terms, compensatory and penalty elements,
and regulated rates'').
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AAR also argues that ``[t]he law is well settled that assessment of
demurrage charges in no way depends upon a finding of shipper or
consignee fault.'' (AAR Comments 6 (quoting Foreston Coal Int'l v.
Balt. & Ohio R.R., 349 I.C.C. 495, 500 (1975).) AAR's argument,
however, fails to take full account of the caselaw on this issue. As an
initial matter, AAR overlooks that each case stands on its own facts,
as the agency retains broad discretion to determine whether demurrage
charges, under all the circumstances of a particular case (including
fault), are reasonable under section 10702 and comport with the
statutory requirements specified in section 10746.\14\ Also overlooked
is the fact that, as AAR acknowledged in the Oversight Proceeding,
historically under ``straight'' demurrage programs,\15\ ``the
[[Page 26868]]
shipper or receiver was not assessed demurrage if severe weather or
other circumstances beyond their control prevent[ed] them from
returning cars on time.'' AAR Comments 5, June 6, 2019, Oversight
Proceeding, EP 754. AAR also overlooks more recent Board decisions,
discussed in the NPPS, EP 757, slip op. at 6-7, expressing concern
about holding a rail user liable for demurrage attributable to delays
beyond its reasonable control. Several carriers acknowledged at the
oversight hearing various circumstances in which it would not be
appropriate to charge a customer for delays the customer did not
cause,\16\ and UP and ASLRRA affirmatively state that demurrage should
not be charged to rail users for delays beyond their reasonable
control.\17\
---------------------------------------------------------------------------
\14\ See, e.g., N. Am. Freight Car Ass'n v. BNSF Ry., NOR 42060
(Sub-No. 1), slip op. at 8 (STB served Jan. 26, 2007) (stating that
Congress ``gave the Board `broad discretion to conduct case-by-case
fact-specific inquiries to give meaning to [section 10702's
statutory] terms, which are not self-defining' '' and explaining
that ``[t]his broad discretion is necessary to permit the Board to
tailor its analysis to the evidence proffered and arguments asserted
under a particular set of facts'' (citing Granite State Concrete Co.
v. STB, 417 F.3d 85, 92 (1st Cir. 2005))); N. Am. Freight Car Ass'n
v. STB, 529 F.3d 1166, 1170-71 (DC Cir. 2008) (agency has ``wide
discretion in formulating appropriate solutions'' when dealing with
complex matters within its expertise, including claims involving
statutory obligations under section 10702 and section 10746
(citation omitted)).
\15\ Historically, the detention of freight rail cars was
governed by a uniform code of demurrage rules and charges, which
offered shippers and receivers two alternative methods for computing
demurrage: Straight demurrage and average demurrage. Under the
straight demurrage plan, which historically applied in the absence
of any other arrangement with the rail carrier, charges were applied
and billed on individual cars at daily rates when cars were detained
beyond the allowable free time. See NPPS, EP 757, slip op. at 4. The
Board mentions straight demurrage programs here not to suggest a
return to the former system but rather to give a more complete
account of the law and history on the issue.
\16\ See, e.g., UP Comments 10-11, 14, 23, June 6, 2019 (filing
ID 247892), Oversight Proceeding, EP 754; Hr'g Tr. 146:11 to 147:1,
May 22, 2019, Oversight Proceeding, EP 754 (CSXT agreeing that
demurrage should not be assessed where charges penalize a shipper
who is powerless to avoid or abate the detention); Hr'g Tr. 923:8 to
924:16, May 23, 2019, Oversight Proceeding, EP 754 (BNSF agreeing
that ``it's not a strict liability standard in the law or in
practice'' and noting language in its tariffs excusing demurrage for
force majeure events beyond the control of a shipper).
\17\ See UP Comments 3 (also endorsing same principle for
accessorial charges); ASLRRA Comments 4.
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In sum, the Board finds that AAR's arguments are misplaced, as
there have been long-standing concerns about rail users being held
responsible for circumstances beyond their reasonable control. The
proposed policy statement properly focused on the foundational
questions that arise in determining whether demurrage rules and charges
are reasonable and designed to fulfill national needs related to
freight car use and distribution, and to maintenance of an adequate car
supply, under 49 U.S.C. 10746.\18\
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\18\ In response to AAR's assertion that a policy statement
cannot be used to change the law, (see AAR Comments 5), the Board
reiterates that this policy statement articulates what the Board may
consider in future decisions and does not constitute a binding
determination by the Board or seek to change the law. See NPPS, EP
757, slip op. at 3-4. The general principles and non-binding
considerations discussed in a statement of Board policy--
particularly one that was published for public comment--are well
within the bounds of appropriate agency action.
---------------------------------------------------------------------------
As noted above, rail users generally support the proposed policy
statement, and several agree with the Board that the principles
outlined in the NPPS would help prevent disputes from arising, and,
when they do arise, help resolve them more efficiently and cost-
effectively.\19\ Some voiced concern that carriers would not
voluntarily change certain rules and practices and called for further
prescriptive actions.\20\ Such prescriptive actions are not appropriate
for inclusion in a policy statement, and the Board declines at this
time to take further regulatory action beyond the actions taken in
Demurrage Exclusion Final Rule, Docket No. EP 760, and the actions
under consideration in Demurrage Billing Requirements, Docket No. EP
759. However, the Board will remain open to argument that these
concerns and suggestions should be considered in future proceedings in
assessing the reasonableness of demurrage rules and charges and whether
they comport with the objectives specified in section 10746. Further,
carriers are encouraged to thoughtfully consider rail users' concerns
and suggestions--along with the principles discussed below--as
potential solutions that would promote the goals of transparency,
timeliness, and mutual accountability stakeholders broadly profess to
embrace.
---------------------------------------------------------------------------
\19\ See, e.g., ACC Comments 3; ISRI Comments 8, 12 (also noting
that the policy statement appropriately ``provid[es] flexibility to
account for differing factual circumstances inherent in the receipt
and shipment of goods by rail''); Barilla Comments 2-3 (principles
will ``establish a foundation for the railroads and their customers
to recognize one another as partners when addressing issues and
potential [rule] changes in the future''; also noting that some
rules discussed at the oversight hearing have since been removed);
AF&PA Comments 3 (principles in the policy statement provide
``provide valuable guidance for the future administration of
demurrage and accessorial charges''); IMA-NA Comments 2 (same); CI
Comments 1 (policy statement ``should assist in resolving many of
the problems with demurrage and accessorial rules and charges'').
\20\ Several parties state that the Board should require
railroads to comply with and incorporate the policy statement into
their tariffs. (See, e.g., Kinder Morgan Comments 2, 11-12; AISI
Comments 6-7; PCA Comments 3-4; WCTL/SEC Comments 5. See also AM
Comments 5; NCTA Comments 4-5; NGFA Comments 3, 21-22 (arguing that
the Board should adopt binding rules or final guidelines and direct
railroads to conform within specified time); FRCA Comments 5
(arguing that ``the Board should require carriers to certify that
their rules and practices comply with Board's standards'' and impose
penalties if noncompliance is demonstrated).)
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Free Time
In the NPPS, EP 757, slip op. at 7-10, the Board described the
background and current issues surrounding free time--the period of time
allowed for a rail user to finish using rail assets and return them to
the railroad before demurrage charges are assessed.\21\ The Board
explained that free time, which railroads may set within reasonable
limits, helps temper adverse impacts to rail users of delays arising
from service variability, and plays a role in the credit and debit
rules and practices of many rail carriers. NPPS, EP 757, slip op. at 8.
---------------------------------------------------------------------------
\21\ As the Supreme Court has noted, ``the duty of loading and
of unloading carload shipments rests upon the shipper or consignee.
To this end he is entitled to detain the car a reasonable time
without any payment in addition to the published freight rate.''
Kittaning, 253 U.S. at 323.
---------------------------------------------------------------------------
The NPPS also explained that, until recently, rail carriers
typically provided at least 24 hours of free time (or one credit day)
to load rail cars and at least 48 hours of free time (or two credit
days) to unload cars.\22\ NPPS, EP 757, slip op. at 8 (citing Portland
& W. R.R.--Pet. for Declaratory Order--RK Storage & Warehousing, Inc.,
FD 35406, slip op. at 5 (STB served July 27, 2011).) Some Class I
carriers use alternative rules and practices for private cars in which
no credit days are given as a proxy for free time. NPPS, EP 757, slip
op. at 8-9.
---------------------------------------------------------------------------
\22\ Tariff provisions typically define the amount of free time
provided in terms of 24-hour periods or ``credit days,'' which
commonly begin to run at 12:01 a.m. the day following actual or
constructive placement (a status assigned when a rail car is
available for delivery but cannot actually be placed at the
receiver's destination because of a condition attributable to the
receiver such as lack of room on the tracks in the receiver's
facility, see Savannah Port Terminal R.R.--Pet. for Declaratory
Order--Certain Rates & Practices as Applied to Capital Cargo, Inc.,
FD 34920, slip op. at 3 n.6 (STB served May 30, 2008)).
---------------------------------------------------------------------------
Recent reductions in free time implemented by several Class I
carriers were a major focal point of the Oversight Proceeding. At least
one rail carrier reduced the number of credit days for loading and
unloading private cars, in some circumstances, from two to zero. Some
other rail carriers reduced free time for unloading from 48 to 24 hours
(or two credit days to one) for both private and railroad-owned cars.
In its April 2019 Notice, the Board directed the Class I carriers to
submit information on a list of specified subjects, including all
tariff changes since January 2016 pertaining to the amount of free time
allowed for loading and unloading rail cars and the reason(s) for the
change. April 2019 Notice, EP 754, slip op. at 2-3.
Rail carriers that reduced free time identified similar objectives
and rationales for doing so: to better align the behavior of shippers
and receivers in order to promote network fluidity for the benefit of
all rail users through improved service reliability and reduced cycle
times. These carriers
[[Page 26869]]
stated that the reductions were made to enable them to optimize network
efficiencies and provide better, more reliable service; that the
changes were not made to generate revenue; and that their hope is that
recent revenue increases generated from demurrage charges will be
temporary as shippers and receivers adapt and respond because, in the
words of one rail carrier, ``the intention is to improve service, not
drive cost increases for our customers.'' \23\ Rail carriers' post-
hearing submissions largely reiterated these points and expressed
willingness to work with customers to help them align their behavior to
better meet the reductions in free time. While the Board recognizes
that some changes and rail carrier outreach occurred following the
hearing, it is apparent that many issues related to free time remain.
---------------------------------------------------------------------------
\23\ UP Comments 2, May 8, 2019, Oversight Proceeding, EP 754;
see generally id. at 1-2; UP Comments 3, June 6, 2019 (filing ID
247876), Oversight Proceeding, EP 754; Norfolk Southern Railway
Company (NSR) Comments 2-3, May 8, 2019, Oversight Proceeding, EP
754; CSXT Comments 3-5, May 8, 2019, Oversight Proceeding, EP 754.
BNSF stated that it ``puts a tremendous amount of energy and
resources into the area of demurrage and storage for the express
purpose of collecting less demurrage revenue.'' BNSF Comments 5, May
8, 2019, Oversight Proceeding, EP 754.
---------------------------------------------------------------------------
In the Oversight Proceeding, interested parties from many
industries expressed multiple concerns about the recent reductions in
free time. Several stated that they lacked the physical capacity or
capital needed to expand facilities to meet the reduced free-time
periods. Many reported that bunching or otherwise unreliable service is
a major obstacle to meeting the reduced free-time periods, and that the
recent reductions have made it more difficult and costly to deal with
unreliable service because the free time that has been eliminated had
served as an important buffer against unpredictable railroad
performance. Rail users that rely on private rail cars expressed
additional objections and concerns and noted that there has been a
significant industry shift from rail carrier ownership of rail cars to
private car ownership since the enactment of section 10746. See NPPS,
EP 757, slip op. at 9-10 (describing comments submitted in Docket No.
EP 754). Although rail carriers presented data in the Oversight
Proceeding, generally on a system-wide basis, reflecting recent
improvements in some metrics, they presented limited data on the extent
to which changes to their demurrage rules and charges succeeded in
reducing loading and unloading times, as compared to the times prior to
the changes. See NPPS, EP 757, slip op. at 11.
Comments from rail users on the NPPS broadly reiterate these
concerns and suggest that the Board should take more binding
action.\24\ Comments from rail carriers on the NPPS were largely silent
about its discussion of free time. CP states that its customers adapted
to free-time reductions implemented in 2013 by adding track capacity,
using CP tools to better manage their pipeline, and adjusting labor
schedules, and that CP is moving more cars while demurrage charges have
decreased. (CP Comments 7.) UP states that it has worked
collaboratively with customers over the past year and that ``the vast
majority'' have successfully adapted to a reduction in free time from
48 hours to 24 hours. (UP Reply 2.)
---------------------------------------------------------------------------
\24\ See, e.g., TFI Comments 4-5; NITL Comments 4-5; CRA
Comments 5-6; AF&PA Comments 4-5; AISI Comments 7-8; Dow Comments 3-
4; Diversified CPC Comments 3; NGFA Comments 11-12; ISRI Comments 4-
5; Joint Reply (ACC, CRA, TFI, NITL) 8-9.
---------------------------------------------------------------------------
Demurrage serves a valuable purpose to encourage the efficient use
of rail assets (both equipment and track) by holding rail users
accountable when their actions or operations use those assets beyond a
specified period of time. That period of time must be reasonable and
consistent with the overarching purpose of demurrage. The Board
continues to have serious concerns about the adverse impacts of
reductions in free time to rail users, including the potentially
negative consequences of providing no credit days for private cars if
rail carriers do not have reasonable rules and practices for dealing
with, among other things, variability in service and carrier-caused
bunching, and for ensuring that rail users have a reasonable
opportunity to evaluate their circumstances and order incoming cars
before demurrage begins to accrue. Some of these reductions to free
time or credit days may make it more difficult for rail users to
contend with variations in rail service and therefore may not serve to
incentivize their behavior to encourage the efficient use of rail
assets.\25\ In some circumstances, which would need to be examined in
individual cases, such reductions may not be reasonable or consistent
with rail carriers' statutory charge to compute demurrage and establish
related rules in a way that fulfills the national needs specified in
section 10746. Where, for example, carrier-caused circumstances give
rise to a situation in which it is beyond the rail user's reasonable
control to avoid charges, the overarching purpose of demurrage is not
fulfilled.
---------------------------------------------------------------------------
\25\ Parties are, of course, free to negotiate and enter into
contracts that provide for any period of free time (including zero
credit days) to which the parties agree. 49 CFR 1333.2; Demurrage
Liability Final Rule, EP 707, slip op. at 25 (noting that the
Board's rules specifically allow parties to enter into contracts
pertaining to demurrage).
---------------------------------------------------------------------------
As stated in the NPPS, EP 757, slip op. at 12, such circumstances
might include, for example, charging demurrage that accrues as a result
of a missed switch (both cars scheduled to be switched and incoming
cars impacted by the missed switch); charging demurrage for transit
days to move cars from constructive placement in remote locations; or
charging demurrage that arises from bunched deliveries substantially in
excess of the number of cars ordered until the rail user has had a
reasonable opportunity to process the excess volume of incoming cars.
Changes in historical practices on which the rail user has long relied
(e.g., regarding switching frequency or delivery methods that deviate
from prior arrangements made by the parties) may also be taken into
account.\26\
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\26\ On the other hand, circumstances within a rail user's
reasonable control might include, for example, taking reasonable
steps to: Ensure that its facility is right-sized for its expected
volume of incoming traffic when it receives reliable, consistent
service; manage its pipeline to mitigate incoming car volumes that
exceed its capacity; and order and release cars in the manner
specified by reasonable tariff requirements.
---------------------------------------------------------------------------
Lastly, the Board remains concerned that, in some circumstances,
such reductions in free time may jeopardize important goals of the
nation's rail transportation policy by rendering freight rail service
less likely to meet the needs of the public and, if other modes are
even effectively an option for a rail user, less competitive with other
transportation modes.\27\
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\27\ See 49 U.S.C. 10101 (stating, in pertinent part, ``[i]n
regulating the railroad industry, it is the policy of the United
States Government . . . (4) to ensure the development and
continuation of a sound rail transportation system with effective
competition among rail carriers and with other modes, to meet the
needs of the public and the national defense; . . . [and] (14) to
encourage and promote energy conservation'').
---------------------------------------------------------------------------
The Board recognizes that reductions in free time might be
justified if there were evidence to show, by way of example, that (1)
advances in technology or productivity have made compliance with the
shorter time frames reasonably achievable; (2) service improvements
resulting from more efficient use of rail assets would facilitate the
ability of shippers and receivers to adjust to the reductions; (3)
reductions are necessary to address systemic problems with inefficient
behavior or practices by shippers or receivers; or (4) rail carriers
have implemented tariff provisions or program features--such as credits
for
[[Page 26870]]
bunching, service variabilities, and certain capacity constraints--that
place the avoidance of demurrage charges within the reasonable control
of the rail user.
The Board also recognizes an important goal of demurrage in
incentivizing the behavior of rail users to encourage the efficient use
of rail assets, which benefits rail carriers and users alike. Rail
carriers and users have a shared responsibility in this endeavor--rail
carriers to implement and administer reasonable rules and charges
designed to accomplish this goal, and rail users to recognize and
accept responsibility for promoting efficiencies within their
reasonable control.
Although the Board will not, as certain commenters suggest, take
more binding action pertaining to free time,\28\ it will closely
scrutinize demurrage rules and charges where free time has been
reduced, or where no credit days have been provided. The Board
encourages all stakeholders to take the principles and considerations
discussed above into account going forward. The Board will do likewise
in future proceedings, along with all evidence and argument the parties
present.
---------------------------------------------------------------------------
\28\ See, e.g., TFI Comments 4-5; NITL Comments 4-5; CRA
Comments 5-6; AF&PA Comments 4-5; AISI Comments 7-8; Dow Comments 3-
4; Diversified CPC Comments 3; NGFA Comments 11-12; ISRI Comments 4-
5; Joint Reply (ACC, CRA, TFI, NITL) 8-9.
---------------------------------------------------------------------------
Bunching
Bunching-related issues were identified as a common problem by rail
users across a broad range of industries in the Oversight Proceeding.
Some rail carriers in that proceeding stated that they award credits
for bunching in some instances but did not describe with specificity
how these credits are awarded or did not otherwise address the concerns
expressed by rail users. See NPPS, EP 757, slip op. at 13-14
(describing comments submitted in Docket No. EP 754).
In response to the NPPS, rail users reiterate that bunching is a
significant problem that has increased following changes to rail
carriers' operating plans,\29\ has become even more difficult to
contend with due to free-time reductions,\30\ and often is not
sufficiently addressed in either carrier tariffs or the initial
invoices.\31\ Some commenters request the Board to elaborate on what it
would consider ``reasonable rules and practices for dealing with . . .
variability in service and carrier-caused bunching''; \32\ two propose
mechanisms keyed to trip-plan compliance; \33\ and some state that
upstream bunching is an issue best resolved among the railroads
participating in the movement without involving the rail user.\34\
---------------------------------------------------------------------------
\29\ See, e.g., CRA Comments 7 (stating that bunching has
increased amid changes implemented by some railroads, despite
members' best efforts to spread out car deliveries, resulting in
demurrage charges that are not within their reasonable control);
NGFA Comments 13 (stating that bunching of empty return cars has
increased due to ``unilaterally imposed reductions in service
frequency as an outgrowth of carriers' implementation of the so-
called precision schedule railroad [(PSR)] operating model''); AFPM
Comments 8 (stating that ``[b]unched deliveries increased in
frequency following changes to rail carriers' operating plans'');
NCTA Comments 6-7 (stating that PSR has disrupted and undermined
service and created problems such as bunched rail cars and
insufficient locomotive availability).
\30\ See, e.g., AF&PA Comments 4-5 (stating that challenges of
contending with free time reductions are aggravated by erratic
service); TFI Comments 5 (same); NITL Comments 4 (same); CRA
Comments 5-6 (same); Auriga/Indorama Comments 2 (same). See also ACC
Comments 2 (stating that free time is necessary to account for
carrier-caused bunching and service variability); Dow Comments 3-4
(proposing minimum free time be keyed to service variability).
\31\ See, e.g., AISI Comments 8-9 (stating that carriers'
tariffs and billing practices do not properly address railcar
bunching); PCA Comments 5 (stating that tariffs often fail to
address bunching); Kinder Morgan Comments 9-10 (same).
\32\ NAFCA Comments 7; see also OPPD Comments 5-6; WCTL/SEC
Comments 5.
\33\ AFPM Comments 9; NGFA Comments 12-13.
\34\ ISRI Reply 5-6; Joint Reply (ACC, CRA, TFI, NITL) 4.
---------------------------------------------------------------------------
Certain rail carriers and ASLRRA express concerns about addressing
upstream bunching in the policy statement. CP argues that any attempt
by the Board to address upstream bunching is contrary to law insofar as
past decisions have held rail users responsible for demurrage unless
the delivering carrier is at fault. (CP Comments 10 (citing Chrysler
Corp. v. N.Y. Cent. R.R., 234 I.C.C. 755, 758 (1939).) In addition,
these commenters note that because the delivering carrier may have no
knowledge of or ability to control upstream events, it should not be
forced to bear the costs of delays arising from off-line events. (CP
Comments 10-12; KCS Comments 3 n.2; ASLRRA Reply 4-5.)
The types of factual scenarios described by CP, KCS, and ASLRRA are
among the reasons why bunching should be addressed on a case-by-case
basis in order to permit the Board to properly consider all relevant
circumstances pertaining to an assessment of demurrage. Further, it is
the Board's view that carriers should consider the actions of upstream
carriers when administering their demurrage rules and charges. CP's
claim that Board consideration of upstream bunching would be contrary
to law overlooks the points discussed above and in the NPPS explaining
that demurrage rules and charges must be designed to incentivize rail
users' behavior.\35\ Where rail carriers' operating decisions or
actions result in bunched deliveries and demurrage charges that are not
within the reasonable control of the rail user to avoid, the
overarching purpose of demurrage is not fulfilled.\36\ When analyzing
the appropriateness of demurrage charges, rail carriers should consider
these principles both when cars originate with the serving carrier and
when cars originate on an upstream carrier--as at least one carrier
professes to do.\37\ The Board encourages all rail carriers to take
these considerations into account in their administration of demurrage
rules and charges, particularly in evaluating whether their automatic
billing processes sufficiently account for carrier-caused bunching
(especially for cars that originate on their network \38\ or bunching
attributable to missed switches), and in resolving bunching disputes.
In any future proceeding, the Board expects to take these
considerations into account as well, along with any additional evidence
and argument the parties may choose to present.
---------------------------------------------------------------------------
\35\ The Board also notes that relief for upstream bunching was
available under the former uniform code for rail users that chose
the straight demurrage plan. See NPPS, EP 757, slip op. at 4-5 &
n.13.
\36\ As noted above, such circumstances might include, for
example, charging demurrage that arises from bunched deliveries
substantially in excess of the number of cars ordered until the rail
user has had a reasonable opportunity to process the excess volume
of incoming cars. Other circumstances that could bear on an
assessment of bunching include the considerations described in note
26, above.
\37\ UP reportedly employs ``a case-by-case process within which
customers are credited for carrier-caused bunching.'' UP Comments
10, June 6, 2019 (filing ID 247892), Oversight Proceeding, EP 754
(explaining that UP ``takes into account customer choices and
actions, the actions of [UP's] interline partners, and [UP's] own
actions in determining whether a customer should be charged for
bunching-related demurrage'' and reiterating that ``[UP] does not
charge the customer for bunching that is beyond the customer's
reasonable control'').
\38\ The Board recognizes that carriers may lack information
needed to take upstream bunching into account in their initial
invoices, but encourages them to do so when resolving bunching-
related disputes. The Board further encourages carriers to seek to
reconcile any costs incurred as a result of actions by the upstream
carrier with that carrier.
---------------------------------------------------------------------------
Accessorial Charges
Some commenters request that the Board clarify the definition of
accessorial charges for purposes of the policy statement,\39\ and ask
that the policy statement include a more robust
[[Page 26871]]
discussion of how its general principles apply to accessorial
charges.\40\
---------------------------------------------------------------------------
\39\ See NAFCA Comments 4; OPPD Comments 3.
\40\ See NGFA Comments 6-7, 19; NAFCA Comments 5; OPPD Comments
3-4.
---------------------------------------------------------------------------
As stated in the April 2019 Notice, EP 754, slip op. at 2 n.1, and
the NPPS, EP 757, slip op. at 2 & n.3, accessorial charges are
generally understood to include anything other than line-haul or
demurrage charges. Upon further consideration, however, the Board notes
that many accessorial charges do not serve the same efficiency-
enhancing purpose as demurrage or implicate issues raised in the Docket
No. EP 754 Oversight Proceeding. \41\ The Board therefore clarifies
that, insofar as the purpose of an accessorial charge is to enhance the
efficient use of rail assets in the same way as demurrage, the
principles discussed in the policy statement would generally apply. The
Board further clarifies that references to accessorial charges in the
policy statement are intended to encompass only such types of
charges.\42\
---------------------------------------------------------------------------
\41\ For example, some types of accessorial charges are imposed
for services such as weighing rail cars or requests for special
trains.
\42\ Such charges would include, by way of example, the types of
overlapping charges discussed below. The Board notes that, based on
the descriptions given by the rail carriers, many of the accessorial
charges identified in the May 1, 2019 Class I data submissions in
Docket No. EP 754 would appear to meet this criterion, including the
UP ``deadhead'' charge referenced by commenters in both that docket
and this proceeding.
---------------------------------------------------------------------------
Overlapping Charges
Many participants in the Oversight Proceeding voiced concerns about
additional charges that had recently been instituted by two Class I
carriers for claimed customer-caused congestion or delay. See NPPS, EP
757, slip op. at 15 (describing comments submitted in Docket No. EP 754
relating to a so-called ``congestion'' charge imposed by NSR and a
``not prepared for service'' charge imposed by UP).
As noted in the NPPS, both rail carriers have since responded to
these specific concerns. See NPPS, EP 757, slip op. at 15 (noting
announcements that NSR would discontinue the ``congestion'' charge and
that UP had clarified and limited the application of the ``not prepared
for service'' charge). The Board was encouraged by these actions but
nevertheless found it important to provide forward-looking guidance
indicating that it would have concerns about such overlapping
demurrage-type charges. See id. Commenters generally either broadly
supported or did not address the Board's proposed guidance. ACC,
however, argues that the discussion in the NPPS did not fully capture
the concerns about overlapping charges, which may arise even when one
of the charges might be considered reasonable. (ACC Comments 3.) The
Board clarifies that, when adjudicating specific cases, it would have
significant concerns about the reasonableness of a tariff provision
that sought to impose an overlapping charge intended to serve the same
purpose as demurrage, or a charge arising from the assessment of
demurrage for congestion or delay that is not within the reasonable
control of the rail user to avoid.\43\ In an individual proceeding, the
Board remains open to evidence and argument that such a charge could in
some instance be reasonable, but no such information was presented in
Docket No. EP 754 or in this proceeding.
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\43\ The Board also notes that one commenter continues to
express concerns about the ``deadhead'' charge assessed by UP. (See
NGFA Reply 8-12.) Although not specifically addressed in the NPPS,
it appears these charges could similarly raise issues related to
overlapping charges or lack of control but, consistent with the
guidance in this policy statement, such charges would need to be
examined on a case-by-case basis.
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Invoicing and Dispute Resolution
In the Oversight Proceeding, the Board heard repeatedly that
demurrage charges are difficult, time-consuming, and costly to dispute
and that invoices are often inaccurate or lack information needed to
assess the validity of the charges. Commenters also stated that, under
some carriers' rules and practices, charges must be disputed within
limited time frames, while carriers are often slow to respond and
disputes are often denied. Some tariffs have imposed costs or charges
that serve as a deterrent to pursuing a dispute or a formal claim. See
NPPS, EP 757, slip op. at 16 (describing comments submitted in Docket
No. EP 754). Rail users reiterate these points in comments on the
proposed policy statement,\44\ and in Demurrage Billing Requirements,
Docket No. EP 759, where the Board has proposed to specify certain
information that Class I carriers must provide on or with demurrage
invoices to enable recipients to, among other things, more readily
verify the validity of the demurrage charges.\45\ Two commenters also
express concerns about untimely billing.\46\
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\44\ See, e.g., NACD Comments 4; OPPD Comments 6-7; AFPM
Comments 10-11; NGFA Comments 16-17; CRA Comments 8; NITL Comments
6-7.
\45\ Comments submitted by Class I carriers in Docket No. EP 759
generally state that a substantial amount of information is already
provided with the invoice or available through online platforms,
while ASLRRA claims that small carriers lack the resources needed to
provide detailed information to invoice recipients. Rail carriers
largely did not address, in either this docket or Docket No. EP 759,
other concerns voiced by rail users about the billing and dispute
resolution process.
\46\ See NCTA Comments 3-4 (reporting that shippers have
experienced delays up to six months in receiving demurrage bills and
suggesting that ``a three month or 90-day time frame limit would be
more appropriate''); FRCA Comments 5 (requesting that carriers be
required to make all invoice information available on a monthly
basis to avoid the undisclosed accumulation of potential charges).
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While the Board recognizes that some rail carriers may already
employ billing and dispute resolution rules and practices consistent
with the principles discussed in this policy statement, the Board
remains deeply troubled by these reports, which come from rail users in
a broad range of industries that are highly dependent on rail service.
If rail carrier rules and practices effectively preclude a rail user
from determining what occurred with respect to a particular demurrage
charge, then the user would not be able to determine whether it was
responsible for the delay; the responsible party would not be
incentivized to modify its behavior; and the demurrage charges would
not achieve their purpose. Transparency, timeliness, and mutual
accountability are important factors in the establishment and
administration of reasonable rules and charges for demurrage.\47\ Rail
users should be able to review and, if necessary, dispute charges
without the need to engage a forensic accountant or expend ``countless
hours and extra overhead'' to research charges and seek to resolve
disputes.\48\
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\47\ These general principles are also important factors in
assessing the reasonableness of rules and practices pertaining to
the assessment of accessorial charges.
\48\ See International Paper Comments 4, May 7, 2019, Oversight
Proceeding, EP 754; accord Packaging Corporation of America Comments
4-5, 7-8, May 8, 2019, Oversight Proceeding, EP 754 (describing
process that is ``hugely time and resource consuming'').
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As indicated in the NPPS, the Board encourages all Class I carriers
(and Class II and Class III carriers to the extent they are capable of
doing so), taking into account the principles discussed here, to
provide, at a minimum and on a car-specific basis: The unique
identifying information of each car; the waybill date; the status of
each car as loaded or empty; the commodity being shipped; the identity
of the shipper, consignee, and/or care-of party; the origin station and
state of the shipment; the dates and times of actual placement,
constructive placement (if applicable), notification of constructive
placement (if applicable), and release; and the number of credits and
debits issued for the shipment (if applicable).\49\ The Board also
expects
[[Page 26872]]
rail carriers to bill for demurrage only when the charges are accurate
and warranted, consistent with the purpose of demurrage, and to send
invoices on a regular and timely basis.\50\
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\49\ In response to comments received in Demurrage Billing
Requirements, Docket No. EP 759, the Board is serving today a
supplemental notice inviting parties to comment on certain
modifications and additions to the notice of proposed rulemaking's
proposal regarding information that Class I carriers would be
required to provide on or with demurrage invoices to promote
transparency and accountability.
\50\ The Board declines to discuss specific time periods but
notes that it would have significant concerns if (absent extenuating
circumstances) a carrier permitted demurrage or accessorial charges
to accrue over several months without invoicing the customer. The
Board also notes that, according to information contained in the
record in Docket No. EP 754 and various demurrage cases, carriers
often appear to bill on a monthly cycle.
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With respect to the dispute resolution process more broadly,
several commenters request elaboration or prescriptive action
pertaining to the Board's initial guidance that shippers and receivers
should be given a reasonable time period to request further information
and to dispute charges, and the rail carrier likewise should respond
within a reasonable time period.\51\ The Board will not take
prescriptive action at this time. However, the Board emphasizes that
the time frames in question should be both reasonable and balanced. By
way of example, the Board would have serious concerns about a process
that imposed a short deadline to dispute charges or a process that
placed no meaningful restrictions on the time carriers can take to
respond. Similarly, the Board would have serious concerns about the
reasonableness of costs or charges that could deter shippers and
receivers from pursuing a disputed claim. Although the Board remains
open to argument and evidence in individual proceedings, no apparent
justification for imposing such costs or charges was provided in the
record in the Oversight Proceeding or in this proceeding.
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\51\ See, e.g., WCTL/SEC Comments 8 (asserting that carriers
should be required to ``respond meaningfully'' to disputed charges
within 30 days); NGFA Comments 17 (requesting greater specificity;
recommending a minimum of 30 days for rail user to request
additional information and dispute an erroneous charge); NAFCA
Comments 8-9 (requesting greater specificity and more definitive
Board position that carriers' dispute resolution processes should be
expedited); OPPD Comments 7 (requesting greater specificity).
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Finally, some commenters call for the Board to establish more
streamlined formal dispute resolution procedures.\52\ The Board notes
that a variety of formal mechanisms already exist, both within and
outside the Board's purview, for aggrieved parties to resolve demurrage
and accessorial charge disputes in an efficient, cost-effective manner.
For example, three Class I carriers have agreed to arbitrate certain
demurrage disputes under the binding, voluntary program set forth in 49
CFR part 1108.\53\ In addition, BNSF was commended by one commenter for
including an arbitration provision in its tariffs, see NGFA Comments
28, May 8, 2019, Oversight Proceeding, EP 754, and UP reported that it
has also agreed to arbitrate contested demurrage and accessorial
charges using various external programs, see UP Response to Data
Request 3 (pdf page 8), May 1, 2019, Oversight Proceeding, EP 754
(listing NGFA's Rail Arbitration Rules and AAR's Interchange
Rules).\54\
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\52\ AFPM Comments 14; PRFBA Comments 1; NGFA Comments 3, 7-8,
21-22; see also NGFA Comments 17 (stating that tariffs should
clearly articulate the carrier's dispute resolution process,
including whether it is willing to arbitrate disputes and if so, in
which forum).
\53\ See UP Notice (June 21, 2013), CSXT Notice (June 28, 2019),
and CN Notice (July 1, 2019), Assessment of Mediation & Arbitration
Procedures, EP 699.
\54\ The Board also notes that, in addition to binding
arbitration, parties can make use of the informal mediation process
conducted by the Board's Rail Customer and Public Assistance (RCPA)
program or formal mediation under 49 CFR part 1109 to attempt to
negotiate an agreement resolving some or all of the issues involved
in a dispute.
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The Board commends rail carrier commitments to address disputes
about demurrage and accessorial rules and charges through arbitration
or other streamlined dispute resolution procedures and strongly
encourages all rail carriers to commit to doing so.\55\ Likewise, the
Board also strongly encourages rail users to make use of these
procedures to resolve disputes that they are unable to resolve
informally, and to keep the Board apprised of their endeavors to do
so.\56\ The Board hopes that such commitments by all stakeholders to
make use of these procedures will make it unnecessary for the Board to
revisit these issues. However, the Board remains open to doing so if
stakeholders encounter obstacles to the effective use of the mechanisms
already in place. The Board also expresses its commitment to resolve
disputes brought before it in an expeditious manner. See 49 U.S.C.
10101(2) (``it is the policy of the United States government . . . to
require fair and expeditious regulatory decisions when regulation is
required'').
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\55\ The Board also encourages carriers to specify their dispute
resolution procedures in their tariffs, consistent with their
broadly expressed commitment to transparency in the Docket No. EP
754 Oversight Proceeding.
\56\ The Board notes that its RCPA program (202-245-0238;
[email protected]) is available to assist with informal resolution of
disputes. In addition, rail users have several avenues available to
them to keep the Board apprised of demurrage-related problems that
they encounter, such as the Railroad-Shipper Transportation Advisory
Council, the National Grain Car Council, and the Rail Energy
Transportation Advisory Committee, all of which meet regularly to
provide guidance and advice to Board members on rail transportation
issues and areas of concern. The Board therefore finds it
unnecessary to establish an advisory committee or task force on
demurrage as proposed by some commenters. (See NGFA Comments 9-10;
CRA Comments 10-11.)
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Credits
A common concern voiced by rail users in the Oversight Proceeding
is that various limitations imposed by rail carriers diminish the
utility of credits as a means of offsetting debits that are incurred,
while carriers' charges (i.e., debits) do not ``expire'' until they are
paid. See NPPS, EP 757, slip op. at 18 (describing comments submitted
in Docket No. EP 754). In the NPPS, the Board provided preliminary
guidance as to how it would expect to evaluate credit rules and
practices when adjudicating specific cases. In response, rail users
reiterate the concerns about credits and broadly endorse the Board's
suggestion that its concerns would be allayed if rail users were
compensated for the value of unused credits at the end of each month
(rather than the credits expiring).\57\ Some rail users call for
further action or guidance from the Board.\58\ Some rail carriers state
that credits are intended to address specific problems associated with
carrier-caused delay, and that allowing customers to keep credits long
after that delay would undermine the purpose of the credit, encourage
inefficient use of rail assets, and create operational and accounting
complexities. (CSXT Comments 3-4; CP
[[Page 26873]]
Comments 12-14 (also claiming that ``allowing [rail users] to monetize
such credits penalizes the carrier'' and ``raises similar concerns as
banked credits'' about disincentivizing efficiency); UP Comments 5-6
n.7.) UP also states that its system is consistent with agency
precedent that favorably discusses monthly reconciliation of credits
and debits and the expiration of unused credits, and suggests that the
Board modify the policy statement to be consistent with that precedent.
(UP Comments 5 (citing Red Ash Coal Co. v. Central R.R. of N.J., 37
I.C.C. 460, 462 (1916).)
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\57\ See, e.g., AF&PA Comments 7-8; TFI Comments 8-9; WCTL/SEC
Comments 7-8; ISRI Comments 7; NGFA Comments 18; ISRI Reply 7-8;
Joint Reply (ACC, CRA, TFI, NITL) 7-8; WCTL/SEC Reply 8.
\58\ See, e.g., AF&PA Comments 8 (arguing that the Board should
clarify that railroads must offer credits for delays beyond the
control of the shipper or receiver and should identify credits on
the invoice); Kinder Morgan Comments 10-11 (asserting that credits
that expire should be deemed presumptively unreasonable unless the
railroad provides appropriate compensation); AISI Comments 8 (same);
ACC Comments 2 (stating that the Board should adopt a policy calling
for credits to be issued for cars delivered more than a specific
time early or late from the original estimated time of arrival);
NGFA Comments 12-13 (stating that carriers should be required to
make tariffs reciprocal and provide remuneration if rail cars are
not placed in accordance with the trip plan within the same amount
of free time allowed by the carrier).
The Board acknowledges rail users' claims that providing such
reciprocity may also promote more efficient car supply, and that the
shift in rail car ownership from railroad-owned to private cars
documented in the record of the Oversight Proceeding, see NPPS, EP
757, slip op. at 9-10, raises issues from the perspective of private
car users. The Board remains open to argument and evidence in future
cases in which these issues may be raised.
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The Board remains troubled by the lack of reciprocity between
demurrage credits and charges, particularly where the expiration date
of a credit, in effect, undermines the value of credits allocated for a
problem or delay that was not within the reasonable control of a rail
user. The Board also recognizes that credits issued for carrier-caused
problems and delays serve a different purpose than credits that
function as a proxy for free time, and that different types of credits
might have different application methods or expiration time frames. As
stated in the NPPS, the Board remains open to argument and evidence in
future cases that involve these issues. However, the Board disagrees
with the concerns raised by the rail carriers on this issue. The
primary concern in the NPPS was ``whether the shipper or receiver has
been afforded a reasonable opportunity to make use of the credits,''
and, contrary to the claims of some carriers, (see CSXT Comments 3; CP
Comments 13; UP Comments 6 n.7), the Board did not suggest that credits
should never expire. The Board's concerns about this issue would be
allayed if rail users were compensated for the value of unused credits
at the end of each month. Compensating rail users for the value of
unused credits at the end of each month could hold rail carriers more
accountable for service failures that undermine network efficiency and
make rail users less likely to incur future demurrage charges that
could be offset by the credits; \59\ it would also be consistent with
the conventional calendar month-end accounting practice discussed in
Red Ash.\60\
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\59\ Conversely, the Board notes that CP's claim that monetizing
credits would ``raise[] similar concerns as banked credits'' about
disincentivizing efficiency, (see CP Comments 14), is neither
explained nor persuasive as a matter of policy.
\60\ The Board also notes that the Red Ash case involved credits
issued under an average demurrage plan to incentivize faster loading
and unloading, not credits issued for service failures.
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The Board reiterates its initial guidance and declines to take
further regulatory action related to credits at this time. The Board
intends to evaluate how credit rules and practices are administered in
determining the reasonableness of demurrage rules and charges when
adjudicating specific cases, including, in particular, whether the rail
user has been afforded a reasonable opportunity to make use of the
credits in question, before any expiration date imposed by the rail
carrier. The Board reiterates that it would also take into account the
purpose and function of the credits in question and that these concerns
would be allayed if rail users were compensated for the value of unused
credits at the end of each month (rather than the credits expiring).
The Board remains open to argument and evidence on all credit issues,
including those involving reciprocity.
Notice of Major Tariff Changes
Some commenters in the Oversight Proceeding indicated that carriers
provided insufficient notice of major changes to demurrage and
accessorial tariff provisions, particularly with respect to changes
involving reductions in free time. Among other things, rail users
commented that they were suddenly forced to try to redesign, on short
notice, operations and infrastructure that had been designed around a
48-hour free-time provision, and noted that rail carriers had many
months to adjust their operations to implement new operating plans but
often expected customers to comply with their new rules and practices
in 45 days. See NPPS, EP 757, slip op. at 19 (describing comments
submitted in Docket No. EP 754). Rail users reiterate these points in
this proceeding. Some comments call for prescriptive guidance that is
not appropriate for inclusion in a policy statement; \61\ others either
tend to support or do not address the principles discussed in the
NPPS.\62\ UP states that it will continue to provide customers with
``reasonable notice of accessorial and demurrage tariff changes but not
less than 60 days' notice.'' (UP Comments 3.)
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\61\ See NGFA Comments 19; CRA Comments 10; AFPM Comments 12-13.
\62\ See, e.g., AF&PA Comments 8 (stating that it ``strongly
agrees with the Board's views''); NITL Comments 8 (stating that it
``strongly supports the Board's proposed principles'').
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The Board reiterates the guidance it provided in the NPPS. As a
matter of commercial fairness, and consistent with the principles
discussed in this policy statement, railroads should provide sufficient
notice of major changes to demurrage and accessorial tariffs to enable
shippers and receivers to evaluate, plan, and undertake any feasible,
reasonable actions to avoid or mitigate new resulting charges. The
Board recognizes that a 20-day notice period is statutorily prescribed
for changes to common carrier rates and service terms. 49 U.S.C.
11101(c). However, in the Docket No. EP 754 Oversight Proceeding, rail
carriers themselves recognized that 20 days was not sufficient lead
time in many cases, and noted that they generally provided between 45
and 60 days, periods that other commenters found were still
insufficient. Rail carriers also described various other actions taken
to help shippers and receivers adapt, such as delayed billing and
working with those that needed more flexibility. See NPPS, EP 757, slip
op. at 19.
The Board continues to encourage rail carriers to take these and
other initiatives to support all rail users facing the financial,
operational, or other challenges of adjusting to major tariff changes,
to thoughtfully consider the amount of advance notice that should be
given, and to be especially cognizant of and accommodating to any
unique obstacles a shipper or receiver may face in adapting to
demurrage and accessorial tariff changes.
Demurrage Billing to Shippers Instead of Warehousemen
In the Oversight Proceeding, several participants expressed
concerns about the impact of demurrage on third-party intermediaries
who handle goods shipped by rail but have no property interest in them
(also commonly known as warehousemen, as noted above) following the
Board's adoption of the final rule in Demurrage Liability, Docket No.
EP 707 (codified at 49 CFR part 1333). The NPPS addressed these issues
and noted that the Board had initiated a rulemaking on this subject.
See NPPS, EP 757, slip op. at 20-21. The Board refers stakeholders to
the decision being issued concurrently herewith in Demurrage Billing
Requirements, Docket No. 759, for further direction and guidance
pertaining to this issue.
General Concluding Considerations
The Board concludes by restating two fundamental principles that
all rail carriers, and all shippers and receivers, are encouraged to
keep in mind. First, demurrage rules and charges may be unreasonable
when they do not serve to incentivize the behavior of shippers and
receivers to encourage the efficient use of rail assets. In other
words, charges generally should not be assessed in circumstances beyond
the shipper's or receiver's reasonable control. It follows, then, that
revenue from demurrage
[[Page 26874]]
charges should reflect reasonable financial incentives to advance the
overarching purpose of demurrage and that revenue is not itself the
purpose. Second, transparency, timeliness, and mutual accountability by
both rail carriers and the shippers and receivers they serve are
important factors in the establishment and administration of reasonable
demurrage and accessorial rules and charges. Just as this policy
statement recognizes that there may be different ways to implement and
administer reasonable rules and charges, carriers are encouraged to
recognize the importance of working with rail users to develop
reasonable solutions to unique situations those shippers and receivers
may face.
The Board expects to take all of the principles discussed in this
policy statement into consideration, together with all of the evidence
and argument that is before it, in evaluating the reasonableness of
demurrage and accessorial rules and charges in future cases.
Congressional Review Act. Pursuant to the Congressional Review Act,
5 U.S.C. 801-808, the Office of Information and Regulatory Affairs has
designated this policy statement as non-major, as defined by 5 U.S.C.
804(2).
Decided: April 30, 2020.
By the Board, Board Members Begeman, Oberman, and Fuchs.
Jeffrey Herzig,
Clearance Clerk.
[FR Doc. 2020-09682 Filed 5-5-20; 8:45 am]
BILLING CODE 4915-01-P
