[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.

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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.
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    \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.
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    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\
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    \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).
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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.

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When adjudicating specific cases, the Board will consider all facts and 
arguments presented in such cases.
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    \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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    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.
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    \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.
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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\
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    \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.
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    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.
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    \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\
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    \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.
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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 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.
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    \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.
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    \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.
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    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.
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    \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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    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.
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    \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.
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    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.)
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    \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.
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    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\
---------------------------------------------------------------------------

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

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

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

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

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

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

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

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

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

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

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

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

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

    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'').
---------------------------------------------------------------------------

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

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).)
---------------------------------------------------------------------------

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

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

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

    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