Supporting Statement - EP 759 Demurrage NPRM (to ROCIS 2019)

2140-0021
December 2019
Expires 5/30/2020
SUPPORTING STATEMENT
FOR REQUEST OF OMB APPROVAL
UNDER THE PAPERWORK REDUCTION ACT AND 5 C.F.R. § 1320
The Surface Transportation Board (STB or Board) requests a modification and three-year
extension of approval for the Board’s requirement that railroads give notice of their demurrage
tariff, otherwise known as Demurrage Liability Disclosure Requirements.
A. Justification.
1. Why the collection is necessary. Demurrage is a charge by a rail carrier that both
compensates it for the expense incurred when its rail cars are detained beyond a specified period
of time (i.e., “free time”) for loading and unloading and serves as a penalty for undue car
detention to encourage the efficient use of rail cars in the rail network. See 49 C.F.R. § 1333.1.
Demurrage is subject to Board regulation under 49 U.S.C. § 10702 (requiring railroads to
establish reasonable rates and transportation-related rules and practices) and 49 U.S.C. § 10746
(requiring railroads to compute demurrage charges and related rules in a way that will fulfill
national needs related to freight car use and distribution and maintenance of an adequate car
supply).
In the simplest demurrage case, a railroad assesses demurrage on the consignor (the
shipper of the goods) for delays in loading cars at origin and on the consignee (the receiver of the
goods) for delays in unloading cars and returning them to the rail carrier at destination.
Demurrage can also, however, involve warehousemen that accept freight cars for loading and
unloading but have no property interest in the freight being transported. Warehousemen are not
typically owners of property being shipped (even though, by accepting the cars, they could be in
a position to facilitate or impede car supply), but rail carriers sometimes bill them for demurrage
as well. Thus, with multiple participants, it is important to provide clarity and notice for all
parties involved.
2. Why the modification is necessary. While disputes between railroads and parties that
originate or terminate rail cars usually involve relatively straightforward application of the
carrier’s tariffs to the circumstances of the case, complications can arise in cases involving
warehousemen or other “third-party intermediaries” who handle the goods but have no property
interest in them. In recent years, a question has arisen as to which party 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. The resulting legal debate prompted the
Board to reexamine its existing policy and to provide clarification for the industry. The
demurrage liability disclosure requirement is necessary to ensure that parties to rail transactions
provide and/or receive notice regarding any potential liability for demurrage charges.

This modification request stems from the Board’s proposed rule to change the Board’s
regulations governing demurrage liability. Demurrage Billing Requirements, EP 759 (84 Fed.
Reg. 55114 (Oct. 15, 2019)) (NPRM). The Board proposes two changes to its existing
demurrage regulations. First, the Board proposes certain requirements regarding Class I carriers’
demurrage invoices, such as minimum information to be included on or with those invoices, that
would enable invoice recipients to verify the validity of the demurrage charges; that would
permit shippers and warehousemen to properly allocate demurrage responsibility amongst
themselves; and that would assist shippers and receivers in determining how to modify their
behavior to encourage the efficient use of rail assets, thereby fulfilling the purpose of demurrage.
Second, the Board proposes a requirement for Class I carriers that if a shipper and
warehouseman agree that the shipper should be responsible for paying demurrage invoices, the
rail carrier must, upon receiving notice of that agreement, send the invoices directly to the
shipper, and not require the warehouseman to guarantee payment.
3. Extent of automated information collection. Carriers may use electronic means to
satisfy the proposed notice requirement. A carrier may email an affected party the tariff itself or a
link to the tariff that is posted on the carrier’s website.
4. Identification of duplication. The information requested does not duplicate any other
information available to the Board or the public. No other federal agency has authority to
adjudicate these complaints, and no other agency collects this information.
5. Effects on small business. The burden of providing notice is minimal. Moreover,
providing the required notice will help small businesses avoid costly litigation regarding demurrage
disputes. Notice is only required once per shipper, and not again unless the railroad chooses to
materially change the terms of its tariff. In the NPRM, the changes apply only to Class I [i.e., large]
carriers.
6. Impact of less frequent collections. The notice requirement is triggered when a
shipper initially arranges with a rail carrier for transportation of goods pursuant to the railroad’s
tariff, or when a rail carrier materially changes the terms of its demurrage tariff. The NPRM
would require additional notice and information in Class I carrier invoices. Less frequent notice
or no notice at all would expose the parties to possible litigation regarding demurrage liability in
the instances when such notice has not been provided.
7. Special circumstances. No special circumstances apply to this collection.
8. Compliance with 5 C.F.R. § 1320.8. The Board published its proposed rule change
(84 Fed. Reg. 55114 (Oct. 15, 2019)), which provided for comments regarding this collection,
with specific reference to concerns detailed in the Paperwork Reduction Act, 44 U.S.C. §§ 35013521 and Office of Management and Budget (OMB) regulations at 5 C.F.R. §1320.8(d)(3).
9. Payments or gifts to respondents. The Board does not provide any payment or gift to
respondents.
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10. Assurance of confidentiality. No confidential information is involved in this
collection.
11. Justification for collection of sensitive information. No sensitive information is
requested.
12. Estimation of burden hours for respondents.
(1) Number of respondents: 684 (including seven Class I railroads)
(2) Frequency of response: Occasionally. The existing demurrage liability disclosure
requirement is triggered in two circumstances: (1) when a shipper initially
arranges with a railroad for transportation of freight pursuant to the rail carrier’s
tariff; or (2) when a rail carrier changes the terms of its demurrage tariff. The
modification sought here makes three changes to the existing collection, as
follows: (1) one-time adjustments to the Class I railroads’ billing systems to (a)
include information on demurrage invoices, (b) to take appropriate action to
ensure that the demurrage invoices are accurate and warranted, and (2) make an
annual adjustment to the Class I carriers’ invoicing practices to invoice the
shipper when the warehouseman and the shipper reach agreement for the serving
Class I carrier to invoice the shipper (estimated 60 agreements).
(3) Annual hour burden for all respondents: 1,329.7 hours. Consistent with the
existing, approved information collection, Board staff estimates that: (1) seven
Class I carriers would each take on 15 new customers each year (105 hours);
(2) each of the seven Class I carriers would update its demurrage tariffs annually
(7 hours); (3) 677 non-Class I carriers would each take on one new customer a
year (677 hours); and (4) each of the non-Class I carriers would update its
demurrage tariffs every three years (225.7 hours annualized). For the
modification to Class I carriers’ invoicing requirements, Board staff estimates
that, on average, each Class I rail carrier would have a one-time burden of 40
hours (280 total hours). Amortized over three years, this one-time burden equals
93.3 hours per year. For the modification requiring each Class I carrier to ensure
that the demurrage charges are accurate and warranted, Board staff estimates that,
on average, each Class I carrier would have a one-time burden of 80 hours (560
total hours) to establish or modify appropriate protocols and procedures.
Amortized over three years, this one-time burden equals 186.7 hours per year.
For the modification adding a shipper invoicing requirement when a
warehouseman and shipper have agreed and notified the Class I carrier, Board
staff estimates that annually seven Class I carriers would each receive 60 requests
per year for additional shipper invoices at five minutes per invoice (35 hours).
The total estimated hour burdens are also set forth in the table below.
Table – Total Burden Hours (per Year)
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Respondents Existing Existing
Estimated
Annual Annual Update One-Time
Burden Burden
Burden for
Additional
Data
7 Class I
105
7 hours
93.3 hours
Carriers
hours
677 Non677
Class I
225.7 hours
--hours
Carriers
Totals
782
232.7 hours
93.3 hours
hours

Estimated
One-Time
Burden for
Appropriate
Protocols

Estimated
Annual
Burden for
Invoicing
Agreement

Total
Yearly
Burden
Hours

186.7 hours

35 hours

427 hours

---

---

902.7
hours

186.7 hours

35 hours

1,329.7
hours

13. Other costs to respondents. No non-labor costs are anticipated as the notice is likely
to be delivered electronically.
14. Estimated costs to the federal government. There will be no cost beyond the normal
labor costs for Board staff.
15. Changes in burden hours. The NPRM would modify the hourly burden in the
existing, approved information collection in three ways. First, the Board estimates that the
proposed invoicing requirements for Class I carriers would add a total one-time hour burden of
280 hours (or 93.3 hours per year as amortized over three years) for Class I carriers because, in
most cases, those carriers would likely need to modify their billing systems to implement some
or all of these changes. Second, the requirement that Class I carriers take appropriate action to
ensure that demurrage charges are accurate and warranted would likely require Class I carriers to
establish or modify appropriate demurrage invoicing protocols and procedures and would add an
estimated total one-time hour burden of 560 hours (or 186.7 hours per year as amortized over
three years). Third, the Board estimates that the proposed invoicing requirement that Class I
carriers invoice demurrage involving a warehouseman to the shipper if the shipper and
warehouseman have agreed to that arrangement and have so notified the rail carrier would add an
annual hour burden of 35 hours. All other hour burdens would remain the same as before this
modification (except for an update to the number of non-Class I carriers and to the estimate of
how frequently Class I carriers choose to update their demurrage tariffs, as reflected in the
estimates above).
16. Plans for tabulation and publication. Because the agency will not be collecting this
information, there are no plans for the agency to publish the information.
17. Display of expiration date for OMB approval. The new expiration date for this
collection will be published in the Federal Register when the collection is approved by OMB.
18. Exceptions to Certification Statement. Not applicable.
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B. Collections of Information Employing Statistical Methods.
Not applicable.

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