The Board Adopts a Final Rule Regarding Demurrage Billing Requirements

In a decision served on April 6, 2021, the Surface Transportation Board (Board) adopted a final rule “requiring Class I carriers to include certain minimum information on or with their demurrage invoices and provide, in the format of their choosing, machine-readable access to the required minimum information.”  Demurrage Billing Requirements, EP 759, slip op. at 3 (STB served April 6, 2021).  According to the Board, “[d]emurrage 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.”  Id., slip op. at 1-2.

The Board issued a notice of proposed rulemaking on October 7, 2019, proposing changes to its existing demurrage regulations to address several issues regarding carriers’ demurrage billing practices.  Demurrage Billing Requirements, EP 759 (STB served Oct. 7, 2019).  The Board received numerous comments from stakeholders, including requests for additional and modified invoicing requirements.  Subsequently, the Board issued a supplemental notice on April 30, 2020, seeking comment on potential modifications and additions to the proposal.  Demurrage Billing Requirements, EP 759 (STB served April 30, 2020).  In response to the supplemental notice, the Board received various comments and replies.

In general, rail users expressed broad support for the proposed minimum information requirements, while Class I carriers opposed the Board’s proposal.  Demurrage Billing Requirements, EP 759, slip op. at 5 (STB served April 6, 2021).  Class I carriers generally argued that “a rule establishing any minimum information requirements is unnecessary; would lead to increased litigation; contradicts Board precedent, the rail transportation policy (RTP) of 49 U.S.C. § 10101, and the purpose of demurrage; and would restrict innovation.”  Id.  Class I carriers also argued that, if minimum information requirements are adopted, “carriers should be allowed to provide the information on their existing online platforms rather than on or with invoices.”  Id. 

In the final rule, the Board noted that it finds “ample support in the record for adoption of minimum information requirements for demurrage invoices.”  Id., slip op. at 8.  The Board also found that, contrary to the carriers’ arguments, “the final rule does not contradict Board precedent, the RTP, or the purpose of demurrage.”  Id., slip op. at 10.

            The final rule requires the following minimum information to be provided on or with any demurrage invoices issued by Class I carriers:

(a) The billing cycle covered by the invoice;

(b) The unique identifying information (e.g., reporting marks and number) of each car involved;

(c) The following information, where applicable:

(1) The date the waybill was created;

(2) The status of each car as loaded or empty;

(3) The commodity being shipped (if the car is loaded);

(4) The identity of the shipper, consignee, and/or care-of party, as applicable; and

(5) The origin station and state of the shipment;

(d) The dates and times of:

(1) original estimated arrival of each car, as generated promptly following interchange or release of shipment to the invoicing carrier and as based on the first movement of the invoicing carrier;

(2) receipt of each car at the last interchange with the invoicing carrier (if applicable);

(3) actual placement of each car;

(4) constructive placement of each car (if applicable and different from actual placement);

(5) notification of constructive placement to the shipper or third-party intermediary (if applicable);

(6) each car ordered in (if applicable) (i.e., the date and time demurrage first stops accruing with respect to a closed-gate facility);

(7) release of each car; and

(e) The number of credits and debits attributable to each car (if applicable).

Id., slip op. at 37. Additionally, under the final rule, Class I carriers must provide “machine-readable access” to the required information, meaning “data in an open format that can be easily processed by computer without human intervention while ensuring no semantic meaning is lost.”  Id., slip op. at 38.  Class I carriers have discretion in determining how to provide rail users with access to machine-readable data, such as “through a machine-readable invoice, a separate electronic file, a customized link, or another similar option.”  Id., slip op. at 27.

The Board stated that it will allow Class I carriers until October 6, 2021 to comply with the final rule.  Id., slip op. at 31.  The Board also noted that this rule is a “default rule, and Class I carriers and rail users may enter into separate agreements about how to convey and receive demurrage information.”  Id., slip op. at 25, n.44.

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