[Federal Register Volume 85, Number 88 (Wednesday, May 6, 2020)]
[Rules and Regulations]
[Pages 26858-26865]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-09683]
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SURFACE TRANSPORTATION BOARD
49 CFR Part 1333
[Docket No. EP 759]
Demurrage Billing Requirements
AGENCY: Surface Transportation Board.
ACTION: Final rule.
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SUMMARY: The Surface Transportation Board (STB or Board) adopts a final
rule that requires Class I carriers to directly bill the shipper for
demurrage when the shipper and warehouseman agree to that arrangement
and so notify the rail carrier.
DATES: This rule is effective on June 20, 2020.
ADDRESSES: Requests for information or questions regarding this final
rule should reference Docket No. EP 759, and be submitted either via e-
filing or in writing addressed to Chief, Section of Administration,
Office of Proceedings, Surface Transportation Board, 395 E Street SW,
Washington, DC 20423-0001.
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: On October 7, 2019, the Board issued a
notice of proposed rulemaking to propose changes to its existing
demurrage regulations to address several issues regarding carriers'
demurrage billing practices. Demurrage Billing Requirements (NPRM), EP
759 (STB served Oct. 7, 2019).\1\ 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.\2\
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\1\ The proposed rule was published in the Federal Register, 84
FR 55109 (Oct. 15, 2019).
\2\ In Demurrage Liability, 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 of demurrage in this decision.
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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.
In the simplest demurrage case, a railroad assesses demurrage on
the consignor (the shipper of the goods) for delays in loading cars at
origin and on the consignee (the receiver of the goods) for delays in
unloading cars and returning them to the rail carrier at
destination.\3\
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\3\ As the Board noted in Demurrage Liability, EP 707, slip op.
at 2 n.2, the Interstate Commerce Act, as amended by the ICC
Termination Act of 1995 (ICCTA), Public Law 104-88, 109 Stat. 803
(1995), does not define ``consignor'' or ``consignee,'' though both
terms are commonly used in the demurrage context. Black's Law
Dictionary defines ``consignor'' as ``[o]ne who dispatches goods to
another on consignment,'' and ``consignee'' ``as [o]ne to whom goods
are consigned.'' Demurrage Liability, EP 707, slip op. at 2 n.2
(citing Black's Law Dictionary 327 (8th ed. 2004)). The Federal
Bills of Lading Act defines these terms in a similar manner.
Demurrage Liability, EP 707, slip op. at 2 n.2 (citing 49 U.S.C.
80101(1) & (2)). For purposes of this decision, the term ``shipper''
will sometimes be used to refer to either consignors or consignees.
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Demurrage, however, can also involve third-party intermediaries,
commonly known as warehousemen or terminal operators, that accept
freight cars for loading and unloading but have no property interest in
the freight being transported.\4\ Warehousemen do not typically own the
property being shipped (although, by accepting the cars, they can be in
a position to facilitate or impede car supply).
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\4\ This decision uses the terms ``warehousemen'' and ``third-
party intermediaries'' to refer to these entities.
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In response to the NPRM, the Board received a significant number of
comments from stakeholders.\5\ This
[[Page 26859]]
decision adopts the proposed rule with respect to requiring Class I
carriers to directly bill the shipper for demurrage when the shipper
and warehouseman agree to that arrangement and so notify the rail
carrier, with the modifications discussed below.\6\
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\5\ The Board received comments and replies from the following:
American Chemistry Council; American Forest & Paper Association
(AF&PA); American Fuel & Petrochemical Manufacturers (AFPM);
American Iron and Steel Institute; American Short Line and Regional
Railroad Association (ASLRRA); ArcelorMittal USA LLC (AM);
Association of American Railroads (AAR); Barilla America, Inc.
(Barilla); Canadian National Railway Company (CN); Canadian Pacific
Railway Company (CP); Corn Refiners Association (CRA); CSX
Transportation, Inc. (CSXT); Daniel R. Elliott; Diversified CPC
International, Inc. (CPC); Dow, Inc. (Dow); The Fertilizer Institute
(TFI); Freight Rail Customer Alliance (FRCA); Industrial Minerals
Association--North America; The Institute of Scrap Recycling
Industries, Inc. (ISRI); International Association of Refrigerated
Warehouses (IARW); International Liquid Terminals Association
(ILTA); International Paper; International Warehouse Logistics
Association; The Kansas City Southern Railway Company (KCS); Kinder
Morgan Terminals (Kinder Morgan); Lansdale Warehouse Company;
National Association of Chemical Distributors; The Mosaic Company;
National Coal Transportation Association (NCTA); The National
Industrial Transportation League (NITL); North American Freight Car
Association; Norfolk Southern Railway Company (NSR); Peabody Energy
Corporation (Peabody); The Portland Cement Association; Private
Railcar Food and Beverage Association, Inc.; Quad, Inc.; Union
Pacific Railroad Company (UP); Valley Distributing & Storage Company
(Valley Distributing); Western Coal Traffic League and Seminole
Electric Cooperative, Inc.; and Yvette Longonje.
\6\ In the NPRM, the Board also proposed requirements for
minimum information to be included on or with Class I carriers'
demurrage invoices. Concurrently with this decision, the Board is
serving a supplemental notice of proposed rulemaking to invite
comments on certain modifications and additions to the proposed
requirements. See Demurrage Billing Requirements, EP 759 (STB served
Apr. 30, 2020). The proposal pertaining to minimum information
requirements, and the comments on that proposal, will be addressed
in a separate decision.
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Background
This proceeding arises, in part, as a result of the testimony and
comments submitted in Oversight Hearing on Demurrage & Accessorial
Charges, Docket No. EP 754. In that proceeding, parties from a broad
range of industries raised concerns about demurrage billing practices,
including issues with the receipt of invoices containing insufficient
information. See NPRM, slip op. at 5-6 (providing overview of comments
received in Docket No. EP 754 related to the adequacy of demurrage
invoices). Warehousemen also raised concerns related to Class I
carriers' billing practices as applied to them following the Board's
adoption of the final rule in Demurrage Liability, EP 707 (STB served
Apr. 11, 2014), codified at 49 CFR part 1333, which established that a
person receiving rail cars for loading or unloading that detains the
cars beyond the free time provided in the rail carrier's governing
tariff may be held liable for demurrage if that person had actual
notice, prior to rail car placement, of the demurrage tariff
establishing such liability. See NPRM, EP 759, slip op. at 6-8
(providing overview of comments received in Docket No. EP 754 relating
to warehousemen).
After carefully considering the comments and testimony in Docket
No. EP 754, the Board issued the NPRM in this docket.\7\ As relevant
here, the Board has proposed a rule relating to the identity of the
party that should receive and be responsible for paying the demurrage
bill when shipments are handled by warehousemen. As explained in the
NPRM, before 2014, there was a split among the U.S. courts of appeals
regarding who should bear liability for demurrage charges when a
warehouseman that detains rail cars for too long is designated as
consignee in the bill of lading, but asserts either that it did not
know of its consignee status or that it affirmatively asked the shipper
not to designate it as consignee. The Board reviewed those court
decisions, determined that it needed to reexamine its policies to
assist in providing clarification, and instituted a proceeding in
Demurrage Liability, Docket No. EP 707. As noted above, in a final rule
issued in that docket, the Board established that a person, including a
warehouseman, receiving rail cars for loading or unloading that detains
the cars beyond the free time provided in the rail carrier's governing
tariff may be held liable for demurrage if that person had actual
notice, prior to rail car placement, of the demurrage tariff
establishing such liability. Demurrage Liability, EP 707, slip op. at
1, 17, 25. Under that final rule, the identification of a party in the
bill of lading no longer controls; as the Board explained, it was
``adopting a conduct-based approach to demurrage in lieu of one based
on the bill of lading.'' Id. at 15. The Board explained that its rule
was ``based on the theory that responsibility for demurrage should be
placed on the party in the best position to expedite the loading or
unloading of rail cars at origin or destination.'' Id. at 8.
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\7\ The Board has also issued a final policy statement
announcing principles the Board would consider in evaluating the
reasonableness of demurrage and accessorial rules and charges.
Policy Statement on Demurrage & Accessorial Rules & Charges, EP 757
(STB served Apr. 30, 2020).
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During the Docket No. EP 754 proceeding, warehousemen addressed the
circumstances under which, in their view, a rail carrier should bill
shippers directly for demurrage without requiring warehousemen to
assume responsibility for any charges left unpaid by the shipper.
Pointing out that, in some cases, shippers may be best positioned to
mitigate delays in returning cars, warehousemen asked that the Board
permit warehousemen and shippers to determine between themselves which
party should receive and be responsible for the demurrage bill.\8\
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\8\ See Kinder Morgan Terminals Comments 3-4, 19-20, May 8,
2019, Oversight Hearing on Demurrage & Accessorial Charges, EP 754.
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In the NPRM, the Board found that warehousemen and shippers are in
the best position to determine which party should bear responsibility
for demurrage charges and, therefore, that they should be able to make
agreements for payment of demurrage charges that reflect this
determination. NPRM, EP 759, slip op. at 11. Allowing shippers and
warehousemen to reach direct-billing agreements that impose liability
for demurrage charges on the party best positioned to mitigate the
delays that cause demurrage would promote the efficient use of rail
assets, thereby fulfilling the purpose of demurrage. Id. Accordingly,
the Board proposed a requirement that Class I carriers send any
demurrage bills related to transportation involving a warehouseman to
the shipper (without requiring the warehouseman to guarantee payment),
if the shipper and warehouseman agree to that arrangement and so notify
the carrier. Id. As discussed below, most shippers and warehousemen
commenters either support the Board's direct-billing proposal or are
neutral towards it, while the six Class I railroads that filed comments
(and AAR) uniformly oppose the proposal, and ASLRRA supports the
proposed exclusion of Class II and Class III carriers from the
proposal. In addition, Class I carriers, warehousemen, and shippers ask
the Board to clarify certain aspects of the proposal.
Final Rule
The Board now adopts a final rule requiring Class I carriers to
directly bill the shipper for demurrage when the shipper and
warehouseman agree to that arrangement and so notify the rail carrier.
As discussed below, the final rule reflects modifications made in
response to parties' comments, following the Board's review of the
issues raised. The final rule is below.
As noted above, most shippers and warehousemen who commented on
direct billing are in favor of the proposal or neutral towards it.\9\
Kinder Morgan
[[Page 26860]]
states that the direct-billing requirement is ``very fair, as it is
predicated upon agreement by the shipper and terminal and would help
end the gridlock that has prevented reasonable discussion and
resolution of individual disputes.'' (Kinder Morgan Comments 7.) Kinder
Morgan argues that direct billing will allow for more efficient
handling of demurrage disputes and will help end ``abusive practices by
railroads with respect to the collection of demurrage charges.'' (Id.
at 1, 8.) Likewise, ILTA contends that direct billing will bring
greater clarity to the assessment and collection of demurrage charges
and will help ensure fair treatment of warehousemen. (ILTA Comments 1.)
Some commenters ask the Board to clarify certain aspects of the
requirement to notify the carrier of the agreement. (ILTA Comments 3;
IARW Comments 1.) In addition, some shippers and warehousemen argue
that the rule should apply to Class II and Class III carriers. (See,
e.g., FRCA Comments 5.)
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\9\ See, e.g., Kinder Morgan Comments 1 (strongly supports the
proposed rule); ILTA Comments 4 (stating that it supports the
proposed rule even though it believes that returning to the
regulatory environment in existence before Demurrage Liability, EP
707, would be a better solution); IARW Comments 1 (strongly supports
the proposed rule); TFI Comments 4 (explaining that its primary
interest is in ensuring that the Board continue to permit shippers
and warehousemen to address demurrage in their contracts); NITL
Comments 11 (stating that it has no concerns with the Board's
direct-billing proposal); AM Comments 2 (stating that it supports
the proposal as long as shippers are not responsible for demurrage
absent an agreement with the warehouseman); Valley Distributing
Comments 1 (supporting the direct-billing proposal); but see Peabody
Comments 2 (stating that it does not support the direct-billing
proposal because it believes that the shipper should always be
invoiced, in part, to reduce the risk that carriers will bill two
parties for the same delay); AFPM Comments 9 (expressing concerns
that there could be miscommunication over which party is to receive
the invoice).
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CN, CP, CSXT, KCS, and AAR (joined by NSR and UP) oppose the
Board's direct-billing proposal. These commenters argue that they lack
privity of contract to enforce direct-billing agreements, (see CSXT
Comments 15; see also CN Comments 15; CP Comments 8-9; AAR Comments 6);
that the notice requirement, as proposed in the NPRM, is flawed, (CSXT
Comments 14-15; KCS Comments 3; CP Comments 8); that the direct-billing
proposal is inconsistent with 49 U.S.C. 10746, (CSXT Comments 12), and
the final rule in Demurrage Liability, EP 707, (CN Comments 17-18; AAR
Comments 4, 6); and that the direct-billing proposal would only
increase the difficulty and complexity of demurrage disputes, (CP
Comments 7-9; CSXT Comments 15-16).
The Board will adopt its direct-billing proposal with the
modifications discussed below.
Class I Carriers' Ability To Understand and Enforce Direct-Billing
Agreements
Many Class I carrier commenters and AAR argue that the NPRM's
direct-billing proposal is unworkable because carriers would be unable
to understand or enforce nuanced and complex agreements to which they
are not parties. CSXT and CN explain that agreements between shippers
and warehousemen can have substantially different provisions regarding
when shippers will accept demurrage liability. (CSXT Comments 15; CN
Comments 15.) CSXT expresses concern that shippers might limit the
circumstances in which they will accept liability. (CSXT Comments 15.)
In this regard, CN references Kinder Morgan's third-party complaint
against some of its customers, which shows that Kinder Morgan's
shipper-customers declined to accept across-the-board responsibility
for demurrage liability, pointing instead to various exceptions that
would place the liability on Kinder Morgan. (CN Comments 15.) CSXT
further argues that carriers ``will have no knowledge of the terms of
the agreement'' and therefore ``will have no ability to understand or
effectively enforce these contractual provisions and no ability to
adjudicate responsibility in situations where receiver and shipper
disagree as to fault.'' (CSXT Comments 15.) \10\ In order to ensure
accountability to the carrier, CP urges the Board to require the
shipper to ``expressly agree that it is liable to the railroad for
demurrage on its assets even if such demurrage is due to actions taken
by the warehouseman or actions of its other shippers.'' (CP Comments
9.)
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\10\ See also AAR Comments 6 (arguing carriers would have no
privity of contract to enforce agreements); CP Comments 8 (stating
that ``it is unclear whether CP would have a cognizable legal claim
against a shipper with whom it is not in privity of contract''); KCS
Comments 2 (opposing the Board's direct-billing proposal because
``issues such as lack of privity of contract could prevent rail
carriers from collecting demurrage that is rightly owed'').
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Kinder Morgan argues that such preconditions by the carrier are not
necessary for direct-billing arrangements, which Kinder Morgan points
out were common before the Docket No. EP 707 rule was adopted. (Kinder
Morgan Reply 14-16.) ILTA argues that Class I carriers' concern about
not being parties to direct-billing agreements ``confounds both legal
obligations and common sense.'' (ILTA Reply 2.)
The Board finds that the arguments by the Class I carriers and AAR
are overstated. As the court cases preceding Docket No. EP 707
indicated, the shipper, rather than the warehouseman, is often the
signatory to the bill of lading and the one that actually has the
privity of contract with the railroad. Indeed, that was why some courts
had held that, unless the warehouseman was aware that it had been named
as a party to the bill of lading, the shipper was the only party to
which the railroad could send the demurrage bill. See Demurrage
Liability, EP 707, slip op. at 3-4 (citing Norfolk S. Ry. v. Groves,
586 F.3d 1273, 1275-76 (11th Cir. 2009), cert. denied, 131 S. Ct. 993
(2011)). Under the final rule adopted in this decision, where shippers
and warehousemen jointly notify their serving railroads that the
shipper is the party to be billed, billing arrangements would
effectively proceed under the standard practices that prevailed for
much of the industry before the final rule in Docket No. EP 707 was
adopted. ILTA correctly notes that it is inconsistent for the carriers,
from a contractual privity standpoint, to prefer avoiding direct
billing of shippers with whom they are often signatories on the bill of
lading in favor of holding warehousemen, with whom they often hold no
contractual relationships, responsible for demurrage.
The intent in proposing the direct-billing requirement at 49 CFR
1333.3(b) was not to require Class I carriers to analyze or enforce any
specific conditions of liability agreed upon by the shipper and
warehouseman. Rather, in an agreement under the new direct-billing
rule, the shipper must agree to (1) receive the demurrage bill from the
Class I carrier and (2) be liable to the Class I carrier for demurrage
that accrues on all of the shipments received by the warehouseman from
the shipper during the term of the agreement.
Warehousemen and shippers may address the nuances of demurrage
liability between themselves in their commercial relationships, as the
Board has previously contemplated.\11\ However, Class I carriers would
not be responsible for billing in accordance with any specific
liability conditions that the warehouseman and shipper may have agreed
upon as between themselves.\12\ Rather, to the extent the shipper
believes that its commercial arrangement with the warehouseman requires
the warehouseman to reimburse the shipper for demurrage it has paid to
the carrier, the Board expects the shipper and warehouseman to resolve
this issue between themselves. In doing so, the warehouseman would
continue to have an incentive to make efficient use of rail cars in the
rail network, contrary to carriers' claims that, if the shipper
[[Page 26861]]
agrees to accept responsibility for demurrage, then the warehouseman
would not have any incentive to efficiently utilize rail cars. (See AAR
Comments 5; CN Comments 17; CP Comments 3.)
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\11\ See Demurrage Liability, EP 707, slip op. at 9 (finding
that its demurrage regulations ``should encourage warehousemen and
shippers to address demurrage liability in their commercial
arrangements'').
\12\ Any suggestions of Class I carriers that they will be
unable to hold shippers liable for demurrage at all when they are
not parties to the agreements between shippers and warehousemen are
unavailing. Under the direct-billing requirement, Class I carriers
must seek demurrage from shippers--just as they regularly did before
the Docket No. EP 707 rules were adopted--only when those shippers
give notification that they have agreed to be responsible for
demurrage under Sec. 1333.3(b).
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To clarify its intent in the regulations, the Board will revise
Sec. 1333.3(b) to specify that the Class I carrier must bill the
shipper for demurrage when a warehouseman ``has reached an agreement
with a shipper (or consignee) that the shipper (or consignee) shall be
billed for demurrage'' and so notifies the Class I carrier.\13\
Furthermore, the Board will add an additional sentence to clarify that,
pursuant to this paragraph, ``the shipper (or consignee) shall be
liable to the Class I carrier for demurrage but shall not be prohibited
from seeking payment from the third-party intermediary for demurrage
charges for which the third-party intermediary is responsible pursuant
to an agreement between the shipper (or consignee) and the third-party
intermediary.'' \14\ The full text of revised Sec. 1333.3(b) is set
forth below.
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\13\ Peabody's concern that the rule will make it more likely
that two parties could be billed for the same demurrage, (see
Peabody Comments 2), is unfounded, as the new rule will require that
when a shipper and warehouseman agree that the shipper is to be
billed for demurrage and convey such agreement to the railroad, the
railroad will bill the shipper, as agreed.
\14\ This clarification is intended to help ensure that shippers
and warehousemen continue to have the ability to address demurrage
in their contracts. (See TFI Comments 4; CRA Comments 4-5.) It also
addresses CP's concern that the proposed rules would ``put the
railroad in the middle'' of a dispute between the shipper and the
warehouseman, which CP alleges would be contrary to the provision in
the rail transportation policy that the Board should ``provide for
the expeditious handling and resolution of [disputes].'' (See CP
Comments 7-8 (citing 49 U.S.C. 10101(15)).)
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Notice of Direct-Billing Agreements
Class I carrier commenters seek clarification of the NPRM proposal
to require Class I carriers to bill the shipper for demurrage charges
``after being notified of the agreement by the shipper, consignee, or
third-party intermediary.'' NPRM, EP 759, slip op. at 14. CSXT
expresses concern that because the proposed rule requires notice by
only one party, the counterparty would be able to disclaim the validity
of the agreement to the carrier. (CSXT Comments 14-15.) Additionally,
both KCS and CP express concerns about the notice requirement as it
relates to interlined traffic. KCS states that, in some cases in which
traffic is interlined for destination delivery to the warehouseman, it
does not know the identity of the original shipper. (KCS Comments 3.)
CP likewise explains that much of its traffic originates or terminates
on CP, but not both, and when CP is the delivering carrier, it may not
have a relationship with the shipper. (CP Comments 8.)
Warehousemen commenters seek clarity about the form of the notice
contemplated by the NPRM. They argue that it is not feasible for
shippers and warehousemen to share their entire contracts with carriers
because doing so would expose confidential business information.
Accordingly, they ask the Board to specify that the notice requirement
may be satisfied by an excerpt or redacted version of the agreement, a
separate letter or an email between the parties, or a copy of standard
terms and conditions for storage. (ILTA Comments 3; IARW Comments 1.)
Based on these comments, the Board will revise and clarify the
notice requirements. First, to avoid the possibility that one of the
parties may subsequently disclaim the existence of an agreement and the
validity of the notice, the Board will require that the shipper and
warehouseman jointly notify the carrier of a direct-billing
agreement.\15\
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\15\ As discussed further in the Appendix below, this joint
notice may be given to the carrier by way of a letter, such as the
example provided in below. In addition, electronic signature of a
joint notice would be sufficient. See 15 U.S.C. 7001(a).
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Second, the Board clarifies that the notice requirement does not
expect that shippers and warehousemen share their contracts with Class
I carriers. As discussed above, shippers that enter into direct-billing
agreements must agree to be billed by Class I carriers for demurrage
and to accept responsibility to the carrier for paying demurrage bills.
Of course, the recipient of the bill, whichever party it may be, has
every right to challenge the appropriateness of the bill with the
carrier or with the Board. But any specific conditions under which the
shipper and warehouseman apportion ultimate responsibility are for the
shipper and warehouseman to address between themselves. If the shipper
believes that it has been billed for demurrage for which the
warehouseman is responsible under the terms of an agreement between the
shipper and warehouseman, then the shipper may seek reimbursement for
those charges from the warehouseman in accordance with their commercial
arrangement and applicable laws. However, the notice of the billing
agreement would be sufficient to provide the Class I carrier with the
information it needs in order to know where to send its demurrage
bills.
Third, to address commenters' concerns that a delivering carrier
may not always know the identity of the shipper in the direct-billing
agreement, the Board will require that the notice contain the shipper's
contact information.\16\ This information is necessary, not only for
interline carriers, but also for all Class I carriers that seek to
charge demurrage because Demurrage Liability, EP 707, established that
carriers must provide actual notice of their demurrage tariffs prior to
charging demurrage.\17\ The Board will also require that the notice
contain the date upon which the Class I carrier is to begin billing the
shipper for demurrage. Recognizing that Class I carriers will need
sufficient time to provide shippers with actual notice of the carriers'
demurrage tariffs and to update their billing systems to reflect new
direct-billing arrangements, this date shall be no earlier than 20 days
after the notice is provided.
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\16\ The Board contemplates that such contact information would
typically include the shipper's full name, mailing address,
telephone number, and email address.
\17\ As shown below, this requirement is re-designated in the
regulations as paragraph (a) of 49 CFR 1333.3.
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For the reasons discussed above, the Board will revise 49 CFR
1333.3(b), which is set forth in full in below, to state that Class I
carriers must directly bill a shipper for demurrage ``after being
jointly notified of the agreement by the shipper (or consignee) and
third-party intermediary.'' The Board will also add a sentence
clarifying that ``[t]he joint notice required by this paragraph may be
provided in hard copy or electronic form, and must contain the contact
information for the shipper (or consignee) who has agreed to be billed
(and liable to the Class I carrier) for demurrage and provide the date
upon which the Class I carrier is to begin billing the shipper (or
consignee) for demurrage (no earlier than 20 days after the notice is
provided).'' To address the concern discussed above regarding potential
disagreements between warehousemen and their customers about the
existence of direct-billing agreements, the Board will also modify
Sec. 1333.3(b) to require that a party to the agreement notify not
only the Class I carrier but also the other party to the agreement that
the agreement is no longer in force if and when appropriate.\18\ To
provide further
[[Page 26862]]
guidance on these notice requirements, the Board has provided a sample
letter in the Appendix below that the warehouseman and shipper may use
(but are not required to use) to notify the Class I carrier of their
direct-billing agreement.
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\18\ With respect to the Class I carriers' obligations for
direct billing, a statement from one party that the agreement has
been terminated is sufficient to end the direct-billing requirement,
regardless of any disputes as to the sufficiency of the termination
under the terms of the specific agreement between the shipper and
warehouseman.
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Direct-Billing Agreements in Relation to 49 U.S.C. 10746
CSXT argues that a direct-billing requirement is contrary to 49
U.S.C. 10746 because ``[f]orcing a railroad's demurrage billing to be
governed by contracts to which that railroad is not a party is directly
inconsistent with Congress's instruction that railroads have the right
to `compute demurrage charges and establish rules related to those
charges' in the first instance.'' (CSXT Comments 12.) However,
requiring railroads to bill shippers instead of warehousemen for
demurrage under specific circumstances does not limit the railroads'
ability to compute demurrage and determine when it will apply. Indeed,
as noted in Demurrage Liability, EP 707, slip op. at 3-4, the ICC, the
Board, and the courts have all weighed in on whom the railroads could
charge for demurrage. These sorts of actions are consistent with 49
U.S.C. 10702, which authorizes the Board to determine the
reasonableness of railroad-established rates, rules, and practices, and
with 49 U.S.C. 1321(a), which authorizes the Board to ``prescribe
regulations in carrying out . . . subtitle IV.'' \19\
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\19\ See also H.R. Rep. No. 104-311, at 100 (1995); H.R. Rep.
No. 104-422, at 178 (1995) (Conf. Rep.) (indicating that Sec. 10746
``retains the agency's authority over demurrage charges and related
rules'').
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In establishing this final rule, the Board exercises its regulatory
authority to ensure that carriers' demurrage practices allow shippers
and warehousemen, who are best positioned to determine which party
between them will typically be most able to promote prompt movement of
the cars, to make agreements that reflect this determination. Allowing
shippers and warehousemen to reach direct-billing agreements that
impose liability for demurrage charges on the party best positioned to
mitigate the delays that cause demurrage would promote the efficient
use of rail assets, thereby fulfilling the purpose of demurrage.
Direct-Billing Agreements in Relation to Demurrage Liability, EP 707
Class I carrier commenters also argue that the direct-billing
proposal contradicts the regulations established in Demurrage
Liability, EP 707. However, the Board may modify its rules as long as
its actions are rational and fully explained.\20\ Here, these
modifications comport with the spirit of Docket No. EP 707 (and with
the other actions the Board is currently pursuing regarding demurrage)
by advancing the principle that demurrage should be assessed on a party
that can alter its behavior to help promote the efficient use of rail
assets. Below, the Board discusses the direct-billing rule as it
relates to the current demurrage regulations at 49 CFR 1333.2 and
1333.3 and modifies 1333.2.
---------------------------------------------------------------------------
\20\ See Nat'l Cable & Telecommc'ns Ass'n v. Brand X internet
Servs., 545 U.S. 967, 981-82, 1001 (2005) (finding that an agency
``is free within the limits of reasoned interpretation to change
course if it adequately justifies the change''); Chevron, U.S.A.,
Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 863 (1984) (``An
initial agency interpretation is not instantly carved in stone.'').
---------------------------------------------------------------------------
1. 49 CFR 1333.2
CSXT and CN argue that a direct-billing rule contradicts the
language in 49 CFR 1333.2, which states that a ``serving carrier and
its customers (including those to which it delivers rail cars at origin
or destination) may enter into contracts pertaining to demurrage, but
in the absence of such contracts, demurrage will be governed by the
demurrage tariff of the serving carrier.'' Based on this provision,
CSXT and CN contend that the only contracts that can alter demurrage
liability are those to which the serving carrier is a party. (CN
Comments 13-14; CSXT Comments 12-13.) Some of the Class I carriers
indicate that they would be willing to enter into such contracts
provided they maintain their ability to hold warehousemen accountable
when they deem it appropriate to do so. (CN Comments 19-20; CSXT
Comments 12.)
As noted, the Board may modify existing regulations as long as its
actions are rational and adequately explained. Here, the language of
Sec. 1333.2 relied on by CN and CSXT permitting contracts between a
``serving carrier and its customers'' does not prevent the Board from
modifying the regulations to require direct billing to shippers in
certain circumstances, and it provides no basis for a finding that
payment guarantees from warehousemen are necessary in direct-billing
agreements. As before, under Sec. 1333.2, a ``serving carrier and its
customers (including those to which it delivers rail cars at origin or
destination) may enter into contracts pertaining to demurrage.'' The
final rule here merely adds another option: A direct-billing
arrangement between the shipper and warehouseman. To harmonize Sec.
1333.2 with the final rule, the Board will revise this section to be
consistent with the language in new Sec. 1333.3(b). Specifically, the
Board will add a sentence stating that ``a third-party intermediary may
enter into contracts with a shipper (or consignee) that the shipper (or
consignee) shall be billed for demurrage pursuant to Sec. 1333.3(b).''
To reflect the added sentence, the Board will update the section
heading to ``Who May Charge Demurrage and Who May Enter into Contracts
Pertaining to Demurrage.'' The full text of the revised section 1333.2
is set forth below.
Furthermore, the Board does not find that payment guarantees from
warehousemen are necessary in direct-billing agreements. After all,
before 2014, railroads regularly billed shippers, rather than
warehousemen, without holding warehousemen as guarantors.\21\ Moreover,
the Board rejects the view that warehousemen should be guarantors
because they are the only parties positioned to mitigate demurrage. As
discussed in the NPRM, EP 759, slip op. at 3, warehousemen, by
accepting rail cars, may be in a position to facilitate or impede car
supply. However, in some cases, shippers may be in a better position to
affect car supply by, for example, modifying the frequency or volume
with which they consign cars.\22\ The Board continues to find, as
discussed in the NPRM, that warehousemen and shippers are in the best
position to know which party can best promote the prompt handling of
cars and hence which party should bear responsibility for demurrage
charges.
---------------------------------------------------------------------------
\21\ As Kinder Morgan points out, guarantees from warehousemen
are unnecessary because ``if the railroads directly billed their
shippers, at the direction of the shipper and receiver as proposed
by the Board, they would simply be engaging in arrangements that
they have traditionally and customarily adopted and encouraged,
without issue, for many decades.'' (Kinder Morgan Reply 14-15.)
\22\ See, e.g., ILTA Comments 1, May 8, 2019, Oversight Hearing
on Demurrage & Accessorial Charges, EP 754; see also KCS Comments 3
(acknowledging that ``in some cases the warehouseman or terminal
operator is not the party that actually causes demurrage to accrue
and that responsibility lies with the shipper'').
---------------------------------------------------------------------------
2. 49 CFR 1333.3
In the NPRM, the Board stated that while the ``proposed rule would
amend the Board's current regulations to require Class I carriers to
issue invoices to shippers and to treat shippers as the ultimate
guarantors of payment (when the shipper and warehouseman agree to that
arrangement and have so notified the rail carrier), . . . rail carriers
are already permitted to do so under the current rule,'' which states
that parties
[[Page 26863]]
who receive rail cars ``may be held liable for demurrage.'' NPRM, EP
759, slip op. at 11 (quoting 49 CFR 1333.3). CN takes exception to the
Board's statement, contending that ``the [NPRM's] suggestions that a
rail carrier is already permitted to issue direct bills to shippers
because they are `listed on the bill of lading' has no support in the
actual language of the Part 1333 regulations,'' which ``effectively
forbid bills to nonreceivers in the absence of an explicit agreement to
that effect.'' (CN Comments 17; see also AAR Comments 4, 6.) CN
maintains that the proposed rule cannot be reconciled with the Board's
prior decision to `` `place demurrage liability on the receiver of rail
cars, regardless of their designation in the bill of lading.' '' (Id.
at 17-18 (quoting Demurrage Liability, EP 707, slip op. at 5).)
The Board does not agree with CN's interpretation of the rule
adopted in Docket No. EP 707. The Board pointed out in the NPRM (and in
the proposed policy statement in Docket No. EP 757) that Sec. 1333.3
states, in permissive terms, that parties who receive rail cars ``may
be held liable for demurrage.'' \23\ In other words, Sec. 1333.3
permits billing of warehousemen, but does not foreclose direct billing
of shippers. None of this prevents the Board from adopting, as it does
here, a final rule that explicitly requires shippers to be billed for
demurrage under certain conditions. Furthermore, as discussed above,
even if CN's interpretation were accurate, which it is not, the Board
is not constrained from modifying regulations previously in effect, as
long as its actions are rational and adequately explained.
---------------------------------------------------------------------------
\23\ CN cites to Demurrage Liability, EP 707, slip op. at 5,
which states that the advance notice of proposed rulemaking in that
proceeding ``sought public input on whether the Board should
consider a new rule that would place demurrage liability on the
receivers of rail cars, regardless of their designation in the bill
of lading.'' (See CN Comments 17-18.) However, the Board ultimately
proposed and adopted permissive language in Sec. 1333.3.
---------------------------------------------------------------------------
Dispute Resolution
Some Class I carrier commenters contend that the Board's proposal
would make demurrage disputes more complex and difficult to resolve. CP
argues that demurrage disputes frequently involve information that is
only within the warehouseman's possession, such as daily orders
submitted by the warehouseman, pipeline information of other shippers,
and information regarding cars arriving from other carriers (when the
warehouseman is served by more than one carrier). (CP Comments 7.) CP
and CSXT also contend that demurrage disputes can raise issues
concerning confidential shipper data. (CP Comments 8; CSXT Comments 15-
16.) CSXT argues that shippers ``will be in a poor position to assess
whether any demurrage charges are attributable to railroad fault or to
the receiver's conduct (such as favoring one customer's traffic over
others)'' because ``[i]nformation about incoming shipments to other
customers at that receiver facility will typically be protected by 49
U.S.C. 11904.'' (CSXT Comments 15-16.) To account for Sec. 11904, CP
requests that the Board mandate that a warehouseman ``obtain the
consent of all its shippers for the delivering railroad to disclose all
shipment data associated with that receiving location necessary to
allow the shipper to audit the carrier's invoicing.'' (CP Comments 9.)
CP also raises concerns about dispute resolution if it needs to pursue
a shipper for demurrage in an inconvenient forum or ``in another
country altogether.'' (Id. at 8.) CP states that there ``must be a
clear path for formal resolution should the shipper refuse to pay due
to delay or bunching that is not caused by the delivering rail
carrier.'' (Id. at 9.)
Apart from the fact that some demurrage disputes may turn on
information--such as the frequency and volume of cars consigned--that
is more accessible to shippers than to warehousemen, these claims ring
hollow. Before 2014, direct billing of the shipper rather than the
warehouseman was common, and yet carriers were somehow able to resolve
their highly fact-specific demurrage disputes.\24\ Moreover, any
information deficit an individual shipper may have vis-[agrave]-vis the
warehouseman--such as access to information about incoming shipments
from other customers at the warehouseman's facility--would presumably
disadvantage the shipper rather than the railroad in a particular
dispute.\25\ Therefore, the Board concludes that shippers that choose
to enter into agreements with warehousemen are capable of determining,
based on the facts and circumstances of their particular situation,
whether they are suited to assess the factual issues associated with a
demurrage dispute. If a particular demurrage dispute between the
carrier and shipper involves information that is solely within the
warehouseman's possession, the discovery of such information is best
addressed in the context of the individual dispute.\26\
---------------------------------------------------------------------------
\24\ CP's expressed concerns that carriers may be forced to
pursue a shipper for demurrage in an inconvenient forum are
unpersuasive given the long history of direct shipper billing before
2014.
\25\ As noted, some demurrage disputes may turn on information
that is more accessible to shippers than to warehousemen, and
warehousemen have also argued that they cannot access relevant
information because they do not have commercial relationships with
carriers. See, e.g., ILTA Comments 2, May 8, 2019, Oversight Hearing
on Demurrage & Accessorial Charges, EP 754 (arguing that the ``the
terminal--lacking a contractual relationship with the railroad--has
no access to information it would need to confirm or dispute
charges''). Because shippers and carriers, and shippers and
warehousemen, do have commercial relationships, the Board expects
that direct-billing agreements could be drafted in such a way to
reduce some information accessibility issues.
\26\ CP makes an unwarranted request that the Board mandate that
warehousemen obtain consent, presumably from multiple customers, to
reveal what would otherwise be confidential shipper data under Sec.
11904. The Board and the courts are well-suited to assist the
parties in the resolution of discovery disputes of this nature in
individual cases through, for example, the use of third-party
subpoenas and protective orders.
---------------------------------------------------------------------------
To the extent carriers, shippers, and warehousemen are having
difficulty resolving demurrage disputes informally or in another
jurisdiction, the Board strongly encourages them to avail themselves of
the Board's alternative dispute resolution options (mediation,
arbitration,\27\ and the Rail Customer and Public Assistance program
\28\[hairsp]).
---------------------------------------------------------------------------
\27\ The Board notes that three of the Class I carriers have
agreed to arbitrate certain demurrage disputes under the binding,
voluntary program set forth in 49 CFR part 1108. See UP Notice (June
21, 2013), CSXT Notice (June 28, 2019), and CN Notice (July 1,
2019), Assessment of Mediation & Arbitration Procedures, EP 699.
\28\ The Board's Rail Customer and Public Assistance (RCPA)
office provides informal assistance to the public on a wide range of
matters within the Board's expertise. The RCPA office can be reached
by telephone at 202-245-0238 or email at [email protected].
---------------------------------------------------------------------------
Exclusion of Class II and III Carriers
In the NPRM, the Board explained that it did not propose to require
Class II and Class III carriers to comply with the rule because it
would be more costly for smaller carriers to do so and the demurrage
issues raised by stakeholders before the Board predominantly pertained
to Class I carriers. NPRM, EP 759, slip op. at 10-11. The Board invited
comment on the proposed exclusion of Class II and Class III carriers.
Id. at 11.
Although some shippers find that that demurrage issues most
frequently involve Class I carriers, (see AFPM Comments 8; ISRI
Comments 10), several commenters express concerns about excluding Class
II and Class III carriers,\29\ particularly those with larger,
[[Page 26864]]
more sophisticated operations, (see FRCA Comments 5; AFPM Comments 8).
One commenter urges the inclusion of Class II and Class III carriers
for uniformity across the industry, (see ISRI Comments 10), and others
fear that Class I carriers will seek to evade the rule by tasking Class
II and Class III carriers with demurrage invoicing where possible, (see
NITL Comments 10; AF&PA Comments 10). Acknowledging that the new
requirements may be too burdensome for the smallest carriers, some
commenters suggest that the Board apply the rule to all carriers and
grant waivers on a case-by-case basis. (NITL Comments 10; AF&PA
Comments 10; AM Reply 5-6.) Others suggest that the Board exclude some
or all Class III carriers from the rule, but not Class II carriers.
(AFPM Comments 8 (exclude all Class III carriers, but not Class II
carriers); FRCA Comments 5 (require Class II carriers and Class III
carriers affiliated with large holding companies to comply.))
---------------------------------------------------------------------------
\29\ (See FRCA Comments 5; AFPM Comments 8; Barilla Comments 3;
CPC Comments 3.) It is unclear whether some comments on this issue
are intended to address exclusion of Class II and III carriers from
the minimum invoicing requirements aspect of the rule, the direct-
billing aspect, or both. For completeness, all potentially
applicable comments are addressed here.
---------------------------------------------------------------------------
ASLRRA supports the Board's proposal to exclude Class II and Class
III carriers, (see ASLRRA Comments 4), pointing out that shippers'
complaints have been about Class I carriers and that small carriers
already ``work closely every day with their customers and if there
arises a question about invoices, services or anything else, the
customer and small railroad resolve those issues in a timely manner
directly between them,'' (see ASLRRA Reply 6-7). ASLRRA questions the
workability of some commenters' suggestion that Class II and Class III
carriers could file for individual waivers, which, it states, would be
an expensive and time-consuming process for small carriers with limited
resources. (ASLRRA Reply 7.) Importantly, ASLRRA dismisses commenters'
concerns that Class I carriers would assign demurrage billing to Class
II and Class III carriers to avoid the rule, arguing that Class I
carriers will not ``want to cede the control of their operations or
practices to others or the compensation they receive for the misuse of
their rail assets.'' (Id. at 8.)
In the NPRM, EP 759, slip op. at 10, 11, the Board proposed to
exclude Class II and Class III carriers because the demurrage issues
raised by stakeholders in Docket No. EP 754 predominantly pertained to
Class I carriers. The comments have not changed the Board's view on
this issue, nor do they provide any realistic basis for concluding that
Class I carriers will seek to avoid the rule by assigning their
demurrage billing to small carriers.\30\ The case-by-case waiver
approach suggested by some shipper parties could be impractical and
unduly burdensome for some small carriers. Likewise, the Board declines
to adopt AFPM's proposal to make Class II carriers (but not Class III
carriers) subject to the rule because, as noted above, the record
indicates most demurrage issues pertain to Class I carriers and the
record does not justify imposing the requirements on Class II carriers
at this time. Nonetheless, the Board continues to strongly encourage
Class II and Class III carriers to comply with the rule to the extent
they are able to do so, but it will not make compliance mandatory at
this time.
---------------------------------------------------------------------------
\30\ Should sufficient evidence be presented in the future that
Class I carriers are attempting to avoid the rule by assigning their
demurrage claims processing to smaller connecting carriers, the
Board can revisit this issue and propose any warranted modifications
to the rule.
---------------------------------------------------------------------------
Conclusion
Consistent with this decision, the Board adopts a final rule
requiring Class I carriers to directly bill the shipper for demurrage
without requiring the warehouseman to act as a guarantor, when the
shipper and warehouseman agree to that arrangement and so notify the
rail carrier, unless and until a party to the agreement notifies both
the Class I carrier and the other party to the agreement that the
agreement is no longer in force. This rule is set out in full below and
will be codified in the Code of Federal Regulations.
Regulatory Flexibility Act
The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601-612,
generally requires a description and analysis of new rules that would
have a significant economic impact on a substantial number of small
entities. In drafting a rule, an agency is required to: (1) Assess the
effect that its regulation will have on small entities, (2) analyze
effective alternatives that may minimize a regulation's impact, and (3)
make the analysis available for public comment. Sec. Sec. 601-604. In
its final rule, the agency must either include a final regulatory
flexibility analysis, Sec. 604(a), or certify that the proposed rule
would not have a ``significant impact on a substantial number of small
entities,'' Sec. 605(b). Because the goal of the RFA is to reduce the
cost to small entities of complying with federal regulations, the RFA
requires an agency to perform a regulatory flexibility analysis of
small entity impacts only when a rule directly regulates those
entities. In other words, the impact must be a direct impact on small
entities ``whose conduct is circumscribed or mandated'' by the proposed
rule. White Eagle Coop. v. Conner, 553 F.3d 467, 480 (7th Cir. 2009).
As discussed above, the final rule will apply only to Class I
carriers. Accordingly, the Board again certifies under 5 U.S.C. 605(b)
that this rule would not have a significant economic impact on a
substantial number of small entities as defined by the RFA.\31\ A copy
of this decision will be served upon the Chief Counsel for Advocacy,
Office of Advocacy, U.S. Small Business Administration, Washington, DC
20416.
---------------------------------------------------------------------------
\31\ For the purpose of RFA analysis, the Board defines a
``small business'' as only including those rail carriers classified
as Class III carriers under 49 CFR 1201.1-1. See Small Entity Size
Standards Under the Regulatory Flexibility Act, EP 719 (STB served
June 30, 2016) (with Board Member Begeman dissenting). Class III
carriers have annual operating revenues of $20 million or less in
1991 dollars ($39,194,876 or less when adjusted for inflation using
2018 data). Class II carriers have annual operating revenues of less
than $250 million in 1991 dollars ($489,935,956 when adjusted for
inflation using 2018 data). The Board calculates the revenue
deflator factor annually and publishes the railroad revenue
thresholds on its website. 49 CFR 1201.1-1; Indexing the Annual
Operating Revenues of R.Rs., EP 748 (STB served June 14, 2019).
---------------------------------------------------------------------------
Paperwork Reduction Act
In this proceeding, the Board is modifying an existing collection
of information that is currently approved by the Office of Management
and Budget (OMB) under OMB Control No. 2140-0021. In the NPRM, the
Board sought comments pursuant to the Paperwork Reduction Act (PRA), 44
U.S.C. 3501-3521, and OMB regulations at 5 CFR 1320.11, regarding: (1)
Whether the collection of information, as modified, is necessary for
the proper performance of the functions of the Board, including whether
the collection has practical utility; (2) the accuracy of the Board's
burden estimates; (3) ways to enhance the quality, utility, and clarity
of the information collected; and (4) ways to minimize the burden of
the collection of information on the respondents, including the use of
automated collection techniques or other forms of information
technology, when appropriate. The Board received one comment, from CN,
in response to the Board's PRA analysis in the NPRM regarding the
requirement that railroads directly bill the shipper for demurrage when
the shipper and warehouseman agree to that arrangement and so notify
the rail carrier.\32\
---------------------------------------------------------------------------
\32\ In its initial comments, ASLRRA questions the source of the
estimated 677 burden hours in the NPRM. This estimate comes from the
existing collection for which the Board is seeking a modification.
In other words, the burden analysis in the Appendix of the NPRM
included the burdens for the existing portion of the collection
being modified by this final rule.
---------------------------------------------------------------------------
[[Page 26865]]
CN argues that it would take longer than five minutes to
permanently implement direct billing to a terminal customer. CN argues
that, if it were required to change its billing for the 500 terminals
it serves in its U.S. network, then it ``conservatively estimates that
each large terminal of more than 5 shippers would require 1 hour of
processing time per month, every month, and each small terminal would
require 30 minutes per month, plus additional time at start up were
they to opt for direct billing.'' (CN Comments 21-22.) However, Class I
carriers are only required to directly bill the shipper for demurrage
when the shipper and warehouseman agree to that arrangement and so
notify the rail carrier. The Board estimates that each Class I railroad
would receive approximately 60 of these agreements per year. The Board
therefore disagrees with CN's burden-hour and frequency estimates.
Nevertheless, Board staff has reviewed its burden-hour estimates to
prepare for such direct billing and, to reflect the fact that the
requests for direct billing could increase a carrier's workload, has
increased its estimate from five minutes per agreement to one hour per
agreement.\33\
---------------------------------------------------------------------------
\33\ The Board also clarifies that its burden estimates are on a
per agreement basis (see NRPM, EP 759, slip op. at 16), not on a per
invoice basis (see id. at 17, inadvertently referencing per
invoice). CN suggests that, if only some terminal customers agree to
direct billing and so notify CN, it would be ``required to devote
significant staffing needs to creating and separating the bills.''
(CN Comments 22.) This general concern does not challenge the
Board's frequency estimate (60 agreements per Class I carrier), nor
does it provide specific burden hours based on a more limited number
of agreements.
---------------------------------------------------------------------------
No other railroads commented on the Board's estimates.
This modification to an existing collection, along with CN's
comment and the Board's response, will be submitted to OMB for review
as required under the PRA, 44 U.S.C. 3507(d), and 5 CFR 1320.11.
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 rule
as non-major, as defined by 5 U.S.C. 804(2).
List of Subjects in 49 CFR Part 1333
Penalties, Railroads.
It is ordered:
1. The Board adopts the final rule as set forth below. Notice of
the final rule will be published in the Federal Register.
2. This decision is effective on June 20, 2020.
3. A copy of this decision will be served upon the Chief Counsel
for Advocacy, Office of Advocacy, U.S. Small Business Administration.
Decided: April 30, 2020.
By the Board, Board Members Begeman, Fuchs, and Oberman.
Jeffrey Herzig,
Clearance Clerk.
For the reasons set forth in the preamble, the Surface
Transportation Board amends part 1333 of title 49, chapter X, of the
Code of Federal Regulations as follows:
PART 1333--DEMURRAGE LIABILITY
0
1. Revise the authority citation for part 1333 to read as follows:
Authority: 49 U.S.C. 1321, 10702, and 10746.
0
2. Section 1333.2 is revised to read as follows:
Sec. 1333.2 Who May Charge Demurrage and Who May Enter into Contracts
Pertaining to Demurrage.
A serving carrier and its customers (including those to which it
delivers rail cars at origin or destination) may enter into contracts
pertaining to demurrage. Additionally, a third-party intermediary may
enter into contracts with a shipper (or consignee) that the shipper (or
consignee) shall be billed for demurrage pursuant to section 1333.3(b).
However, in the absence of such contracts, demurrage will be governed
by the demurrage tariff of the serving carrier.
0
3. In Sec. 1333.3, redesignate the existing text as paragraph (a) and
add paragraph (b) to read as follows:
Sec. 1333.3 Who Is Subject to Demurrage.
(a) * * *
(b) If the rail cars are delivered to a third-party intermediary
that has reached an agreement with a shipper (or consignee) that the
shipper (or consignee) shall be billed for demurrage, then the serving
Class I carrier shall, after being jointly notified of the agreement by
the shipper (or consignee) and third-party intermediary, bill the
shipper (or consignee) for demurrage charges without requiring the
third-party intermediary to act as a guarantor, unless and until a
party to the agreement notifies both the serving Class I carrier and
the other party to the agreement that the agreement is no longer in
force. Pursuant to this paragraph, the shipper (or consignee) shall be
liable to the Class I carrier for demurrage but shall not be prohibited
from seeking payment from the third-party intermediary for demurrage
charges for which the third-party intermediary is responsible pursuant
to an agreement between the shipper (or consignee) and the third-party
intermediary. The joint notice required by this paragraph may be
provided in hard copy or electronic form, and must contain the contact
information for the shipper (or consignee) who has agreed to be billed
(and liable to the Class I carrier) for demurrage and provide the date
upon which the Class I carrier is to begin billing the shipper (or
consignee) for demurrage (no earlier than 20 days after the notice is
provided). With respect to Class I carriers' obligations for direct
billing, a statement from one party that the agreement has been
terminated is sufficient to end the direct-billing requirement,
regardless of any disputes as to the sufficiency of the termination
under the terms of the specific agreement between the shipper (or
consignee) and third-party intermediary.
Note: The following appendix will not appear in the Code of
Federal Regulations.
Appendix
Sample Letter
[Date]
[Shipper's (or Consignee's) Name]
[Shipper's (or Consignee's) Mailing Address]
[Shipper's (or Consignee's) Phone Number]
[Shipper's (or Consignee's) Email Address]
[Third-Party Intermediary's Name]
[Third-Party Intermediary's Mailing Address]
[Third-Party Intermediary's Phone Number]
[Third-Party Intermediary's Email Address]
Dear [Serving Class I Carrier]:
[Shipper's (or Consignee's) Name] and [Third-Party
Intermediary's Name] have reached an agreement that [Shipper's (or
Consignee's) Name] shall be billed for demurrage as of [date], and
that [Shipper's (or Consignee's) Name] shall be liable to [Serving
Class I Carrier] for demurrage that accrues on all of the shipments
received by [Third-Party Intermediary's Name] from [Shipper's (or
Consignee's) Name] during the term of the agreement.
Sincerely,
-----------------------------------------------------------------------
Shipper's (or Consignee's) Name
-----------------------------------------------------------------------
Shipper's (or Consignee's) Signature
-----------------------------------------------------------------------
Third-Party Intermediary's Name
-----------------------------------------------------------------------
Third-Party Intermediary's Signature
[FR Doc. 2020-09683 Filed 5-5-20; 8:45 am]
BILLING CODE 4915-01-P