Demurrage Liability Disclosure Requirements

Federal Register / Vol. 79, No. 73 / Wednesday, April 16, 2014 / Rules and Regulations
utility company that operates what is, in
essence, a regular fixed route public
transportation system for a city, and which
receives funding under 49 U.S.C. 5307 or 49
U.S.C. 5309 via an agreement with a state or
local government agency, would fall under
the provisions of this section. The provider
would have to comply with the vehicle
acquisition, paratransit, and service
requirements that would apply to the public
entity through which it receives the FTA
funds, if that public entity operated the
system itself. The Department would not,
however, construe this section to apply to
situations in which the degree of FTA
funding and state and local agency
involvement is considerably less, or in which
the system of transportation involved is not
a de facto surrogate for a traditional public
entity fixed route transit system serving a city
(e.g., a private non-profit social service
agency which receives funds under 49 U.S.C.
5310 to purchase a vehicle).

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As already discussed under § 37.135, the
states will receive FTA recipient plans for
recipients of funding under 49 U.S.C. 5311
administered by the State or any small
urbanized area recipient of funds under 49
U.S.C. 5307 administered by a state. Public
entities who do not receive FTA funds will
submit their plans directly to the applicable
Regional Office (listed in appendix B to the
rule).

PART 38—AMERICANS WITH
DISABILITIES ACT (ADA)
ACCESSIBILITY SPECIFICATIONS FOR
TRANSPORTATION VEHICLES
17. The authority for Part 38
continues to read as follows:

■

Authority: 42 U.S.C. 12101–12213; 49
U.S.C. 322.

18. In the appendix to part 38, revise
the first paragraph under the heading
‘‘V. Public Information Systems’’ to read
as follows:

■

Appendix to Part 38—Guidance
Material

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Entities are encouraged to employ any
available services, signage, or alternative
systems or devices that are capable of
providing the same or equivalent information
to persons with hearing loss. Two possible
types of devices are visual display systems
and listening systems. However, it should be
noted that while visual display systems
accommodate persons who are deaf or are
hearing impaired, assistive listening systems
aid only those with a partial loss of hearing.

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[FR Doc. 2014–08525 Filed 4–15–14; 8:45 am]
BILLING CODE 4910–9X–P

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DEPARTMENT OF TRANSPORTATION
Surface Transportation Board
49 CFR Part 1333
[Docket No. EP 707]

Demurrage Liability
Surface Transportation Board
(Board or STB), DOT.
ACTION: Final rule.
AGENCY:

The Board is adopting final
rules establishing that a person
receiving rail cars from a rail carrier for
loading or unloading who detains the
cars beyond the ‘‘free time’’ provided in
the carrier’s governing tariff will
generally be responsible for paying
demurrage, if that person has actual
notice, prior to rail car placement, of the
demurrage tariff establishing such
liability. The Board also clarifies that it
construes the provisions of 49 U.S.C.
10743, titled ‘‘Liability for payment of
rates,’’ as applying to carriers’ line-haul
rates, but not to carriers’ charges for
demurrage.

SUMMARY:

DATES:

This rule is effective on July 15,

2014.
FOR FURTHER INFORMATION CONTACT:

Amy Ziehm at (202) 245–0391.
Assistance for the hearing impaired is
available through the Federal
Information Relay Service (FIRS) at
(800) 877–8339.
SUPPLEMENTARY INFORMATION:
Demurrage is a charge for detaining rail
cars for loading or unloading beyond a
specified amount of time called ‘‘free
time.’’ Demurrage has compensatory
and penalty functions. It compensates
rail carriers for the use of railroad
equipment and assets; and, by
penalizing those who detain rail cars for
too long, it also encourages prompt
return of rail cars into the transportation
network. Because of these dual roles,
demurrage is statutorily recognized as
an important tool in ensuring the
smooth functioning of the rail system.
See 49 U.S.C. 10746.
The Interstate Commerce Act, as
amended by the ICC Termination Act of
1995 (ICCTA), Public Law 104–88, 109
Stat. 803 (1995), provides that
demurrage is subject to Board
regulation. Specifically, 49 U.S.C. 10702
requires railroads to establish
reasonable rates and transportationrelated rules and practices, and 49
U.S.C. 10746 requires railroads to
compute demurrage and to establish
demurrage-related rules ‘‘in a way that
fulfills the national needs related to’’
freight car use and distribution and that
will promote an adequate car supply. In

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the simplest case, demurrage is assessed
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 carrier at destination.1
This agency has long been involved in
resolving demurrage disputes, both as
an original matter and on referral from
courts hearing railroad complaints
seeking recovery of charges.2 The
disputes between railroads and parties
that originate or terminate rail cars can
involve relatively straightforward
application of the carrier’s tariffs 3 to the
circumstances of the case.
Complications can arise, however, in
cases involving warehousemen or other
third-party intermediaries who handle
the goods but have no property interest
in them. A consignee that owned the
property being shipped had commonlaw liability (for both freight charges
and demurrage) when it accepted cars
for delivery. See Pittsburgh, Cincinnati,
Chicago & St. Louis Ry. v. Fink, 250 U.S.
577, 581 (1919). Warehousemen,
however, are not typically owners of the
property being shipped (even though, by
accepting the cars, they are in a position
to facilitate or impede car supply).
Under the legal principles that
developed, in order for a warehouseman
to be subject to demurrage or detention
charges, there had to be some other
basis for liability beyond the mere fact
of handling the goods shipped. See, e.g.,
1 The Interstate Commerce Act does not define
‘‘consignor’’ or ‘‘consignee.’’ 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.’’ Black’s Law
Dictionary 327 (8th ed. 2004). The Federal Bills of
Lading Act defines these terms in a similar manner.
49 U.S.C. 80101(1) & (2).
2 E.g., Springfield Terminal Ry.—Pet. for
Declaratory Order—Reasonableness of Demurrage
Charges, NOR 42108 (STB served June 16, 2010);
Capitol Materials Inc.—Pet. for Declaratory Order—
Certain Rates & Practices of Norfolk S. Ry., NOR
42068 (STB served Apr. 12, 2004); Unger ex rel. Ind.
Hi-Rail Corp.—Pet. for Declaratory Order—
Assessment & Collection of Demurrage & Switching
Charges, NOR 42030 (STB served June 14, 2000);
South-Tec Dev. Warehouse, Inc.—Pet. for
Declaratory Order—Ill. Cent. R.R., NOR 42050 (STB
served Nov. 15, 2000); Ametek, Inc.—Pet. for
Declaratory Order, NOR 40663, et al. (ICC served
Jan. 29, 1993), aff’d, Union Pac. R.R. v. Ametek,
Inc., 104 F.3d 558 (3d Cir. 1997).
3 Historically, carriers gave public notice of their
rates and general service terms in tariffs that were
publicly filed with the ICC and that had the force
of law under the so-called ‘‘filed rate doctrine.’’ See
Maislin Indus., Inc. v. Primary Steel, Inc., 497 U.S.
116, 127 (1990). The requirement that rail carriers
file rate tariffs at the agency was repealed in ICCTA.
Nevertheless, although tariffs are no longer filed
with the agency, rail carriers may still use them to
establish and announce the terms of the services
they hold out.

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Smokeless Fuel Co. v. Norfolk & W. Ry.,
85 I.C.C. 395, 401 (1923).
What became the most important
factor under judicial and agency
precedent was whether the
warehouseman was named the
consignee on the bill of lading.4 Thus,
our predecessor, the Interstate
Commerce Commission (ICC), held that
a tariff may not lawfully impose such
demurrage charges on a warehouseman
who is not the owner of the freight, who
is not named as a consignor or
consignee in the bill of lading, and who
is not otherwise party to the contract of
transportation. Responsibility for
Payment of Detention Charges, E. Cent.
States (Eastern Central), 335 I.C.C. 537,
541 (1969) (involving liability for
detention, the motor carrier equivalent
of demurrage), aff’d, Middle Atl.
Conference v. United States (Middle
Atlantic), 353 F. Supp. 1109, 1114–15
(D.D.C. 1972) (three-judge court sitting
under the then-effective provisions of 28
U.S.C. 2321 et seq.).
In recent years, however, a question
arose as to who should bear liability
when an intermediary that accepts rail
cars and detains them too long is named
as consignee in the bill of lading, but
asserts either that it did not know of its
consignee status or that it affirmatively
asked the shipper not to name it
consignee. On that issue, the United
States Courts of Appeals for the Third
and Eleventh Circuits have split.5
In Norfolk Southern Railway v.
Groves, a warehouseman denied
liability for demurrage charges despite
being named as a consignee on the bill
of lading, claiming that it did not
consent to being named as a consignee
and that it was never informed that it
was designated as such. 586 F.3d 1273,
1275–76 (11th Cir. 2009), cert. denied,
131 S. Ct. 993 (2011). Relying on
contract principles, the Eleventh Circuit
concluded that ‘‘a party must assent to
being named as a consignee on the bill
of lading to be held liable as such, or at
the least, be given notice that it is being
named as a consignee in order that it
might object or act accordingly.’’ As
such, the court concluded that the
warehouseman was not a consignee and
thus not liable for demurrage. Id. at
1278.
4 A bill of lading is the transportation contract
between the shipper and the carrier for moving
goods between two points. Its terms and conditions
bind the shipper, the originating carrier, and all
connecting carriers.
5 Additionally, the United States Court of Appeals
for the Seventh Circuit indicated a predilection
toward the Eleventh Circuit’s decision, though it
did not directly decide the issue. See Ill. Cent. R.R.
v. S. Tec Dev. Warehouse, Inc. (South Tec), 337
F.3d 813, 820–21 (7th Cir. 2003).

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On virtually identical facts, in CSX
Transportation Co. v. Novolog Bucks
County (Novolog), the Third Circuit
rejected the notion that a
warehouseman’s designation as
consignee in the bill of lading, without
permission and where the
warehouseman is not the ultimate
consignee of the freight, cannot
establish its status as consignee for
purposes of demurrage liability. 502
F.3d 247, 257 (3d Cir. 2007). Rather, the
court held that ‘‘recipients of freight
who are named as consignees on bills of
lading are subject to liability for
demurrage charges arising after they
accept delivery unless they act as agents
of another [party] and comply with the
notification procedures established in
ICCTA’s consignee-agent liability
provision, 49 U.S.C. 10743(a)(1).’’ Id. at
254.6
The legal debate and resulting
conflicting opinions prompted the
Board to reexamine its existing policy
and to assist in providing clarification.
In reviewing these decisions, the Board
determined that it was necessary to
revisit its demurrage precedent to
consider whether the agency’s policies
accounted for current statutory
provisions and commercial practices.
On December 6, 2010, the Board
published an Advance Notice of
Proposed Rulemaking (ANPR) that
raised a series of specific questions
about how the demurrage process works
and 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, if the
carrier had provided the receiver with
notice of its demurrage tariff. Demurrage
Liability, EP 707 (STB served Dec. 6,
2010), 75 Fed. Reg. 76496 (Dec. 10,
2010). Shortly thereafter, the United
States Supreme Court denied a request
that it review the split in the circuits.
Norfolk S. Ry. v. Groves, 131 S.Ct. 993
(2011) (mem.).
After reviewing the comments
received in response to the ANPR, the
Board issued a Notice of Proposed
Rulemaking (NPR) on May 7, 2012, in
which the Board announced proposed
rules whereby any person receiving rail
cars who detains the cars beyond the
free time may be held liable for
demurrage if the carrier has provided
6 The statutory notice provision of § 10743(a)(1),
which is also referred to in Groves, states, among
other things, that a person receiving property as an
agent for the shipper or consignee will not be liable
for ‘‘additional rates’’ that may be found due
beyond those billed at the time of delivery, if the
receiver notifies the carrier in writing that it is not
the owner of the property, but rather is only an
agent for the owner.

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that person with actual notice of the
demurrage tariff. Demurrage Liability,
EP 707 (STB served May 7, 2012). The
Board also announced a new
construction of the provisions of 49
U.S.C. 10743, under which those
provisions would apply to carriers’ linehaul rates, but not to demurrage charges.
The proposed rules were published in
the Federal Register, 77 FR 27384 (May
10, 2012), and comments were
submitted in response to the NPR.
After receiving comments, the Board,
by decision served May 28, 2013, issued
an initial regulatory flexibility analysis
(IRFA) and request for comments
regarding the impact of the proposed
rules on small rail carriers. Demurrage
Liability, EP 707 (STB served May 28,
2013). The Board received comments
from two entities.
Final Rules: We now adopt final rules
based on suggestions made in the
parties’ comments and on the Board’s
review of the issues raised. We address
below certain clarifications made in
response to the comments received.
Additional information is contained in
the Board’s decision. The full decision
is available on the Board’s Web site at
www.stb.dot.gov.
Are the Demurrage Rules Generally
Applicable? In the NPR, we proposed
rules governing demurrage that would
allow rail carriers to impose demurrage
liability on ‘‘[a]ny person receiving rail
cars from a rail carrier’’ if the carrier had
provided actual notice of the demurrage
tariff to that person. Several commenters
argued that the language of the proposed
rule was too broad, and that we should
clarify that it applies only to a narrow
subset of receivers—namely,
warehousemen.
We do not believe that such a
clarification is appropriate. It is true that
much of this proceeding has focused on
the liability of warehousemen. This is
only natural, given that this proceeding
was commenced after various courts
drew differing conclusions about the
liability of warehousemen for
demurrage. The rationales behind these
new demurrage rules, however, are
generally applicable to all receivers.
First, we stated in the NPR that,
‘‘[b]ecause warehousemen and other
third-party receivers are often not
signatories to the bill of lading, we do
not believe that the bill of lading should
be the contract that establishes
demurrage liability.’’ NPR at 12. This
rationale is equally applicable to other
receivers (i.e., consignees) of rail cars, as
it is the shipper (i.e., consignor) who
creates the bill of lading prior to
providing it to the rail carrier. Thus, we
continue to believe that the bill of
lading should not be the contract that

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establishes demurrage liability,
regardless of whether the receiver is a
warehousemen or other consignee.7
Next, we stated in the NPR that ‘‘[o]ur
proposed rule would . . . tie demurrage
liability to the conduct of the parties
directly involved with handling the rail
cars and would advance the goals of
§ 10746 by permitting the carrier to
impose charges on the party best able to
get the cars back to the carrier.’’ NPR at
13. In other words, after concluding that
demurrage should no longer be based on
the bill of lading, we concluded that it
should instead be governed by a
conduct-based rule. Such a rule is as
applicable to traditional consignors or
consignees as it is to warehousemen.
Finally, the NPR noted that tariffs
play a different role today than they did
in the past, when they were filed at the
agency and parties were deemed to have
constructive knowledge of their terms.
NPR at 13. As a result, we concluded
that ‘‘a shipper or receiver of rail cars
to whom the rail carrier has given actual
notice of its own demurrage tariff will
be deemed to have accepted the rail
carrier’s demurrage terms whenever it
accepts the cars.’’ Id. at 13 (emphasis in
original). Again, the logic behind this
rule is applicable to both warehousemen
and other receivers. Because neither is
deemed to have constructive notice of a
tariff’s terms now that the tariff is no
longer filed at the agency, we concluded
that any person receiving rail cars must
be provided with actual notice in order
to be held liable for demurrage.
We therefore reject the requests to
narrow the scope of these rules to thirdparty receivers. We also reject the
requests to clarify that the demurrage
rules we are adopting here provide an
alternative legal basis for collecting
demurrage in addition to the bill of
lading. As stated above, we are adopting
a conduct-based approach to demurrage
in lieu of one based on the bill of lading.
As such, part 1333 governs demurrage
generally and 49 CFR 1333.3 will
continue to refer to ‘‘[a]ny person
receiving rail cars.’’
Are the Demurrage Rules Applicable
to Railroad-Owned and Privately Owned
Cars? Several commenters point out
that, although the NPR initially
described demurrage as being ‘‘a charge
for detaining railroad-owned rail freight
cars,’’ the proposed rules themselves
speak only of ‘‘rail cars.’’ NPR at 2, 20.
We have been asked to clarify whether
the rules are limited to railroad-owned
7 Additionally, demurrage charges can accrue at
loading, prior to the creation of the bill of lading.
This is yet another reason why the bill of lading
should not govern demurrage liability.

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cars or if they apply to privately owned
cars as well.
The final rules will continue to refer
to ‘‘rail cars,’’ and we clarify here that
this term encompasses both railroadowned cars and privately owned cars
when such privately owned cars are
held on railroad property. This is
consistent with Board precedent, which
has previously stated that demurrage
charges may be applied to privately
owned cars when held on railroad
property because such charges
‘‘compensate the railroad for use of its
assets (i.e., the space on its track or at
its yards), and they encourage more
efficient use of freight cars on its
system.’’ N. Am. Freight Car Ass’n v.
BNSF Ry., NOR 42060 (Sub-No. 1), slip
op. at 9 (STB served Jan. 26, 2007), aff’d,
529 F.3d 1166 (D.C. Cir. 2008); see also
R.R. Salvage & Restoration, Inc.—Pet.
for Declaratory Order—Reasonableness
of Demurrage Charges, NOR 42102, slip
op at 4 (STB served July 20, 2010).
To clarify that the goals of demurrage
apply equally to railroad-owned cars
and privately owned cars when held on
railroad property, it was suggested that
the Board modify the end of the
proposed rule at 49 CFR 1333.1 to read
as follows: ‘‘To encourage the efficient
use of rail cars and the rail network.’’
We do not believe that such a change is
necessary. Under the rule as written,
when privately owned cars are held
beyond the free time on railroad
property, demurrage will apply both to
‘‘compensate[ ] rail carriers for the
expenses incurred [for the use of
railroad assets]’’ and ‘‘to encourage the
efficient use of rail cars’’ on the railroad
system. See § 1333.1. Thus, we do not
believe any change to the language of
§ 1333.1 is warranted.
Form of the Actual Notice: Several
comments address what form the actual
notice of demurrage tariff should take.
Certain commenters suggest that actual
notice be satisfied by the Board’s
issuance of these final rules in the
Federal Register. We find such
constructive notice to be inadequate,
however. Although publication of this
decision and the final rules should put
parties on notice as to the general legal
framework for demurrage, it will not put
them on notice as to the specific terms
of a rail carrier’s tariff. Thus, to satisfy
the actual notice requirement, the rail
carriers must provide the demurrage
tariff directly to receivers.
Certain commenters ask that we
clarify that a written or electronic notice
with a link to the tariff online would
satisfy the actual notice requirement.
Some commenters agree that electronic
or written notice with a link to the full
tariff could qualify as actual notice,

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though suggest that, in order to qualify
as actual notice, the communication
would need to provide a summary of the
material provisions of the tariff. We
agree that it is not necessary to send the
full terms of the tariff in order to satisfy
the requirement, and that a link to the
tariff in full could suffice. We decline,
however, to decide at this time whether
particular forms of notice are adequate
or inadequate. Rather, the Board will, as
appropriate, address any future
arguments with respect to the adequacy
of actual notice in the context of a
specific factual dispute.
It was also requested that the Board
clarify that, in order to satisfy the actual
notice requirement, rail carriers may
provide a one-time ‘‘blanket notice’’ to
each customer, rather than having to
provide actual notice with each delivery
to the same customer. Assuming the
adequacy of such blanket notices,
several commenters then addressed the
related issue of what responsibility, if
any, rail carriers have to provide actual
notice of changes to the demurrage tariff
after the blanket notice has been issued.
We agree that it is not necessary to
provide actual notice with each and
every shipment, and that a one-time
‘‘blanket notice’’ would satisfy the
requirement. We are not persuaded,
however, by the argument that no
further obligation should be imposed on
the carrier after providing a blanket
notice because, so long as the electronic
link to the tariff remains valid, the
receiver has the ability to learn of any
changes. As we stated earlier, we reject
this type of constructive notice in the
demurrage context. If, after providing a
blanket notice, a carrier makes material
changes to the demurrage tariff, the
carrier must provide actual notice of
those changes to the receiver in order to
hold the receiver liable for demurrage
charges under the changed tariff.
Method of Providing Actual Notice: In
the NPR, we suggested that the actual
notice should be provided electronically
or in writing. NPR at 13–14 (citing Rate
Disclosure, 1 S.T.B. at 159). Although
there was little direct discussion of this
requirement in the comments, several
commenters appear satisfied that the
actual notice should be provided in
either electronic or written form.
One commenter states that providing
a one-time notice, with either the full
tariff or a link to that tariff, may be
burdensome to some small carriers, at
least in part because some of the small
carriers say that they do not know the
identity of the receivers of the rail cars
they handle. It asks the Board to carve
out an exception for Class III rail
carriers, and offers several suggestions,
including a total exemption from the

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actual notice provision, an exemption if
the demurrage tariff is published on the
Class III carrier’s Web site, and a
rebuttable presumption that the receiver
was given actual notice or could have
obtained such notice by accessing the
tariff on the Class III carrier’s Web site.
But our rules are not absolute, by which
we mean that they do not require the
carrier to do anything; they simply say,
as did the court in Groves, that a carrier
may not collect demurrage from a party
unless that party has first been given
real notice of its potential liability. As
a practical matter, a rail carrier that does
not know the identity of its receivers
cannot collect demurrage from those
receivers today, so under the new
regime such carriers will be in no
different position than they are now.
Finally, and most importantly, we are
adopting these final rules in an effort to
simplify the demurrage process and to
provide uniformity in the area. These
goals would not be met by creating
different procedures for different classes
of carriers.
Thus, our regulation at 49 CFR 1333.3
will require actual notice of the
demurrage tariff to be electronic or in
writing. Consistent with the NPR, in
which we saw no reason to depart from
the directives governing the form of
carrier communications responding to
shipper requests for rates, we will add
language mirroring that found in 49 CFR
1300.3–4. Specifically, we are adding a
sentence at the end of § 1333.3, which
is set out in full in Appendix A, stating
that ‘‘[t]he notice required by this
section may be in written or electronic
form.’’
Other Notice Issues: We were asked to
clarify that proof of delivery of the
written notice is sufficient to establish
proof of actual notice. In other words, a
carrier need not prove that a receiver
read the tariff so long as the carrier can
prove that it delivered the tariff to the
receiver. Black’s Law Dictionary defines
actual notice as ‘‘notice given directly
to, or received personally by, a party.’’
Consistent with this definition, we
clarify here that proof of notice given
directly to a party is sufficient to
constitute ‘‘actual notice’’ under the
rule.
Some comments raise concerns about
receivers who have renamed or
restructured their company, arguing that
carriers may not be informed when a
receiver changes its corporate name or
has restructured, and that such a
receiver should not be able to avoid
demurrage liability on that basis simply
because the carrier does not provide an
additional notice to the renamed or
restructured company. One commenter
proposes that we create a safe harbor for

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carriers, asking that a carrier be deemed
to have provided actual notice so long
as, prior to delivery, it mailed a copy of
its current demurrage tariff to the street
address of the rail-served facility. This
proposal is meant to prevent a receiver
from disclaiming liability if the actual
notice is not addressed to the correct
legal name of the receiver.
Those concerns could arise in certain
circumstances. It would seem
inappropriate to allow the delivery of
written notice to one entity at a
particular street address to convey
actual notice to all future entities at that
address. But whether the renaming or
restructuring of a corporate entity is
sufficient to trigger the actual notice
requirement appears to be highly
contextual. We therefore decline to
provide a bright line rule as to this
issue, but rather find that such
questions should be addressed in the
context of a specific factual dispute.
Constructive Placement: In the ANPR,
the Board sought comment on a variety
of matters to assist it in developing an
appropriate way to allocate demurrage
liability. Of the many issues on which
the Board specifically sought comment,
one pertained to how warehousemen or
similar non-owner receivers could best
be made aware that they were liable for
demurrage charges. As part of that
inquiry, it asked whether actual or
constructive placement of rail cars
constituted adequate notice to the
receiver. ANPR at 7. After reviewing
comments in response to the ANPR, we
issued the NPR detailing a specific
proposal under which receivers would
not incur demurrage liability unless
they had been provided written or
electronic notice of the demurrage tariff,
thus moving away from the concept that
placement in itself might constitute
adequate notice. Nevertheless, the
placement of rail cars does play one role
under our rules. We stated in the NPR
that liability does not begin unless a car
is placed at the receiver’s facility or
proper notice of constructive placement
is provided to the entity upon which
liability is to be imposed. NPR at 10.
Certain comments on both the ANPR
and the NPR suggest that constructive
placement is a difficult issue for
warehousemen. These comments argue
that when warehousemen provide rail
carriers with notice of reasonable
operational constraints, which the
carrier then disregards, it is unfair for a
railroad to be able to claim constructive
placement.
As we stated in the NPR, however,
these types of issues are outside the
scope of this proceeding. NPR at 6 n.16.
The Board sought comment in the
ANPR on the viability of placement as

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a mechanism for notice of demurrage
liability, not on the practice of
constructive placement generally.
Although our rules state that demurrage
liability does not begin until actual
placement or proper notice of
constructive placement, we decline to
elaborate on what would constitute
‘‘proper notice of constructive
placement,’’ as placement issues were
not the focus of this proceeding.
Receivers are free to avail themselves of
the Board’s alternative dispute
resolution options or to pursue a
complaint with the Board if they believe
that the collection of demurrage charges
against them is an unreasonable practice
as a result of particular placement
issues. See, e.g., Capitol Materials,
Inc.—Pet. for Declaratory Order—
Certain Rates & Practices of Norfolk S.
Ry., 7 S.T.B. 576, 584 (2004)
(unreasonable practice claim relating to,
among other things, placement); R.R.
Salvage & Restoration, Inc.—Pet. for
Declaratory Order—Reasonableness of
Demurrage Charges, NOR 42102 (STB
served July 20, 2010).
Avoidance of Disputes: We were
asked to include a statement of agency
support for mediation, arbitration, and
the Rail Customer and Public Assistance
Program for the resolution of demurrage
disputes. We agree that demurrage is an
area well-suited to alternative dispute
resolution, which includes the informal
mediation process conducted by the
Board’s Rail Customer and Public
Assistance Program (RCPAP), formal
mediation that attempts to negotiate an
agreement resolving some or all of the
issues in a dispute, and binding
arbitration. In Assessment of Mediation
and Arbitration Procedures, Docket No.
EP 699 (STB served May 13, 2013), we
adopted new rules governing mediation
and arbitration. Disputes related to
demurrage charges are one of four
specifically enumerated areas that the
Board deemed eligible for voluntary
binding arbitration. Although mediation
is not so limited in its scope, we believe
that demurrage disputes are equally
well-suited to mediation, both formally
pursuant to our regulations at 49 CFR
1109 and informally through RCPAP.
The Board’s mediation and arbitration
procedures may be found at 49 CFR
1109.1–4 and 1108.1–13, respectively.
Several parties also discussed the role
of private contracts in avoiding
demurrage disputes. Our rules
specifically allow (but do not require)
parties to enter into contracts pertaining
to demurrage. The rules crafted here,
though, are default rules only, meant to
govern demurrage in the absence of a
privately negotiated contract.

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Federal Register / Vol. 79, No. 73 / Wednesday, April 16, 2014 / Rules and Regulations
Regulatory Flexibility Act. The
Regulatory Flexibility Act of 1980, 5
U.S.C. 601–612, generally requires a
description and analysis of new rules
that would have a significant economic
impact on a substantial number of small
entities. In drafting a rule, an agency is
required to: (1) Assess the effect that its
regulation will have on small entities;
(2) analyze effective alternatives that
may minimize a regulation’s impact;
and (3) make the analysis available for
public comment. Sections 601–604. In
its notice of proposed rulemaking, the
agency must either include an initial
regulatory flexibility analysis, section
603(a), or certify that the proposed rule
would not have a ‘‘significant impact on
a substantial number of small entities,’’
section 605(b).8 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).
In the NPR, the Board certified that
the proposed rules would not have a
significant impact on a substantial
number of small entities. Nevertheless,
by decision served on May 28, 2013, the
Board issued an initial regulatory
flexibility analysis (IRFA) and request
for comments in order to explore further
the impact, if any, of the proposed rules
on small rail carriers. Demurrage
Liability, EP 707 (STB served May 28,
2013). The Board received comments
from the American Short Line and
Regional Railroad Association
(ASLRRA), which conducted a survey of
small rail carriers, and the Small
Railroad Business Owners Association
of America. Having reviewed the
comments, we now publish this final
regulatory flexibility analysis.9
Description of the Reasons That Action
by the Agency Is Being Considered
The Board instituted this proceeding
in order to reexamine its existing
policies on demurrage liability and to
promote uniformity in the area in light
of conflicting opinions from different
circuits of the United States courts of
appeals. The Board determined that it
was necessary to revisit its demurrage
precedent to consider whether the

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8 The

Small Business Administration’s (SBA)
Office of Size Standards develops the numerical
definition of a small business. See 13 CFR 121.201.
The SBA has established a size standard for rail
transportation, stating that a line-haul railroad is
considered small if its number of employees is
1,500 or less, and that a short line railroad is
considered small if its number of employees is 500
or less. Id. (subsector 482).
9 Pursuant to the Small Business and Work
Opportunity Act of 2007, 15 U.S.C. 631 note, we are
also publishing a Small Entity Compliance Guide
on the Board’s Web site at www.stb.dot.gov.

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agency’s policies accounted for current
statutory provisions and commercial
practices. This decision and the NPR
both contain a more detailed description
of the agency’s historical regulation of
demurrage, the conflicting opinions
from the courts of appeals, and the
Board’s reasons for adopting the final
rules.
Succinct Statement of the Objectives of,
and Legal Basis for, the Final Rule
The objectives are to update our
policies regarding responsibility for
demurrage liability and to promote
uniformity in the area by defining who
is subject to demurrage. The legal basis
for the proposed rule is 49 U.S.C. 721.
Description of and, Where Feasible, an
Estimate of the Number of Small
Entities to Which the Final Rule Will
Apply
In general, the rule will apply to any
rail carrier providing rail cars to a
shipper at origin or delivering them to
a receiver at end-point or intermediate
destination who wishes to charge
demurrage for the detention of rail cars
beyond the free time. See Rule § 1333.3.
The rule will apply to approximately
562 small rail carriers.
Description of the Projected Reporting,
Recordkeeping, and Other Compliance
Requirements of the Final Rule,
Including an Estimate of the Classes of
Small Entities That Will Be Subject to
the Requirement and the Type of
Professional Skills Necessary for
Preparation of the Report or Record
The final rules require that rail
carriers make certain third-party
disclosures, i.e., provide persons
receiving rail cars for loading or
unloading with notice of the demurrage
tariff, either electronically or in writing,
in order to hold that person liable for
demurrage charges. See Rule § 1333.3.
The Board is seeking, pursuant to the
Paperwork Reduction Act, approval
from the Office of Management and
Budget for this requirement. To provide
this initial notice, rail carriers wishing
to collect demurrage from their receivers
may need to update their demurrage
practices to conform to the final rules to
the extent that their existing practices
conflict with the rules.
In our decision requesting comments
on the impact of the rules on small rail
carriers, we estimated that small rail
carriers had an average of 10
terminating stations and that the burden
imposed would therefore be to provide
10 one-time notices. ASLRRA
conducted a survey of small railroads
regarding the impact of the rules in
response to our request for comments.

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ASLRRA states that 55% of the
respondents to its study have 25 or
fewer customers. ASLRRA also stated
that although some Class III rail carriers
have the capability to provide written or
electronic notice to their customers
now, a subset of Class III rail carriers
with either revenues of $2.5 million or
less or a limited number of shippers
would need to hire or equip personnel
to undertake the task of providing notice
of their demurrage tariff to their
customers.
ASLRRA’s study also indicates that
some small rail carriers identify as
‘‘handling carriers’’ and do not know
who the receiver of the rail cars is. Of
the carriers surveyed, 38% responded
that they either never know the name of
the receiver or agent or only sometimes
do. To provide actual notice under the
rules, and thereby make themselves
eligible to collect demurrage from their
receivers, these carriers would be
required to know the identity of the
entity to which they are delivering rail
cars. Current practice allows handling
carriers to receive rail cars from Class I
railroads and deliver them to receivers
without knowing the receivers’ identity.
This practice is not an impediment to
providing actual notice, but instead may
be a byproduct of the current demurrage
system, as it is not necessary for the
handling carriers to know the identity of
the receiver, unless it intends to collect
demurrage. Even under the current
system, a rail carrier that does not know
the identity of its receivers cannot
collect demurrage, so under the new
regime such carriers will be in no
different position than they are now.
Nevertheless, to provide actual notice
under the final rules, such knowledge
would be necessary, and handling rail
carriers, if they do not know the identity
of the recipient of the cars, may contact
the Class I carrier to receive that
information.
Identification, to the Extent Practicable,
of All Relevant Federal Rules That May
Duplicate, Overlap, or Conflict With the
Final Rule
The Board is unaware of any
duplicative, overlapping, or conflicting
federal rules.

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Description of any Significant
Alternatives to the Final Rule That
Accomplish the Stated Objectives of
Applicable Statutes and That Minimize
any Significant Economic Impact of the
Proposed Rule on Small Entities,
Including Alternatives Considered,
Such as: (1) Establishment of Differing
Compliance or Reporting Requirements
or Timetables That Take Into Account
the Resources Available to Small
Entities; (2) Clarification,
Consolidation, or Simplification of
Compliance and Reporting
Requirements Under the Rule for Such
Small Entities; (3) Use of Performance
Rather Than Design Standards; (4) any
Exemption From Coverage of the Rule,
or any Part Thereof, for Such Small
Entities
Under the final rule, rail carriers are
free to choose between providing notice
electronically or in writing. In response
to the NPR, many commenters suggested
that notice could be fulfilled by
providing a link to the notice, rather
than the complete text of the notice of
demurrage tariff. Additionally, some
commenters also argued that a one-time
notice should fulfill the notice
requirement, as opposed to providing
notice with every shipment. As we
explain earlier in this decision, we agree
with both of these suggestions, which
will minimize the burden on rail
carriers.
We considered establishing a different
notice requirement for small rail
carriers, or exempting small rail carriers
from the notice requirement altogether,
but rejected these alternatives because
they would conflict with the primary
goal of this rulemaking, which is to
simplify the demurrage process in light
of current practices and to promote
uniformity in the area. To minimize the
burden on small rail carriers, we did
adopt several suggestions, described
above. However, the goals of this
rulemaking would not be met by
creating an exemption for certain classes
of carriers. Although ASLRRA’s
comments state that providing a onetime notice, with either the full tariff or
a link to that tariff, may be burdensome
to some small carriers, we believe that
incorporating this relatively modest
requirement into the carriers’ regular
business practices and customer
communications will provide certainty
in the event of a demurrage dispute.
Thus, the procedures adopted here will
provide notice in the event that a carrier

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wants to collect demurrage, which even
today it can do only if it knows the
identity of the party from whom it seeks
to collect.
Paperwork Reduction Act. Under the
Paperwork Reduction Act (PRA), 44
U.S.C. 3501–3520, and Office of
Management and Budget (OMB)
regulations at 5 CFR 1320.3(c), a
disclosure requirement, such as the
notification requirements in the final
rule, falls within the definition of a
‘‘collection of information,’’ which must
be approved by OMB. In the NPR, the
Board sought comments pursuant to the
PRA and OMB regulations at 5 CFR
1320.8(d)(1) and (3) regarding: (1)
Whether the proposed collection of
information 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. Comments relating to
these issues are addressed above or in
the Board’s decision.
The proposed collection was
submitted to OMB for review as
required under the PRA, 44 U.S.C.
3507(d), and 5 CFR 1320.11. OMB
withheld approval pending submission
of the final rule. As also required under
5 CFR 1320.11, we are today submitting
the collection contained in this final
rule to OMB for approval. Once
approval is received, we will publish a
notice in the Federal Register stating
the control number and the expiration
date for this collection. Under the PRA
and 5 CFR 1320.11, an agency may not
conduct or sponsor, and a person is not
required to respond to, a collection of
information unless the collection
displays a currently valid OMB control
number.
This action will not significantly
affect either the quality of the human
environment or the conservation of
energy resources.
It is ordered:
■ 1. The final rules will be effective on
July 15, 2014.
■ 2. A copy of this decision will be
served upon the Chief Counsel for
Advocacy, Office of Advocacy, U.S.
Small Business Administration.

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List of Subjects in 49 CFR Part 1333
Demurrage, Railroads.
Decided: April 9, 2014.
By the Board, Chairman Elliott and Vice
Chairman Begeman.
Jeffrey Herzig,
Clearance Clerk.

For the reasons set forth in the
preamble, the Surface Transportation
Board amends title 49, chapter X,
subchapter D, of the Code of Federal
Regulations by adding part 1333 to read
as follows:
PART 1333—DEMURRAGE LIABILITY
Sec.
1333.1
1333.2
1333.3

Demurrage defined.
Who may charge demurrage.
Who is subject to demurrage.

Authority: 49 U.S.C. 721.
§ 1333.1

Demurrage defined.

Demurrage is a charge that both
compensates rail carriers for the
expenses incurred when rail cars are
detained beyond a specified period of
time (i.e., free time) for loading or
unloading, and serves as a penalty for
undue car detention to encourage the
efficient use of rail cars in the rail
network.
§ 1333.2

Who may charge demurrage.

Demurrage shall be assessed by the
serving rail carrier, i.e., the rail carrier
providing rail cars to a shipper at an
origin point or delivering them to a
receiver at an end-point or intermediate
destination. 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.
§ 1333.3

Who is subject to demurrage.

Any person receiving rail cars from a
rail carrier for loading or unloading who
detains the cars beyond the period of
free time set forth in the governing
demurrage tariff may be held liable for
demurrage if the carrier has provided
that person with actual notice of the
demurrage tariff providing for such
liability prior to the placement of the
rail cars. The notice required by this
section shall be in written or electronic
form.
[FR Doc. 2014–08454 Filed 4–15–14; 8:45 am]
BILLING CODE 4915–01–P

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