Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-07-01070/USCOURTS-caDC-07-01070-0/pdf.json

Parties Involved:
BNSF Railway Company
Intervenor
North America Freight Car Association
Petitioner
Surface Transportation Board
Respondent
United States of America
Respondent

Document Text:

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued March 14, 2008 Decided June 24, 2008

No. 07-1070

NORTH AMERICA FREIGHT CAR ASSOCIATION,

PETITIONER

v.

SURFACE TRANSPORTATION BOARD AND

UNITED STATES OF AMERICA,

RESPONDENTS

BNSF RAILWAY COMPANY,

INTERVENOR

On Petition for Review of an Order of the

Surface Transportation Board

John M. Cutler, Jr. and Andrew P. Goldstein argued the

cause for the petitioner.

Anika Sanders Cooper, Attorney, Surface Transportation

Board, argued the cause for the respondents. Thomas O. Barnett,

Assistant Attorney General, Robert B. Nicholson and John P.

Fonte, Attorneys, United States Department of Justice, and Ellen

D. Hanson, General Counsel, and Craig M. Keats, Deputy

General Counsel, Surface Transportation Board, were on brief.

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1

“Demurrage” refers to “a charge assessed for detaining a freight

car, truck, or other vehicle beyond any free time stipulated for loading

or unloading.” PCI Transp., Inc. v. Fort Worth & W. R.R., 418 F.3d

535, 537 n.1 (5th Cir. 2005). “Demurrage” and “storage” are often

used interchangeably with respect to such charges.

2

The ICCTA, Pub. L. No. 104-88, 109 Stat. 803 (1995), abolished

the Interstate Commerce Commission (ICC, Commission), created the

STB, transferred to it the ICC’s remaining regulatory authority and

Richard E. Weicher, Sidney L. Strickland, Jr., Robert M.

Jenkins III and David M. Gossett were on brief for the

intervenor.

Before: HENDERSON, BROWN and KAVANAUGH, Circuit

Judges.

Opinion for the court filed by Circuit Judge HENDERSON.

KAREN LECRAFT HENDERSON, Circuit Judge: The

petitioner is North America Freight Car Association (NAFCA),

a trade association of companies that use private railroad freight

cars (i.e., cars that are owned or leased by the companies

themselves or by other private shippers rather than by the

railroad) to transport goods on track owned by railroads.

NAFCA seeks review of a decision of the Surface Transportation

Board (STB, Board) denying NAFCA’s challenge to “storage”

and “demurrage”1

 charges (collectively 2001 Charges), which

the Burlington Northern and Santa Fe Railway Company—now

BNSF Railway Company (BNSF)—imposed in 2001 for empty

private freight cars that remain on BNSF tracks beyond a base

“free time” period (ranging from one to five days). See N. Am.

Freight Car Ass’n v. BNSF Ry., STB Docket No. 42060

(Sub-No. 1), 2007 WL 201203 (served Jan. 26, 2007) (STB

Dec.). NAFCA petitions for review on the ground that BNSF’s

charges violate three provisions of the Interstate Commerce

Commission Termination Act of 1995 (ICCTA):2

 (1) 49 U.S.C.

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provided that ICC precedent applies to the STB. Ariz. Elec. Power

Coop., Inc. v. STB, 454 F.3d 359, 364 n.* (D.C. Cir. 2006).

§ 10702(2), which requires that a railroad “establish

reasonable . . . practices” related to transportation and service;

(2) 49 U.S.C. § 10746, which requires that demurrage charges

fulfill two enumerated objectives; and (3) 49 U.S.C. § 10745,

which authorizes a rail carrier to compensate a shipper for

providing a service related to transportation. For the reasons set

out below, we deny NAFCA’s petition.

I.

In July 2001, BNSF instituted a new “storage” charge for

empty private industrial cars (primarily tank cars) and

“demurrage” charge for empty private covered hopper cars,

which are used to transport grain, grain products and sugar.

Under BNSF’s plan, the storage charge for an industrial car

begins to accrue at the second 12:01 a.m. after “constructive

placement” of the car—that is, after BNSF notifies the shipper

the empty car is ready to deliver to the shipper—and continues

until the shipper directs BNSF to deliver the car to the shipper’s

facility. The storage charge is a “straight” three-tiered rate: $25

per day in areas where track congestion is most likely, $15 per

day where congestion is likely and $10 per day where congestion

is least likely. See STB Dec. 2; Verified Statement of BNSF

General Director Douglas W. Langston (Langston Statement) 9-

11. BNSF’s demurrage charge for an empty hopper car is an

“average” assessment: upon constructive placement, each car is

assigned two “credits” and for each day thereafter that the car

remains on the track, one “debit” is assessed until the shipper

orders the car delivered. At the end of each month, all of the

debits and credits for cars delivered to a particular location are

reconciled and the shipper is charged $50 for each net debit.

STB Dec. 2-3; Langston Statement 10 n.8. BNSF instituted two

policies to ease the transition to the new storage and demurrage

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3

NAFCA also filed a separate protest and petition asking the STB

to investigate the tank car storage charge as a “departure tariff,” that

is, a charge that departs from the terms of a compromise agreement

governing the mileage allowances for tank car use, as set out in

Investigation of Tank Car Allowance Sys., 3 I.C.C.2d 196 (1986),

modified, 7 I.C.C.2d 645 (1991). The Board denied the petition in

2004. See N. Am. Freight Car Ass’n—Protest & Pet. for

Investigation—Tariff Publications of the Burlington N. & Santa Fe

Ry., STB Docket No. 42060 (served Aug. 13, 2004). That denial is

not before the court. 

charge regime: (1) it agreed to waive charges for shippers that

build facilities to store their cars within the first year of the

program; and (2) it offered shippers “floating” leases of BNSF

track to store their cars, which leases permit BNSF to move the

stored cars as needed to free up track. Langston Statement 8-9,

24-25. 

In August 2001, NAFCA filed a complaint with the STB

challenging both the storage charge and the demurrage charge on

the ground that they both violate four provisions of the ICCTA:

49 U.S.C. §§ 10702(2), 11121(a), 10746 and 10745. See N. Am.

Freight Car Ass’n v. BNSF Ry., STB Docket No. 42060

(Sub-No. 1), Am. Compl. 7-8 (filed Mar. 14, 2005).3

 In a

decision served January 26, 2007, the STB denied NAFCA’s

complaint. In its decision, the Board explained why railroads

had begun to extend storage and demurrage charges—

historically limited to loaded cars—to unloaded rail cars as well:

 In recent years, private car owners have increased

their private car fleets in an attempt to have more cars

available during seasonal and other periods of greater

need. At times this has increased the number of empty

private cars on the system, which has led to various

difficulties and inefficiencies for carriers on whose

lines the private cars sit. In response, a number of

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NAFCA does not now argue, as it did before the STB, that the

2001 Charges violate 49 U.S.C. § 11121. See NAFCA Br. 26-61.

railroads have begun charging shippers for holding a

shipper’s empty private cars on their systems. 

STB Dec. 2. The Board upheld BNSF’s storage and demurrage

charges, finding that they “meet both purposes for which such

charges are applied to loaded cars: they 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.” Id. at 9. The Board further concluded that such

“[p]romotion of cost recovery and efficient equipment utilization

are not unreasonable purposes.” Id. 

On March 22, 2007 NAFCA filed a petition for review.

II.

NAFCA challenges the 2001 Charges as violative of 49

U.S.C. §§ 10702(2), 10746 and 10745.4 Our review of the

Board’s decision is deferential:

We will set aside a Board decision only if it is

“arbitrary, capricious, an abuse of discretion, . . .

otherwise [unlawful, or] . . . unsupported by substantial

evidence.” 5 U.S.C. § 706(2)(A), (E). In ascertaining

whether a railroad’s rate is reasonable, the Board is at

the zenith of its powers and thus entitled to particular

deference. Where the Board’s findings rest on such

relevant evidence as a reasonable mind might accept as

adequate to support a conclusion, and where the Board

has articulated a rational connection between the facts

found and the decision made, we will not disturb its

judgment. In dealing with complex matters within its

expertise, the Board has“wide discretion in formulating

appropriate solutions.

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5

Section 10101 provides in relevant part:

In regulating the railroad industry, it is the policy of the

United States Government—

(1) to allow, to the maximum extent possible,

competition and the demand for services to establish

reasonable rates for transportation by rail;

 . . .

PPL Mont., LLC v. STB, 437 F.3d 1240, 1244-45 (D.C. Cir.

2006) (citations and quotations omitted) (alterations in original).

Applying this standard, we address each of NAFCA’s arguments.

A. “Unreasonable Practices” Under 49 U.S.C. § 10702

First, NAFCA contends the STB arbitrarily concluded that

the 2001 Charges are “reasonable practices” under 49 U.S.C.

§ 10702(2). Section 10702 provides:

 A rail carrier providing transportation or service

subject to the jurisdiction of the Board under this part

shall establish reasonable—

 (1) rates, to the extent required by section

10707, divisions of joint rates, and

classifications for transportation and service it

may provide under this part; and

 (2) rules and practices on matters related to

that transportation or service.

On the record before us, we conclude the STB permissibly

determined that the 2001 Charges constitute reasonable practices

under section 10702(2).

Preliminarily, NAFCA argues that the STB erred in finding

that the 2001 Charges are consistent with four congressional rail

policies set out in 49 U.S.C. § 10101.5

 In its decision the STB

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(5) to foster sound economic conditions in

transportation and to ensure effective competition and

coordination between rail carriers and other modes;

. . .

 (9) to encourage honest and efficient management

of railroads;

 (10) to require rail carriers, to the maximum extent

practicable, to rely on individual rate increases, and

to limit the use of increases of general applicability;

 . . . .

49 U.S.C. § 10101.

found as follows: 

Recovering the cost of empty private car storage from

the suppliers of those cars advances several aspects of

the rail transportation policy, including allowing the

demand for services to establish rates (49 U.S.C.

10101(1)), fostering sound economic conditions in

transportation (49 U.S.C. 10101(5)), encouraging

efficient management of railroads (49 U.S.C.

10101(9)), and encouraging individualized ratemaking

(49 U.S.C. 10101(10)). 

STB Dec. 7. NAFCA asserts the STB’s finding as to each of the

four listed statutory polices is arbitrary. We disagree. 

NAFCA contends the 2001 Charges do not further the first

cited policy—“to allow, to the maximum extent possible,

competition and the demand for services to establish reasonable

rates for transportation by rail,” 49 U.S.C. § 10101(1)—because

“demurrage charges are not established by ‘demand’ but, instead,

as compensation for use of a railroad car and to encourage more

prompt release of equipment.” NAFCA Br. 29. The STB,

however, based its approval of the 2001 Charges largely on the

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increase in demand for track in recent years. As the Board

explained: “[R]ailroad conditions today are quite different from

what they were even 10 years ago. Traffic is up and capacity is

tight.” STB Dec. 6. 

Second, NAFCA asserts the 2001 Charges do not “foster

sound economic conditions in transportation,” 49 U.S.C.

§ 10101(5), relying on NAFCA’s expert testimony that they have

“just the opposite effect.” NAFCA Br. 29. The STB, however,

reached the contrary—and reasonable—conclusion that the 2001

Charges serve the important economic purposes of “eliminat[ing]

cross-subsidies,” see infra Pt. II.A.4, and “compensat[ing] BNSF

for the use of its track.” STB Dec. 6. 

Third, NAFCA argues that the 2001 Charges do not

“encourage . . . efficient management of railroads,” 49 U.S.C.

§ 10101(9), because they “provide no incentive for a railroad to

improve erratic, undependable service.” NAFCA Br. 30. This

may be so but the STB reasonably determined that the 2001

Charges do foster efficient use of track and cars in that they

“encourage shippers to utilize their private cars more efficiently

and . . . discourage them from holding empty private cars on

BNSF’s system for extended periods of time.” STB Dec. 6.

Fourth, NAFCA contends the 2001 Charges do not

affirmatively promote the statutory goal “to require rail carriers,

to the maximum extent practicable, to rely on individual rate

increases, and to limit the use of increases of general

applicability.” 49 U.S.C. § 10101(10). According to NAFCA,

the 2001 Charges “have nothing to do with ‘individual rate

increases’ as contemplated by Section 10101(10),” which “was

designed to discourage railroads from engaging in collective

ratemaking to the extent that collective ratemaking is permissible

under the ICCTA.” NAFCA Br. 30. NAFCA offers no authority

for its narrow interpretation of section 10101(10) and the STB

read the provision more broadly—that is, also to encourage

increases that reflect the costs that each individual customer

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causes the railroad. See STB Dec. 9 (“[F]or BNSF to seek to

recover from private car suppliers the costs associated with

storing those suppliers’ empty private cars on its system . . . is

consistent with the individualized pricing principles advanced by

Congress in the Staggers Act.”). We defer to the Board’s

interpretation as consistent with the statutory language. See W.

Coal Traffic League v. STB, 216 F.3d 1168, 1171 (D.C. Cir.

2000) (where Congress’s intent is not unambiguously expressed,

court will “defer to the Board’s interpretation of the statute so

long as it is ‘based on a permissible construction of the statute’ ”

(quoting Chevron U.S.A. Inc. v. Natural Res. Def. Council, Inc.,

467 U.S. 837, 843 (1984))). 

Apart from its objections to the STB’s policy findings,

NAFCA identifies five respects in which it claims the 2001

Charges constitute an unreasonable practice in violation of

section 10702(2).

1. BNSF’s “Erratic” Service

NAFCA first claims the 2001 Charges are unreasonable

because they do not reflect that BNSF’s “erratic” service

contributed both to the need for private cars and to the delay in

retrieving empty cars from BNSF’s track. We conclude that the

Board properly considered and reasonably rejected NAFCA’s

claims and evidence of erratic service.

First, the Board found that NAFCA failed to carry its

evidentiary burden to establish that BNSF was responsible for

service variability and concluded that, “[i]n light of the

complexity and variety of many private car movements, it would

be inappropriate to hold that a railroad’s tariffs are unlawful

because they do not penalize the railroad for service variability

unrelated to fault.” STB Dec. 12 (citing Capitol Materials, Inc.,

STB Docket No. 42068, slip op. at 7, 2004 WL 771676, at *6

(served April 12, 2004) (“[G]iven the many variables outside a

railroad’s control that may affect delivery . . . a railroad cannot

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reasonably be expected always to be able to meet an ideal

delivery timetable.”)). The Board’s conclusion was not, as

NAFCA first maintains, contrary to precedent. 

Regarding precedent, neither this court nor the STB has

adopted a presumption, as NAFCA suggests, that variations in

train service are the fault of the railroad or that the railroad

should necessarily bear their costs. Instead, the decisions make

manifest that the question of fault is fact-specific. See Dana

Corp. v. ICC, 703 F.2d 1297, 1305 (D.C. Cir. 1983) (holding

ICC “must permit the shippers to show that, in particular

instances, the idle-car time for which charges are assessed is

attributable to the fault of the carriers”); Prince Mfg. Co. v.

Norfolk & W. Ry., 356 I.C.C. 702, 705 (1978) (“[J]ustification

for relief [from demurrage fees] depends upon the particular

exigencies in each case.”); Ormet Corp. v. Ill. Cen. R.R., 341

I.C.C. 647, 650-51 (1972) (“[J]ustification for relief depends

upon varying circumstances.”). Further, both this court and the

Board have indicated the burden is on a complaining shipper to

show that demurrage fees are excessive in a particular instance

because of some fault on the railroad’s part. In Dana Corp., for

example, we overturned the ICC’s decision and remanded to the

Commission specifically to permit “the shippers to show” the

demurrage charges were “attributable to the fault of the carriers.”

703 F.2d at 1305 (emphasis added). In Cities Service Oil Co. v.

Soo Line Railroad, 356 I.C.C. 838, 842 (1977), the ICC declared

that a complainant bears “the burden of establishing by

competent evidence” that challenged demurrage charges are

“unjust and unreasonable” and dismissed the complaint seeking

waiver of the charges because the shipper failed to satisfy its

burden. Here, the STB reasonably concluded that NAFCA did

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Placing the burden on the complaining shipper is consistent with

the Commission’s general rule that the complainant has the burden to

show that a practice is “unreasonable” under section 10702. See

Aluminum Co. of Am. v. St. Louis-S.F. Ry. Co., 364 I.C.C. 137, 143

(1980). 

not meet its burden because it offered no evidence that particular

variations in service were BNSF’s fault.6 See STB Dec. 12-13.

With regard to the need for private cars, the Board

specifically found it was caused largely by fluctuations in

demand: “In recent years, private car owners have increased their

private car fleets in an attempt to have more cars available during

seasonal and other periods of greater need.” STB Dec. 2. This

finding was supported by substantial evidence in the record. See

Verified Statement of CHS, Inc. Vice President Dan Mack

(Mack Statement) ¶ 8 (shippers furnish their own general

purpose covered hopper cars because railroads do not provide

sufficient cars “to meet all levels of demand”); Verified

Statement of Archer Daniels Midland Co. Senior Vice President

Randy Neumayer (Neumayer Statement) ¶ 3 (company acquires

private cars to be assured its grain processing and flour milling

facilities “receive a sufficient and timely supply of raw

materials” and because cars are “essential to meet ADM’s

commitments to its customers, who often lack storage capacity

or receive non-fungible commodities that cannot be

commingled”); Verified Statement of Bunge North America, Inc.

Vice President Darrell R. Wallace (Wallace Statement) ¶ 7

(company-owned hopper cars are “essential” because of varying

market requirements); see also STB Dec. 12-13.

As for the delayed retrieval of cars, the Board pointed out

that NAFCA did not explain why particular shippers “are not

prepared to receive their empty cars before charges accrue.”

STB Dec. 13. The Board noted that shippers “have the ability to

track their cars, but they have not shown that they have done so”

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and that “[e]ven without tracking their cars, private agricultural

hopper car owners are given an average of 2 days to accept their

empty private cars without charge,” which, the Board noted, is

adequate free time for “the vast majority of private car owners”

who “do not incur demurrage or storage charges.” Id. 

Finally, even had NAFCA offered evidence of particular

instances of railroad fault, it was not unreasonable for the Board

to conclude that the fact “that a shipper might suffer hardship

from a service failure at a particular location or particular

locations does not warrant overturning the railroad’s entire

storage or demurrage program, as there are other remedies

available for that situation.” Id. n.46 (noting Dana Corp.

allowed shippers “to show that, in particular instances, the

idle-time for which charges are assessed is attributable to the

fault of the carriers” (emphasis added)). Specifically, the Board

pointed out that it is “available to hear [shippers’] complaints” in

the “rare” instance where the railroad and the shipper cannot

resolve a particular demurrage dispute. Id. n.47.

2. Proportionality of “Penalties”

Relying on Consolidated Rail Corp. v. ICC, 646 F.2d 642

(D.C. Cir. 1981), NAFCA next asserts the 2001 Charges’ short

free time periods are “more costly measures than are necessary”

to correct the asserted problem of track congestion. NAFCA Br.

38. In Consolidated Rail, the court upheld the ICC’s decision

cancelling a tariff that required a shipper to pay for expensive

“special train service” to transport hazardous radioactive

materials—a requirement the ICC found was “unnecessary and

wasteful.” 646 F.2d at 643. The ICC determined that “ ‘[a]ll

available evidence support[ed] the finding that . . . use of special

trains provide[d] no cognizable safety benefit’ ” and therefore

found, “ ‘based on the evidence at hand, the special train

requirement’ ”—which was “ ‘several times as costly as regular

service without (any) commensurate safety benefits’ ”—was

“ ‘wasteful transportation and an unreasonable practice in

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In Consolidated Rail, the U.S. Department of Transportation and

the Nuclear Regulatory Commission had established “complete and

comprehensive” safety standards “pursuant to specific statutory

authority.” 646 F.2d at 650. We concluded that a presumption arose

that a safety expenditure not specified in the regulations was

unnecessary and unreasonable. Here, there is no basis for a similar

presumption.

violation of Section 10701(a) of the [Interstate Commerce

Act].’ ” Id. at 645 (quoting Trainload Rates on Radioactive

Materials, E. R.R., 362 I.C.C. 756, 773 (served May 2, 1980)).

We explained that the ICC “based this factual determination

primarily on evidence it drew from its previously issued

Environmental Impact Statement,” which “specifically addressed

the relative safety of [special train service] and regular trainload

service for radioactive material.” Id. Accordingly, we held that

“the ICC acted properly in determining, on the record before it,

that the use of special train service was unnecessary,” id. at 643,

observing that the railroads there “failed to present evidence

sufficient to rebut” the presumption (arising from the regulatory

regime there7

) that “heavy additional expenditures by the

railroads . . . were . . . unnecessary and hence unreasonable,” id.

at 656.

In this case, the STB likewise “acted properly” in

concluding that NAFCA, which bore the burden of showing

unreasonableness, see Aluminum Co. of Am. v. St. Louis-S.F. Ry. Co.,

364 I.C.C. 137, 143 (1980), failed to prove its claim. NAFCA

asserts it is unreasonable to impose demurrage charges after as

few as 25 hours (or even an average of two days) of free time

when the problem is cars remaining on track “for ‘extended

periods of time’ exceeding 30 days per car.” NAFCA Br. 40

(quoting STB Dec. 6). This argument misconstrues the record.

Before the Board, BNSF noted that 2,686 empty private cars

were on its tracks for more than thirty days on April 30, 2001,

simply as an “example” of the extent of the problem. See BNSF

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8

According to the STB (and NAFCA does not dispute this), other

railroad-owned cars, which are assigned exclusively to a single

shipper, “are treated no more favorably than private cars.” STB Dec.

Reply Statement of Fact & Argument 15 n.3 (citing Langston

Statement 5). In its decision, the STB relied on this figure, along

with others, not, as NAFCA suggests, to establish a benchmark

but rather to contrast the time cars sat empty on BNSF’s tracks

before and after the 2001 Charges were imposed. See STB Dec.

10. Neither the STB nor BNSF indicated that cars remaining on

the tracks for shorter periods of time were not also problematic.

Nor was the STB required to adopt the five-day free time period

NAFCA proposed based on NAFCA’s bare allegation that

“BNSF’s avowed goal of curbing ‘long term’ storage of empty

private cars on BNSF track clearly can be satisfied with five

days’ free time.” NAFCA Rebuttal Statement 71. NAFCA

offered no evidence to establish that a five-day period is

necessarily more reasonable than two days (or any other specific

time period). 

3. Disparate Treatment of Private Shippers

NAFCA also asserts the 2001 Charges are unreasonable

because they discriminate against private car shippers in favor of

shippers using railroad-owned cars. According to NAFCA,

“BNSF will hold its own cars indefinitely at no charge for

shippers who order them for loading, but requires private car

shippers to accept or order their empty cars within as little as 25

hours after arrival of the cars, or face steep penalties.” NAFCA

Br. 41. In its decision, the Board responded that where a

difference in treatment exists, namely, for railroad-owned cars in

the “C” pool designation—i.e., those which “are generally

associated with a particular station and may in fact be used by

multiple shippers,” STB Br. 29-30 n.26 (citing Langston

Statement 70)— the cars “may be moved by the railroad to limit

congestion.” STB Dec. 15.8

 We find this explanation for the

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15 (citing BNSF Reply Statement 68-75).

9

NAFCA argues the STB erred in not addressing the testimony

of NAFCA’s expert witness that “the 2001 Charges do not represent

‘unbundling’ in an economic sense” because “[t]rue unbundling is

designed to provide a buyer with an option that offers a lower price for

the product when it features fewer accessories and components, but

BNSF is offering no lower price to shippers so that they might obtain

varying treatment reasonable. NAFCA argues that in reality

98% of the time BNSF does not move the C pool cars, NAFCA

Br. 41-42 (citing NAFCA Rebuttal Statement 61), but this fact

does not vitiate the STB’s rationale. It remains true that BNSF

can and does move C pool cars as needed to free up track and in

the future may do so more frequently as demand or congestion

requires.

4. Cross-Subsidization

NAFCA further argues the 2001 Charges are unreasonable

because they force private car shippers to subsidize shippers who

use railroad cars because private shippers pay twice for the use

of BNSF track: once through the freight rates they pay and a

second time via the 2001 Charges. The STB, however, agreed

with BNSF that “prior to the 2001 Charges, all other shippers

were cross-subsidizing private car owners for the cost of holding

empty private cars for extended periods on the BNSF system.”

STB Dec. 6. As the Board explained: 

Storing empty private cars imposes costs on the

railroad, including the loss of system fluidity and the

opportunity cost associated with using track for

long-term car storage that instead could be used to

facilitate the efficient movement of freight. The 2001

Charges recover costs from those that generate them.

Id. (footnote omitted).9

 Thus, according to the Board, the 2001

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holding track from another source.” NAFCA Br. 44. But the STB did

not rely on an unbundling theory and it adequately explained why it

believed that the 2001 Charges promoted individualized pricing by

requiring each shipper to shoulder the cost of storing its cars on BNSF

track.

10Alternatively, the Board asserted that, “even if prior rates did

fully incorporate the costs of indefinitely storing empty private

cars . . . , BNSF demonstrates that the practices of the owners and

users of private cars in recent years have put increasing burdens on the

carrier’s infrastructure and operations, and under the law, BNSF may

raise the price for its services, as long as the total amount paid is

reasonable.” STB Dec. 7 (footnote omitted) (noting also that NAFCA

“do[es] not here challenge the reasonableness of any line-haul rates”).

Charges eliminated rather than effected cross-subsidization. The

Board’s analysis is both logical and reasonable. In rejecting

NAFCA’s argument, the Board noted that NAFCA offered no

evidence that the line haul rates before the 2001 Charges

“included the cost of storing empty private cars for any particular

length of time or that they included all such costs.” STB Dec.

7.10 

5. More Efficient Rail Service

Finally, NAFCA argues the 2001 Charges are unreasonable

because they have not, as the STB claimed, resulted in more

efficient rail service. On this subject, the STB found:

[I]n May 2001 empty private industrial cars sat on

BNSF’s track for an average of 2 days after

constructive placement. By contrast, in July 2005, the

average was less than half a day. And in May 2001,

empty private agricultural cars sat on BNSF’s track for

an average of one and one-third days, whereas in July

2005, the average was two-fifths of a day. Further,

BNSF shows that billings for empty private cars sitting

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on its track beyond the allowed free period have

dropped consistently every year since 2001—from

$12.5 million in a six-month period in 2001, to $11.2

million in 2002, to $6.8 million in 2003, to $4.7 million

in 2004. Indeed, Complainants admit that the 2001

Charges may well have “caused many shippers to

endeavor to order empty private cars from BNSF track

into shipper loading tracks more quickly than before the

changes took effect”—the very effect the 2001 Charges

were intended to produce.

STB Dec. 10 (footnotes omitted) (quoting NAFCA Opening

Statement of Fact and Argument (NAFCA Opening Statement)

30). NAFCA does not dispute the Board’s “reduction” findings,

which are supported by record evidence. NAFCA does,

however, contest the Board’s determination that the reductions

show the 2001 Charges have been effective.

First, NAFCA claims that the reduction in post-placement

holding time for agricultural hopper cars is only twelve hours

and summarily asserts that such a short reduction “is not

sufficient to assure more prompt physical removal of the car

from BNSF track even where BNSF provides daily switching.”

NAFCA Br. 47 (citing NAFCA Rebuttal Statement 26-27 (citing

Wallace Rebuttal Verified Statement ¶ 9)). NAFCA references

its argument before the Board that “a reduction in the time

between the commencement and termination of constructive

placement” does not necessarily result in “a commensurate

reduction in the time that empty private cars sat on BNSF track”

because “BNSF does not necessarily remove an empty private

car from BNSF track and place it for loading as soon as, or even

on the same day as, BNSF receives the shipper’s placement

order.” NAFCA Rebuttal Statement 25-26. The Board found,

however, (and NAFCA concedes) that there was a decrease in

the total time the car “sat” on the track after constructive

placement—both before and after the shipper orders the car

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11That there was little or no improvement in BNSF’s on-time

performance or average train velocity, as NAFCA asserts, does not

negate the other evidence showing the 2001 Charges have been

effective. 

delivered. STB Dec. 10; Langston Statement 13 (“The charts

clearly show that since the storage policy was first adopted, the

average time that private cars are left on BNSF’s tracks has

decreased by over one full day for industrial privates and by

roughly half a day for agricultural privates.” (citing id. exs. E,

F)) (emphasis added); NAFCA Br. 47. As NAFCA offers no

basis to believe the lag time to which it refers (between the

shipper’s order to deliver its car and the car’s actual movement)

decreased since 2001, it is logical to infer the reduction in total

time reflects a decrease in the time before the shipper orders

delivery.11

Second, NAFCA argues that the reduction in demurrage fees

since 2001 is illusory because of a corresponding increase over

the same period in payments to BNSF under the floating track

leases. NAFCA claims that the “only change was that the empty

private cars remained on the same BNSF track as prior to the

2001 Charges, with BNSF now collecting lower demurrage

charges but higher track rentals.” NAFCA Br. 47-48. Even if

there has been no net reduction in the number of empty cars on

BNSF’s tracks, nonetheless there has been an increase in

efficiency because, as the Board noted, the leased space is “in

less congested areas” and the leases “permit BNSF to move and

store cars where they will cause the least disruption.” STB Dec.

11 & n.32; see Langston Statement 25.

B. Section 10746: Demurrage Charge Statute

NAFCA also contends that the 2001 Charges violate 49

U.S.C. § 10746. Section 10746 provides:

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12BNSF’s straight plan permits a shipper to submit a claim for

relief from erroneously assessed charges (“error relief”), including

those caused by bunching. See Mack Statement App. B-2, at 4-5.

 A rail carrier providing transportation subject to the

jurisdiction of the Board under this part shall compute

demurrage charges, and establish rules related to those

charges, in a way that fulfills the national needs related

to—

 (1) freight car use and distribution; and

 (2) maintenance of an adequate supply of

freight cars to be available for transportation

of property.

NAFCA asserts the 2001 Charges violate this statute in two

respects.

1. Lack of “Error Relief”

NAFCA first asserts the 2001 Charges do not fulfill the

statute’s two objectives because they do not provide shippers

with adequate relief for “bunching,” i.e., “deliveries not

reasonably timed or spaced,” STB Dec. 13, or other delays

caused by BNSF’s erratic service. NAFCA complains that

BNSF’s “straight” tank car storage plan (which assesses a flat

daily storage charge) provides for only limited relief from

storage charges accrued as a consequence of erratic service such

as bunching12 and that BNSF’s average hopper demurrage plan

provides for no “error relief” at all in such circumstances.

NAFCA Br. 50. At a minimum, NAFCA asserts, in light of the

discrepancies between the straight plan and the average plan,

hopper car users should be permitted to choose between the two.

The STB rejected this argument, explaining that “BNSF’s

straight private car storage program does allow for relief from

bunching that occurs as a result of an act or neglect of BNSF,”

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STB Dec. 13 & n.45, and that “it is not unusual for average

demurrage plans to exclude or limit relief for bunching, in light

of the benefit of the averaging afforded under such plans,” id. at

13 (footnote omitted) (citing Capitol Materials, Inc., STB

Docket No. 42068, slip op. at 7, 2004 WL 771676, at *6 (served

April 12, 2004)). We find no error in the Board’s decision to

uphold the storage and demurrage plans at issue notwithstanding

the limited availability of relief thereunder.

First, given the longstanding practice of not providing error

relief under an average demurrage plan, BNSF’s failure to offer

such relief under its average plan is neither surprising nor

arbitrary. See Ill. Cent. Gulf R.R. v. ICC, 702 F.2d 111, 114 (7th

Cir. 1983) (“ ‘[R]ecent cases . . . have been uniform in their

adherence to the policy that penalty demurrage should not be

excused where an average agreement is in effect.’ ” (alteration

in original) (quoting Cleveland Elec. Illuminating Co. v. ICC,

685 F.2d 170, 174 (6th Cir. 1982); citing Empire-Detroit Steel

Div. v. ICC, 659 F.2d 396, 398 (3d Cir. 1981); Monongahela

Power Co. v. ICC, 640 F.2d 504 (4th Cir. 1981)); Capitol

Materials, Inc., 2004 WL 771676, at *2 (“Unlike ‘straight’

demurrage—under which no credits are available for early

release of cars but relief can be available for problems such as

‘bunching’ . . . —under an average demurrage agreement the

shipper is excused from demurrage charges only if a car is

delayed by an extraordinary event like a flood, earthquake,

tornado or hurricane.”). 

More fundamentally, contrary to NAFCA’s assertion, there

is no legal requirement that a demurrage charge provide “error

relief” or that a shipper be afforded the option to choose between

a straight and an average plan. In Field Container Corp. v. ICC,

712 F.2d 250 (7th Cir. 1983), on which NAFCA relies for the

latter proposition, the Seventh Circuit did not impose such a

requirement but simply upheld an average demurrage charge the

shipper had voluntarily agreed to in lieu of the default straight

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demurrage charge, noting that under the terms of the tariff, “[a]

railroad [could ]not force a shipper into the average agreement”

and “no shipper [was] coerced to adopt the average agreement;

it [was] his choice.” Id. at 255-56.

What the law does require, as we have already observed, is

that a shipper be allowed to demonstrate before the Commission

that erratic service is the fault of the railroad and that the shipper

should therefore not be assessed a charge for idle track time

caused thereby. See Dana Corp., 703 F.2d at 1305. In this case,

the Board reasonably found NAFCA did not carry its burden.

The bunching evidence consists of testimony by shippers’

officers that there is wide variation in transit times for their cars.

See Neumayer Statement ¶ 6; Verified Statement of Ag

Processing Inc. Senior Vice President Terry J. Voss ¶¶ 5-8;

Wallace Statement ¶ 9. As we have already concluded, the

Board reasonably found NAFCA failed to carry its burden to

show that such service variance—much less bunching in

particular—was attributable to BNSF. As the Board noted,

NAFCA did “not make any specific claims of bunching” and the

Board reasonably found that NAFCA’s “general claim of

possible harm” was “too vague to permit [the Board] to find an

otherwise valid tariff unlawful.” STB Dec. 13.

2. Statutory Findings 

NAFCA asserts the Board also violated section 10746 by

failing to make an affirmative finding that the 2001 Charges

promote the second objective set out in the statute —namely, that

BNSF’s demurrage charges be computed “in a way that fulfills

the national needs related to . . . (2) maintenance of an adequate

supply of freight cars to be available for transportation of

property.” 49 U.S.C. § 10746(2). In fact, NAFCA claims to

have “establish[ed] a prima facie failure of the 2001 Charges to

promote an adequate supply of freight cars in derogation of the

Section 10746 goals” because NAFCA’s “undisputed evidence

shows that private freight cars are necessary in order to meet the

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13In fact, on the same page, the policy document identifies one of

the demurrage policy’s benefits as “[p]rovid[ing] leverage for BNSF

to have private owners/lessors properly size their fleets.” NAFCA

Opening Statement Ex. 9 (emphasis added).

commercial needs of BNSF shippers who do not receive an

adequate supply of cars from BNSF, and that one of the goals of

the 2001 Charges was to reduce the number of private cars

operated by shippers.” NAFCA Br. 55-56. As evidence of

BNSF’s purportedly improper “goal,” NAFCA appears to rely on

a single sentence in an internal BNSF policy document

addressing the 2001 Charges: “The need for a comprehensive

private equipment policy has arisen from operational constraints

that warrant BNSF to introduce a tool which will provide us a

lever into the sizing of on-line privately supplied equipment

fleets.” NAFCA Opening Statement Ex. 9; see NAFCA Opening

Statement 28. The quoted sentence, however, indicates only that

BNSF desired to reduce the number of private cars on its track

(which BNSF freely admits) and not, as NAFCA suggests, that

BNSF sought to reduce the number to an inadequate level.13

Further, the Board made an affirmative finding there was no

“evidence that the 2001 Charges have made, or are likely to

make, the freight car supply inadequate.” STB Dec. 11. In the

absence of any evidence to the contrary (and NAFCA cites

none), the Board’s finding satisfies its section 10746(2)

obligation, if any, to make an express finding. 

C. Section 10745

Finally, NAFCA argues that BNSF’s failure to compensate

shippers for storing their cars violates 49 U.S.C. § 10745, which,

NAFCA asserts, requires such compensation. We conclude the

STB reasonably determined there is no section 10745 obligation.

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14Thus, we need not and do not decide whether section 10745

imposes an affirmative obligation on a railroad to establish a charge

or allowance for transportation service furnished by a shipper.

NAFCA contends that, “[a]lthough [the language of section 10475]

appears on the surface to be precatory, the case law establishes that it

is actually mandatory,” quoting Bud Antle, Inc. v. United States, 593

F.2d 865, 872 (9th Cir. 1979) (“If a ‘shipper legitimately performs a

service, it is entitled, under the plain terms of [then-49 U.S.C. App.

§ 15(15)], to be paid by the carrier a just and reasonable

allowance.’ ”). NAFCA Br. 56 (quotation omitted). The statute at

issue in Bud Antle, since repealed, presumed the existence of a charge

or allowance and mandated that it be published and be reasonable:

“If the owner of property transported under this chapter

directly or indirectly renders any service connected with

such transportation, or furnishes any instrumentality used

therein, the charge and allowance therefor shall be

published in tariffs or schedules filed . . . and shall be no

Section 10745 provides:

A rail carrier providing transportation or service

subject to the jurisdiction of the Board under this part

may establish a charge or allowance for transportation

or service for property when the owner of the property,

directly or indirectly, furnishes a service related to or an

instrumentality used in the transportation or service.

The Board may prescribe the maximum reasonable

charge or allowance a rail carrier subject to its

jurisdiction may pay for a service or instrumentality

furnished under this section. The Board may begin a

proceeding under this section on its own initiative or on

application.

To the extent the statute may require that a railroad compensate

shippers under some circumstances, the STB reasonably

determined that the statute does not apply to shippers that

provide their own storage for cars.14

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more than is just and reasonable, and the Commission may,

after hearing on a complaint or on its own initiative,

determine what is a reasonable charge as the maximum to be

paid by the carrier or carriers for the services so rendered or

for the use of the instrumentality so furnished, and fix the

same by appropriate order . . . .”

593 F.2d at 869 (quoting 49 U.S.C. § 15(13), repealed by Pub. L. No.

95-473, § 4(b), 92 Stat. 1466 (1980)) (emphases added). Current

section 10745, by contrast, simply provides that a “rail carrier . . . may

establish a charge or allowance.” (Emphasis added.) Given the

differences between the two statutes, we decline to hold that section

10745 requires that a charge or allowance be imposed. 

In its decision, the Board explained its interpretation of

section 10745 as follows:

A shipper constructing its own storage space for storage

of its own idle cars is not furnishing a rail carrier an

instrumentality used in the transportation of freight, nor

is it providing a service related to such transportation.

See 49 U.S.C. 10102(9)(B) (identifying, as within the

meaning of “transportation,” services including storage

of goods being shipped, but not storage of rail cars).

Rather, it is assuming, as it should, a cost associated

with the fleet-sizing decisions that the shipper itself has

made.

STB Dec. 15. We believe the Board’s distinction—between an

instrumentality or service directly related to the actual movement

of freight when in transit, such as storing goods before delivery,

and one that is not so directly related, such as “storing” a private

car once it is emptied of its freight—reflects a permissible

interpretation of the statutory phrase “a service related to or an

instrumentality used in the transportation or service related to

movement” and is therefore entitled to deference. See Ass’n of

Am. R.Rs. v. STB, 237 F.3d 676, 680 (D.C. Cir. 2001).

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NAFCA now argues the STB erred in relying on subsection

(9)(B) of the statute while ignoring subsection (9)(A), which

defines “transportation” to include “a locomotive, car, vehicle,

vessel, warehouse, wharf, pier, dock, yard, property, facility,

instrumentality, or equipment of any kind related to the

movement of passengers or property, or both, by rail, regardless

of ownership or an agreement concerning use.” 49 U.S.C.

§ 10102(9)(A). NAFCA contends the area in which a private

shipper stores its rail cars necessarily comes within the definition

because it is a “yard, property, facility [or] instrumentality . . .

related to the movement of . . . property . . . by rail.” We believe,

however, that the distinction the Board drew in construing

subsection (B) applies equally to subsection (A), which uses

similar language in its requirement that, to qualify as

“transportation,” the storage facility must be “related to the

movement of passengers or property, or both, by rail,” and which

may, as with subsection (9)(B), reasonably be interpreted to

exclude storage of rail cars no longer moving goods. 

For the foregoing reasons, the petition for review is denied.

So ordered.

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