Demurrage and Detention Billing Requirements
| Published date | 26 February 2024 |
| Record Number | 2024-02926 |
| Citation | 89 FR 14330 |
| Court | Federal Maritime Commission |
| Section | Rules and Regulations |
Federal Register, Volume 89 Issue 38 (Monday, February 26, 2024)
[Federal Register Volume 89, Number 38 (Monday, February 26, 2024)]
[Rules and Regulations]
[Pages 14330-14363]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-02926]
[[Page 14329]]
Vol. 89
Monday,
No. 38
February 26, 2024
Part III Federal Maritime Commission-----------------------------------------------------------------------46 CFR Part 541Demurrage and Detention Billing Requirements; Final Rule
Federal Register / Vol. 89 , No. 38 / Monday, February 26, 2024 /
Rules and Regulations
[[Page 14330]]
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FEDERAL MARITIME COMMISSION
46 CFR Part 541
[Docket No. FMC-2022-0066]
RIN 3072-AC90
Demurrage and Detention Billing Requirements
AGENCY: Federal Maritime Commission.
ACTION: Final rule.
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SUMMARY: In accordance with the Ocean Shipping Reform Act of 2022, the
Federal Maritime Commission (the Commission or FMC) is issuing
regulations governing demurrage and detention billing requirements.
This final rule requires common carriers and marine terminal operators
to include specific minimum information on demurrage and detention
invoices, outlines certain detention and demurrage billing practices,
such as determination of which parties may appropriately be billed for
demurrage or detention charges, and sets timeframes for issuing
invoices, disputing charges with the billing party, and resolving such
disputes. It adopts with changes the notice of proposed rulemaking
published on October 14, 2022. Substantive changes allow consignees to
be billed and clarify the timeframe for non-vessel-operating common
carriers passing through demurrage and detention charges to issue their
own invoices. Non-substantive changes improve clarity and remove
drafting errors.
DATES: This final rule is effective on May 28, 2024, except for
instruction 2 adding Sec. 541.6, and instruction 3 adding Sec.
541.99, which are delayed. The Commission will publish a document in
the Federal Register announcing the effective date of these amendments.
ADDRESSES: To view background documents or comments received, you may
use the Federal eRulemaking Portal at www.regulations.gov under Docket
No. FMC-2022-0066.
FOR FURTHER INFORMATION CONTACT: David Eng, Secretary; Phone: (202)
523-5725; Email: fmc.gov">secretary@fmc.gov.
SUPPLEMENTARY INFORMATION:
I. Background
As rising cargo volumes have increasingly put pressure on common
carriers, port and terminal performance, demurrage and detention
charges have for a variety of reasons substantially increased. For
example, over a two-year period between 2020 and 2022, nine of the
largest carriers serving the U.S. liner trades individually charged a
total of approximately $8.9 billion in demurrage and detention charges
and collected roughly $6.9 billion.\1\ On July 28, 2021, Commissioner
Rebecca F. Dye, the Fact Finding Officer for Fact Finding Investigation
No. 29, International Ocean Transportation Supply Chain Engagement
(Fact Finding No. 29), recommended, among other things, that the
Commission ``[i]ssue an [Advance Notice of Proposed Rulemaking (ANPRM)]
seeking industry input on whether the Commission should require common
carriers \2\ and marine terminal operators \3\ to include certain
minimum information on or with demurrage and detention billings and
adhere to certain practices regarding the timing of demurrage and
detention billings.'' \4\ The Fact Finding Officer expressed concern
about certain demurrage and detention billing practices and a need to
ensure that it is clear to shippers ``what is being billed by whom'' so
that they can understand the charges.\5\ The Commission voted to move
forward with this Fact Finding 29 recommendation on September 15,
2021.\6\
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\1\ Federal Maritime Commission, Detention and Demurrage,
https://www.fmc.gov/detention-and-demurrage/
#:~:text=In%20dollar%20terms%2C%20the%20nine,over%20the%20two%2Dyear%
20period (last visited Oct. 11, 2023).
\2\ There are two types of common carriers: (1) vessel-operating
common carriers (VOCCs), also called ocean common carriers, and (2)
non-vessel-operating common carriers (NVOCCs). 46 U.S.C. 40102(7),
(17), (18).
\3\ ``Marine terminal operator'' (MTO) is defined at 46 U.S.C.
40102(15).
\4\ See Fact Finding Investigation No. 29, Interim
Recommendations at 6 (July 28, 2021) (Fact Finding 29 Interim
Recommendations), available at: https://www2.fmc.gov/ReadingRoom/docs/FFno29/FF29%20Interim%20Recommendations.pdf/.
\5\ Fact Finding 29 Interim Recommendations at 7.
\6\ Fed. Mar. Comm'n, Press Release, FMC to Issue Guidance on
Complaint Proceedings and Seek Comments on Demurrage and Detention
Billings (Sept. 15, 2021), https://www.fmc.gov/fmc-to-issue-guidance-on-complaint-proceedings-and-seek-comments-on-demurrage-and-detention-billings/.
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On February 15, 2022, the Commission issued an ANPRM to request
industry views on potential demurrage and detention billing
requirements.\7\ Specifically, the Commission requested comments on:
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\7\ Advance Notice of Proposed Rulemaking on Demurrage and
Detention Billing Requirements, 87 FR 8506 (Feb. 15, 2022). See
Docket No. 22-04, Demurrage and Detention Billing Requirements.
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Whether a proposed regulation on demurrage and detention
billing practices should apply to non-vessel-operating common carriers
(NVOCCs) as well as vessel-operating common carriers (VOCCs);
Whether the regulations should differ based on whether the
billing party is an NVOCC or a VOCC; \8\
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\8\ 87 FR at 8507, 8508-8509 (Questions 1 and 7).
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Whether the proposed regulations on demurrage and
detention billings should apply to marine terminal operators (MTOs);
\9\
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\9\ 87 FR at 8507, 8509 (Questions 2 and 3).
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What information should be required in demurrage and
detention invoices; \10\
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\10\ 87 FR at 8508.
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Whether bills should include information on how the
billing party calculated demurrage and detention charges.\11\ For
example, the Commission requested comments on whether it should require
the billing party to include the following information:
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\11\ Id.
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[cir] Identifying clear and concise container availability dates in
addition to vessel arrival dates for import shipments; and,
[cir] For export shipments, the earliest return dates (and any
modifications to those dates) as well as the availability of return
locations and appointments, where applicable; \12\ and
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\12\ 87 FR at 8509 (Question 6).
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Whether the bills should include information on any events
(e.g., container unavailability, lack of return locations,
appointments, or other force-majeure reasons) that would justify
stopping the clock on charges.\13\
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\13\ Id.
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In the ANPRM, the Commission stated that it was considering whether
it should require common carriers and MTOs to adhere to certain
practices regarding the timing of demurrage and detention billings. The
Commission sought comments on whether it should require billing parties
to issue demurrage or detention invoices within 60 days after the
charges stopped accruing.\14\ The Commission stated that the Uniform
Intermodal Interchange Agreement (UIIA) \15\ currently stipulates that
invoices be issued within 60 days and asked whether the 60-day
timeframe was effective in addressing concerns raised by billed
parties, or whether a longer or shorter time period would be more
appropriate.\16\ In addition, the Commission requested comments on
whether it should regulate the timeframe for refunds and, if so, what
would be an appropriate timeframe.\17\
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\14\ 87 FR at 8508, 8509 (Question 12).
\15\ The UIIA is a standard industry contract that provides
rules for the interchange of equipment between motor carriers and
equipment providers, such as VOCCs. Participation is voluntary.
\16\ 87 FR at 8508.
\17\ 87 FR at 8508, 8509 (Question 14).
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On June 16, 2022, after the Commission issued the ANPRM and
received comments, the Ocean Shipping Reform Act of 2022 (OSRA 2022)
was
[[Page 14331]]
enacted into law.\18\ In OSRA 2022, Congress amended various statutory
provisions contained in part A of subtitle IV of title 46, U.S. Code.
Specifically, OSRA 2022 prohibits common carriers from issuing an
invoice for demurrage or detention charges unless the invoice includes
specific information to show that the charges comply with part 545 of
title 46, Code of Federal Regulations and applicable provisions and
regulations.\19\ OSRA 2022 then lists the minimum information that
common carriers must include in a demurrage or detention invoice:
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\18\ Public Law 117-146, 136 Stat. 1272 (2022).
\19\ Public Law 117-146 at Sec. 7(a)(1), 136 Stat. at 1274
(codified at 46 U.S.C. 41104(a)(15)).
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date that container is made available;
the port of discharge;
the container number or numbers;
for exported shipments, the earliest return date;
the allowed free time in days;
the start date of free time;
the end date of free time;
the applicable detention or demurrage rule on which the
daily rate is based;
the applicable rate or rates per the applicable rule;
the total amount due;
the email, telephone number, or other appropriate contact
information for questions or requests for mitigation of fees;
a statement that the charges are consistent with any of
Federal Maritime Commission rules with respect to detention and
demurrage; and
a statement that the common carrier's performance did not
cause or contribute to the underlying invoiced charges.\20\
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\20\ Public Law 117-146 at Sec. 7(a)(2), 136 Stat. at 1275
(codified at 46 U.S.C. 41104(d)(2)).
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Failure to include the required information on a demurrage or
detention invoice eliminates any obligation of the billed party to pay
the applicable charge.\21\ In addition, OSRA 2022 authorizes the
Commission to revise the minimum information that common carriers must
include on demurrage or detention invoices in future rulemakings.
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\21\ Public Law 117-146 at Sec. 7(a)(2), 136 Stat. at 1275
(codified at 46 U.S.C. 41104(f)).
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OSRA 2022 additionally requires the Commission to initiate a
rulemaking further defining prohibited practices by common carriers,
marine terminal operators, shippers, and OTIs regarding the assessment
of demurrage or detention charges.\22\ OSRA 2022 provides that such
rulemaking must ``only seek to further clarify reasonable rules and
practices related to the assessment of detention and demurrage charges
to address the issues identified in the final rule published on May 18,
2020, entitled `Interpretive Rule on Demurrage and Detention Under the
Shipping Act' (or successor rule)[.]'' \23\ Specifically, the
Commission's rulemaking must clarify ``which parties may be
appropriately billed for any demurrage, detention, or other similar per
container charges.'' \24\
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\22\ Public Law 117-146 at Sec. 7(b)(1), 136 Stat. at 1275.
\23\ Public Law 117-146 at Sec. 7(b)(2), 136 Stat. at 1275
(emphasis added).
\24\ Id.
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On October 14, 2022, the Commission published a notice of proposed
rulemaking (NPRM) that would require common carriers and marine
terminal operators to include specific minimum information on demurrage
and detention invoices and outlined certain billing practices relevant
to appropriate timeframes for issuing invoices, disputing charges with
the billing party, and resolving such disputes.\25\ The proposed rule
addressed considerations identified in the Ocean Shipping Reform Act of
2022. The proposed rule sought comment on the adoption of minimum
information that common carriers must include in a demurrage or
detention invoice; the addition to this list of information that must
be included in or with a demurrage or detention invoice; a proposed
definition of prohibited practices clarifying which parties may be
appropriately billed for demurrage or detention charges; and billing
practices that billing parties must follow when invoicing for demurrage
or detention charges.
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\25\ 87 FR 62341.
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II. Comments
In response to the NPRM published October 14, 2022, the Commission
received 191 comments from interested parties. All major groups of
interested persons were represented in the comments: vessel-operating
common carriers (VOCCs), non-vessel-operating common carriers (NVOCCs),
marine terminal operators (MTOs), motor carriers, beneficial cargo
owners (BCOs), ocean transportation intermediaries (OTIs), third party
logistics providers, customs brokers, bi-partisan groups of the U.S.
House of Representatives, another Federal agency, and the National
Shipping Advisory Committee (the Commission's federal advisory
committee). Comments were submitted by individuals, large and small
companies, and by national trade associations. All comments submitted
on the NPRM are available at https://www.regulations.gov/docket/FMC-2022-0066/comments.
About 75 percent of commenters supported the rule, about 15 percent
questioned the rule, and 10 percent did not specify. Motor carriers
overwhelmingly support the entire rule. BCOs mostly support the rule
but some object to prohibiting others from being billed. NVOCCs and
OTIs generally supported the rule, but with many objecting to the
inclusion of NVOCCs. VOCCs overwhelmingly questioned or did not support
the rule. Nearly all VOCCs questioned the rule prohibiting billing
other parties and the timing of billing requirements. About half of
VOCCs questioned the required information from the ANPRM that the
Commission added to the information specifically required by OSRA 2022.
MTOs overwhelmingly questioned the rule, with most arguing these
regulations should not apply to MTOs.
The top three issues addressed by commenters were: (1) concerns
with the prohibition on billing other parties that are not
contractually connected, (2) concerns with additional information the
Commission proposed to require in addition to the OSRA 2022 mandated
information, and (3) concerns with the time periods for billing.
These comments are addressed in the discussion that follows.
III. Discussion of Comments
A. Sec. 541.1 Purpose
Issue: Two commenters requested that ``minimum'' be added to the
second sentence before ``procedures'' to mirror the use of ``minimum''
before ``information'' in the first sentence.\26\
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\26\ Bass Tech International (FMC-2022-0066-0230); National
Industrial Transportation League (FMC-2022-0066-0230-0104).
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FMC response: FMC declines to make the proposed change. Neither
commenter provided sufficient justification as to why such a change
would provide additional clarity. The Commission has drafted Sec.
541.1 to reflect the language of OSRA 2022.
B. Sec. 541.2 Scope and Applicability
1. Regulation of MTO Demurrage and Detention Billing Practices
(a) FMC's Authority To Regulate
Issue: MTOs and MTO trade associations argued that MTOs should not
fall within the scope of the rule.
MTOs offered many reasons why they should not be subject to the
proposed regulations. The majority presented their interpretation of
the effect that the legislative process leading to the
[[Page 14332]]
enactment of OSRA 2022 should have, which they believe demonstrates
that Congress intended to prohibit inclusion of MTOs in this
rulemaking. MTOs pointed first to how Congress amended 46 U.S.C. 41104,
which applies to common carriers, not MTOs.\27\ MTOs argued that
Congress deliberately chose not to amend 46 U.S.C. 41106 when it added
invoicing requirements to 46 U.S.C. 41104, so that invoicing
requirements would only apply to carriers, not to MTOs.\28\ The
National Association of Waterfront Employers (NAWE) and the Port of NY/
NJ Sustainable Services Agreement (PONYNJSSA) also argued that
Congress's choice not to add invoicing requirements to 46 U.S.C. 41102,
which applies to both MTOs and carriers, precludes the Commission from
including MTOs in the scope of this regulation.\29\ Most commonly,
these commenters pointed out that Congress, and specifically the House
of Representative's version of OSRA 2021, originally included MTOs in
the invoicing requirements.\30\ The MTOs argue that Congress, late in
the process, chose to exempt MTOs from compliance with demurrage and
detention requirements in the enacted version of OSRA 2022.\31\ Two
members of Congress, Congressman Jake Auchincloss and Congressman Brian
Babin, wrote jointly [August 17th Congressional Letter] to make this
argument, and stated that including MTOs within the scope of the
regulation would threaten stability and cargo fluidity at United States
ports.\32\
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\27\ E.g., Husky Terminal and Stevedoring, LLC (FMC-2022-0066-
0248); Port Houston (FMC-2022-0066-0268).
\28\ Husky Terminal and Stevedoring, LLC (FMC-2022-0066-0248).
\29\ National Association of Waterfront Employers (FMC-2022-
0066-0276); Port of NY/NJ Sustainable Services Agreement (FMC-2022-
0066-0218). NAWE and PONYNJSSA also argued that: (1) the only way
OSRA 2022 can be harmonized with 46 U.S.C. 41102(c) is by excluding
MTOs from the proposed rule's substantive demurrage and detention
billing requirements, and (2) if 46 U.S.C. 41102(c) and OSRA 2022
cannot be harmonized, the more specific statute, OSRA 2022, should
control.
\30\ Port Authority of New York & New Jersey (FMC-2022-0066-
0226); Port Houston (FMC-2022-0066-0268); West Coast MTO Agreement
(FMC-2022-0066-0229).
\31\ Port Authority of New York & New Jersey (FMC-2022-0066-
0226); American Association of Port Authorities (FMC-2022-0066-
0255); West Coast MTO Agreement (FMC-2022-0066-0229).
\32\ Letter from Jake Auchincloss and Brian Babin, U.S. House
Representatives (Aug. 17, 2023) (FMC-2022-0066-0282). The
Congressmen also took issue with a recent Commission decision
finding the imposition of equipment charges on a holiday weekend at
odds with the incentive principle. That issue is outside the scope
of this rulemaking.
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NAWE also argued that the Commission cannot enforce 46 U.S.C.
41102(c) here without contravening the Commission's Interpretive Rule
at 46 CFR 545.4(b). NAWE stated that the Commission's Interpretive Rule
requires that an impermissible ``practice'' occur on a ``normal,
customary, and continuing basis,'' while the proposed rule would
penalize any isolated invoice omission. NAWE argued that taking action
in a case alleging a single shipment violation is an implicit repeal of
the agency's Interpretive Rule at Sec. 545.4 without public notice and
comment.
Other members of Congress submitted comments on the proposed rule
as well, but in support of the inclusion of MTOs in this rule.\33\ A
letter from these members of Congress [January 2nd Congressional
Letter] stated that since authoring OSRA 2022, they became aware that
MTOs are invoicing their own demurrage and detention charges separate
from VOCC charges. They pointed out that this invoicing practice
directly contradicts the statements of NAWE to Congress during the
drafting of OSRA 2022.\34\ The letter stated that they support applying
any demurrage and detention invoicing requirements that apply to VOCCs
to MTOs as well, with reasonable exceptions for demurrage charges set
by public port tariffs and where MTOs are acting only as a collections
agent.\35\
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\33\ Letter from John Garamendi, Dusty Johnson, Jim Costa, David
Valado, Mike Thompson, and Jimmy Panetta, U.S. House Representatives
(Jan. 2, 2023)(FMC-2022-0066-0279).
\34\ Id. (``Since enactment of the Ocean Shipping Reform Act of
2022, we have heard reports of marine terminal operators invoicing
their own charges for demurrage and detention separate from those
charged by ocean carriers. This practice directly contradicts
written comments by the National Association of Waterfront
Employers--the trade association for marine terminal operators--on
the House discussion draft and to the Committee on Transportation
and Infrastructure in 2021.'')
\35\ Id.
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FMC response: The Commission has the statutory authority to apply
this rule to MTOs and declines to exclude them from the duties and
responsibilities of issuing accurate demurrage and detention invoices.
Commenters raised two major arguments against the Commission's proposed
inclusion in the regulations of MTOs. Commenters argued that the
Commission did not have authority to apply the regulations to MTOs \36\
and that it should not apply regulations to MTOs for a variety of
reasons addressed below individually.\37\ The Commission has clear
statutory authority to regulate MTOs under section 41102(c). There is
also a clear need, based on the record of this rulemaking, for these
regulations to address MTOs demurrage and detention invoices sent to
entities other than VOCCs.
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\36\ National Association of Waterfront Employers (FMC-2022-066-
0276).
\37\ American Association of Port Authorities (FMC-2022-0066-
0255); West Coast MTO Agreement (FMC-2022-0066-0229); Trapac, LLC
(FMC-2022-0066-0136).
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Section 41102(c) of Title 46 prohibits common carriers, MTOs, and
ocean transportation intermediaries from failing to establish, observe,
and enforce just and reasonable regulations and practices relating to
or connected with the receiving, handling, storing, or delivering
property. The Commission has authority under 46 U.S.C. 46105(a) to
prescribe regulations to carry out its duties and powers. The
Commission has repeatedly explained that the issue of detention and
demurrage charges falls within the prohibitions of 46 U.S.C.
41102(c).\38\ Further, the plain language of 46 U.S.C. 41102(c)
describes exactly the type of conduct this rule intends to regulate.
This section prohibits an MTO from ``failing to establish, observe, and
enforce just and reasonable regulations and practices relating to or
connected with receiving . . . [or] storing property.'' This rule
issued pursuant to the Commission's power to issue regulations \39\ to
define these prohibitions, as well as those found in OSRA 2022,
interprets what constitutes just and reasonable practices on invoicing
and charges related to the use of marine terminal space or shipping
containers. The Commission concludes that this rule will help ensure
that MTOs' demurrage and detention billing practices are just and
reasonable pursuant to section 41102.
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\38\ Interpretive Rule on Demurrage and Detention Under the
Shipping Act, 84 FR 48850, 48852 (Sep. 17, 2019); Interpretive Rule
on Demurrage and Detention Under the Shipping Act, 85 FR 29638 (May
18, 2020); Fact Finding Investigation No. 28, Final Report (Dec. 3,
2018), available at: https://www2.fmc.gov/readingroom/documents/20973; Fact Finding Investigation No. 29, Final Report (May 31,
2022), available at: https://www.fmc.gov/wp-content/uploads/2022/06/FactFinding29FinalReport.pdf; see also California v. United States,
320 U.S. 577, 584-85 (1944) (interpreting the analogous provision in
the Shipping Act of 1916 as applying to demurrage); Am. Export-
Isbrandtsen Lines, Inc. v. Fed. Mar. Comm'n, 444 F.2d 824, 829 (D.C.
Cir. 1970) (interpreting the analogous provision in the Shipping Act
of 1916 as applying to detention).
\39\ 46 U.S.C. 46105(a).
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Arguments that the Commission lacks this authority because Congress
chose to place detailed invoicing requirements in a section that only
applies to carriers, or because Congress removed requirements that
would expressly apply to MTOs during the statutory drafting process, do
not address the Commission's pre-
[[Page 14333]]
existing and continuing legal authority to issue demurrage and
detention invoicing regulations that apply to MTOs even before OSRA
2022. The actual statutory text of 46 U.S.C. 41102(c) and Congress's
direction to use 46 U.S.C. 41102(c) to define prohibited demurrage and
detention practices for marine terminal operators is clear and does not
necessitate resorting to the incomplete history of the legislative
drafting process of OSRA 2022.\40\ Moreover, Congress explicitly
included in OSRA 2022 the direction that the Commission initiate a
rulemaking to further define prohibited practices by MTOs, among
others, under 46 U.S.C. 41102(c) regarding the assessment of detention
and demurrage.\41\ Thus, in OSRA 2022, Congress amplified the
Commission's existing authority to issue regulations that govern the
issuance of demurrage and detention invoices in section 41102(c) and
added to that authority a mandate to further define prohibited
practices. The identification of MTOs within section 7(b), entitled
``Common Carriers,'' does not support the view that Congress intended
to limit the scope of its directive to the Commission to ensuring that
invoices are accurate. Instead, the plain language of the statute shows
an intent by Congress to address in a targeted manner the failures of
the current invoicing process. Such a targeted approach requires
ensuring that MTOs, as well as VOCCs and NVOCCs, issue accurate
invoices.
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\40\ The Commission notes that canons of construction, such as
reviewing legislative drafting history, are most useful in
evaluating an interpretation of an ambiguous statute or regulation.
See, e.g., Green v. Bock Laundry Mach. Co., 490 U.S. 504, 508-09
(1989)(``We begin by considering the extent to which the text of
[the disputed provision] answers the question before us. Concluding
that the text is ambiguous with respect to [that question], we then
seek guidance from legislative history . . .''). But that is not why
the commenters raised the legislative drafting history. The
commenters would have the Commission affirmatively read into
existence a prohibition on regulating MTO demurrage and detention
invoices because some versions of legislation contemplated by
Congress laid out statutory requirements and others did not. The
absence of a statutory requirement is not proof of a prohibition on
issuing regulations. If Congress wanted to prohibit the Commission
from regulating MTO demurrage and detention invoices, it could have
done so. The Commission does not agree that the legislative history
prohibits inclusion of MTOs in these regulations.
\41\ Public Law 117-146, 136 Stat. 1272, at 1275.
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The need to include MTOs in this rule is supported by the comments.
Excluding MTOs from this rule is likely to create a regulatory
loophole, significantly affecting the ability of the rule to effect
change in the current invoicing process. The comments support a finding
that MTOs are invoicing for their own demurrage and detention
charges.\42\ Common carriers, the usual contractual party, could simply
have MTOs issue their demurrage and detention invoices to avoid the
necessary invoicing requirements this rule puts into place, and
invoices coming from MTOs would not be required to comply with either
Congress's instructions at 46 U.S.C. 41104(d) or these regulations.
Billed parties would receive a significant portion of invoices from
MTOs with whatever information MTOs chose to provide, which may not
include the critical information a billed party needs to ensure the
bill is accurate. The MTO as the billing party would not be subject to
the dispute resolution processes contained in these rules. Not
including MTOs in the scope of this rule would meaningfully reduce the
effectiveness of the rule and perpetuate current problematic invoicing
practices. The Commission finds, as supported by the comments, that
finalizing a rule that excluded MTOs would undermine Congress's intent
as expressed through the plain language of OSRA 2022.\43\
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\42\ Garamendi, Johnson, Costa, Valado, Thompson, and Panetta,
supra note 33.
\43\ See Balsam Brands (FMC-2022-0066-0095) (arguing that
excluding MTOs potentially creates a loophole that would undermine
the purposes and effectiveness of the regulation).
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The August 17th Congressional Letter and other commenters argued
that it was not Congress's intent that these rules apply to MTOs.\44\
The August 17th Congressional Letter urged the removal of MTOs from the
rulemaking's substantive requirements because the legislative history
shows that Congress intended to remove MTOs from demurrage and
detention invoicing requirements and such requirements could
potentially increase port congestion.\45\ However, as noted above, the
legislative history of OSRA 2022 cannot be read to prohibit agency
action to address an issue the legislation itself identifies as in need
of resolution.
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\44\ Auchincloss and Babin, supra note 32.
\45\ Many MTOs also made the argument that the legislative
history of OSRA 2022 shows that Congress intended to exempt MTOs
from demurrage and detention invoice requirements. American
Association of Port Authorities (FMC-2022-0066-0255); West Coast MTO
Agreement (FMC-2022-0066-0229); Fenix Marine Services, Ltd. (FMC-
2022-0066-0186); Husky Terminal and Stevedoring, LLC (FMC-2022-0066-
0248); Port of Houston (FMC-2022-0066-0268); Trapac, LLC (FMC-2022-
0066-0136); National Association of Waterfront Employers (FMC-2022-
0066-0276).
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Further, the January 2nd Congressional Letter urged the Commission
to ensure the inclusion of MTOs in the Commission's final rule.
Congressmen Garamendi, Johnson, Costa, Valado, Thompson, and Panetta
wrote the January 2nd Congressional Letter.\46\ The January 2nd
Congressional Letter reported that comments submitted to Congress by
NAWE in 2021 stated that MTOs do not invoice their own charges for
detention and demurrage separate from those charged by ocean common
carriers. Since then, the signatories of the January 2nd Congressional
Letter state they have received reports of MTOs invoicing their own
demurrage and detention charges separate from those of ocean common
carriers. The January 2nd Congressional Letter concluded that all
requirements in the final rule for invoicing demurrage and detention
that cover ocean common carriers should apply to MTOs. The Commission
finds the argument from the January 2nd Congressional Letter persuasive
and consistent with the comments indicating that MTO invoicing is
prevalent. It is critical to include MTOs in the final rule to ensure
meaningful change to existing industry practice creating inefficiencies
and confusion.
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\46\ Garamendi, Johnson, Costa, Valado, Thompson, and Panetta,
supra note 33.
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With respect to the specific information required in invoices,
Congress and the President have already spoken on what they believe to
be reasonable demurrage and detention invoicing requirements for
billing parties, as evidenced by what they required of common carriers
at 46 U.S.C. 41104(d). The Commission believes that these elements are
appropriate to require in a demurrage and detention invoice sent to a
billed party, regardless of whether the invoices come from an MTO or a
common carrier, because these elements are mandated by Congress and
supported by past agency investigation and review.\47\ The need for
consistency in demurrage and detention invoicing further supports
requiring MTOs to comply with this rule, because billed parties should
be able to expect a standardized set of information in a demurrage or
detention invoice,\48\ regardless of whether it comes from a carrier or
an MTO.\49\
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\47\ ``[T]he intent of this rulemaking is to ensure that the
person receiving the bill understands the charges, regardless of
whether the billing party is a VOCC, NVOCC, or an MTO.'' See 87 FR
at 62347.
\48\ Harbor Trucking Association (FMC-2022-0066-0261).
\49\ As noted above, demurrage and detention invoices between
MTOs and VOCCs are not subject to this rule.
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Requiring standardized practices from MTOs also addresses the
confusion raised in comments about what actual role MTOs play in
invoicing for demurrage and detention. Some MTOs
[[Page 14334]]
told Congress that they do not issue their own demurrage and detention
invoices separate from carriers.\50\ Some MTOs have told the Commission
that they do not send traditional demurrage and detention invoices, but
instead issue ``demurrage receipts'' or ``disclose charges.'' \51\ One
MTO contended to the Commission that it does not send demurrage and
detention invoices to BCOs or truckers, and that it is VOCCs who charge
BCOs demurrage and detention; but the same MTO also said that MTOs
sometimes collect demurrage and detention on behalf of VOCCs.\52\ Other
MTOs said that they do send demurrage and detention invoices.\53\ Yet,
even if these MTOs agreed that they do send demurrage and detention
invoices, they disagreed with the idea that these invoices should be
subject to the same regulation as other billing parties.
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\50\ Garamendi, Johnson, Costa, Valado, Thompson, and Panetta,
supra note 33.
\51\ Fenix Marine Services (FMC-2022-0066-0186); West Coast MTO
Agreement (FMC-2022-0066-0229).
\52\ Trapac, LLC (FMC-2022-0066-0136).
\53\ Ports America/SSA Marine (FMC-2022-0066-0249).
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These inconsistent statements by MTOs highlight the need for clear
rules governing all demurrage and detention billing parties so that
billed parties receive accurate information to facilitate faster
payment and dispute resolution. Allowing MTOs to escape the basic
requirements of this rule by artfully styling their demurrage and
detention invoices as ``receipts'' or ``disclosures'' would undermine
the statute, frustrate the Commission's expressed intention to simplify
and clarify demurrage and detention invoicing for billed parties, and
leave in place the confusing status quo that spurred Congress to pass
OSRA 2022.
Further, the logic of the MTO argument against regulation is not
persuasive. If, as some MTOs claim, they do not invoice shippers, BCOs,
and truckers for demurrage and detention, the rule would not affect
their practices in any event. If MTOs do send invoices, however, they
should abide by the same rules as any other billing party. If they do
have contractual privity, they should be able to obtain any information
necessary to issue a compliant invoice through that contract. If MTOs
do not have the information required to issue invoices consistent with
these rules, they should not send invoices. If they still need to send
these invoices, they should obtain all of the required information like
any other billing party. If they cannot obtain that information and
they still wish to collect a charge, they should forward the invoice to
a billing party with whom they have a contractual relationship and that
can comply with this rule, and collect the demurrage and detention
charge after providing the billing party accurate information about the
charge.
Some commenters further challenged the Commission's authority to
regulate MTOs pursuant to 46 U.S.C. 41102. NAWE argued that the
Commission lacks authority to regulate MTO invoicing through the
general legal authority to regulate unjust and unfair practices at 46
U.S.C. 41102(c). NAWE argued that a more specific statutory provision
controls over a more general provision, and that when two statutes
cannot be harmonized, the later in time statute controls over the
earlier. NAWE contended that 46 U.S.C. 41102(c) and OSRA 2022 can be
harmonized, by simply omitting MTOs from the proposed rule. If,
however, the authorities cannot be harmonized, it contends, the
Commission must follow OSRA 2022 as it is the more specific and later-
in-time statute.
As previously noted, the Commission has explained that it
interprets 46 U.S.C. 41102(c) as governing the invoicing of demurrage
and detention. Nothing in OSRA 2022 prohibited the Commission from
regulating MTO demurrage and detention invoicing. Therefore, the
Commission disagrees with NAWE's argument that the statutes cannot be
harmonized.
(b) Burden on MTOs To Comply With the Rule and Security Concerns
Issue: MTOs argued that applying these rules to MTOs would force
them to expend significant resources to overhaul their websites and
create additional security measures.\54\
---------------------------------------------------------------------------
\54\ Fenix Marine Services, Ltd. (FMC-2022-0066-0186).
---------------------------------------------------------------------------
FMC response: MTOs did not submit estimates of or proposals for
what work would be needed, or would cost, to modify their systems to
comply with this rule. One MTO explained they have already invested
significant resources to modify their system to incorporate the
information from carriers required by OSRA 2022. This certainly
suggests it is reasonable to expect MTOs to modify their systems to
comply with this rule. It is not clear why MTOs could do this for their
VOCC customers' invoices but not their own invoices.\55\
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\55\ Husky Terminal and Stevedoring, LLC (FMC-2022-0066-0248).
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(c) Changes to Current MTO Practices
Issue: MTOs argued that this rule would upend settled practices and
increase confusion and congestion at ports.\56\
---------------------------------------------------------------------------
\56\ American Association of Port Authorities (FMC-2022-0066-
0255).
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FMC response: Current billing practices and the lack of
transparency in those practices have raised concerns about whether
current practices allow for a competitive and reliable American freight
delivery system.\57\ The changes to current practices this rule
requires are meant to change the settled practices that do not ensure
accuracy, clarity, and visibility of charges. This rule seeks to
improve upon existing practices that do not provide adequate
information for the efficient invoicing of charges. Further, these
changes provide clarity on how billed parties access the dispute
resolution process. Requiring targeted information may ultimately lead
to fewer disputed bills and therefore streamline the demurrage and
detention billing process. As discussed further in this preamble, the
Commission is delaying implementation of the rule by 90 days. The
Commission believes that this is sufficient time to allow MTOs and
other regulated parties to make the necessary changes to their business
operations in order to comply with the rule.
---------------------------------------------------------------------------
\57\ See, e.g., Order of Investigation, Fact Finding
Investigation No 28.
---------------------------------------------------------------------------
(d) Impacts on Common Law Lien Rights
Issue: MTOs argued that the rule would force MTOs to waive their
common law lien rights. MTOs said they would have to choose between:
(1) releasing cargo without demurrage or detention charges being paid
(waiving their lien rights), or (2) refunding any collected charges if
the invoice does not comply with this final rule.\58\
---------------------------------------------------------------------------
\58\ See, e.g., American Association of Port Authorities (FMC-
2022-0066-0255); West Coast MTO Agreement (FMC-2022-0066-0229).
---------------------------------------------------------------------------
FMC response: This rule does not impact traditional cargo lien
rights. This rule allows MTOs to make their own business decisions
about whether or not they require demurrage and detention charges to be
paid prior to releasing cargo. Contrary to the commenters' assertions,
releasing cargo without payment of demurrage and detention charges does
not automatically waive cargo lien rights. Cargo liens are lost upon
delivery only if the cargo is delivered unconditionally.\59\ It is well
established law that a lien can survive delivery if the parties have
contracted for such and the release has been
[[Page 14335]]
conditioned.\60\ In some circumstances releasing cargo conditionally
might potentially carry additional administrative burden and risk, but
it may be advantageous to a particular MTO in other circumstances.
Alternatively, MTOs can require demurrage and detention charges be paid
prior to releasing cargo. This option carries its own risks, however.
As the commenter stated, if an MTO collects demurrage and detention
charges and then those charges are later successfully contested by the
billed party, the MTO must refund the incorrect charges. Under this
rule, billed parties have 30 calendar days from the date the invoice is
issued to contest demurrage and detention charges. This, however,
should serve as an incentive for the invoices to be correct when
issued. MTOs assert that issuing correct invoices will be difficult to
impossible for them to do under the new rule because they do not know
the end date of free time. The Commission is not convinced by this
argument. MTOs have not presented evidence to the Commission that such
information is unattainable by MTOs, only that they do not presently
have it. The information needed to calculate this charge is knowable in
advance of the release of cargo; it can be pulled from the bill of
lading, tariff, terminal schedule, or other relevant transportation
documents MTOs already have access to and billing formulas created that
allow accurate invoices to be created quickly and accurately once an
availability date is known (and projected outward for each day cargo
pick-up is delayed).
---------------------------------------------------------------------------
\59\ E.g., Cross Equip. Ltd. v. Hyundai Merch. Marine (Am.)
Inc., 214 F.3d 1349 (Table) (5th Cir. 2000)(2000 WL 633596)(citing
e.g., 4,885 Bags of Linseed, 66 U.S. (1 Black) 108, 109 (1861)).
\60\ Id. (citing e.g., The Bird of Paradise, 72 U.S. 545, 555
(1866)).
---------------------------------------------------------------------------
(e) Impact on the Commission's Interpretive Rule Codified at 46 CFR
545.4
Issue: Commenters argued that the Commission's proposed rule
amounts to an implicit repeal of the Commission's Interpretive Rule at
46 CFR 545.4 and therefore that the Commission's action violated the
Administrative Procedure Act (APA).
FMC response: The Commission has solicited public comment in both
an ANPRM and NPRM about whether the scope of this rule should cover MTO
invoicing. The Commission stated unequivocally in the NPRM that MTOs
would be subject to this rule. MTOs have had repeated and public notice
that the Commission was considering this option, so the Commission
disagrees with concerns that the rule lacked adequate time for public
notice and comment. Any argument about what parts of the Interpretive
Rule at 46 CFR 545.4 remains in force is inherently an argument about
that guidance and not about whether the Commission's instant rule
complies with the APA.
Some commenters argue the rule is inconsistent with the
Interpretive Rule at 46 CFR 545.4. The Commission finds that OSRA 2022
specifically required the Commission to issue rules under 46 U.S.C.
41102(c) that further define the prohibited practices by common
carriers, marine terminal operators, and shippers, regarding the
assessment of detention or demurrage charges. The plain language of
this directive and the plain language of 41104(d) do not require
evidence of multiple violations. This view is further supported by 46
U.S.C. 41104(f) which functions to void an invoice if a single required
element is not included, not when the complainant can show multiple
instances of such behavior.\61\ Thus, in the narrow context of
demurrage and detention invoices issued by MTOs and common carriers,
the Commission concludes that Congress dictated that evidence of a
single violation is sufficient. To the extent that the commenters argue
this narrowing by Congress repeals the Commission's entire Interpretive
Rule codified at 46 CFR 545.4, the Commission disagrees.
---------------------------------------------------------------------------
\61\ See also 46 U.S.C. 41310(b) (Charge complaints authority
states that Commission is required to investigate compliance with
section 41102 of ``the charge'' received and does not specify that
multiple instances must be alleged for the Commission to investigate
and order a refund and/or civil penalty).
---------------------------------------------------------------------------
(f) MTOs Collecting Demurrage and Detention on Behalf of Other Parties
Issue: Several MTOs have raised questions about how the rule does,
and should, apply to them when they are collecting demurrage and
detention charges on behalf of VOCCs, NVOCCs, and BCOs. For example,
Maher Terminals said that the definition of ``billing party'' in the
proposed rule does not clarify the identity of the billing party when
an MTO bills and collects on behalf of a VOCC. (The rule would define
``billing party'' as ``the ocean common carrier, marine terminal
operator, or non-vessel-operating common carrier who issues a demurrage
or detention invoice.'') Maher Terminals proposed a revision to the
definition that would have made clear that when an MTO bills on behalf
of a VOCC/NVOCC/BCO that the VOCC/NVOCC/BCO is the billing party.
FMC response: In the scenario described above, it is assumed that
the MTO would be acting as an agent of the VOCC/NVOCC/BCO. Whether an
MTO must comply with the rule in this case depends upon the contractual
duties of the MTO as an agent. Traditional rules of agency remain
applicable under the Shipping Act.\62\ According to the Restatement
(Third) Of Agency Sec. 1.01 (2006): ``As defined by the common law,
the concept of agency posits a consensual relationship in which one
person, to one degree or another or respect or another, acts as a
representative of or otherwise acts on behalf of another person with
power to affect the legal rights and duties of the other person. . .
.'' The principal has a right to control the actions of the agent, but
``a principal's failure to exercise the right of control does not
eliminate it.'' Restatement (Third) Of Agency Sec. 1.01 (2006). The
Restatement also notes that an enforceable contract, written or oral,
does not need to exist for there to be a principal-agent relationship.
Restatement (Third) Of Agency Sec. 1.01 (2006).
---------------------------------------------------------------------------
\62\ E.g., Landstar Exp. Am., Inc. v. Fed. Mar. Comm'n, 569 F.3d
493, 495 (D.C. Cir. 2009).
---------------------------------------------------------------------------
While the circumstances of each case must be known to make any
particular determination as to whether an agency relationship exists,
it is fair to assume, based on the Restatement's description of agency
that the majority of instances where MTOs collect demurrage and
detention charges on behalf of another party likely create an agency
relationship. Thus, except to the extent that a principal VOCC or NVOCC
has not delegated their obligations under 46 U.S.C. 41104, the agent-
MTO must assume those obligations when acting to collect demurrage and
detention charges. Of course, the exact principal-agent relationship is
open to negotiation between the principal and agent. An agent is free
to negotiate the specific acts they will or will not undertake on
behalf of the principal. It is possible that in a particular MTO-
principal demurrage and detention billing relationship that the MTO is
responsible for providing all of the invoice elements in 46 U.S.C.
41104(d)(2) while in another MTO-principal demurrage and detention
billing relationship that the MTO complies with only certain elements
of 46 U.S.C. 41104(d)(2) and that the invoice must be sent back to the
principal for completion of the other elements before the invoice is
issued to the billed party.
2. 46 U.S.C. 41104(e), NVOCC Safe Harbor
Issue: One commenter said that the proposed rule did ``not address
the safe harbor provision provided to NVOCCs at 46 U.S.C. 41104(e),
which exempts NVOCCs from the demurrage and
[[Page 14336]]
detention invoice requirements and, importantly, liability for any
invoice inaccuracies when the NVOCC passes through an underlying ocean
common carrier's invoice.'' \63\ The commenter requested that the rule
be modified ``to ensure NVOCCs remain exempt from the demurrage and
detention requirements when passing through the charges or invoice.''
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\63\ National Customs Brokers & Forwarders Association of
America, Inc. (FMC-2022-0066-0180).
---------------------------------------------------------------------------
FMC response: The commenter misinterprets the language of 46 U.S.C.
41104(e). The statute does not exempt NVOCCs from the demurrage and
detention invoice requirements of 46 U.S.C. 41104(d)(2). It merely
shifts responsibility for refunds or penalties under 46 U.S.C.
41104(d)(1) in the certain, specified scenario from the NVOCC to the
ocean common carrier. The safe harbor provision is most applicable in a
situation where an NVOCC receives an invoice from a VOCC and passes it
on to its customers. In order for the safe harbor provision to apply,
however, OSRA 2022 requires the Commission to make a finding that the
non-vessel-operating common carrier is not otherwise responsible for
the charge. The Commission declines to make a general finding as part
of this rulemaking that all NVOCCs are ``not otherwise responsible''
for errors in invoices they pass through. Rather, this is a fact-based
analysis that the Commission undertakes on a case-by-case basis. If the
Commission finds in a particular matter that a violation of 46 U.S.C.
41104(d)(1) has occurred and also has made the relevant finding under
46 U.S.C. 41104(e) that the NVOCC is not otherwise liable, only then is
the safe harbor provision applicable.
As discussed in the NPRM, there are important reasons for requiring
NVOCCs to comply with detention and demurrage invoicing requirements:
invoices that a BCO receives from an NVOCC may be their only notice of
detention and demurrage charges and because of its contractual
relationship with the BCO an NVOCC is often the only party in this
transaction able to inform BCOs as to the nature of these charges.\64\
The intent of this rulemaking is to ensure that the person receiving
the bill understands the charges regardless of who the billing party
is.
---------------------------------------------------------------------------
\64\ 87 FR 62341, 62347.
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C. Sec. 541.3 Definitions
1. ``Billing Dispute''
Issue: One commenter raised two concerns about the proposed
definition of ``billing dispute.'' \65\ First, the commenter was
concerned that under the proposed definition, an MTO may not know when
a ``mere billing inquiry is tantamount to a `disagreement' with respect
to a specific invoice.'' Second, the commenter was concerned that the
word ``raised'' does not ``provide adequate guidance in this context as
it suggests that a disagreement is being broached for discussion
purposes rather than being clearly conveyed to the billing party as a
disagreement.''
---------------------------------------------------------------------------
\65\ Maher Terminals, LLC (FMC-2022-0066-0269).
---------------------------------------------------------------------------
FMC response: The Commission has removed the term ``billing
dispute'' from Sec. 541.3 in the final rule. ``Billing dispute'' does
not need to be defined because it is not a term used in Sec. Sec.
541.4-541.99, in either the NPRM or final rule. ``Dispute'' is used in
Sec. 541.6(d), but only in the paragraph header and does not require
further definition.
2. ``Billed Party'' and ``Billing Party''
(a) Responsibility for Payment
Issue: One commenter requested that the definition of ``billed
party'' be amended by replacing ``is responsible for the payment of any
incurred demurrage or detention charge'' with ``has contracted with the
billing party for the ocean carriage or storage of good.'' \66\ They
were concerned that the language ``responsible for the payment''
``reads as a legal conclusion'' and did not comport with the
Commission's goal that demurrage and detention invoices be billed to
persons having a contractual relationship with the billing party for
the carriage or storage of goods. Another commenter requested that the
Commission amend the definition of ``billed party'' to include motor
carriers that control containers to account for situations where VOCCs
enter directly into written contracts with motor carriers that use
containers in the transportation of goods.\67\
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\66\ Shippers Coalition (FMC-2022-0066-0160).
\67\ Metro Group Maritime (FMC-2022-0066-0209).
---------------------------------------------------------------------------
FMC response: The Commission declines to make the requested
changes. With respect to the first comment, the definition of ``billed
party'' is simply to clarify the rights and responsibilities of the
party receiving the bill. It is a fact-based definition centered on who
the party is to whom the billing party issues the invoice. The
definition is not the basis of an assessment of whether the billed
party properly received the invoice, which is governed by Sec. 541.4.
Nothing in this rule prohibits third parties from receiving copies of
invoices or voluntarily paying demurrage or detention charges on behalf
of the shipper/consignee.
In regard to the second comment, there seems to be a
misunderstanding on the commenter's part about the rule's
applicability. As discussed in the NPRM, a primary purpose of this rule
is to stop demurrage and detention invoices from being sent to parties
who did not negotiate contract terms with the billing party. That
concern is not present where a motor carrier has directly contracted
with a VOCC. Nothing in this rule, either in the proposed or final
version, prohibits a VOCC from issuing a demurrage or detention invoice
to a motor carrier when a contractual relationship exists between the
VOCC and the motor carrier for the motor carrier to provide carriage or
storage of goods to the VOCC. The definition of ``billed party'' is
intentionally broad to capture any party to whom a detention or
demurrage invoice is issued. When a VOCC issues a detention or
demurrage invoice to a motor carrier, the VOCC must comply with the
requirements of part 541. The Commission has jurisdiction over common
carriers, marine terminal operators (MTOs), and ocean transportation
intermediaries (OTIs), including over through transportation. Without
knowing the particulars of the hypothetical, in this situation,
presumably the FMC's jurisdiction, and thus this rule, would apply only
to cargo moved inland under a through bill of lading and contracts
between a VOCC. A motor carrier not based on a through bill of lading
would likely be outside the scope of this rule.
(b) Billing Party's Control of Assets
Issue: One commenter was concerned that the Commission's proposed
definition of ``billing party'' ``is missing the requirement that the
entity issuing the invoice has the right to do so'' and ``[t]he
regulations should recognize that there is a distinction between a
billing party in control of the assets and one that is not, i.e., a
non-vessel operating common carrier (NVOCC).'' \68\ The commenter
suggested that the definition be amended to read as follows: Billing
party means the ocean common carrier, marine terminal operator, or non-
vessel operating common carrier who issues a demurrage or detention
invoice because they control the equipment and terminal space or are
passing through the charges for collection.
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\68\ New York New Jersey Foreign Freight Forwarders & Brokers
Association, Inc. (FMC-2022-0066-0247).
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[[Page 14337]]
FMC response: The Commission declines to make the requested change.
In this final rule, the Commission has added a 30-day period to Sec.
541.7 for NVOCCs to issue an invoice when they pass through demurrage
and detention charges. This is an acknowledgement that NVOCCs are not
always in control of the assets and often receive an invoice from a
VOCC. For more information, see Timeframes for NVOCCs in the discussion
of comments regarding Sec. 541.7.
(c) Who is a person?
Issue: Two comments expressed concern that the proposed definitions
of ``billed party'' and ``billing party'' included the term ``person''
but did not provide further clarification on what ``person'' means for
purposes of the rule.\69\ The commenters recommended either adding a
cross reference to Sec. 515.2(n) in the definitions or defining
``person'' in Sec. 541.3 consistent Sec. 515.2(n).
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\69\ Meat Import Council of America, Inc./North American Meat
Institute (FMC-2022-0066-0188); Tyson Foods, Inc. (FMC-2022-0066-
0225).
---------------------------------------------------------------------------
FMC response: The Commission agrees that identifying a definition
for the term ``person'' can be helpful. It has added a definition of
``person'' to Sec. 541.3 that aligns with Sec. 515.2(n).
(d) Consignees
The Commission specifically sought comments on the NPRM as to
whether it would be appropriate to allow common carriers to bill
consignees named on the bill of lading as an alternative to the
shipper.\70\ In response to commenters' support for including
consignees as a party to whom an invoice can be properly billed, the
Commission has revised the rule to incorporate this change. As part of
this change, the Commission has added a definition of ``consignee'' to
Sec. 541.3 in this final rule. For a full analysis of comments
concerning allowing consignees to be billed, see the discussion of
consignees under Sec. 541.4 concerning properly issued invoices.
---------------------------------------------------------------------------
\70\ 87 FR 62341, 62350 (Oct. 14, 2022).
---------------------------------------------------------------------------
(e) NVOCCs
Issue: One NVOCC commenter had concerns that the terms ``billed
party'' and ``billing party'' ``do not clearly separate the position of
the NVOCC,'' who, the commenter noted, can be both the billed party
(when billed by the VOCC), and the billing party (when billing the BCO)
on the same shipment.\71\
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\71\ CV International, Inc. (FMC-2022-0066-0217).
---------------------------------------------------------------------------
FMC response: The Commission acknowledges that there are
circumstances when an NVOCC is both a billed party and a billing party
on the same shipment. As explained in more detail below in the response
to Sec. 541.7(c), the Commission has amended the rule to allow an
extra thirty (30) days for NVOCCs to issue an invoice when they are
passing through the charges from a VOCC to a customer. The Commission
has also added Sec. 541.7(c) to require that when an NVOCC informs a
VOCC that its customer has disputed its invoice, the VOCC must then
allow the NVOCC additional time to dispute the invoice it received from
the VOCC. NVOCCs must still follow the correct procedures for issuing
an invoice when acting as a ``billing party'' and are entitled to the
same protections as other ``billed parties'' when acting in that
capacity.
3. Demurrage and Detention
(a) Separate Definitions of ``Demurrage'' and ``Detention''
Issue: Four comments requested that the rule separately define
``demurrage'' and ``detention.'' \72\ In support of this change,
commenters generally made generic statements about how billing
practices are frequently different for demurrage compared to detention.
---------------------------------------------------------------------------
\72\ BassTech International LLC (FMC-2022-0066-0230); National
Retail Federation (FMC-2022-0066-0231); Pacific Merchant Shipping
Association (FMC-2022-0066-0233); Ports America/SSA Marine (FMC-
2022-0066-0249).
---------------------------------------------------------------------------
FMC response: The Commission has made the determination not to
split ``demurrage and detention'' into separately defined terms because
part 541 and OSRA 2022 treat both charges equally. It may be true that
practices differ when billing demurrage versus detention. None of the
commenters, however, provided sufficient evidence to support what these
specific differences are and how they would require changes to the
rule. The Commission will continue to monitor the matter and retains
the authority to separately define these terms in a future rulemaking
for these or other regulations if circumstances warrant.
(b) Ports/MTO Demurrage Versus VOCC/NVOCC Demurrage
Issue: One commenter said that the rule needed to distinguish
between demurrage and detention fees charged by ports and MTOs and
those charged by VOCCs and NVOCCs because of the difference in
underlying agreements and the fact that the charges serve different
purposes.\73\
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\73\ American Association of Port Authorities (FMC-2022-0066-
0255).
---------------------------------------------------------------------------
FMC response: The Commission declines to make the requested change.
As noted in the NPRM, the definition of ``demurrage or detention'' in
this rule is the same as the scope used in 46 CFR 545.5(b)--the goal is
to encompass all charges having the purpose or effect of demurrage or
detention.\74\ The Commission has the same goal in this rule of
ensuring all charges having the purpose or effect of demurrage or
detention are covered and believes the definition proposed is the most
accurate.
---------------------------------------------------------------------------
\74\ 87 FR 62341, 62348.
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(c) Chassis and Other Special Equipment
Issue: One commenter requested that the Commission expand the
proposed definition of ``demurrage and detention'' to include charges
related to the use of chassis and other special equipment.\75\
---------------------------------------------------------------------------
\75\ Consumer Technology Association (FMC-2022-0066-0228).
---------------------------------------------------------------------------
FMC response: The Commission declines to make the requested change.
As noted in the NPRM, the definition of ``demurrage or detention'' in
this rule is the same as the scope used in 46 CFR 545.5(b).\76\ Section
7, paragraph (b)(2) of OSRA 2022 directs that this rulemaking ``only
seek to further clarify reasonable rules and practices related to the
assessment of detention and demurrage charges to address the issues
identified in [the 2020 Interpretive Rule].'' Expanding the scope of
the definition of ``demurrage and detention'' in this rule beyond the
term's definition in the 2020 Interpretive Rule would be contrary to
statute because it would require us to address issues not identified in
that Interpretive Rule.
---------------------------------------------------------------------------
\76\ 87 FR 62341, 62348.
---------------------------------------------------------------------------
(d) ``Marine Terminal Space''
Issue: The Commission received two comments related to the phrase
``marine terminal space'' in the definition of ``demurrage and
detention.'' New York New Jersey Freight Forwarders & Brokers
Association, Inc. requested clarification of what ``marine terminal
space'' means in the ``demurrage or detention'' definition.\77\ They
asked whether ``marine terminal space'' includes when a through bill of
lading is used to transport imported merchandise into an interior port
or rail yard and suggested that specific language be added to the
definition of ``detention and demurrage'' to clarify this. The other
commenter, International Dairy Foods Association, requested that the
Commission include a provision in the final rule indicating that
container dwell fees are ``detention and demurrage charges'' since they
are
[[Page 14338]]
``related to the use of marine terminal space.'' \78\
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\77\ FMC-2022-0066-0247.
\78\ FMC-2022-0066-0244.
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FMC response: The Commission declines to make these changes. As
noted in Section I, regarding inland rail, the Commission has
jurisdiction over cargo moved inland pursuant to a through bill of
lading. This jurisdiction is clear pursuant to Norfolk Southern Railway
Co. v. Kirby, 543 U.S. 14 (2004). As a result, the Commission does not
see a need to add this language specifically into this regulation. In
response to International Dairy Foods Association, the Commission notes
that the common definition of ``container dwell fees'' is
interchangeable with the definition of ``detention and demurrage.'' As
a result, the Commission declines to add another provision stating that
container dwell fees are included in the rule's definition.
4. Additional Comments
(a) ``Designated Agent''
Issue: Two comments requested that the Commission define in Sec.
541.3 the term ``designed agent,'' which was used in Sec. 541.2 in the
notice of proposed rulemaking.\79\
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\79\ Meat Import Council of America, Inc./North American Meat
Institute (FMC-2022-0066-0188); Tyson Foods, Inc. (FMC-2022-0066-
0225).
---------------------------------------------------------------------------
FMC response: The Commission has not incorporated this request into
the final rule. The term ``designated agent'' does not appear in any of
the final regulatory text and thus including the term would not be
useful or appropriate.
(b) ``Billable party for origin demurrage'', ``Billable party for
destination demurrage'', and ``Billable party for detention''
Issue: One commenter requested that the terms ``billable party for
origin demurrage'', ``billable party for destination demurrage'', and
``billable party for detention'' be added to Sec. 541.3 to ``[define]
the appropriately billable parties'' associated with demurrage and
detention charges.\80\
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\80\ BassTech International, LLC (FMC-2022-0066-0230).
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FMC response: The Commission declines to make the proposed
insertions. Just as the Commission determined not to split ``demurrage
and detention'' into separate terms because the rule treats both
charges equally, we also decline further delineations for origin
demurrage, destination demurrage, and detention. The delineations are
not required for the purposes of this rule.
D. Sec. 541.4 Properly Issued Invoices
The Commission received many comments on proposed Sec. 541.4, the
``Properly Issued Invoice'' provision. The majority of commenters,
especially motor carriers and shippers, expressed support for the
proposed rule. One commenter characterized this proposed provision as
``critical to accomplishing the Commission's objective in the
rulemaking.'' \81\
---------------------------------------------------------------------------
\81\ E.g, Harbor Trucking Association (FMC-2022-0066-0261).
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Many commenters that supported the proposed provision noted that
third parties do not have a contractual relationship with the ocean
carrier.\82\ Accordingly, it would be difficult for such third parties
to dispute demurrage or detention invoices because they are not aware
of the terms of the contract under which the container was shipped.
Instead, commenters observed that the person that contracted for the
carriage of goods or space to store cargo had the most knowledge about
the shipment and are in the best position to understand the shipment
invoice and to dispute the invoice if needed.\83\ In addition,
requiring that the billing party only invoice the person that
contracted for carriage or storage of goods affirms that both the
billing party and the billed party know the terms and conditions under
which demurrage or detention may be charged.
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\82\ See, e.g., Bipartisan House Comment (FMC-2022-0066-0279);
T.G. Logistics, Inc. (FMC-2022-0066-0253); Retail Industry Leaders
Association (FMC-2022-0066-0259); Meat Import Council of America,
Inc./North American Meat Institute (FMC-2022-0066-0188); RPM Courier
Systems (FMC-2022-0066-0120); Monica Rivera Beattie's Trucking Group
(FMC-2022-0066-0115); Monk Transportation Ltd. (FMC-2022-0066-0117);
Pacifica Trucks, LLC (FMC-2022-0066-0118); Harbor Freight Transport
Corp. (FMC-2022-0066-0123); BBT Logistics, Inc. (FMC-2022-0066-
0127); Golden State Logistics (FMC-2022-0066-0158); Dependable
Highway Express (FMC-2022-0066-0164); Impact Transportation (FMC-
2022-0066-0172); Tricon Transportation, Inc. (FMC-2022-0166-0174);
RANTA Transport LLC (FMC-2022-0066-0175); Bridgeside Incorporated
(FMC-2022-0066-0179); RED Trucking agents for Cowan Systems LLC
(FMC-2022-0066-0181); FOX Intermodal Corp. (FMC-2022-0066-0185);
Pacific Coast Container Inc. (FMC-2022-0066-0194); Bonelli
Logistics, Inc. (FMC-2022-0066-0196); DELKA Trucking, Inc. (FMC-
2022-0066-0221); A1 Dedicated Transport, LLC (FMC-2022-0066-0232);
Mutual Express Company (FMC-2022-0066-0243); Dray Trucking, LLC
(FMC-2022-0066-0258). Several commenters highlighted the importance
of prohibiting common carriers from invoicing parties.
\83\ American Chemistry Council (FMC-2022-0066-0184).
---------------------------------------------------------------------------
Furthermore, several commenters asserted that because there is a
contractual relationship between the billing and billed parties, there
would be a greater incentive to provide timely and accurate invoices as
well as a greater willingness to resolve disputes.\84\
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\84\ See, e.g., Eagle Systems, Inc. (FMC-2022-0066-0203);
Association of Bi-State Motor Carriers (FMC-2022-0066-0212); Harbor
Trucking Association (FMC-2022-0066-0090).
---------------------------------------------------------------------------
Commenters stated that ``parties who are not party to the ocean
transportation contract and had no financial interests in the cargo
itself, should not be subjected to detention [or] demurrage invoices.''
\85\ Commenters asserted that without a contractual relationship, third
parties have little commercial leverage to dispute charges imposed upon
them by common carriers.\86\
---------------------------------------------------------------------------
\85\ Agriculture Transportation Coalition (FMC-2022-0066-0275).
\86\ Id.
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Additionally, several commenters noted that the proposed provision
would improve the current demurrage and detention billing process
because the invoice would be sent to the person with the most knowledge
of the terms of the contract.\87\ Because the invoice is going to the
party who has this knowledge, one commenter asserted that this will
streamline the entire billing process, reduce costs, and increase
efficiency to the supply chain.\88\
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\87\ Excargo Services Inc. (FMC-2022-0066-0151).
\88\ Reliable Transportation Specialist, Inc. (FMC-2022-0066-
0214).
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Motor carriers and motor carrier trade organizations detailed
several issues with the current system. For example, motor carriers
frequently find themselves locked out from marine terminals for failure
to pay detention charges as the motor carriers wait to receive payment
from their customers.\89\ Essentially, under the current system, motor
carriers, who are threatened with being locked out of terminals, can be
trapped in situations where they have no contractual leverage or
negotiating power to fight back.\90\ Such commenters stated that the
current system does not adequately protect motor carriers from unfair
billing practices.\91\ In addition, motor carrier and motor carrier
trade organizations frequently stated that the party responsible for
demurrage or detention charges is simply not them.\92\
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\89\ Association of Bi-State Motor Carriers (FMC-2022-0066-
0212); Agriculture Transportation Coalition (FMC-2022-0066-0275);
Intransit Container, Inc. (FMC-2022-0066-0227); Best Transportation
(FMC-2022-0066-0090).
\90\ Association of Bi-State Motor Carriers (FMC-2022-0066-
0212).
\91\ Andale Trucking (FMC-2022-0066-0146).
\92\ See, e.g., Cloud Trucking Inc. (FMC-2022-0066-0105).
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In addition, the proposed provision would reduce confusion with who
is responsible for paying the invoice because it prohibits the billing
party from invoicing more than one party.
[[Page 14339]]
Although many commenters supported proposed Sec. 541.4, a few
commenters, especially ocean common carriers and MTOs, expressed
concerns with the proposed regulation.
1. Alternative Approaches
Issue: A few commenters expressed concern with the Commission's
analytical approach to the rule--using contractual relationships as the
basis for establishing to whom demurrage and detention invoices should
be sent. For example, Dole Ocean Cargo Express urged the Commission not
to adopt a rule that ``categorically limits the entities to which ocean
carriers may bill detention and/or demurrage charges.'' \93\ NITL
recommended that instead of a contractual relationship-based approach,
the Commission's rule should instead focus on which party ``is best
able to comply with a carrier's reasonable demurrage and detention
rules, except when an alternative party requests and assumes this
responsibility in a written agreement with the carrier other than the
bill of lading contract.'' On the opposite end of the spectrum, the
National Retail Federation said that instead the Commission should
provide clear rules for who can be billed for detention or demurrage
and provided example language based on who, in their opinion has
influence over occurrences of these charges.\94\ Hapag-Lloyd (America)
LLC said that the rule's prohibition on issuing an invoice to any other
person than the person for whose account the billing party provided
ocean transportation or storage would slow down the release of cargo
and complicate the process of properly assessing the lawfulness of a
charge, particularly in the case of overseas shippers, and thus would
not support cargo fluidity.\95\
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\93\ FMC-2022-0066-0201.
\94\ FMC-2022-0066-0231.
\95\ FMC-2022-0066-0240.
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FMC response: After careful analysis, the Commission has determined
that prohibiting billing parties from issuing demurrage and detention
invoices to persons with whom they do not have a contractual
relationship will best benefit the supply chain. If the billed party
has firsthand knowledge of the terms of its contract, then they are in
a better position to ensure that both they and the billing party are
abiding by those terms. Although other parties may in some
circumstances have more influence on whether demurrage or detention
actually accrues, they are not the best party to understand the terms
of the contract and dispute any charges. While there are benefits to
bright-line rules such as the one suggested by the National Retail
Federation, there are drawbacks as well. For example, the National
Retail Federation's specific suggestion that drayage motor carriers
potentially be the responsible billed party under certain conditions
fails to account for situations where a motor carrier's delay is the
result of no action of their own, but rather the result of the actions
of others, such as MTOs cancelling appointments with little to no
notice to the motor carrier. The Commission understands that some
regulated parties will need to change their business practices in order
to comply with this rule.
Finally, the Commission does not believe that shippers located
outside of the United States will serve as a basis of significant delay
in the movement of cargo. As discussed in the preamble to the
Interpretive Rule, shippers have commercial incentives to get their
cargo off terminal, and modern digital Information Technology systems
allow for prompt communications between parties, regardless of
potential vast geographical distances.\96\
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\96\ 85 FR 29638, 29652.
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2. Meaning of ``Contracted With''
Issue: The Commission received several comments requesting
clarification about the proposed requirement that the party ``must have
contracted'' for the carriage or storage of goods. BassTech
International LLC asked if, given that both the shipper and the
consignee are parties to the bill of lading (which is the contract of
carriage), this meets the Commission's intended criteria.\97\ BassTech
also asked whether, alternatively, the regulatory language is meant to
limit invoicing to a party that has entered into a Service Contract
with the ocean carrier for the transportation of the cargo.\98\ The
National Customs Brokers & Forwarders Association of America, Inc.
requested guidance on whether a consignee may be considered to have a
contract with a common carrier when listed on a bill of lading.\99\
Other comments on this issue raised questions about implied contracts.
The Shippers Coalition was concerned about implied contracts being used
as the basis for an invoice and suggested that the Commission require
in the regulation that these contracts be in writing.\100\ Finally,
several MTOs requested clarification or acknowledgement by the
Commission about their right to enforce a published Terminal Schedule
as an implied contract against a BCO or trucker that enters the
terminal.\101\
---------------------------------------------------------------------------
\97\ FMC-2022-0066-0230.
\98\ ``Service Contract'' is defined at 46 U.S.C. 40102(21).
\99\ FMC-2022-0066-0180.
\100\ FMC-2022-0066-0160.
\101\ TraPac (FMC-2022-0066-0136); Fenix Marine Services (FMC-
2022-0066-0186); West Coast MTO Agreement (FMC-2022-0066-0229).
Furthermore, ``schedule'' is defined by FMC regulations at 46 CFR
525.1(c)(17).
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FMC response: ``Contract'' in this rule has its normal and ordinary
legal meaning.\102\ This can be reflected in a document such as a
contract of affreightment, for example, or a bill of lading, which
courts have held to be maritime contracts.\103\ Because contracts
(other than contracts implied by law) require a meeting of the minds,
merely listing a party on a bill of lading, or other shipping
transportation document, is not sufficient for them to become a billed
party for purposes of part 541 if they played no role in contracting
for the transportation of the cargo. Whether a meeting of the minds has
occurred is something that can vary based on the specific circumstances
of a given relationship. Because a contract can exist even if not
memorialized in writing, the Commission declines to add a requirement
that contracts need to be in writing for purposes of this rule. The
Commission notes, however, that written contracts can provide important
documentary evidence of agreement. In addition, the Commission notes
that the term ``contracts'' for the purposes of Sec. 541.4 is not
limited to service contracts; the term is broader given its normal and
ordinary legal meaning and a contractual relationship can exist without
a written document or specific form.
---------------------------------------------------------------------------
\102\ See, e.g., Norfolk Southern Railway Co. v. Kirby, 543 U.S.
14, 16 (2004) (``[C]ontracts for carriage of goods by sea must be
construed like any other contracts: by their terms and consistent
with the intent of the parties''); Contract, Black's Law Dictionary
(11th ed. 2019).
\103\ E.g., Norfolk Southern Railway Co. v. Kirby, 543 U.S. 14
(2004).
---------------------------------------------------------------------------
This rule does not prohibit or otherwise limit an MTO from
maintaining the practice of issuing any party--including BCOs or Motor
Carriers--an invoice based on a Terminal Schedule, including charges
for detention or demurrage, if the Terminal Schedule includes such
charges and the Schedule has been made available in accordance with 46
CFR 525.3. In fact, the practice of issuing invoices based on a
Terminal Schedule that includes those charges continue to be
permissible if they are just and reasonable as stated in 46 CFR 545.4.
The consistent application of the Terminal Schedule charges to various
customers is likely to be done on a normal, customary, and continuous
[[Page 14340]]
basis, meeting that crucial element of the interpretive rule. Also, as
noted by commenters, 46 U.S.C. 40501(f) and 46 CFR 525.2(a)(2)
establish that such Schedules are enforceable as implied contracts.
Under such a scenario, a Motor Carrier has a contractual relationship
with the MTO and the terms of the contract (the Schedule) are known to
the Motor Carrier in advance by operation of 46 CFR 523.3. This is a
very different situation than where a Motor Carrier is billed for
demurrage or detention and the Motor Carrier has no contractual
relationship with the billing party and is not privy to the specifics
of the contractual agreement (such as where a Motor Carrier is billed
demurrage or detention based on an agreement between a shipper and a
billing party).
This rule does require that when an MTO issues a bill for demurrage
or detention for purposes of enforcing a Terminal Schedule, the billing
must comply with part 541, including providing all the information
required by Sec. 541.6. The Commission recognizes that this may
require MTOs to revise their current business practices. The
Commission's primary concern with this rule is to ensure that billed
parties understand the demurrage or detention invoices they
receive.\104\ Additional burdens on MTOs to be able to provide the
necessary data, which the Commission does not believe to be unduly
burdensome, is outweighed by the benefits of transparency, which will
allow billed parties to verify the accuracy of demurrage and detention
charges and with whom the charges originate (for example, the MTO
itself or the VOCC). As discussed in the Commission's Order of
Investigation for Fact Finding Investigation No. 28, the lack of
visibility surrounding current MTO demurrage and detention billing
practices ``have raised questions over whether the current practices
allow for a competitive and reliable American freight delivery
system.'' \105\
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\104\ E.g., 87 FR 62341, 62347.
\105\ FMC Order of Investigation, Fact Finding Investigation No.
28, 2 (2018). The Order of Investigation and other materials related
to Fact Finding 28 are available on the Commission's website at
https://www.fmc.gov/fact-finding-28/.
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3. Consignees
Issue: Noting that there are a variety of shipping arrangements
that allocate risks, obligations, and costs between the shipper and the
consignee named on the bill of lading, the Commission sought comments
in the NPRM on whether it would be appropriate to also include the
consignee named on the bill of lading as another person who may receive
a demurrage or detention invoice, thus allowing the common carrier to
bill either the person who contracted for the shipment of the cargo or
consignee named on the bill of lading.\106\ The Commission received 29
comments in response. Three comments said that invoices should be sent
to contractual parties only.\107\ These commenters said consignees were
not the party responsible for payment,\108\ or that consignees
typically do not have enough knowledge to determine whether the billing
information is consistent with the terms of the underlying
contract.\109\ Two comments said that invoices should be sent only to
consignees.\110\ The International Tank Container Organisation (ITCO)
opposed allowing charges to be sent back to the shipper, saying that it
would ``further complicate an already complex supply chain and hinder
both efficient operations and global trade.'' \111\ ITCO asserted doing
so ignores the INTERCOMS understanding and will put the United States
in conflict with international trading terms.\112\
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\106\ 87 FR 62341, 62349-62350.
\107\ Meat Import Council of America, Inc./North American Meat
Institute (FMC-2022-0066-0188); International Association of Movers
(FMC-2022-0066-0222); and Consumer Technology Association (FMC-2022-
0066-0228).
\108\ International Association of Movers (FMC-2022-0066-0222).
\109\ Consumer Technology Association (FMC-2022-0066-0228).
\110\ International Tank Container Organisation (FMC-2022-0066-
0096); Flexport, Inc. (FMC-2022-0066-0111).
\111\ FMC-2022-0066-0096.
\112\ INTERCOMS (International Commercial Terms) are a set of
standardized trade terms published by the International Chamber of
Commerce (ICC) that are commonly used in international trade
contracts.
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The vast majority of comments (24), however, were of the opinion
that the rule should make allowances for sending invoices to the
shipper or the consignee (in at least some scenarios).\113\ Comments
that supported allowing invoices to be sent to consignees generally
said that consignees should be included because: (1) consignees are
frequently the party best situated to mitigate against the accrual of
demurrage and detention charges and (2) consignees frequently have the
most knowledge about a shipment and therefore best able to dispute any
charges. A few supporters put qualifiers on when they thought
consignees should be allowed to be invoiced. For example, SM Line said
that consignees should be included as a potential party to be billed
but that the Commission should not limit billed parties according to
how, and whether the party appears on a specific bill of lading.\114\
In contrast, Shippers Coalition and the American Association of
Exporters and Importers said that consignees should only be allowed to
be invoiced if there is an advance written agreement between the
carrier and consignee to do so.\115\
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\113\ Shippers Coalition (FMC-2022-0066-0160); FedEx Trade
Networks Transport & Brokerage, Inc. (FMC-2022-0066-0165); American
Association of Exporters and Importers (FMC-2022-0066-0168);
National Customs Brokers & Forwarders Association of America, Inc.
(FMC-2022-0066-0180); SM Line Corp. (FMC-2022-0066-0182); American
Chemistry Council (FMC-2022-0066-0184); International Housewares
Association (FMC-2022-0066-0187); A Customs Brokerage, Inc. (FMC-
2022-0066-0200); Dole Ocean Cargo Express (FMC-2022-0066-0201)
(would prefer no limits on who an invoice could be issued to but
included statements that a consignee is sometimes the proper person
to be billed); National Association of Chemical Distributors (FMC-
2022-0066-0208); Metro Group Maritime (FMC-2022-0066-0209); Consumer
Brands Association (FMC-2022-0066-0210); CV International (FMC-2022-
0066-0217); Seafrigo USA Inc. (FMC-2022-0066-0223); West Coast MTO
(FMC-2022-0066-0229); Bass Tech International LLC (FMC-2022-0066-
0230); National Retail Federation (FMC-2022-0066-0231); Pacific
Merchant Shipping Association (FMC-2022-0066-0233); Connection
Chemical LP (FMC-2022-0066-0236); World Shipping Council (FMC-2022-
0066-0242); Husky Terminal and Stevedoring LLC (FMC-2022-0066-0248);
New York New Jersey Foreign Freight Forwarders and Brokers
Association, Inc. (FMC-2022-0066-0247); Ocean Carrier Equipment
Management Association, Inc. (FMC-2022-0066-0257); Cheese Importers
Association of America (FMC-2022-0066-0265).
\114\ FMC-2022-0066-0182.
\115\ Shippers Coalition (FMC-2022-0066-0160); National
Association of Exporters and Importers (FMC-2022-0066-0168).
---------------------------------------------------------------------------
FMC response: In light of these comments, the Commission has made
changes to this final rule to allow consignees to be billed as an
alternative to the shipper when the consignee is the party contracting
for the shipping and is therefore in contractual privity with the
carrier. The Commission does not adopt the concept in the proposed
rule's preamble that consignees should be required to be listed on the
bill of lading in order to be billed. Rather, it is the consignee's
contractual privity with the shipper that determines whether the
consignee can be billed. Merely listing the consignee on the bill of
lading is not sufficient to support billing the consignee. (Conversely,
although presumably a less common scenario, it is possible to properly
issue an invoice to a consignee that has not been listed on the bill of
lading.) Corresponding to the changes in Sec. 541.4 which allow
consignees to be billed, the Commission has also added a definition of
``consignee'' to Sec. 541.3. This definition comports with the
definition of ``consignee'' that appears in Sec. 520.2 so as to align
this definition with the rest of the CFR, while containing language
[[Page 14341]]
that further clarifies the consignee's place in the chain of shipping
transactions for purposes of demurrage and detention billing practices.
As such, and consistent with the comments, the rule finds a middle
ground between acknowledging that a consignee may be the correctly
billed party in some cases, but not all. The Commission encourages, but
is not requiring, advance written agreements between carriers and
consignees regarding demurrage and detention billing.
4. Payment by Third Parties Generally
Issue: The Commission received four comments regarding allowing
payment of invoices by third parties.\116\ The Agriculture
Transportation Coalition and Pacific Coast Council of Customs Brokers
and Freight Forwarders Association requested that the rule include a
clear mandate that the delegation payment authority is allowed but must
be based on actual acceptance of such responsibility by the third
party, such as a written or digital signature evidencing acceptance.
FedEx Trade Networks and John S. Connor, Inc. requested that the rule
specify that third parties may only receive copies of invoices and pay
them with the billed party's knowledge and consent (but did not say
that such consent should be required to be in writing). FedEx Trade
Networks and John S. Connor, Inc. also requested that the regulation
contain an explicit statement that if a third party receives a copy of
the invoice that the third party itself is not accountable for the
payment.
---------------------------------------------------------------------------
\116\ FedEx Trade Networks Transport & Brokerage, Inc (FMC-2022-
0066-0165); Pacific Coast Council of Customs Brokers and Freight
Forwarders Association (FMC-2022-0066-0224); John S. Connor, Inc.
(FMC-2022-0066-0267); and Agriculture Transportation Coalition (FMC-
2022-0066-0275).
---------------------------------------------------------------------------
FMC response: The Commission does not believe that the suggested
changes are necessary. The rule is clear in its direction that, with a
limited exception for consignees, demurrage and detention invoices must
be issued to the person for whose account the billing party provided
ocean transportation or storage and who contracted with the billing
party for the carriage or storage of goods. This will often, but not
always, be the shipper of record. Outside of the exception for
consignees, billing parties must not send invoices to third parties.
The rule only mandates to whom the invoice can be issued and therefore
who has legal liability to pay it. It is purposefully silent on third
parties voluntarily paying an invoice--thus allowing the practice by
declining to prohibit it. The Commission does not believe it is
necessary to require such agreements to be in writing or otherwise
memorialized between the billed party and the third party. The
Commission does not believe it is the agency's place to dictate a third
party's business liability decision in this scenario. A third party
will either: (1) pay the invoice on behalf of the billed party based on
a previous guarantee by the billed party that they will be reimbursed;
or (2) pay the invoice without such an agreement in place and assume
the risk that they potentially may not be reimbursed.
E. Sec. 541.5 Failure To Include Required Information
1. Invoice Attachments
Issue: Four commenters requested clarification whether a billing
party may provide the required data elements as an attachment,
addendum, additional pages, etc. to their invoice, for reasons of
convenience or necessity because of the invoice's length.\117\ FedEx
Trade Networks asserted that when an NVOCC is merely passing through
the VOCC's charges, it should be able to satisfy the requirements by
attaching the ocean carrier's invoice.\118\
---------------------------------------------------------------------------
\117\ New York New Jersey Foreign Freight Forwarders & Brokers
Association, Inc. (FMC-2022-0066-0247); CV International, Inc. (FMC-
2022-0066-0217); National Customs Brokers & Forwarders Association
of America, Inc. (FMC-2022-0066-0180); FedEx Trade Networks
Transport & Brokerage, Inc. (FMC-2022-0066-0165).
\118\ FMC-2022-0066-0165.
---------------------------------------------------------------------------
FMC response: The required information may be included as an
attachment to the invoice, as the statute simply requires that invoices
``include'' this information. In addition, Sec. 541.6 states that an
invoice must ``contain'' that information. As such, it is the
Commission's position that this information may be included as an
attachment, or otherwise incorporated. An NVOCC passing through VOCC
demurrage or detention charges can satisfy the requirements by merely
attaching the ocean carrier's invoice if that invoice contains all the
necessary information in Sec. 541.6. If all the necessary information
is not on the ocean carrier's invoice, the NVOCC must locate and amend
the missing information prior to sending the invoice on.
2. Voiding of Invoice Too Extreme a Penalty
A few commenters asserted that the penalty of having a billed party
not be required to pay an invoice if the invoice was not compliant is
an extreme penalty for a single violation.\119\ The National
Association of Waterfront Employers (NAWE) additionally argued that
such a stringent penalty is not consistent with the Commission's
Interpretive Rule on 46 CFR 545.4, which requires more than a single
instance to something that happens on a ``normal, customary, and
continuous basis.'' \120\
---------------------------------------------------------------------------
\119\ E.g., National Association of Waterfront Employers (FMC-
2022-0066-0276); Ports America/SSA Marine (FMC-2022-0066-0249); Port
Houston (FMC-2022-0066-0268).
\120\ FMC-2022-0066-0202.
---------------------------------------------------------------------------
FMC response: The elimination of the billed party's obligation to
pay an invoice that lacks the required information is statutorily
mandated under 46 U.S.C. 41104(f) for common carriers. As such, 46 CFR
541.5 merely states what the statute already requires and the
Commission lacks discretion to eliminate or relax this requirement.
Section 41104(f) does allow the elimination of payment obligation for
``an invoice'' that does not meet the contents of the invoice
requirements. This language signals Congress' desire to not require
that a common carrier repeat the error multiple instances for a shipper
to be able to seek relief. Thus, in the demurrage and detention
context, the statutory language of section 41104(f) is clear and
unambiguous in requiring only a single instance to trigger the
elimination of the obligation to pay the inaccurate invoice and
supersedes the ``more than one instance'' interpretation of the
``normal, customary, and continuous basis'' language found in 46 CFR
545.4.
Similarly, pursuant to 46 U.S.C. 41102(c), it is a prohibited
practice for an MTO to fail to include the required minimum information
in a demurrage and detention invoice sent to a party other than a VOCC.
Sending incomplete bills that do not contain sufficient information for
shippers to verify if the bills received are accurate would not
constitute having just and reasonable practices relating to or
connected with receiving, handling, storing or delivering property.
Extending the elimination of charge obligations provision at 46 U.S.C.
41104(f) to MTOs issuing demurrage and detention invoices would meet
the statutory direction that the Commission must ``further define
prohibited practices by . . . marine terminal operators, . . . under
section 41102(c) of title 46, United States Code, regarding the
assessment of demurrage or detention charges'' and ensure that all
demurrage and detention bills sent to billed parties provide the
necessary information for the bills to be paid or disputed quickly
[[Page 14342]]
thereby ensuring efficiency across the shipping system. Having the
invoice content and elimination of charge obligations requirements for
all billing parties be the same throughout the industry will ensure
that there is more clarity and accuracy in invoicing throughout the
shipping system.
F. Sec. 541.6 Contents of Invoice
1. Sec. 541.6(a), Identifying Information
(a) Sec. 541.6(a)(1), Bill of Lading and Sec. 541.6(a)(2), Container
Number
Issue: The Commission did not receive any comments directly
addressing the requirement that the invoice must list the container
number--presumably because this is a data element listed in OSRA 2022.
A few commenters, however, raised concerns that requiring the bill of
lading number, especially in conjunction with the container number,
would increase the risk of theft of the cargo and create security risks
by allowing for false pick-up appointments.\121\ Some of these comments
further asserted that requiring bill of lading information to be
included on the invoice would require significant and costly upgrades
to their IT systems.
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\121\ TraPac, LLC (FMC-2022-0066-0136); Fenix Marine Services
(FMC-2022-0066-0186); West Coast MTO Agreement (FMC-2022-0066-0229);
National Association of Waterfront Employers (FMC-2022-0066-0276);
Pacific Merchant Shipping Association (FMC-2022-0066-0233); Husky
Terminal and Stevedoring, LLC (FMC-2022-0066-0248); Port Houston
(FMC-2022-0066-0268).
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FMC response: The Commission disagrees with the commenters'
assertion regarding potential security issues. The Commission
previously addressed this concern when the issue was raised by the
Ocean Carrier Equipment Management Association (OCEMA) in response to
the ANPRM.\122\ Here, we reiterate and expand upon that response. Bill
of lading numbers are available through publicly accessible import and
export data systems, such as the Journal of Commerce's Port Import/
Export Reporting Services (PIERS) and are already frequently included
on demurrage and detention invoices. Because bill of lading numbers are
not confidential information, they are not a good basis for security
measures. Container numbers are not protected information either.
Container numbers are written on the outside of the container. Thus,
like bill of lading numbers, they are not a good basis for security
measures. Including an already publicly available number on an invoice
does not increase security concerns. The commenters' claims also do not
consider the multiple levels of security at the port that deter an
incorrect party from taking the cargo. These security measures include
basic security infrastructure such as perimeter fencing, security
gates, monitoring equipment, and alarm systems, and other access
control measures such as Port Security Plans and Transportation Worker
Identification Credential (``TWIC'') requirements. Nor do their
comments consider that the rule prohibits the billing party from
issuing demurrage or detention invoices to a person other than the
person for whose account the billing party provided ocean
transportation or space to store goods.
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\122\ 87 FR 62341, 62350 (Oct. 14, 2022).
---------------------------------------------------------------------------
The bill of lading number and container number provide valuable
identifying information to the billed party such as determining which
shipment is being charged and a means of verifying accuracy of charges.
Therefore, the Commission is retaining the requirement that this
information be included on the invoice. The Commission recognizes that
some billing parties may need to revise operations, including software
and website updates, such as those related to how they generate cargo
pick-up numbers. However, the Commission has no evidence to support a
finding nor received data from commenters showing that such revisions
would be time intensive or costly. Billing parties could, for example,
for minimal time and cost, replace that portion of a pick-up number
currently based on bill of lading number/container number with a number
produced by a random number generator and doing so would be more secure
than current systems that incorporate bill of lading numbers/container
numbers into the pick-up number.
(b) Sec. 541.6(a)(3), Port(s) of Discharge
Issue: New York New Jersey Foreign Freight Forwarders and Brokers
Association requested the Commission amend Sec. 541.6(a)(3) to clarify
that the port of discharge can be any U.S. port--ocean or interior--to
address situations, for example, where cargo arrives at a West or East
Coast port, or via Canada, and then moves by rail to the interior.\123\
The commenter was concerned that without the suggested clarification to
the regulation there is the risk that the billed party would not
receive the proper billing information to assess the correctness of
invoices issued for charges incurred at interior ports.
---------------------------------------------------------------------------
\123\ FMC-2022-0066-0247.
---------------------------------------------------------------------------
FMC response: The commenter is correct that detention or demurrage
invoices issued for cargo delivered on a through bill of lading under
the Commission's jurisdiction are required under this rule to list all
ports of discharge, ocean and inland. The Commission believes that this
requirement is sufficiently incorporated into the language we proposed
in the NRPM and have adopted in this final rule. The regulation's use
of ``port(s),'' as opposed to ``port'' accounts for situations where
there are multiple ports of discharge.
(c) Sec. 541.6(a)(4), Basis for Why the Billed Party Is the Proper
Party of Interest
Issue: The Commission received several requests from commenters to
clarify what level of detail is necessary to satisfy the requirement
that the invoice include the basis for why billed party is the proper
party of interest and thus liable for the charge.\124\ Mediterranean
Shipping Company specifically requested guidance as to whether the
requirement would be satisfied with: (1) a reference to the applicable
tariff rule supporting the billing; (2) specific reference needed to
contractual provisions; or (3) a reference number to identify the
contract at issue.\125\
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\124\ National Customs Brokers & Forwarders Association of
America, Inc. (FMC-2022-0066-0180); Mediterranean Shipping Company
(FMC-2022-0066-0143); FedEx Trade Networks Transport & Brokerage,
Inc. (FMC-2022-0066-0165); U.S. Dairy Export Council/National Milk
Producers Federation (FMC-2022-0066-0235).
\125\ FMC-2022-0066-0143.
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FMC response: There is no specific or set of specific documents or
reference(s) that would meet the requirement of Sec. 541.6(a)(4). The
purpose of the regulation is that billed parties must be able to
identify why the billing party believes that they are responsible for
paying the invoice and to refute that basis if they believe that they
have been billed incorrectly. A reference to the applicable tariff rule
supporting the billing, specific reference to contractual provisions,
or a reference number to identify the contract at issue might all, or
might all not, meet this standard depending on the specific
circumstances of a particular invoice.
(d) Requests for Additional Identifying Information
Issue: The U.S. Department of Agriculture requested that the
Commission also require billing parties include on the invoice
transportation history information, such the date and time a container
was loaded on or off a vessel, and the date and time the vessel left or
arrived at the port.\126\ The Meat
[[Page 14343]]
Import Council of America, Inc. (MICA) and the North American Meat
Institute proposed that the Commission should require billing parties
to identify on the invoice the vessel(s) used to transport the
cargo.\127\ These commenters believe that these additional data
elements on the invoice would increase transparency and help billed
parties in verifying calculations of free time, availability, and
earliest-return-date, and thus make it easier to identify and dispute
excess charges.
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\126\ FMC-2022-0066-0274.
\127\ FMC-2022-0066-0188.
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FMC response: The Commission agrees that having this additional
information may be helpful in some circumstances. The Commission,
however, has not been presented with enough evidence to be convinced
that the potential benefits to some billed parties on some invoices
outweigh the burden to billing parties by requiring this information on
all invoices. The Commission will continue to monitor detention and
demurrage billing trends and retains the authority to revise non-
statutorily mandated detention and demurrage invoice data elements in
the future if it determines there is a need to do so.
(e) Billing Exceptions
Issue: The American Association of Exporters and Importers (AAEI)
supported Sec. 541.6 and the required contents of the invoice.\128\
AAEI also stated that if demurrage and detention charges are incurred
or removed due to terminal or vessel operating deficiencies, then the
invoices should include the details with standardized categories of
billing exceptions.
---------------------------------------------------------------------------
\128\ FMC-2022-0066-0168.
---------------------------------------------------------------------------
FMC response: The Commission declines to add a requirement for
billing exceptions to Sec. 541.6. Under OSRA 2022, the billing party
has an obligation to ensure the accuracy of its invoices. In addition,
Sec. 541.8 specifies the procedures for disputing charges--these
disputes can be initiated if the billed party feels they are not
responsible for the charges. As a result, the Commission declines to
proscribe that billing parties deduct certain charges, especially given
that there could be disagreement over where the fault in the charges
lies.
2. Sec. 541.6(b), Timing Information
(a) Sec. 541.6(b)(1), Invoice Date
Issue: The National Customs Brokers & Forwarders Association of
America,\129\ CV International,\130\ and New York New Jersey Foreign
Freight Forwarders and Brokers Association, Inc.\131\ asked the
Commission to clarify whether backdating of invoices is permissible
under this rule, or whether the billing date on demurrage and detention
invoices should reflect the actual date an invoice is mailed out or
otherwise finalized. John S. Connor, Inc. agreed, saying that
backdating is a common practice that must not be allowed.\132\ National
Industrial Transportation League raised related concerns about some
carriers continuing to assess charges during the time spent to process
payments after payment has been made by the billed party or its
agent.\133\
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\129\ FMC-2022-0066-0180.
\130\ FMC-2022-0066-0217.
\131\ FMC-2022-0066-0247.
\132\ FMC-2022-0066-0267.
\133\ FMC-2022-0066-0277.
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FMC response: Billing parties have an obligation under 46 U.S.C.
41104(d)(2) to issue detention and demurrage invoices that contain
accurate information concerning the statutorily specified data elements
as well as any additional information determined necessary by the
Commission. To solidify this point, the Commission has incorporated
into Sec. 541.6 the requirement for accurate information. Accuracy is
an implied legal condition of any statutory or regulatory information
collection imposed on regulated parties by Congress or agencies and is
generally not specifically incorporated as a written requirement.
However, based on these comments, it appears that such clarification in
the regulatory text may be of use to regulated parties and its
incorporation mirrors the use of the word in 46 U.S.C. 41104(d).
(b) Sec. 541.6(b)(2), Invoice Due Date
Issue: Seafrigo USA urged the Commission to clarify the meaning of
``billing due date,'' and specifically asked whether it means the
payment due date.\134\ The Meat Import Council of America, Inc. and the
North American Meat Institute, in a joint comment, suggested that
billing parties must be prohibited from listing the payment due date as
the same date the invoice is issued as billed parties should have the
full 30 days after an invoice is received, not simply issued.\135\ The
U.S. Department of Agriculture recommended that the Commission specify
in the regulation the timeframe for payment of an invoice, making
certain that the regulation is clear that payment is not due until any
disputes are resolved.\136\ Fenix Marine Services stated that the
proposed demurrage and detention invoice requirements are incompatible
with traditional MTO billing practices, and changing their practice to
conform to the FMC's rule would mean a major overhaul of many MTO's
longstanding billing practices.\137\
---------------------------------------------------------------------------
\134\ FMC-2022-0066-0223.
\135\ FMC-2022-0066-0188.
\136\ FMC-2022-0066-0274.
\137\ FMC-2022-0066-0186.
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FMC response: The billing due date (or ``invoice due date'' as
worded in this final rule) is the date by which the billed party must
pay the invoiced charges. The Commission has revised Sec. 541.8(a) to
make clear that billing parties must allow billed parties at least 30
calendar days from the invoice issuance date to request mitigation,
refund, or waiver of fees. Correspondingly, the due date of an invoice
must be on or after 30 days after it is issued. As discussed in the
NPRM and elsewhere in this document, the Commission acknowledges that
this rule may require some billing parties to change their billing
information technology systems and practices.
(c) Sec. 541.6(b)(3)-(5), Free Time
Issue: One commenter requested that ``end of free time'' in Sec.
541.6(b)(5) be defined as ``the end of free time as determined by the
ocean common carrier or marine terminal, whichever, is later'' because
ocean common carriers and marine terminal may have disparate last free
day dates.\138\
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\138\ FedEx Trade Networks Transport & Brokerage, Inc. (FMC-
2022-0066-0165).
---------------------------------------------------------------------------
FMC response: The Commission declines to define ``end of free
time'', ``start of free time'', or ``free time'' as part of this
rulemaking for the reason noted by the commenter--their meaning can
vary terminal to terminal.\139\ The Commission does not have evidence
at this time to support a finding that standardizing these terms is
warranted.
---------------------------------------------------------------------------
\139\ See 85 FR 29638, 29654.
---------------------------------------------------------------------------
(d) Sec. 541.6(b)(6), Container Availability Date
Issue: Two NVOCCs requested clarification of the meaning of
``availability date'' in Sec. 541.6(b)(6).\140\ One of the commenters
requested that FMC define the term in Sec. 541.3.\141\ A third
commenter said that the term ``availability date'' creates too much
ambiguity in that some shipments may be delayed in customs resulting
from actions taken or not taken by the receivers and import customs
brokers.\142\ They argued that vessel arrival date should be used
instead because actual time of arrival of the
[[Page 14344]]
vessel is clearly defined and gives NVOCCs a clear date from which to
start the clock.
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\140\ Seafrigo USA (FMC-2022-0066-0223); DHL Global Forwarding
(FMC-2022-0066-0219).
\141\ Seafrigo USA (FMC-2022-0066-0223).
\142\ International Tank Container Organisation (FMC-2022-0066-
0096).
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FMC response: The Commission declines to incorporate the
commenters' suggestions. First, the date of container availability is
statutorily mandated by 46 U.S.C. 41104(d)(2)(A). Congressional action
would be needed to change it to vessel arrival date. Second, the
Commission declines to add a definition of ``availability date'' to
Sec. 541.3 for the same reason we declined to define it in our 2020
final Interpretive Rule on demurrage and detention--``availability''
can vary by port or marine terminal.\143\ As we discussed there:
``Suffice it to say, availability at a minimum includes things such as
the physical availability of a container: Whether it is discharged from
the vessel, assigned a location, and in an open area (where
applicable).'' \144\ Additionally, as discussed in the Interpretive
Rule's notice of proposed rulemaking: ``In this context, `cargo
availability' or `accessibility' refers to the actual ability of a
cargo interest or trucker to retrieve its cargo. Cargo is not
available, for instance, if a cargo interest or trucker cannot pick it
up because it is in a closed area of a terminal, or if the port is
closed.'' \145\ We adopt the meaning for these terms provided in the
Interpretive Rule in this rule as well.
---------------------------------------------------------------------------
\143\ 85 FR 29638, 29654 (May 18, 2020) (internal citation
omitted).
\144\ Id.
\145\ 84 FR 48850, 48852 (Sept. 17, 2019) (internal citation
omitted).
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(e) Sec. 541.6(b)(7), Earliest Return Date
A number of comments raised the issue of earliest return date.
Intermodal Motor Carriers Conference urged the Commission to clarify
OSRA 2022's earliest return date, and to require that date on the
detention and demurrage invoice.\146\ The International Tank Container
Organisation (ITCO) noted that OSRA 2022 requires that the earliest
return date be specified, while this rule does not require it on the
invoice.\147\ ITCO opined that the term ``availability date,'' which is
currently used in the rule, creates too much ambiguity. Balsam Brands
\148\ and Harbor Trucking Association \149\ said that the earliest
return date should be listed for export shipments, and any
modifications to this date should be identified. The New York New
Jersey Foreign Freight Forwarders and Brokers Association, Inc.
(NYNJFF&BA) stated that the requirement to provide the earliest return
date for export shipment should be understood as meaning the first
notice for receiving containers at ports, as this notice sets the rest
of the process in motion for getting a container back on a vessel.\150\
NYNJFF&BA states that if demurrage and detention can be charged in
instances when cargo remains at the terminal beyond the free time as a
result of VOCC decisions, then there is no incentive to improve the
information and receiving window dates in the early return date (ERD)
notices. When containers are delivered per ERD notices, the cargo
waiting for a new vessel cannot be incentivized by the imposition of
demurrage and detention to reduce time at the terminal.
---------------------------------------------------------------------------
\146\ FMC-2022-0066-0189.
\147\ FMC-2022-0066-0096.
\148\ FMC-2022-0066-0095.
\149\ FMC-2022-0066-0262.
\150\ FMC-2022-0066-0247.
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To strengthen the rule's requirements, the National Association of
Chemical Distributors \151\ and Connection Chemical \152\ suggested
that the Commission add the term ``accurate'' before the earliest
return date, to ensure that any changes to this date are reflected as
conditions change. CV International stated that earliest return dates
change frequently because of unreliable vessel schedules and congested
terminals.\153\ As a result, CV International suggested that when a
container is in motion, the earliest advised return date should apply.
John S. Connor, Inc. made similar comments.\154\
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\151\ FMC-2022-0066-0208.
\152\ FMC-2022-0066-0236.
\153\ FMC-2022-0066-0217.
\154\ FMC-2022-0066-0267.
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The Meat Import Council of America, Inc. (MICA) and the North
American Meat Institute (NAMI) jointly argued that the final rule
should not diminish the significance of intervening, clock-stopping
events when a billed party disputes the charges.\155\ MICA/NAMI
suggests that the Commission requiring including earliest return date
and changes to that date on detention and demurrage invoices would
increase transparency and minimize billing disputes. Lastly, the
National Customs Brokers and Forwarders Association of America
requested clarification and Commission guidance on how billing parties
should account for data elements in the minimum invoice information
requirements where dates, such as the earliest return dates,
change.\156\
---------------------------------------------------------------------------
\155\ FMC-2022-0066-0188.
\156\ FMC-2022-0066-0180.
---------------------------------------------------------------------------
FMC response: The Commission declines to make the commenters'
changes requested regarding earliest return date in this rule. This is
an issue that the Commission will continue to examine. For example, the
Commission issued a Request for Information in August 2023 seeking
comments on what shippers and BCOs can do to better predict container
earliest return dates.\157\
---------------------------------------------------------------------------
\157\ 88 FR 55697, 55698 (Aug. 16, 2023) (Question 6).
---------------------------------------------------------------------------
In addition, Commissioner Rebecca Dye has proposed to reform three
practices of ocean carriers and marine terminal operators at the Ports
of Los Angeles and Long Beach, and the Port of New York and New Jersey
that relate to earliest return date, container returns, and container
pickup (notice of availability).\158\ Commissioner Dye encourages
reactions or questions regarding these proposals from the shipping
public. More information on this project may be found on FMC's website.
---------------------------------------------------------------------------
\158\ https://www.fmc.gov/commissioner-dye-proposes-reforms-to-international-ocean-supply-chain-practices/ (July 26, 2023).
---------------------------------------------------------------------------
(f) Sec. 541.6(b)(8), Date(s) for Which Demurrage and/or Detention
Were Charged
Issue: TraPac LLC stated that requiring billing parties to include
the specific dates on which demurrage or detention is charged would,
for MTOs, result in an unnecessary burden on terminals as MTOs would
need to develop a reporting system to provide information regarding the
container's status on a ``clock start'' and ``clock stop'' basis.\159\
According to the commenter: (1) it is not reasonable or realistic to
expect MTOs to transmit information in real time; and (2) if not in
real time, it could result in significant delay. Consumer Technology
Association said that the Commission should require disclosure of any
relevant ``stop-the-clock'' events that toll the passage of free time--
such as container availability, facility closures, port congestion, or
lack of available appointment slots. They said that having this
information would greatly facilitate the timely resolution of disputes
but noted that this information is often only available to billing
parties.\160\ BassTech International LLC suggested that, for emphasis
of the billing party's obligation for the accurate assessment of
charges, the Commission change ``were charged'' to ``were incurred and
charged.'' \161\
---------------------------------------------------------------------------
\159\ FMC-2022-0066-0136.
\160\ FMC-2022-0066-0228.
\161\ FMC-2022-0066-0230.
---------------------------------------------------------------------------
FMC response: As discussed in the NPRM, instead of requiring
billing parties to identify specific ``clock-stopping'' events on
demurrage and detention invoices, this rule requires the billing
parties to identify the specific
[[Page 14345]]
dates on which they charged demurrage or detention.\162\ The rule
permits billing parties to take into account any intervening events
that affected the charges, if known, and enables billed parties to
confirm or dispute the validity of charges on specific dates. The rule
incorporates the intent of OSRA 2022 to shift the burden to billing
parties to justify the demurrage or detention charges while allowing
billing parties to correct invoices when the intervening events are not
initially known to them.
---------------------------------------------------------------------------
\162\ 87 FR 62341, 62351.
---------------------------------------------------------------------------
(g) General Comments
Issue: One commenter said that any schedule data on invoices must
include all previous revisions and not only the final dates.\163\ The
commenter said such information was necessary because issues on exports
in demurrage and detention invoices are caused by last minute schedule
changes over which the shipper has no control.
---------------------------------------------------------------------------
\163\ Anonymous (FMC-2022-0066-0093).
---------------------------------------------------------------------------
FMC response: The Commission declines at this time to mandate that
billing parties include all previous revisions. We do not believe that
enough evidence has been presented to the Commission at this time to
justify the increased burden of such a requirement. However, we will
continue to monitor the issue of demurrage and detention invoices and
may consider this or other additional changes in the future if
circumstances warrant.
3. Sec. 541.6(c), Rate Information
The Commission did not receive comments regarding proposed Sec.
541.6(c). It is adopting the proposed language from the NPRM in this
final rule with minor, non-substantive, clarifying amendments. In
paragraph (c), ``The invoice'' has been changed to ``A demurrage or
detention invoice'' to reflect the language of Sec. 541.3. Paragraph
(c) has also been amended to clarify that these are minimum
requirements. Paragraph (c)(2) has been amended by adding terminal
schedule to the listed examples of documents, and ``i.e.,'' has been
changed to ``e.g.,'' to reflect that this is not an exhaustive list of
all possible documents.
4. Sec. 541.6(d), Dispute Information
(a) Sec. 541.6(d)(1)
One commenter suggested eliminating paragraphs (d)(2) and (3) and
merging the necessary information into a single paragraph Sec.
541.6(d) to read as follows: ``The invoice must contain sufficient
information to enable the billed party to readily identify a contact to
whom they may direct questions or concerns related to the invoice
including the name, email, telephone number and mailing address of the
responsible person to whom invoice questions or notifications of a
billing dispute must be submitted.'' \164\ According to the commenter,
the proposed revision ``prevent[s] the imposition of potentially
unreasonable or obstructive processes by the billing party'' and
instead allows disputes to be handled following the standard business
practice for similar events.
---------------------------------------------------------------------------
\164\ BassTech International LLC (FMC-2022-0066-0230).
---------------------------------------------------------------------------
FMC response: The Commission declines to make the suggested
changes. Subsection (d)(1) already accomplishes what the proposed
changes seek. In addition, this rule makes dispute resolution simpler,
more consistent, and transparent. These are the same goals that the
Commission espoused in the Interpretive Rule, which the commenter
acknowledges in their submission. In addition, the ``conventional
manner'' in which these disputes have been handled ``in the normal
course of business'' for which the commenter advocates have until now
not always been successful and resulted in practices that resulted in
OSRA 2022 and this rulemaking. Maintaining the existing model would
fail to address the reasons behind the statute and this rulemaking.
(b) Sec. 541.6(d)(2), Information on How To Request Fee Mitigation,
Refund, or Waiver
Issue: The Commission received a number of comments regarding the
proposed requirement in Sec. 541.6(d)(2) that the URL address of a
publicly accessible part of the billing party's website provide a
detailed description of what the billed party must provide to request
fee mitigation, refund or waver. Two commenters said that the proposed
URL requirement would be too burdensome. One of these commenters urged
the Commission to instead adopt a requirement that allows for any
method of delivery of such information to the shipper so long as it
includes a transparent description of the required information.\165\
The other commenter said that the proposal could lead to burdensome
procedures that are inconsistent with the shifting of the burden of
proof regarding reasonableness of the charges from shippers to carriers
that OSRA 2022 espouses.\166\ Six commenters were in support of the URL
requirement.\167\ The International Dairy Foods Association stated that
this requirement ``will help cargo owners easily find and understand
what information they need to include in such requests. This will
improve the efficiency of the dispute process and make it less likely
that requests are denied on procedural grounds.'' \168\
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\165\ Seafrigo USA Inc. (FMC-2022-0066-0223).
\166\ National Retail Federation (FMC-2022-0066-0231).
\167\ International Tank Container Organisation (FMC-2022-0066-
0096); International Dairy Foods Association (FMC-2022-0066-0244);
and the Retail Industry Leaders Association (FMC-2022-0066-0259).
\168\ FMC-2022-0066-0244.
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Three additional commenters all said the rule would benefit from
expanding the acceptable digital platforms beyond URLs to include QR
codes or digital watermarks, for example, so that information regarding
the dispute process can be retrieved to keep pace with evolving
innovations and technologies.\169\ The Meat Import Council of America,
Inc. and the North American Meat Institute proposed replacing ``URL
address'' with either ``[a] digital trigger (URL address, QR code,
digital watermark or other similar digital triggers) to the publicly-
accessible portion of the billing party's website that provides a
detailed description of information or documentation that the billed
party must provide to successfully request fee mitigation, refund, or
waiver'' or ``[a] digital trigger to the publicly-accessible portion of
the billing party's website that provides a detailed description of
information or documentation that the billed party must provide to
successfully request fee mitigation, refund, or waiver.'' \170\
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\169\ Meat Import Council of America, Inc. and the North
American Meat Institute (FMC-2022-0066-0188); Tyson Foods Inc. (FMC-
2022-0066-0225); and the Agriculture Transportation Coalition (FMC-
2022-0066-0275).
\170\ FMC-2022-0066-0188.
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FMC response: The Commission disagrees with the two commenters'
assertion that the proposed requirement is too burdensome. While there
may be some initial time/infrastructure requirements in order for some
billing parties to comply, those will be minimal, and the benefits of
transparency to billed parties greatly outweigh these minimal burdens.
In response to commenters, the Commission has added language to Sec.
541.6(d)(2) to expand this category from URLs to digital means more
generally, including URLs, QR codes and other digital means that would
allow this requirement to keep pace with technology.
[[Page 14346]]
(c) Sec. 541.6(d)(3), Disclosure of Timeframe for Requesting a Fee
Mitigation, Refund, or Waiver
The Commission did not receive comments regarding proposed Sec.
541.6(d)(3) and is adopting the proposed language from the NPRM in this
final rule.
5. Sec. 541.6(e), Certifications
(a) Sec. 541.6(e)(1), Certification of Compliance With FMC Demurrage
and Detention Rules
Issue: The International Tank Container Organisation \171\ and
Maher Terminals LLC \172\ argued that the certification of compliance
is not necessary given that it is legally required for regulated
parties to comply with Commission regulations. Maher Terminals also
expressed concern that such a certification would require billing
parties ``to state as a fact a matter that which is really a conclusion
of law.'' \173\
---------------------------------------------------------------------------
\171\ FMC-2022-0066-0096.
\172\ FMC-2022-0066-0269.
\173\ Id.
---------------------------------------------------------------------------
FMC response: Certification that the billing party's charges are
consistent with FMC detention and demurrage rules is required by 46
U.S.C. 41104(d)(2)(L). Accordingly, the Commission will include it in
the rule.
(b) Sec. 541.6(e)(2), Certification That Billing Party's Performance
Did Not Cause or Contribute to the Underlying Invoiced Charges
Issue: One commenter said that the certification statement should
reflect an NVOCC's more limited liability in instances where it is
simply passing through the charges from a VOCC and, as with the other
required elements on the invoice, is just a vehicle and not the
responsible party.\174\ They provided the following sample
certification statement for the Commission's consideration: ``To the
best of our knowledge the charges on this invoice are a direct pass
through and compliant with the requirements of the Shipping [Act] of
1984 as amended by [OSRA 2022] and that our NVOCC did not cause,
contribute, or mark up these underlying charges.''
---------------------------------------------------------------------------
\174\ A Customs Brokerage, Inc. (FMC-2022-0066-0200).
---------------------------------------------------------------------------
FMC response: The Commission declines to change the proposed
language and finalizes it in this rule. A billing party has a legal
obligation to include accurate information on each of the invoice
elements found in Sec. 541.6. In accordance with 46 U.S.C. 41104, the
Commission will make a determination if a particular self-certification
is inaccurate or false only after an investigation following filing of
a charge complaint.
(c) MTOs
Issue: Four commenters argued that MTOs do not have the information
necessary to make these certifications and certifications should not be
required of MTOs because of the burden it would impose on them to
collect the necessary information, and further, such certification
would not address the Commission's primary concern, which is having
transparent and clear invoices for billed parties to clearly understand
billed charges.\175\ A fifth commenter asserted that imposing these
certifications on MTOs is beyond OSRA 2022.\176\
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\175\ The National Association of Waterfront Employers (FMC-
2022-0066-0276); Husky Terminal and Stevedoring, LLC (FMC-2022-0066-
0248); and Ports America/SSA Marine (FMC-2022-0066-0249).
\176\ Maher Terminals LLC (FMC-2022-0066-0269).
---------------------------------------------------------------------------
FMC response: In instances where an MTO invoices a shipper, the
Commission has determined that the MTO should be subject to the same
regulations that apply to VOCCs and NVOCCs, including certification
requirements. As discussed earlier in this preamble, the Commission has
statutory authority to apply this rule to MTOs. Paragraph (c) of
section 41102, title 46, United States Code, prohibits MTOs from
failing to establish, observe, and enforce reasonable practices
connected to the receiving, handling, storing, or delivering of
property. This section provides clear and direct authority for the
Commission to regulate MTO practices connected to the receiving,
handling, storing, or delivery of cargo, including mandating
certification requirements. In addition, OSRA 2022 explicitly
instructed the Commission to issue a rule defining prohibited practices
by common carriers, marine terminal operators, shippers, and ocean
transportation intermediaries under 46 U.S.C. 41102(c) regarding the
assessment of demurrage and detention charges. MTOs are not required to
include the data elements listed in Sec. 541.6 when they are issuing
invoices to VOCCs.
(d) Additional Certification/Disclaimer
Issue: One comment said that the rule should include a requirement
on the invoice or the accompanying website a note that reminds the
billed party that if the information is incorrect or details are
missing, then the shipper is not obligated to pay the invoice.\177\
---------------------------------------------------------------------------
\177\ The U.S Dairy Export Council/National Milk Producers
Federation (FMC-2022-0066-0235).
---------------------------------------------------------------------------
FMC response: At this time, the Commission will not impose
additional mandatory certifications/disclaimers on top of those found
in OSRA 2022, as codified at 46 U.S.C. 41104(d)(2)(L) and (M).
Nonetheless, the agency recognizes the potential benefits of such a
statement and does not object to the voluntary adoption of this
practice.
(e) Independent Assessment
Issue: One commenter posited that in addition to the self-
certification requirements of OSRA 2022, the Commission should also
consider requiring billing parties to utilize an independent third-
party certification body, from an official roster of such bodies that
is recognized by the Commission, to conduct an annual audit of billing
party's detention and demurrage practices and provide an annual report
to the FMC with its findings.\178\ According to the commenter, the
self-certification requirements of OSRA 2022 provide no benefit to
billed parties as they do not prevent ``over-invoicing by carriers.''
According to the commenter, since the self-certification requirements
took effect with the passage of OSRA 2022, their members ``have
received detention and demurrage invoices that included such a
statement, that were later refunded or waived by the carrier when
disputed because the carrier issued the invoice after having rolled
shippers' bookings for weeks on end.'' \179\
---------------------------------------------------------------------------
\178\ International Dairy Foods Association (FMC-2022-0066-
0244).
\179\ Id.
---------------------------------------------------------------------------
FMC response: The Commission declines to adopt this change at this
time. The Commission will continue to monitor the situation following
implementation of this final rule and may take additional action(s) in
the future if circumstances warrant.
6. Contents of Invoice, Generally
(a) Machine-Readable Invoice Data
Issue: A few commenters indicated their support for the Commission
to explore mandating that invoice data be provided in electronic,
computer-readable format, such as spreadsheets. American Chemistry
Council \180\ and Consumer Brands Association,\181\ for example,
highlighted that providing computer-readable data invoices would allow
for faster and more accurate analysis of demurrage charges and
associated data. American Chemistry Council \182\ and Agriculture
[[Page 14347]]
Transportation Coalition \183\ both noted in their comment that U.S.
Surface Transportation Board (STB) regulations require Class I
railroads to provide machine-readable access to demurrage billing
information.
---------------------------------------------------------------------------
\180\ FMC-2022-0066-0090.
\181\ FMC-2022-0066-0210.
\182\ FMC-2022-0066-0184.
\183\ FMC-2022-0066-0275.
---------------------------------------------------------------------------
FMC response: Electronic invoices have a number of benefits for
billing parties and billed parties, and the Commission highly
encourages billing parties to adopt computer-readable invoice formats
into their standard operating procedures. The Commission, however, has
chosen not to mandate usage at this time due to concerns about the
current low rate of infiltration of electronic documentation processes
within the industry. The Journal of Commerce, for example, recently
reported that: ``[o]nly 2.1% of bills of lading and waybills in the
container trade were electronic last year.'' \184\ The Commission will
continue to monitor the use of machine-readable invoices within the
industry and may consider compulsory use in the future.
---------------------------------------------------------------------------
\184\ Greg Knowler, Key supply chain stakeholders commit to
electronic bills of lading, Journal of Commerce, Sept. 5, 2023
(https://www.joc.com/article/key-supply-chain-stakeholders-commit-electronic-bills-lading_20230904.html).
---------------------------------------------------------------------------
(b) MTOs
Issue: One comment asserted that if the Commission requires
demurrage or detention invoices issued by MTOs to contain information
in addition to those elements specifically enumerated in OSRA 2022, it
should ``recognize the nature of MTO pass through charges and either
afford MTO invoices a conceptually similar safe harbor, or not compel
MTOs to provide such information.'' \185\
---------------------------------------------------------------------------
\185\ Ports America/SSA Marine (FMC-2022-0066-0249).
---------------------------------------------------------------------------
FMC response: While the most common practice is for MTOs to invoice
the VOCC and the VOCC to send a combined invoice to the shipper, in
some cases MTOs bill shippers directly. The Commission's primary
concern with this rule is to ensure that billed parties understand the
demurrage or detention invoices they receive. In instances where an MTO
invoices a shipper, the MTO should be subject to the same regulations
that apply to VOCCs and NVOCCS when they invoice shippers.
G. Sec. 541.7 Issuance of Demurrage or Detention Invoices
1. Sec. 541.7(a), Timeframe for Issuing an Invoice
Issue: The Commission received 109 comments on its proposal to
require billing parties to issue detention and demurrage invoices
within 30 days: one from another federal agency, 16 from BCOs, 66 from
motor carriers, 10 from NVOCCs/OTIs/Customs Brokers/Third-party
logistics (3PLs), 10 from individuals, and 6 from VOCCs/MTOs.
The U.S. Department of Agriculture supported the 30-day time
limit.\186\ Fifteen of the 16 BCOs supported the 30-day requirement.
One BCO thought that 30 days was too long and that the deadline should
be 10 days.\187\ All of the motor carriers other than the Intermodal
Association of North America (IANA), which administers the UIAA
supported the 30-day time limit. The IANA advocated for the Commission
to follow the UIAA standard of 60 days to issue demurrage and detention
invoices (UIAA Section E.6).\188\ All of the NVOCC/OTI/Customs Brokers/
3PLs supported the 30-day deadline.
---------------------------------------------------------------------------
\186\ FMC-2022-0066-0274.
\187\ National Fisheries Institute (FMC-2022-0066-0256).
\188\ FMC-2022-0066-0157.
---------------------------------------------------------------------------
VOCCs/MTOs and their trade associations were mixed in their
responses. Intransit Container fully supported a deadline of 30
days.\189\ The World Shipping Council (WSC) \190\ and the American
Association of Port Authorities \191\ supported a deadline but said
that the deadline should align with the UIAA standard of 60 days. Port
Houston \192\ and the Ocean Carrier Equipment Management Association,
Inc. (OCEMA) \193\ were adamant that the Commission should not impose a
deadline at all. OCEMA said that if a deadline was imposed, it should
be no later than the UIAA standard. OCEMA acknowledged that the
Commission based their deadline of 30 days on an understanding that
billing parties are capable of issuing demurrage or detention invoices,
on average, within 30 days. OCEMA, however, believes that justification
was not adequately supported and potentially flawed. First, OCEMA said
that the Commission did not explain how the average was derived, and it
was therefore unclear how many of the transactions exceeded 30 days.
Second, OCEMA asserted that in making its determination, the Commission
did not consider the potential sources of delay for those invoices that
take more than 30 days to be issued, such as delays in transmission of
essential data by third parties, IT system capabilities and differing
levels of automation regionally in the invoicing process, personnel and
labor shortages, force majeure events, or cyber-attacks or system
outages. Related to this point, OCEMA also asserts that the Commission
did not take into consideration that under a free-contract system,
parties sometimes come to an agreement for longer deadlines in light of
the circumstances applicable to a particular shipment for a given
shipper or consignee's product supply chain.
---------------------------------------------------------------------------
\189\ FMC-2022-0066-0227.
\190\ FMC-2022-0066-0242.
\191\ FMC-2022-0066-0255.
\192\ FMC-2022-0066-0268.
\193\ FMC-2022-0066-0257.
---------------------------------------------------------------------------
The VOCCs and their trade associations also complained that the
proposal is unfair. Hapag-Lloyd (America) LLC argued that the proposal
provides no consequences for failure to timely submit a dispute to an
invoice, so it is unclear what incentive billed parties have to respond
quickly.\194\ WSC said that billed parties would face no consequences
for failing to meet the deadline to dispute an invoice, while billing
parties forfeit contractual rights by missing the deadline. WSC argued
that fundamental fairness, equal protection, and due process dictate
the Commission must add language to impose similar requirements on
billed parties, namely that they forfeit the right to request fee
mitigation, refund, or waiver by failing to submit that request within
30-days from receiving the invoice. OCEMA focused on the fact that the
rule includes no flexibility for delays outside the billing parties'
control, for instance caused by third parties, that prevent compliance
with the 30-day deadline to issue invoices. Finally, OCEMA argued that
the 30-day deadline could turn out to create a disincentive principle
since shippers or truckers in possession of equipment will no longer
feel compelled to return it quickly as the unavailability of data or
other tools to delay billing will prevent billing parties from meeting
the 30-day deadline.
---------------------------------------------------------------------------
\194\ FMC-2022-0066-0240.
---------------------------------------------------------------------------
BassTech International LLC stated that the proposed rule's
invoicing requirements do not address the need for invoicing ``on
demand'' in instances where payment is a prerequisite for cargo
release, such as is customary for import demurrage charges.\195\ As
such, they suggested revising Sec. 541.7(a) to read as follows: ``A
billing party must issue a demurrage or detention invoice within thirty
(30) days from the date on which the charge was last incurred or, when
payment of charges is a precondition for delivery of cargo or
containers, on demand. If the billing party does not issue demurrage or
detention invoices within the required
[[Page 14348]]
timeframe, then the billed party is not required to pay the charge.''
---------------------------------------------------------------------------
\195\ FMC-2022-0066-0230.
---------------------------------------------------------------------------
FMC response: The Commission will maintain the 30 days proposed in
the NPRM. The Commission explained in the NPRM why a deadline of 30
days for issuing demurrage or detention invoices is reasonable.\196\
WSC and OCEMA suggest the Commission should prove why other deadlines
are unreasonable before proposing a deadline, but the Commission
declines this invitation to try to prove a negative. WSC and OCEMA did
not offer concrete examples of why billing parties could not comply
with a 30-day deadline, and instead made reference to delays caused by
third parties without offering specifics of the types of delays they
routinely face or how long they take to resolve.\197\ The Commission
does not agree with the argument that the deadline in the rule is
insufficiently supported.
---------------------------------------------------------------------------
\196\ 87 FR 62341, 62354.
\197\ FMC-2022-0066-0242; FMC-2022-0066-0257.
---------------------------------------------------------------------------
Neither is the Commission persuaded by commenters stating that it
should follow widely accepted and longstanding practices. The text of
OSRA 2022 indicates it was written to help remedy dysfunctional,
predatory, and unfair invoicing permitted by these accepted and
longstanding practices.\198\ The complaint that this proposal is unfair
and inequitable to carriers misunderstands the regulation's approach to
implementing OSRA. The rule provides a minimum time for the dispute of
detention and demurrage invoices, after which billing parties are free
to reject any further attempts at dispute as untimely. The rule does
not lay out penalties for failure by a billed party to timely dispute
an invoice, because it is up to the billing party to choose how to
remedy that failure.
---------------------------------------------------------------------------
\198\ See Testimony of Chairman Maffei before Congress: ``Review
of Fiscal Year 2024 Budget Request for the Federal Maritime
Transportation Programs, and Implementation of the Ocean Shipping
Reform Act of 2022,'' March 23, 2023, available at https://www.fmc.gov/testimony-of-chairman-maffei-before-congress-review-of-fy2024-budget/; Statement by President Joe Biden on Congressional
Passage of Ocean Shipping Reform Act, June 13, 2022, available at
https://www.whitehouse.gov/briefing-room/statements-releases/2022/
06/13/statement-by-president-joe-biden-on-congressional-passage-of-
ocean-shipping-reform-act/
#:~:text=Statement%20by%20President%20Joe%20Biden%20on%20Congressiona
l%20Passage%20of%20Ocean%20Shipping%20Reform%20Act,-
Home&text=Lowering%20prices%20for%20Americans%20is,American%20retaile
rs%2C%20farmers%20and%20consumers.
---------------------------------------------------------------------------
2. Sec. 541.7(b), Invoices Sent to an Incorrect Party
Issue: The U.S. Department of Agriculture expressed concern about
billed parties incurring additional costs of unexpected and harder-to-
verify charges in situations where the invoice was originally sent to
the wrong person.\199\ USDA urged that the Commission remove from the
rule the proposed grant of additional time to the billing party to
issue an invoice to a billed party when the invoice was originally
issued to an incorrect person (and that original recipient disputed the
charges). USDA asserted that the carrier should, in all circumstances,
have 30 days from the date charges stop accruing to bill the correct
party.
---------------------------------------------------------------------------
\199\ FMC-2022-0066-0274.
---------------------------------------------------------------------------
Hapag-Lloyd (America) LLC noted that the rule provides no
consequences for failing to timely dispute an invoice.\200\ They
asserted that, given the requirement that billing parties must issue
corrected invoices within 60 days, the rule actively dissuades billed
parties from timely settling disputes. The World Shipping Council
pointed out that 46 CFR 541.7(b) sets a hard deadline of 60 days after
the charges were last incurred by which the correct party must be
invoiced but if a billing party uses 30 days to issue the invoice and
the billed party takes 30 days to dispute the invoice, there is no time
left to bill another party before the 60-day invoicing deadline.\201\
WSC said that this would result in the correct party not having to pay
the invoice and billed parties being incentivized to delay disputing
invoices.
---------------------------------------------------------------------------
\200\ FMC-2022-0066-0240.
\201\ FMC-2022-0066-0242.
---------------------------------------------------------------------------
Another commenter requested that paragraph (b) be deleted from
Sec. 541.7 ``and to leave this exceptional circumstance to be handled
through reasonable and conventional business practice . . . .'' \202\
---------------------------------------------------------------------------
\202\ BassTech International LLC (FMC-2022-0066-0230).
---------------------------------------------------------------------------
FMC response: The final rule removes the link between a billing
party's ability to reissue an invoice with an incorrectly billed
party's disputing of that invoice. With this reworded language, the
billing party must reissue the invoice to the correct party within 30
calendar days of when the charges were last incurred. Otherwise, the
billed party is not required to pay the charges. This penalty is
consistent with the language and purposes of OSRA 2022. It also
reflects the Commission's position that the billing party should only
be issuing a demurrage and detention invoice to a billed party based on
their contractual privity with that billed party, and that this invoice
should be sent to the correct party in the first instance. Tying the
issuance of the corrected invoice to when the demurrage and detention
charges stop accruing is consistent with the incentive present in the
rest of the rule. The burden of issuing a correct invoice should not
rely on an incorrectly billed party to dispute the incorrect invoice.
The change is also consistent with the comments received on the NPRM.
3. Timeframes for NVOCCs
Issue: The Commission solicited comments in the NPRM on whether
different timeframes should apply to NVOCCs. Most commenters supported
applying the same timelines to NVOCCs and VOCCs. However, when NVOCCs
pass through demurrage or detention invoices assessed against their
customers, it may be difficult for them to issue demurrage and
detention invoices within the required timeframe if the NVOCC does not
receive the initial invoice in a timely manner. Therefore, the
Commission requested comments on how it could best reflect the
application of the deadline to NVOCCs that pass through demurrage or
detention charges. A number of NVOCCs commented that Sec. 541.7's
thirty (30) calendar-day timeframe for a billing party to issue an
invoice did not allow time for an NVOCC to issue an invoice when it
passes through the charges. Many of these comments supported adding
additional time to Sec. 541.7 for NVOCCs to issue an invoice. Some of
the comments suggested specific extra time that ranged from 21 days to
60 days. Many suggested an extra 30 days because the initial billing
party had 30 days to issue an invoice, and NVOCCs should be given the
same amount of time. CMA CGM argued that it is vital that the deadline
for resolution not be triggered until all the information required to
support the dispute is submitted to the carrier and that the rule
should emphasize, not undermine, the carriers' publicly available
dispute resolution process.
FMC response: In response to these comments, the Commission has
amended Sec. 541.7 to state that NVOCCs have an additional thirty (30)
calendar days in which to issue an invoice. This 30-day period runs
from the date on which the invoice the NVOCC received was issued. In
addition, the Commission recognizes the fact that an NVOCC can be both
a billed party and a billing party with respect to the same
transaction, and that in such a situation, the NVOCC may not be in a
position to dispute an invoice with a VOCC until the NVOCC's customer
has disputed the invoice with the NVOCC. As such, the Commission has
added Sec. 541.7(c) to require that when an NVOCC informs a VOCC that
[[Page 14349]]
its customer has disputed its invoice, the VOCC must then allow the
NVOCC additional time to dispute the invoice it received from the VOCC.
4. Ability To Cure an Invoice Not in Compliance With Sec. 541.6
Issue: A number of commenters requested the ability to correct an
invoice that lacked certain information or contained incorrect data.
FedEx Trade Networks, for example, stated that the ability to cure an
invoice error is reasonable, especially given that a billed party is
not required to pay the invoice in the face of any error.\203\
Commenters also sought clarification on the timing of amendments, if
amendments are allowable. FedEx Trade Networks stated that each billing
party should have the same amount of time to correct the invoice, as an
error that originates with the VOCC may need to be remedied by the
ocean carrier and each subsequent billing party. CV International
suggested that the billing party have two working days from the time
the billed party communicates the error to make the corrections, during
which time no additional demurrage and detention charges should
accrue.\204\ The New York New Jersey Foreign Freight Forwarders and
Brokers Association, Inc. echoed these sentiments and also suggested
that billed parties should be required to notify the billing party of
any errors within a specific time frame, such as seven days.\205\ John
S. O'Connor Logistics made similar suggestions as well.\206\ U.S. Dairy
Export Council/National Milk Producers Federation requested
clarification regarding a carrier's submission of a corrected invoice,
and whether that must that be completed within the 30-day timeframe, or
whether it restarts the clock.\207\ Connection Chemical requested
similar clarification.\208\
---------------------------------------------------------------------------
\203\ FMC-2022-0066-0165.
\204\ FMC-2022-0066-0217.
\205\ FMC-2022-0066-0247.
\206\ FMC-2022-0066-0267.
\207\ FMC-2022-0066-0235.
\208\ FMC-2022-0066-0236.
---------------------------------------------------------------------------
FMC response: The Commission declines to add time for a billing
party to correct its invoice. While billing parties have an obligation
under 46 U.S.C. 41104(d)(2) to issue accurate invoices, issuing an
invoice that does not comply with OSRA 2022's requirements does not
permanently eliminate the billed party's obligation to pay those
charges. In particular, 46 U.S.C. 41104(f) cancels the obligation to
pay an invoice that does not conform to OSRA but does not prevent the
carrier from reissuing the charges on an invoice/bill that does meet
the statutory requirements. The correctly billed party has an
obligation to pay charges billed via a compliant invoice. In addition,
given the statutory obligation in 46 U.S.C. 41104(d)(2), the Commission
also declines to add a requirement that billed parties inform billing
parties of any inaccuracies.
5. Sec. 541.7, General Comments
FedEx Trade Networks stated that the Commission should make clear
that when a demurrage or detention charge is in dispute, the billing
party should be prohibited from issuing further overdue
statements.\209\ In addition, FedEx Trade Networks recommended that the
Commission explicitly state conditions under which the billing party
may not charge demurrage and detention, such as when: the container has
not arrived at the port; the container is not available within the
terminal; the container cannot be released due to a hold by any
government action; the container is in the terminal, but the ocean
carrier fails to load it on the ocean vessel; the container is in a
closed, blocked or inaccessible area; no appointments to pick-up
freight are available; there is a ``dual transaction,'' in which a
container cannot be picked up unless another piece of equipment is
returned is required; and the equipment must be returned to a different
location to be accepted.
---------------------------------------------------------------------------
\209\ FMC-2022-0066-0165.
---------------------------------------------------------------------------
FedEx Trade Networks also recommended that when demurrage and
detention fees do have to be paid, the Commission should implement
certain requirements to create greater efficiencies and serve the
objective of demurrage and detention: demurrage bills should be
separated from freight pick-up for credit-worthy customers; demurrage
should be a standard amount per port and per day, with no tiered fees;
more payment options, such as electronic funds transfers, credit cards
(without fees), should be available, and credit should be universally
accepted; charges should be fair and reasonable, with the goal of
moving freight from the terminal; the amortized value of the equipment
should be considered when setting detention rates; and the bill should
be readily available, especially online.
FMC response: The Commission declines to make these changes to the
final rule. The information required to be included in an invoice as
per Sec. 541.6 should discourage billing parties from issuing
demurrage and detention invoices when charges have not yet accrued,
such as when a vessel has not yet arrived in port, because an
improperly issued invoice means that the billed party will not have to
pay it under the terms of Sec. 541.5. In addition, the rule contains a
dispute resolution process that is designed to motivate the parties to
a find a resolution within a short timeframe. This process should allow
cargo to be released sooner, as well as discourage parties from
repeated behaviors such as continuously issuing overdue invoices.
Furthermore, this rule provides the requirements for detention and
demurrage invoices and is already designed to make the process more
efficient. FedEx Trade Networks' suggestions are outside the process
for demurrage and detention billing requirements. As such, they are
outside the scope of this rulemaking.
H. Sec. 541.8 Requests for Fee Mitigation, Refund, or Waiver
1. Sec. 541.8(a), Request for Mitigation, Refund, or Waiver of Fees
From the Billing Party
Issue: The Commission proposed giving billed parties 30 days to
dispute demurrage and detention charges. Forty-five comments were
submitted on this issue. Twenty-eight comments supported or supported
with qualification the proposal (1 VOCC,\210\ 5 NVOCCs/OTIs/3PLs,\211\
8 BCOs,\212\ 13 Motor Carriers,\213\ and 1 Federal agency \214\). One
commenter that
[[Page 14350]]
supported the proposal said that the 30-day time limit ``will
incentivize billing parties to ensure the accuracy of their invoices
from the start.'' \215\ Fourteen comments were in clear opposition (11
BCOs \216\ and 3 NVOCCs/3PLs \217\). Three additional commenters
submitted comments on the matter that did not fall neatly into either
support or opposition.\218\
---------------------------------------------------------------------------
\210\ American Association of Exporters and Importers (FMC-2022-
0066-0168).
\211\ International Tank Container Organisation (FMC-2022-0066-
0096); Excargo Services Inc. (FMC-2022-0066-0151); Seafrigo USA Inc.
(FMC-2022-0066-0223); APL Logistics Americas, Ltd (FMC-2022-0066-
0271); New York New Jersey Foreign Freight Forwarders and Brokers
Association, Inc. (FMC-2022-0066-0247).
\212\ Northwest Horticultural Council (FMC-2022-0066-0178);
American Chemistry Council (FMC-2022-0066-0184); International
Housewares Association (FMC-2022-0066-0187); MICA/NAMI (FMC-2022-
0066-0188); Tyson Foods, Inc. (FMC-2022-0066-0225); National
Association of Beverage Importers, Inc. FMC-2022-0066-0238);
International Dairy Foods Association (FMC-2022-0066-0244);
Agriculture Transportation Coalition (FMC-2022-0066-0275).
\213\ BW Mitchum Trucking Co. (FMC-2022-0066-0110); GBA
Transport (FMC-2022-0066-0152); Triple G Express (FMC-2022-0066-
0154); MacMillan-Piper, Inc. (FMC-2022-0066-0159); Bridgeside Inc.
(FMC-2022-0066-0179); Intermodal Motor Carriers Conference (FMC-
2022-0066-0189); Eagle Systems, Inc. (FMC-2022-0066-0203); Bi-State
Motor Carriers (FMC-2022-0066-0212); California Trucking Association
(FMC-2022-0066-0220); Maryland Motor Truck Association, Inc. (FMC-
2022-0066-0241); Virginia Trucking Association (FMC-2022-0066-0260);
Harbor Trucking Association (FMC-2022-0066-0261); California
Trucking Association (FMC-2022-0066-0270).
\214\ U.S. Department of Agriculture (FMC-2022-0066-0274).
\215\ Harbor Trucking Association (FMC-2022-0066-0261).
\216\ Shippers Coalition (FMC-2022-0066-0160); National
Association of Chemical Distributors (FMC-2022-0066-0208); Consumer
Brands Association (FMC-2022-0066-0210); Consumer Technology
Association (FMC-2022-0066-0228); BassTech International LLC (FMC-
2022-0066-0230); National Retail Federation (FMC-2022-0066-0231);
National Milk Producers Federation/U.S. Diary Export Council (FMC-
2022-0066-0235); Connection Chemical (FMC-2022-0066-0236); Retail
Industry Leaders Association (FMC-2022-0066-0259); National
Association of Manufacturers (FMC-2022-0066-0264); National
Industrial Transportation League (FMC-2022-0066-0277).
\217\ DHL Global Forwarding (FMC-2022-0066-0219); CVI
International (FMC-2022-0066-0217); International Association of
Movers (FMC-2022-0066-0222).
\218\ Hapag-Lloyd (America) LLC (FMC-2022-0066-0240); World
Shipping Council (FMC-2022-0066-0242); Maher Terminals LLC (FMC-
2022-0066-0269).
---------------------------------------------------------------------------
As noted above, some of the commenters that supported the proposal,
did so with qualification. The Agriculture Transportation Coalition
said that 30 days is sufficient time for shippers to review invoices
and submit requests for fee mitigation, refund, or waiver but that the
clock should start once the shipper receives the invoice or after the
invoice has been posted on-line in a location accessible to the
shipper.\219\ American Chemistry Council had similar views to
Agriculture Transportation Coalition but said that the clock should not
start until invoices are received by the billed party.\220\ American
Chemistry Council explained: ``Carriers are increasingly moving to
online systems where the billed party must search for new invoices.
Because of resource constraints, small companies may track new invoices
on a weekly basis, rather than daily.'' \221\ To address this concern,
American Chemistry Council proposed amending Sec. 541.8 by adding at
the end ``. . . or within thirty-seven (37) days of the billing party
making the invoice available online'' to ensure that these companies
have the full 30-day window to review invoices. The National
Association of Beverage Importers, Inc. supported the 30-day timeframe
but said that it should be subject to a one-time additional 30-day
extension.\222\ Similarly, NYNJFF&BA supported a 30-day timeframe
generally, but said the timeframe should be allowed to be extended if
both parties agreed to the extension.\223\ (NYNJFF&BA did not put a
time limit on how far the deadline could be extended so long as both
parties were in agreement.) NYNJFF&BA also said that the 30-day clock
for a VOCC receipt of a dispute must be extended to accommodate the
request if the dispute was raised within the proper timelines from the
final party billed.
---------------------------------------------------------------------------
\219\ FMC-2022-0066-0275.
\220\ FMC-2022-0066-0184.
\221\ Id.
\222\ FMC-2022-0066-0238.
\223\ FMC-2022-0066-0247.
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Billed parties, such as shippers and their trade associations,
generally argued that 30 days is insufficient. They argued that they
need more time because shippers do not have the administrative
bandwidth to examine each invoice carefully within 30 days and to
determine if a dispute should be filed, particularly considering that
some charges have unique and complex scenarios that need to be
investigated before they are disputed.\224\ Commenters noted that low
administrative bandwidth could be caused by a variety of factors,
including: the billed party being a small business,\225\ because of
high transactional volume,\226\ or because of the use of third-party
auditors.\227\ Some commenters pointed out that a billed party's
primary business is not transportation, as opposed to billing parties,
so shippers are at a disadvantage relative to carriers in validating
and disputing invoices. Some expressed concern that a 30-day period for
submitting invoice disputes could be construed as a legal ``condition
precedent'' to filing a claim and essentially function to shorten the
statute of limitations for claims brought before the Commission.\228\
The National Retail Federation pointed out that while the Commission
said in the NPRM that it was basing the 30-day deadline on the UIAA,
that shippers have never been a party to the UIAA.\229\ As an
alternative, several of these commenters argued that a 60-day time
period is more appropriate.\230\ Other billed parties, however, argued
that 30 days is insufficient without proposing an alternative
timeframe,\231\ or proposed eliminating the timeframe requirement
entirely.\232\
---------------------------------------------------------------------------
\224\ E.g., Connection Chemical (FMC-2022-0066-0236); National
Association of Chemical Distributors (FMC-2022-0066-0208).
\225\ National Association of Chemical Distributors (FMC-2022-
0066-0208).
\226\ E.g., Consumer Technology Association (FMC-2022-0066-
0228); Retail Industry Leaders Association (FMC-2022-0066-0259).
\227\ E.g., National Retail Federation (FMC-2022-0066-0231).
\228\ National Association of Chemical Distributors (FMC-2022-
0066-0208).
\229\ Id.
\230\ Shippers Coalition (FMC-2022-0066-0160); Consumer Brands
Association (FMC-2022-0066-0210); International Association of
Movers (FMC-2022-0066-0222); National Milk Producers Federation/U.S.
Dairy Export Council (FMC-2022-0066-0235); Retail Industry Leaders
Association (FMC-2022-0066-0259).
\231\ E.g., Connection Chemical (FMC-2022-0066-0236); National
Retail Federation (FMC-2022-0066-0231).
\232\ National Association of Chemical Distributors (FMC-2022-
0066-0208); BassTech International LLC (FMC-2022-0066-0230);
National Industrial Transportation League (FMC-2022-0066-0277).
---------------------------------------------------------------------------
VOCCs and their trade associations asserted the proposal is unfair.
Hapag-Lloyd (America) LLC argued that the proposal provides no
consequences for failure to timely submit a dispute to an invoice, so
it is unclear what incentive billed parties have to respond
quickly.\233\ The World Shipping Council said that billed parties face
no consequences for failing to meet the deadline to dispute an invoice,
while billing parties forfeit contractual rights by missing the
deadline.\234\ WSC argued that fundamental fairness, equal protection,
and due process dictate the Commission must add language to impose
similar requirements on billed parties, namely that they forfeit the
right to request fee mitigation, refund, or waiver by failing to submit
that request within 30-days from receiving the invoice. The Ocean
Carrier Equipment Management Association, Inc. focused on the fact that
the rule includes no flexibility for delays outside the billing
parties' control, for instance caused by third parties, that prevent
compliance with the 30-day deadline to issue invoices.\235\ Finally,
OCEMA argued that the 30-day deadline could turn out to create a
disincentive principle since shippers or truckers in possession of
equipment will no longer feel compelled to return it quickly as the
unavailability of data or other tools to delay billing will prevent
billing parties from meeting the 30-day deadline.
---------------------------------------------------------------------------
\233\ FMC-2022-0066-0240.
\234\ FMC-2022-0066-0242.
\235\ FMC-2022-0066-0257.
---------------------------------------------------------------------------
Commenters also expressed concern about the Commission setting
strict deadlines for billing parties that could result in forfeiting
contractual rights, with billed parties potentially facing no
consequences for failing to meet the rule's deadlines. For instance,
WSC, OCEMA, and Hapag-Lloyd all argued that it is unfair that billed
parties face no consequences for failing to timely submit a dispute to
an invoice. The Pacific Merchant Shipping Association (PMSA) agreed
with WSC that the lack of consequences for billed parties is
[[Page 14351]]
unfairly incongruous and inconsistent.\236\ PMSA argued that if the
consequences of failing to meet the prescribed deadlines are not
removed for billing parties, then the rule should require billed
parties to pay the charge if they have not disputed it within the 30-
day deadline.\237\
---------------------------------------------------------------------------
\236\ FMC-2022-0066-0233.
\237\ Id.
---------------------------------------------------------------------------
FMC response: The Commission must balance the benefits to billed
parties against the detriment to billing parties of an extended
timeline to dispute invoices. The longer billed parties take to
investigate charges, validate them, and marshal evidence, the longer
billing parties remain in limbo about whether the billed party intends
to pay. Billed parties advocated for an extended timeframe but did not
provide compelling evidence of how long each part of the dispute
process takes, for instance investigating invoices or validating
charges. Nor did they explain how an extended timeframe for billed
parties to evaluate invoices helps facilitate the movement of cargo.
The rule's new deadlines ensure billed parties are not scrambling to
unearth ancient evidence to dispute stale invoices, and the Commission
is not convinced by the evidence billed parties presented in support of
extending the timeframe.
Further, the regulatory timeframe for disputes serves only as a
minimum timeframe billed parties must permit dispute. The timeframes
are not designed or intended to control in every dispute scenario. They
are intended to ensure billing parties provide some minimum time for a
billed party to dispute an invoice. The billing and billed parties can
agree to extend the timeframe, or the billed party can file a complaint
with the Commission at any time. Nothing in the final rule prevents a
billed party from filing a complaint during the 30-day dispute deadline
or prevents a billed party from filing a complaint with the Commission
even though they did not dispute the charge with the billing party
during the 30-day timeframe.
Based on this record, the Commission has removed the language from
Sec. 541.8(b) stating that a billed party was not required to pay an
invoice if a billing party takes longer than 30 days to resolve a
dispute. The Commission also added language to Sec. 541.8(b) to allow
the parties to agree to longer timeframes for the dispute resolution
process. These changes better allow for the balancing of benefits that
this process requires.
2. Sec. 541.8(b), Resolution of Dispute
(a) 30-Day Timeframe
Issue: The Commission proposed giving parties 30 days to resolve a
disputed demurrage or detention invoice charge. Thirty-nine comments
were submitted on this issue. Thirty comments supported or supported
with qualification the proposal (8 BCOs,\238\ 5 NVOCCs/OTIs/Customs
Brokers/3PLs,\239\ 13 Motor Carriers,\240\ 3 VOCCs/MTOs,\241\ and 1
Federal agency \242\). Six comments were opposed (all BCOs).\243\ The
other three comments (all NVOCCs/OTIs/Customs Brokers/3PL) that were
submitted neither clearly supported nor opposed the proposal.\244\
---------------------------------------------------------------------------
\238\ Northwest Horticultural Council (FMC-2022-0066-0178);
American Chemistry Council (FMC-2022-0066-0184); International
Housewares Association (FMC-2022-0066-0187); MICA/NAMI (FMC-2022-
0066-0188); Tyson Foods, Inc. (FMC-2022-0066-0225); National
Association of Beverage Importers, Inc. (FMC-2022-0066-0238);
International Dairy Foods Association (FMC-2022-0066-0244);
Agriculture Transportation Coalition (FMC-2022-0066-0275).
\239\ International Tank Container Organisation (FMC-2022-0066-
0096); Excargo Services Inc. (FMC-2022-0066-0151); Seafrigo USA Inc.
(FMC-2022-0066-0223); New York New Jersey Foreign Freight Forwarders
and Brokers Association, Inc. (FMC-2022-0066-0247); APL Logistics,
Ltd (FMC-2022-0066-0271).
\240\ BW Mitchum Trucking Co. (FMC-2022-0066-0110); GBA
Transport (FMC-2022-0066-0152); Triple G Express (FMC-2022-0066-
0154); MacMillan-Piper, Inc. (FMC-2022-0066-0159); Bridgeside
Inc.(FMC-2022-0066-0179); Intermodal Motor Carriers Conference (FMC-
2022-0066-0189); Eagle Systems, Inc. (FMC-2022-0066-0203); Bi-State
Motor Carriers (FMC-2022-0066-0212); California Trucking Association
(FMC-2022-0066-0220); Maryland Motor Truck Association, Inc. (FMC-
2022-0066-0241); Virginia Trucking Association (FMC-2022-0066-0260);
Harbor Trucking Association (FMC-2022-0066-0261); California
Trucking Association (FMC-2022-0066-0270).
\241\ American Association of Exporters and Importers (FMC-2022-
0066-0168); World Shipping Council (FMC-2022-0066-0242); Maher
Terminals LLC (FMC-2022-0066-0269).
\242\ U.S. Department of Agriculture (FMC-2022-0066-0274).
\243\ Consumer Technology Association (FMC-2022-0066-0228);
National Retail Federation (FMC-2022-0066-0231); National Milk
Producers Federation/U.S. Diary Export Council (FMC-2022-0066-0235);
Retail Industry Leaders Association (FMC-2022-0066-0259); National
Association of Manufacturers (FMC-2022-0066-0264); National
Industrial Transportation League (FMC-2022-0066-0277).
\244\ CVI International (FMC-2022-0066-0217); DHL Global
Forwarding (FMC-2022-0066-0219); International Association of Movers
(FMC-2022-0066-0222).
---------------------------------------------------------------------------
Consumer Technology Association was concerned that the process
would be subject to abuse and potentially undermine incentives of
demurrage and detention charges.\245\ The commenter was particularly
concerned with the possibility of parties overwhelming a carrier with
requests for waivers/refunds with the express intent of making it
impossible for the carrier to act within 30 days. They said the
Commission should make clear that:
---------------------------------------------------------------------------
\245\ Consumer Technology Association (FMC-2022-0066-0228).
(1) carriers may adopt reasonable documentation requirements for
claims for waivers/refunds, and that carriers do not waive their
right to collect charges when they do not act on claims that fail to
comply with reasonable documentation requirements;
(2) claims that are not submitted to carriers via the informal
dispute process are presumed reasonable and the burden of proof as
to the unreasonableness of such charges shifts back to the entity
challenging the charge;
(3) Abuse of the informal dispute resolution process (e.g., by
submitting excessive or frivolous claims) may constitute a violation
of 46 U.S.C. 41102(a). (Alternatively, that abuse of the system
creates a presumption that the charge was reasonable that must be
overcome by the party challenging same);
(4) At an absolute minimum, indicate that: billed parties have
an obligation to act in good faith when disputing invoices, that
submission of excessive and/or frivolous disputes does not
constitute good faith, and that charges that are the subject of
waiver/refund requests not submitted in good faith are to be
presumed reasonable.
Other commenters who opposed the proposed regulation, generally
said that they disagreed with it because it did not account for those
instances when more than 30 days is required to investigate and reach a
final resolution.\246\ Some commenters who generally supported the
regulation agreed with these concerns. (The dividing line between
support and opposition generally came down to those that supported some
type of alternative timeframe to the strict 30 days in the NPRM and
those that would eliminate a specified timeframe entirely.) For
example, the World Shipping Council generally supported the proposal
but recommended that the 30-day period be subject to a single extension
request of a second 30-day period.\247\ Maher Terminals supported
having a specific timeframe but said that instead of 30 days, the
timeframe should be extended to 90-120 days.\248\
---------------------------------------------------------------------------
\246\ E.g., National Retail Federation (FMC-2022-0066-0231);
Retail Industry Leaders Association (FMC-2022-0066-0259).
\247\ FMC-2022-0066-0242.
\248\ FMC-2022-0066-0269.
---------------------------------------------------------------------------
FMC response: The Commission has decided to maintain a 30-day
dispute resolution timeframe, but in response to these comments has
created an exception to allow for resolution beyond 30 days when a
later date has been agreed to by both parties. The Commission has also
clarified in the text that the 30-day deadline is 30
[[Page 14352]]
calendar days. The rule does not prescribe or prohibit the billing
party from imposing reasonable consequences on the billed party for
failing to dispute the charge during the 30-calendar-day period.
(b) What does ``resolve'' mean?
Issue: The Commission received several comments concerning what
``resolve'' means in the proposed regulation.\249\ These commenters
said it was unclear from the text of the proposed regulation whether a
refund, if one were to be issued, or other final form of redress,
needed to be completed within the 30-day deadline, or whether the
parties merely needed to come to an agreement for resolution of the
matter and final tender could be after the 30 day deadline. Two
commenters, Mediterranean Shipping Company \250\ and the World Shipping
Council,\251\ requested that the Commission formally define the term in
the rule. American Chemistry Council had similar concerns, but instead
of requesting that ``resolution'' be defined, they requested that the
Commission codify into the regulation that final redress be completed
within the 30-day limit.\252\ Shippers Coalition expressed their
concern that the proposed language would result in billing parties just
saying ``no'' to a request for mitigation/refund/waiver, in order meet
the 30-day deadline.\253\ To address this concern, Shippers Coalition
proposed amending Sec. 541.8(b) to include an additional sentence such
as: ``In considering a request for mitigation, refund, or waiver of
fees, a common carrier shall consider that under 46 U.S.C. 41310(b) a
common carrier shall bear the burden of establishing the reasonableness
of any demurrage or detention charges.'' \254\
---------------------------------------------------------------------------
\249\ E.g., International Tank Container Organisation (FMC-2022-
0066-0096); Dole Ocean Cargo Express, LLC (FMC-2022-0066-0201);
Mediterranean Shipping Company (FMC-2022-0066-0142); World Shipping
Council (FMC-2022-0066-0242); American Chemistry Council (FMC-2022-
0066-0184); Shippers Coalition (FMC-2022-0066-0160); New York New
Jersey Foreign Freight Forwarders and Brokers Association, Inc.
(FMC-2022-0066-0247).
\250\ FMC-2022-0066-0142.
\251\ FMC-2022-0066-0242.
\252\ FMC-2022-0066-0184.
\253\ FMC-2022-0066-0160.
\254\ Id.
---------------------------------------------------------------------------
FMC response: The Commission has amended Sec. 541.8(b) to: (1)
require attempted resolution, rather than resolution, within 30 days;
and (2) allow extension of the timeframe, if such a later date is
agreed to by the parties. The Commission recognizes that this change
will mean that the rule will no longer impose definite outer limits for
closing out of a disputed transaction. These changes, however, further
the goal of building better relationships in the demurrage and
detention context between the billing and billed parties, the parties
that know the most about the transaction. While parties can come to the
Commission at any time during the process, the Commission wants to
encourage to the fullest extent possible good-faith efforts for
resolution between the parties when disagreements occur.
We decline to formally define ``resolution'' or ``attempted
resolution'' because what these terms mean in any particular instance
will be determined based upon mutual agreement of the involved parties.
The Commission believes it is acceptable for some ambiguity, especially
given that the Commission has removed the penalty of the billed party
not having to pay the invoice if the parties do not come to a
resolution. Applying the normal meaning of the word, resolution of a
request includes payment by the billing party of any refund due to the
billed party.
As noted above, Sec. 541.8 does not impact a party's right to file
a Charge Complaint with the Commission. Parties do not need to wait a
certain period of time or for a triggering event to occur prior to
filing a complaint under Sec. 541.8. Parties interested in filing a
Charge Complaints at the Commission may do so by following the Interim
Procedures for Submitting ``Charge Complaints.'' \255\
---------------------------------------------------------------------------
\255\ Industry Advisory--Interim Procedures for Submitting
``Charge Complaints'' Under 46 U.S.C. 41310--Federal Maritime
Commission--Federal Maritime Commission (fmc.gov) (posted July 14,
2022) (https://www.fmc.gov/industry-advisory-interim-procedures-for-submitting-charge-complaints/).
---------------------------------------------------------------------------
(c) Penalty
Pacific Merchant Shipping Association (PMSA) argued that voiding an
invoice is a harsh result.\256\ PMSA disagreed with the Commission's
conclusion that voiding a charge in its entirety is the only potential
remedy of consequence that the Commission could establish, or that this
penalty is consistent the Commission's current practices or the
Congressional mandates in OSRA 2022. PMSA stated that such a conclusion
flies in the face of the Commission's charge compliant process and
argued that even if this penalty were intended to be punitive, it
exceeds the congressional direction and authority granted to the
Commission in OSRA 2022. PMSA noted that OSRA 2022, at section 7(b),
directs the Commission to conduct the present rulemaking in order to
``further clarify reasonable rules and practices'' regarding demurrage
and detention, and to determine ``which parties may be appropriately
billed for any demurrage, detention, or other similar per container
charges.'' PMSA argued that Congress did not authorize the Commission
to adopt new penalties whereby demurrage and detention charges would be
eliminated as a punishment for violating a prohibited practice, and
that the rule contravenes Congress' wishes in this regard.
---------------------------------------------------------------------------
\256\ FMC-2022-0066-0233.
---------------------------------------------------------------------------
Furthermore, PMSA argued that because the Charge Complaint process
is available to any billed party, Sec. 541.8(b) could have been set up
in any number of more reasonable and less punitive ways to address a
non-responsive billing party and still be within the scope of
clarifying the process, such as introducing a rebuttable presumption
against a non-responsive billing party or foreclosing certain defenses
against a non-responsive billing party in the Complaint process.
FMC response: In consideration of these concerns, the Commission
has removed the provision from Sec. 541.8(b) that allows the billed
party to avoid paying the invoice if the dispute is not resolved within
30 days. Although that provision had been added to speed up and
incentivize the dispute resolution process, this was not a requirement
that was mandated by OSRA 2022. By contrast, the rule keeps the
requirement of 46 U.S.C. 41104(d)(1) and codified in 46 CFR 541.5,
regarding voiding an invoice that does not include the necessary
information, because this requirement was mandated by OSRA 2022.
(d) Release of Cargo During Dispute
Issue: The Commission received a few comments concerning the
ability to hold cargo as a lien against demurrage and detention
invoices when an invoice is disputed. Commenters were concerned not
only about the cargo that is the subject of a dispute but also about
the potential for lockouts of non-related cargo.
Mediterranean Shipping Company argued that cargo that is the
subject of a disputed demurrage or detention invoice should be
permitted to be maintained by the billing party pending payment.\257\
FedEx Trade Networks argued, in contrast, that when a demurrage or
detention charge is in dispute, the billing party should be required to
release the cargo that is the subject of a disputed charge.\258\
---------------------------------------------------------------------------
\257\ FMC-2022-0066-0143.
\258\ FMC-2022-0066-0165.
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[[Page 14353]]
A third alternative was proposed by Consumer Technology
Association.\259\ CTA argued that during a dispute resolution period,
the billing party should be required to release the billed party's
property so long as the billed party pays the undisputed portion of an
invoice.
---------------------------------------------------------------------------
\259\ FMC-2022-0066-0228.
---------------------------------------------------------------------------
The joint comment of the Meat Import Council of America and North
America Meat Institute said that it is a common practice by VOCCs to
hold additional, unrelated cargo from being released until all
outstanding invoices are paid, even when the receiving party may be
contesting the validity of those original invoices.\260\
---------------------------------------------------------------------------
\260\ FMC-2022-0066-0188.
---------------------------------------------------------------------------
MICA/NAMI said that when invoiced charges are contested by the
receiving party, it is unacceptable for VOCCs to ``lock out'' that
entity from all future business with the VOCC until those outstanding
fees are paid. MICA/NAMI argued that the current practice does not
comport with the tenets of the Incentive Principle, and that allowing
it to continue would dissuade importers and exporters, as well as third
party service providers, from availing themselves of any dispute
settlement mechanisms that are available given the need to service
other, unrelated loads with the VOCC.
The Retail Industry Leaders Association echoed similar concerns of
MICA/NAMI, stating that a common complaint among its members is the
practice of ocean common carriers and MTOs refusing to provide
additional bookings to a BCO unless the BCO or another entity in the
supply chain pays outstanding detention and demurrage charges that are
under dispute.\261\ According to RILA, this practice is often used as a
way of forcing a BCO to abandon a dispute with the carrier or MTO and
pay the charges due. The Association noted that this practice could
take several forms, including a demand for payment upon receipt of an
invoice. The Association expressed its concern that this practice could
be used to circumvent the text and purpose of the rule and recommended
that the Commission thus prohibit it.
---------------------------------------------------------------------------
\261\ FMC-2022-0066-0259.
---------------------------------------------------------------------------
FMC response: This rule does not impact traditional cargo lien
rights. This rule allows billing parties to make their own business
decisions about whether or not they require demurrage and detention
charges to be paid prior to releasing cargo or whether or not to
release cargo conditionally or unconditionally.
The Commission does not believe that leaving the issue of not
allowing additional bookings unaddressed will result in circumvention
of the rule. The main purpose of this rule is to provide clarity and
transparency of invoices and the billing process. This rule also
eliminates the practice of issuing invoices to multiple parties in the
hopes that one of them will pay it, which was one of the concerns
raised by RILA.
I. Rail
1. Through Bill of Lading
Issue: One NVOCC/OTI requested that the Commission explicitly state
in Sec. 541.2 whether the rule applies demurrage and detention billing
originating from the rail for the rail leg of a through bill of
lading.\262\
---------------------------------------------------------------------------
\262\ FedEx Trade Networks Transport & Brokerage, Inc. (FMC-
2022-0066-0165).
---------------------------------------------------------------------------
FMC response: Ocean cargo that is shipped under a through bill of
lading to a final destination in the United States remains under
Commission jurisdiction for any Shipping Act violations, including
violations occurring under OSRA 2022, and associated implementing
regulations.\263\ These cases are discussed in greater detail below.
---------------------------------------------------------------------------
\263\ See Norfolk Southern Railway Co. v. Kirby, 543 U.S. 14;
see also Mitsui O.S.K. Lines Ltd. v. Global Link Logistics, Inc.,
Olympus Partners, Olympus Growth Fund III, L.P, Louis J. Mischianti,
David Cadenas, Keith Heffernan, CJR World Enterprises, Inc. and Chad
J. Rosenberg (2011 WL 7144008 (F.M.C.) January 30, 2014).
---------------------------------------------------------------------------
2. Storage and Demurrage Fees for Shipments Moving on Through Bill of
Lading
Issue: National Customs Brokers & Forwarders Association of
America, Inc. requested guidance as to whether the proposed definition
of ``demurrage and detention'' would cover certain storage or demurrage
fees for shipments moving on through bills of lading.\264\ Two other
commenters, John S. Connor, Inc.\265\ and CV International,\266\
specifically requested that inland rail be included in the definition
of ``demurrage and detention'' to account for storage at inland rail
terminals.
---------------------------------------------------------------------------
\264\ FMC-2022-0066-0180.
\265\ FMC-2022-0066-0267.
\266\ FMC-2022-0066-0217.
---------------------------------------------------------------------------
FMC response: The Commission declines to make a specific addition
to the definition of ``demurrage and detention'' to add inland rail.
This is an issue that has been raised in the National Shipper Advisory
Committee (NSAC) and continues to be examined by the Commission.\267\
The Commission has direct jurisdiction over common carriers, marine
terminal operators (MTOs), and ocean transportation intermediaries
(OTIs).\268\ This includes jurisdiction over ``through
transportation,'' meaning continuous transportation between the origin
and destination and is offered or performed by one or more carriers, at
least one of which is a common carrier under the Shipping Act. As such,
ocean cargo that is shipped under a through bill of lading to a final
destination in the United States remains under Commission jurisdiction
for any Shipping Act violations. The Commission has long held that its
jurisdiction extends to ocean cargo that is shipped under a through
bill of lading to a final destination in the United States. The Supreme
Court addressed this issue in Norfolk Southern Railway Co. v. Kirby,
543 U.S. 14 (2004), which held that inland transportation pursuant to a
through bill of lading does not change the fact that the bill of lading
is a maritime contract. This case addressed the delivery of machinery
from Australia to Huntsville, Alabama, on a through bill of lading. The
machinery arrived in Savannah, Georgia, by way of an ocean vessel,
where it was discharged and loaded onto a train whose ultimate
destination was the inland port of Huntsville. The train derailed en
route to Huntsville, causing damage to the machinery.\269\ The Supreme
Court decided Norfolk Southern Railway Co. under admiralty law even
though the machinery's damage arose from the train crash because the
inland rail portion was pursuant to through bills of lading, which the
court noted were ``essentially, contracts'' for the transportation of
the goods. These bills of lading were ``maritime contracts because
their primary objective is to accomplish the transportation of goods by
sea from Australia to the eastern coast of the United States.'' \270\
---------------------------------------------------------------------------
\267\ https://www.fmc.gov/industry-oversight/national-shipper-advisory-committee/.
\268\ See 46 U.S.C. 40901-40904, 41104, 41106.
\269\ 543 U.S. at 18-19.
\270\ Id. at 24 (internal citations omitted).
---------------------------------------------------------------------------
This principle has become settled in Commission case law decided
under the Shipping Act. For example, in Mitsui O.S.K. Lines Ltd. v.
Global Link Logistics, Inc., Olympus Partners, Olympus Growth Fund III,
L.P, Louis J. Mischianti, David Cadenas, Keith Heffernan, CJR World
Enterprises, Inc. and Chad J. Rosenberg, the Commission stated that the
Shipping Act of 1984's legislative history specifically recognized
intermodalism ``as an important component of ocean transportation, and
the implications of intermodalism for ocean transportation
[[Page 14354]]
were addressed.'' \271\ In particular, the legislative history
``recognized that an ocean carrier's use of a single intermodal tariff
could save shippers time and allow them to avoid having to arrange the
transfer of cargo from one transportation mode to another.'' The
legislative history further stated that ``when an ocean carrier offers
an intermodal service, that carrier has the single responsibility for
assuring the delivery of cargo from point to point, and only that
carrier needs to be concerned with the arrangements for transferring
the cargo between modes. Furthermore, this process involves a single
bill-of-lading rather than multiple bills of lading.'' \272\
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\271\ 2011 WL 7144008 (F.M.C.) January 30, 2014.
\272\ Id. at 6, citing H.R. REP. NO. 98-53, pt. 1, at 13 (1983).
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In Mitsui, the Commission also stated that ``the intermodal nature
of ocean transportation was reflected in the [Shipping] Act's inclusion
of definitions of `through rate' and `through transportation,' '' which
were ``in recognition of the need to permit the employment of modern
intermodalism concepts and practices in our foreign trade.'' \273\ As
such, the Commission concluded that ``given this legislative history,
it appears that Congress intended to extend the Commission's
jurisdiction to encompass through rates and through transportation.
Congress specifically noted the use by ocean carriers of single
intermodal bills of lading, such as those involved in this case, to
cover shipments going to inland destinations or points.'' \274\
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\273\ Id. at 6, citing H.R. REP. NO. 98-53, pt. 1, at 29.
\274\ Id. at 6.
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Given this discussion, it remains the Commission's position that it
has jurisdiction over ocean cargo that is shipped under a through bill
of lading to a final destination in the United States. This rulemaking
does not change the Commission's authority over merchandise carried
pursuant to a through bill of lading.
3. Amending the Definition of ``Demurrage and Detention''
Issue: One commenter requested that the Commission add ``storage''
to the definition of ``demurrage and detention,'' as well as including
rail/inland depot space in the definition.\275\ There, the commenter
reasoned that on through bills of lading, the VOCC is responsible for
transporting cargo inland via rail, and that the same demurrage and
detention billing regulations should apply to rail storage/demurrage.
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\275\ CV International, Inc. (FMC-2022-0066-0217).
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FMC response: The Commission declines to add storage to the
definition of ``demurrage and detention.'' The terms ``detention and
demurrage'' are used extensively in the shipping industry, and they are
not generally defined within the industry to include ``storage.''
Expanding the definition to include ``storage'' is beyond the scope of
this rulemaking.
J. Paperwork Reduction Act
Issue: One commenter asserted that the Commission violated the
Paperwork Reduction Act of 1995 (PRA) because ``it does not appear that
any effort was made to realistically assess the time or cost burdens
imposed by the rule[.]'' \276\
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\276\ Ocean Carrier Equipment Management Association, Inc. (FMC-
2022-0066-0257).
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FMC response: The Commission complied with PRA requirements. In
accordance with 5 CFR 1320.11, in the NPRM, the Commission discussed
costs associated with the information collection outlined in the
proposed rule, and the bases for those costs.\277\ The Commission
requested comments on the information collection generally, and
specifically requested comments on the accuracy of the burden estimate.
Neither the commenter \278\ nor anyone else submitted a comment on the
proposed information collection. While some commenters on the NPRM,
particularly MTOs, generally asserted concerns about potential burdens
that the rule would impose on them, neither this particular commenter
nor any other commenter provided data or information to the Commission
that directly challenged the FMC's burden calculation or provided
additional information to improve the calculation estimate.\279\
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\277\ 87 FR 62341, 62356.
\278\ Ocean Carrier Equipment Management Association, Inc. (FMC-
2022-0066-0257).
\279\ Regulations.gov, Docket FMC-2022-0066 and https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202210-3072-001# (last
visited June 12, 2023).
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K. Miscellaneous Comments
1. Requests for Additional Regulations
Issue: While many commenters expressed support for this rulemaking,
a number of them mentioned items they thought required further action
by the Commission. In particular, the Cheese Importers Association of
America (CIAA) noted that even with the regulation's change to billing
practices, there are operational practices that are still harming food
importers.\280\ This included charging detention and demurrage even
when parties cannot access their shipping containers, when the ship did
not go to the proper port, and when the carrier failed to properly
notify that the container was available for pick up. CIAA requested
that the Commission develop a reasonable standard regarding delivery
practices. Similarly, the Northwest Horticultural Council (NHC) stated
that the Commission should take further action to clarify reasonable
detention and demurrage practices and make sure shippers are not
unreasonably charged in situations where delays are beyond their
control, an issue that was echoed in a comment by an anonymous
exporter.\281\ This exporter also noted that a number of issues
regarding earliest return dates could be ripe for Commission
regulation.
---------------------------------------------------------------------------
\280\ FMC-2022-0066-0265.
\281\ FMC-2022-0066-0178.
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Pacifica Trucks LLC stated that in addition to the invoicing rules
that this regulation encompasses, the Commission should address ocean
carriers' application of demurrage and detention fees in other
situations that Pacifica Trucks considers unfair.\282\ In particular,
Pacifica Trucks opined that the Commission should ban ocean carriers
from assessing demurrage and detention fees in the following
situations: when the carrier's intermodal marine or terminal truck gate
is closed; when the carrier's intermodal marine or terminal does not
offer unrestricted appointments to pick up cargo; when the motor
carrier documents an unsuccessful attempt to make an appointment for
either a loaded or empty container and no other unrestricted
appointments were available; when the intermodal marine container
terminal diverts equipment from the original interchange location
without 48 hours' notice to the motor carrier; when a loaded container
is not available for pickup when the motor carrier arrives at the
intermodal marine terminal, or the area containing the cargo is closed
or inaccessible; when the intermodal marine terminal is too congested
to accept the container and turns the motor carrier away; when the
carrier's intermodal marine terminal unilaterally imposes transaction
restrictions such as chassis matching or empty container requirements
that prevent a transaction and fail to provide a return location or
other conditions that impede the motor carrier's ability to pick up or
return their containers.
---------------------------------------------------------------------------
\282\ FMC-2022-0066-0118.
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In addition, the Harbor Trucking Association requested Commission
action on the return of empty containers, as well as standardizing
[[Page 14355]]
payment practices such as payment centers having differing hours of
operation, delays in payment processing and the need for consistency as
to how free days are applied.\283\ Other commenters raised similar
issues.
---------------------------------------------------------------------------
\283\ FMC-2022-0066-0261.
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FMC response: The Commission agrees that these are important issues
but concludes that they are outside the scope of this rulemaking. The
Commission thanks commenters for their thoughtful input on these
issues.
2. APA Challenge
Issue: Three commenters asserted that the NPRM violates the
Administrative Procedure Act (APA).\284\
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\284\ World Shipping Council (FMC-2022-0066-0242); National
Association of Waterfront Employers (FMC-2022-0066-0276); Port
Houston (FMC-2022-0066-0268).
---------------------------------------------------------------------------
The World Shipping Council argued that the proposed rule violates
the APA ``because the Commission's replacement of the Interpretive Rule
and the Incentive Principle with a series of bright-line rules
represents a clear departure from its past precedent on detention and
demurrage without any reasonable explanation.'' WSC elaborated, saying:
[T]he Commission's proposed bright-line regulations on which
parties can be billed cannot logically coexist with its current
policies under the Interpretive Rule, which employs a case-by-case
analytical tool and the Incentive Principle to determine if a
carrier, MTO, or OTI's detention and demurrage billing practices are
reasonable. The proposed rules and the Interpretive Rule cannot
coexist because there are numerous instances when it is not only
reasonable for carriers to take actions prohibited by this proposed
regulation, but to do otherwise would disincentivize the fluid
movement of freight through the supply chain. The predictable result
is a proposal that is not only unworkable and unreasonable as a
matter of policy, but per se arbitrary and capricious as a matter of
law.
The National Association of Waterfront Employers and Port Houston
said that in contravention of 46 CFR 545.4(b)'s requirement that an
unjust and unreasonable practice must be something that occurs on a
``normal, customary, and continuous basis,'' this rule, as proposed
would penalize MTOs for any isolated, one-off invoice omission, and
apply the penalty to the entire invoice, including as to charges that
may not be implicated by the mistake at issue. These commenters said
that: ``In effect, this regulation would be an implicit repeal of the
existing regulatory definition of ``unjust and unreasonable practices''
under 46 CFR 545.5 as it relates to MTO demurrage charges, without an
opportunity for public comment on such repeal, as required by the
APA.''
FMC response: The Commission disagrees with the commenters'
characterization of this action and assertion of APA violations. The
rule's provisions have been extensively explained by the agency, and
the rule is implemented by the Commission in accordance with the APA's
rulemaking procedures under 5 U.S.C. 553. As noted above, the
Commission has twice solicited public input on the proposal to regulate
MTO invoicing. The Commission stated unequivocally in the NPRM that
MTOs would be subject to this rule. MTOs have had repeated public
notice that the Commission was considering regulating MTO demurrage and
detention invoicing, so the Commission disagrees with concerns that the
rule lacked adequate public notice and comment.
As for concerns that this rule implicitly overrules the
Commission's Interpretive Rule at 46 CFR 545.4, these concerns have
also been previously addressed. Any argument about what parts of the
Interpretive Rules at 46 CFR 545.4 and 545.5 remain in force is
inherently an argument about that guidance and not about whether this
rule complies with the APA. OSRA 2022 specifically required the
Commission to issue rules under 46 U.S.C. 41102(c) that further define
the prohibited practices by common carriers, marine terminal operators,
and shippers, regarding the assessment of detention or demurrage
charges. The plain language of this direction and the plain language of
41104(d) do not require evidence of multiple violations. This view is
further supported by 46 U.S.C. 41104(f) which functions to void an
invoice if a single required element is not included, not when the
complainant can show multiple instances of such behavior.\285\ To the
extent that this rule requires a change in the narrow context of the
Commission's guidance on how it will apply 46 U.S.C. 41102(c) to MTO
demurrage and detention invoicing, this rule merely implements changes
made by Congress.
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\285\ See also 46 U.S.C. 41310(b) (Charge complaints authority
states that Commission is required to investigate compliance with
section 41102 of ``the charge'' received and does not specify that
multiple instances must be alleged for the Commission to investigate
and order a refund and/or civil penalty).
---------------------------------------------------------------------------
In response to NAWE and Port Houston, the Commission has amended
Sec. 541.5 to read ``applicable charge'' rather than ``applicable
invoice.'' This change mirrors the statutory language of 46 U.S.C.
41104(f). It was not the Commission's intent to imply that a failure to
include the mandatory invoice requirements related to detention and
demurrage charges would void non-detention or demurrage charges that
might appear on the same invoice.
3. Extended Implementation Time Period
Issue: The Commission received four requests for delayed
implementation of the final rule. Two MTOs requested an implementation
date of no less than 120 days from publication of any final rule.\286\
The Intermodal Association of North America (IANA) requested no less
than 90 days, saying that would be the minimum amount of time needed
they would need to make necessary changes to the UIAA associated with
implementation of Sec. 541.7(a).\287\ The third MTO requested delayed
implementation but did not propose a specific timeframe.\288\
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\286\ West Coast MTO Agreement (FMC-2022-0066-0229); Fenix
Marine Services, Ltd. (FMC-2022-0066-0186).
\287\ West Coast MTO Agreement (FMC-2022-0066-0229).
\288\ CMA CGM (America) LLC (FMC-2022-0066-0183).
---------------------------------------------------------------------------
FMC response: The agency is delaying the general effective date of
this rule 90 days from publication in the Federal Register and Sec.
541.6's implementation is delayed pending approval of the associated
Collection of Information by the Office of Management and Budget. The
Commission believes that the additional days of general implementation
together with any additional waiting period for OMB approval of the
Information Collection will provide industry with sufficient time to
implement all changes required by this rule.
4. Requests for Hearing and Additional Public Comment Period
Issue: The Commission received two requests for a hearing so that
the Commission could further hear from stakeholders about impacts and
potential unintended consequences of implementing the rule.\289\
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\289\ National Retail Federation (FMC-2022-0066-0231); National
Industrial Transportation League (FMC-2022-0066-0277).
---------------------------------------------------------------------------
FMC response: After careful consideration, the Commission declines
to establish another round of public comments or to hold the requested
hearings. The Commission has already issued an ANPRM and an NPRM on
this subject. As such, there have been two opportunities for public
comments on these matters. As demonstrated by the number and quality of
the comments received, the Commission believes that the ANPRM and the
NPRM have
[[Page 14356]]
provided the public and interested parties with sufficient opportunity
to comment on the underlying issues. As such, the Commission believes
that a hearing or additional opportunity for public comment is
unnecessary. In addition, the Commission is not making significant
changes to the final regulations such that a Supplementary Notice of
Proposed Rulemaking (SNPRM) would be warranted.
5. Costs and Benefits Analysis
Issue: Three commenters asserted that the Commission did not
adequately assess costs and benefits of the proposed rule in the NPRM
and that the Commission violated Executive Order 13579.\290\
---------------------------------------------------------------------------
\290\ TraPac, LLC (FMC-2022-0066-0136); National Association of
Waterfront Employers (FMC-2022-0066-0276); Port Houston (FMC-2022-
0066-0268).
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FMC response: The Commission provided an estimate of the costs for
regulated entities to implement the proposed rule to be between $6.3
and $12.7 million.\291\ As discussed above with regards to comments
concerning the Paperwork Reduction Act, the Commission did not receive
information from these, or any other commenters, to support changing
that estimate. The Commission highlights for the awareness of these
commenters that, as an independent agency, the Commission is not
subject to the same cost benefit analysis requirements as non-
independent agencies. Executive Order 13579 was written taking into
account the unique nature of independent agencies. The Executive Order
does not require independent agencies to take specific actions, nor
does it impose mandates on independent agencies to comply with
Executive Order 12866, Executive Order 13563, or any other Executive
order.
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\291\ 87 FR 62342, 62356 (Oct. 14, 2022).
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IV. Summary of Final Rule and Changes From the NPRM
Sec. 541.1 Purpose
There are no changes from the text proposed in the NPRM.
Sec. 541.2 Scope and Applicability
This final rule makes minor changes to the text proposed in the
NPRM. In paragraph (a), ``to a billed party or their designated agent''
has been removed. ``To a billed party'' has been removed because part
541 also covers demurrage or detention invoices that are sent to
persons who are not a ``billed party'' as defined in Sec. 541.3. ``Or
their designated agent'' has been removed as the text is unnecessary.
Traditional rules of agency remain applicable under the Shipping
Act.\292\ In paragraph (b), ``regulation'' has been replaced with
``part.'' ``Regulation'' was a scrivener's error in the proposed text.
While ``regulation'' is sometimes used to describe a rule in totality,
it more frequently is used to describe a single section or subsection
of the Code of Federal Regulations. ``Part'' is more precise and, most
importantly, aligns with the Code of Federal Regulation's
organizational taxonomy.
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\292\ E.g., Landstar Exp. Am., Inc. v. Fed. Mar. Comm'n, 569
F.3d 493, 495 (D.C. Cir. 2009).
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Part 541 governs any invoice issued by an ocean common carrier or
non-vessel-operating common carrier for the collection of demurrage or
detention charges. Part 541 does not govern the billing relationships
among and between ocean common carriers and marine terminal operators.
The Commission has not received information about the relationships or
interactions between VOCCs and MTOs that warrants regulating the format
used by MTOs to bill VOCCs. At the present time, the Commission is
confident that the strong commercial relationships between the parties
is enough to ensure that the proper information is shared and that the
party who ultimately receives the invoice is receiving accurate
information. Part 541 does apply to all other demurrage and detention
invoices issued by MTOs. MTOs often do not have direct contractual
relationships with shippers. However, MTOs are entitled to separately
assess demurrage as an implied contract provided that it is published
as part of an MTO Schedule and there are some situations where marine
terminal operators impose fees directly on shippers and NVOCCs. A
primary concern of the Commission is to ensure billed parties
understand the demurrage or detention invoices they receive. Therefore,
in those cases where an MTO charges any party other than a VOCC
detention or demurrage charges, the Commission finds that MTOs should
be subject to the same regulations that apply to VOCCs and NVOCCs.
Sec. 541.3 Definitions
This final rule makes three changes from the text proposed in the
NPRM. ``Billing dispute'' has been removed and ``consignee'' and
``person'' have been added as defined terms. ``Billing dispute'' does
not need to be defined because it is not a term used in Sec. Sec.
541.4-541.99, in either the NPRM or final rule.
Billed party. For purposes of part 541, ``billed party'' means the
person receiving the demurrage or detention invoice and who is
responsible for payment of any incurred demurrage or detention charge.
Billing party. For purposes of part 541, ``billing party'' means
the VOCC, NVOCC, or MTO who issues a demurrage or detention invoice.
While in most cases, the billing party will be a VOCC, this term is
defined broadly to incorporate the occasions when an MTO or an NVOCC
may issue a demurrage or detention invoice.
Consignee. The definition of ``consignee'' that has been added to
Sec. 541.3 comports with the definition of ``consignee'' that appears
in Sec. 520.2.
Demurrage or detention. ``Demurrage or detention'' includes any
charge assessed by common carriers and marine terminal operators
related to the use of marine terminal space or shipping containers. The
scope of the term in Sec. 541.3 is the same as the scope of
``demurrage or detention'' in Sec. 545.5(b). It encompasses all
charges having the purpose or effect of demurrage or detention
regardless of what those charges may be called by the billing party.
The definition excludes charges related to equipment other than
containers, such as chassis, because depending on the context, ``per
diem'' can refer to containers, chassis, or both.
Demurrage or detention invoice. For purposes of part 541,
``demurrage or detention invoice'' means any statement, printed,
written, or accessible online, that documents an assessment of
demurrage or detention charges. This broad definition includes all
currently existing methods of invoicing shipping (e.g., email and
online portal), as well as those that may be developed in the future.
Person. The definition of ``person'' that has been added to Sec.
541.4 aligns with Sec. 515.2(n).
Sec. 541.4 Properly Issued Invoices
This final rule makes changes to the proposed Sec. 541.4 text to
allow consignees to be issued demurrage and detention invoices as an
alternative billed party. The revised regulation makes clear that the
consignee is an alternative billed party, and the same invoice may be
not issued to both the shipper and the consignee. Additionally, the
Commission has made minor, non-substantive changes that aid in clarity.
If the billed party has firsthand knowledge of the terms of a
service contract with a common carrier, then they are in a better
position to ensure that both they and the carrier are abiding by those
terms. When demurrage or detention invoice disputes
[[Page 14357]]
do arise, the billed party is in a better position than third parties
such as truckers and customs brokers to analyze the accuracy of the
charge. Further, when the billed party disputes a charge, they have an
existing commercial relationship with the billing party and are in a
better position to resolve the dispute. Therefore, under this final
rule, a properly issued invoice is an invoice that is issued to: (1)
the person that has contracted with the billing party for the ocean
transportation or storage of cargo, or (2) the consignee (when in
contractual privity with the carrier).
In the final rule, the Commission has changed the word ``goods'' to
``cargo'' in Sec. 541.4(a)(1). ``Cargo'' is a broader term that puts
the focus on the container, rather than the items inside it. As such,
this comports with the rule's focus on the container, as demurrage and
detention charges are levied on the container rather than the items
inside it.
``Contract'' in this rule has its normal and ordinary legal
meaning.\293\ Because contracts (other than contracts implied by law)
require a meeting of the minds, merely listing a party on a bill of
lading, or contract of affreightment, will not be sufficient for them
to become a billed party for purposes of part 541 if they played no
role in contracting for the ocean transportation or storage of cargo.
Whether a meeting of the minds has occurred is something that can vary
based on the specific circumstances of a given relationship. Because a
contract can exist even if not memorialized in writing, the Commission
declines to add a requirement that contracts need to be in writing for
purposes of this rule. The Commission notes, however, that written
contracts can provide important documentary evidence of agreement.
---------------------------------------------------------------------------
\293\ See, e.g., Norfolk Southern Railway Co. v. Kirby, 543 U.S.
14, 16 (2004) (``[C]ontracts for carriage of goods by sea must be
construed like any other contracts: by their terms and consistent
with the intent of the parties''); Contract, Black's Law Dictionary
(11th ed. 2019).
---------------------------------------------------------------------------
Consignees may be billed as an alternative to the shipper when the
consignee is the party contracting for the shipping and is therefore in
contractual privity with the carrier. Merely listing the consignee on
the bill of lading is not sufficient to support billing the consignee.
(Conversely, although rarer, it is possible to properly issue an
invoice to a consignee that has not been listed on the bill of lading.)
This rule does not prohibit or otherwise limit an MTO from issuing
any party--including BCOs or Motor Carriers--an invoice based on a
Terminal Schedule, including charges for detention or demurrage, if the
Terminal Schedule includes such charges and the Schedule has been made
available in accordance with 46 CFR 525.3. As noted by the commenters,
46 U.S.C. 40501(f) and 46 CFR 525.2(a)(2) establish that such Schedules
are enforceable as implied contracts. Under such a scenario, a Motor
Carrier has a contractual relationship with the MTO and the terms of
the contract (the Schedule) are known to the Motor Carrier in advance
by operation of 46 CFR 525.3. This is a very different situation than
where a Motor Carrier is billed for demurrage or detention and the
Motor Carrier has no contractual relationship with the billing party
and is not privy to the specifics of the contractual agreement (such as
where a Motor Carrier is billed demurrage or detention based on an
agreement between a shipper and a billing party).
This rule does require that when an MTO issues a bill for demurrage
or detention for purposes of enforcing a Terminal Schedule, the billing
must comply with part 541, including providing all the information
required by Sec. 541.6. The Commission recognizes that this may
require MTOs to revise their current business practices. As discussed
in the NPRM, the Commission's primary concern with this rule is to
ensure that billed parties understand the demurrage or detention
invoices they receive.\294\ Any additional burden on MTOs to be able to
provide the necessary data, which the Commission does not believe will
be unduly burdensome, is outweighed by the benefits of transparency.
---------------------------------------------------------------------------
\294\ E.g., 87 FR 62341, 62347.
---------------------------------------------------------------------------
The Commission notes that other MTO billing relationships are also
subject to part 541. For example, an MTO issuing a demurrage or
detention invoice in order to collect on behalf of a VOCC or issuing a
demurrage or detention invoice to an NVOCC must comply with part 541.
However, MTOs sometimes require BCOs or their agents to pay freight
charges prior to removal of cargo and those freight charges are
excluded from the definition of ``demurrage and detention'' in Sec.
541.3.
Sec. 541.5 Failure To Include Required Information
Under 46 U.S.C. 41104(f), failure to include any of the required
minimum information in 46 U.S.C. 41104(d) eliminates the obligation of
the charged party to pay the applicable charge. Section 541.5 is
intended to mirror this requirement. To clarify that intent, the
Commission has changed the paragraph from ``applicable invoice'' in the
NPRM to ``applicable charge'' in this final rule. It was not the
agency's intent to imply that non-demurrage or detention charges could
be voided by failure to include the information in Sec. 541.6.
Similarly, pursuant to 46 U.S.C. 41102(c), it is a prohibited
practice for an MTO to fail to include the required minimum information
in a demurrage and detention invoice sent to a party other than a VOCC.
Sending incomplete bills that do not contain sufficient information for
shippers to verify if the bills received are accurate would not
constitute having just and reasonable practices relating to or
connected with receiving, handling, storing or delivering property.
Extending the elimination of charge obligations provision at 46 U.S.C.
41104(f) to MTOs issuing demurrage and detention invoices would enforce
Congress' intent to have the Commission ``further define prohibited
practices by . . . marine terminal operators, . . . under section
41102(c) of title 46, United States Code, regarding the assessment of
demurrage or detention charges'' and ensure that all demurrage and
detention bills sent to billed parties provide the necessary
information for the bills to be paid or disputed quickly thereby
ensuring efficiency across the shipping system.
Sec. 541.6 Contents of Invoice
This final rule makes minor changes to the proposed requirements
regarding digital notification of how a billed party can request fee
mitigation, refund, or waiver as well as minor, non-substantive changes
to align language with OSRA 2022 and the defined terms in Sec. 541.3.
The Commission has made changes throughout the regulation to align
the text to the defined terms in Sec. 541.3. ``Invoice'' has been
replaced with ``demurrage or detention invoice.'' ``Billing date'' and
``billing due date'' have been changed to ``invoice date'' and
``invoice due date.'' Finally, ``invoiced party'' has been changed to
``billed party.''
In response to comments, the Commission has added language that
clearly specifies that the information submitted on the invoice must be
accurate. Inclusion of the language aligns with the language used in 46
U.S.C. 41104(d)(2).
The Commission has amended the introductory sentences of paragraphs
(a), (b), and (c) to make clear that these are minimum information
elements. Billing parties may include additional information on the
invoices and are encouraged to do so if they believe that such
information will be useful to billed parties in verifying the validity
of demurrage and detention charges.
[[Page 14358]]
The Commission has amended paragraph (c)(2) by adding terminal
schedule to the listed examples of documents, and changing ``i.e.,'' to
``e.g.,'' to reflect that this is not an exhaustive list of all
possible documents.
The Commission has amended paragraph (d)(2) to expand the means of
digital notification to billed parties of what they need to do to
successfully submit a fee mitigation, refund, or waiver request. The
language in the proposed rule required that the invoice contain a URL
address that directs the billed party to a publicly accessible website
that provides the necessary information. This final rule has expanded
that to any digital means, including QR codes, or digital watermarks.
Sec. 541.7 Issuance of Demurrage and Detention Invoices
This rule requires detention and demurrage invoices to be issued
within specified timeframes. As the proposed timeframe language was
ambiguous, in this final rule the Commission has clarified that all
``days'' in the regulation are calendar days.
The Commission is retaining the requirement as proposed in the NPRM
that, generally, all demurrage and detention invoices must be issued in
30 days. The Commission has removed the language ``required timeframe''
from the version of Sec. 541.7(a) that appeared in the NPRM in order
to make this subsection clearer. The Commission has revised this
subsection to more explicitly dictate the required timing for purposes
of clarity.
In response to comments received during the NPRM, the Commission
has revised Sec. 541.7 to allow an exception for NVOCCs. That
exception is located in paragraph (b) in this final rule. NVOCCs must
issue demurrage and detention invoices within 30 days from the issuance
date of the demurrage or detention invoice it received. If a billing
party does not issue a demurrage or detention invoice within the
required timeframe, then the billed party is not required to pay the
charge. Paragraph (c) has been added to reflect situations where an
NVOCC is acting as both a billing and billed party in relation to the
same charge, and allows the NVOCC to inform its billing party that the
charge has been disputed by the NVOCC's billed party. In that
circumstance, the NVOCC must provide an additional 30 days for the
NVOCC to dispute the charge upon notice.
The final language of Sec. 541.7(d) has removed the link between a
billing party reissuing an invoice with an incorrectly billed party's
disputing of that invoice. This is consistent with the incentive
present in the rest of the rule. The burden of issuing a correct
invoice should not rely on an incorrectly billed party to dispute the
incorrect invoice. Removing this link is also consistent with several
comments that requested removing the 60-day requirement from Sec.
541.7(d), which applied to bills sent to a correctly billed party
following the billing of an incorrect party. Section 541.7(d) now gives
a billing party 30 calendar days to issue a corrected invoice, which is
consistent with the rule's purpose of a swift timeline for demurrage
and detention billing.
The NPRM's linking a billing party's ability to reissue an invoice
with an incorrectly billed party's disputing that invoice also caused
confusion as to whether there was any interplay between Sec. 541.7 and
Sec. 541.8. The changes to the rule text adopted in this final rule
make clear that Sec. 541.7 spells out the rules for issuing an invoice
to the correctly billed party. By contrast, Sec. 541.8 speaks to a
process that assumes the invoice was sent to the correct party, as the
term ``billed party'' encompasses the fact that it is the correct
party.
Sec. 541.8 Requests for Fee Mitigation, Refund, or Waiver
This rule requires billing parties to allow at least 30 days for
billed parties to submit a fee mitigation, refund, or waiver request.
The Commission has retained the NRPM's proposal that if such a request
is submitted by the billed party, the billing party must resolve the
request within 30 days. However, based on public comments, the
Commission has allowed an exception. A request for fee mitigation,
refund, or waiver may be resolved later than 30 days if both parties
agree to the later date. The Commission has added language to clarify
that the timeframes in the regulation are calendar days. Also based on
public comment, the Commission has removed the penalty provision
proposed in the NPRM that if the billing party fails to resolve the fee
mitigation, refund, or waiver request within the 30-day deadline, the
billed party is not required to pay the charge at issue. This proposed
penalty provision is not a requirement of OSRA 2022.
Section 541.8 does not impact a party's right to file a Charge
Complaint with the Commission. Parties do not need to wait a certain
period of time or for a triggering event to occur prior to filing a
complaint. Parties interested in filing a Charge Complaints at the
Commission may do so by following the steps outlined on the
Commission's website.\295\
---------------------------------------------------------------------------
\295\ Industry Advisory--Interim Procedures for Submitting
``Charge Complaints'' Under 46 U.S.C. 41310--Federal Maritime
Commission--Federal Maritime Commission (fmc.gov) (posted July 14,
2022) (https://www.fmc.gov/industry-advisory-interim-procedures-for-submitting-charge-complaints/).
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When the Commission receives sufficient information, it will
promptly initiate an investigation.\296\
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\296\ Id.
Table 1--Changes From NRPM to Final Rule
----------------------------------------------------------------------------------------------------------------
Section Paragraph Change from NPRM Reason
----------------------------------------------------------------------------------------------------------------
541.2 Scope and applicability........ (a).................... Removes ``to a billed Language unnecessary.
(b).................... party or their Correction of
designated agent''. scrivener's error.
Changes ``regulation''
to ``part''.
541.3 Definitions.................... ``Billing dispute''.... Definition removed..... Language unnecessary.
Correction of
scrivener's error.
Term not used in Sec.
Sec. 541.4-541.99.
``Consignee''.......... Definition added....... Final Rule allows
consignees to be an
alternative billed
party.
``Person''............. Definition added....... Clarification.
541.4 Properly issued invoices....... (a).................... Paragraph divided into Final Rule allows
subparagraphs (a)(1) consignees to be an
and (2); consignees alternative billed
listed as an party.
alternative billed
party.
[[Page 14359]]
``provided ocean The term ``cargo'' was
transportation or added to put the focus
storage'' changed to on the storage of the
``provided ocean container rather than
transportation or the merchandise inside
storage of cargo''. of it and to be
consistent with the
addition of the term
in the second clause.
``for the carriage or The term ``goods'' was
storage of goods'' changed to ``cargo''
changed to ``for the for a broader term
ocean transportation that put the focus on
or storage of cargo''. the container rather
than the merchandise
inside it.
(b).................... Language added stating Clarification.
that invoices cannot
be issued to more than
one party.
(c).................... Formerly paragraph (b). Conforming amendment.
541.5 Failure to include required ``invoice'' changed to Conforms regulatory
information. ``charge''. language to statutory
language.
541.6 Contents of invoice............ Introductory paragraph. removed................ Information
incorporated into
other paragraphs.
(a).................... ``The invoice'' changed Correction of
to ``A demurrage or scrivener's error.
detention invoice''.
``including'' changed Clarification.
to ``and at a minimum
must include''.
In (a)(4), ``invoiced Correction of
party'' changed to scrivener's error.
``billed party''.
``must be accurate'' Clarification.
added.
(b).................... ``The invoice'' changed Correction of
to ``A demurrage or scrivener's error.
detention invoice''.
``including'' changed Clarification.
to ``and at a minimum
must include''.
``must be accurate'' Clarification.
added.
In (b)(1) and (2) Conforming change;
``billing date'' elsewhere in the
changed to ``invoice regulatory text
date''. ``invoice'' is used.
(c).................... ``The invoice'' changed Correction of
to ``A demurrage or scrivener's error.
detention invoice''.
``including'' changed Clarification.
to ``and at a minimum
must include''.
``must be accurate'' Clarification.
added.
In (c)(2) ``(i.e., the Clarification/
tariff name and rule Correction of
number, applicable scrivener's error.
service contract Adds terminal schedule
number and section, or to the list of
applicable negotiated examples and clarifies
arrangement)'' changed that this is a non-
to ``e.g., the tariff exhaustive set of
name and rule number, examples.
terminal schedule,
applicable service
contract number and
section, or applicable
negotiated
arrangement)''.
(d).................... ``The invoice'' changed Correction of
to ``A demurrage or scrivener's error.
detention invoice''.
``including'' changed Clarification.
to ``and at a minimum
must include''.
In (d)(2), ``The URL Expands the means of
address'' changed to digital notification.
``Digital means, such
as a URL address, QR
code, or digital
watermark, that
directs the billed
party to''; ``portion
of the billing party's
website'' removed.
(e).................... ``The invoice'' changed Correction of
to ``A demurrage or scrivener's error.
detention invoice''.
``must be accurate'' Clarification.
added.
541.7 Issuance of demurrage and (a).................... ``30 days'' changed to Clarification.
detention invoice. ``thirty (30) calendar
days''.
``demurrage or Correction of
detention invoices'' scrivener's error.
changed to ``a
demurrage or detention
invoice''.
In the second sentence Clarification.
``the required
timeframe'' changed to
``thirty (30) calendar
days from the date on
which the charge was
last incurred''.
[[Page 14360]]
(b).................... New paragraph added.... Clarifies timeframe for
NVOCCs passing through
demurrage and
detention charges to
issue their own
invoices.
(c).................... New paragraph added.... Clarifies timeframe for
NVOCCs when acting as
both a billing and
billed party in
relation to the same
charge.
(d).................... Formerly paragraph (b). Conforming amendment.
In the first sentence Correction of
``the incorrect scrivener's error and
party'' changed to clarification to
``an incorrect further distinguish an
person''. incorrectly issued
invoice.
``days'' changed to Clarification.
``calendar days''.
In the NPRM, the Shifts burden to the
correct billed party billing party to issue
had to receive the accurate invoices.
invoice within 30 days
from the date of the
dispute, but no later
than 60 days after the
charges were last
incurred. The final
rule instead imposes a
strict 30-calendar-day
deadline from when the
charges were last
incurred for the
issuance of an invoice
to a correct billed
party, regardless of
whether or not there
may have been an
invoice previously
issued to an incorrect
party.
541.8 Requests for fee mitigation, (a).................... Paragraph reworded..... Clarification. The
refund, or waiver. paragraph has been re-
worked for clarity. No
substantive change
from the NPRM; billing
parties must still
allow billed parties
30 days from when an
invoice is issued to
request mitigation,
refund or waiver.
Clarification that the
timeframe is in
calendar days.
(b).................... ``must resolve'' Change promotes good-
changed to ``must faith efforts of
attempt to resolve''. billing and billed
parties to work
resolve disputes.
``30 days'' changed to Clarification.
``thirty (30) calendar
days''.
added ``or at a later Clarification.
date as agreed upon by
both parties'' to the
end of the first
sentence.
``If the billing party Removes non-statutory
fails to resolve the penalty.
fee mitigation,
refund, or waiver
request within the 30-
day deadline, the
billed party is not
required to pay the
charge at issue.''
removed.
----------------------------------------------------------------------------------------------------------------
V. Rulemaking Analyses and Notices
A. Regulatory Flexibility Act
The Regulatory Flexibility Act, 5 U.S.C. 601-612, provides that
whenever an agency is required to publish a notice of proposed
rulemaking under the Administrative Procedure Act (APA), 5 U.S.C. 553,
the agency must prepare and make available for public comment an
initial regulatory flexibility analysis (IRFA) describing the impact of
the proposed rule on small entities, unless the head of the agency
certifies that the rulemaking will not have a significant economic
impact on a substantial number of small entities. 5 U.S.C. 603, 605.
This final rule requires VOCCs, NVOCCs, and MTOs to include minimum
billing information on detention and demurrage invoices. The rulemaking
additionally requires billing parties that issue demurrage and
detention invoices to follow certain billing practices; specifically,
billing parties must issue demurrage and detention invoices within 30
calendar days from when charges stop accruing. See 87 FR at 27975-
27976.
The Commission presumes that VOCCs and MTOs generally do not
qualify as small entities under the guidelines of the Small Business
Administration (SBA). The Commission previously stated that VOCCs and
MTOs generally are large companies that exceed the employee (500) and/
or annual revenue ($21.5 million) thresholds to be considered small
business entities. However, the Commission presumes that NVOCCs are
small business entities.
There are likely two types of costs imposed by the proposed
rulemaking on the affected businesses. The imposition of a 30-calendar
day deadline to issue an invoice from when demurrage and detention
charges stop accruing could result in a loss of revenue to the billing
[[Page 14361]]
party. In addition, the minimum billing information requirements
imposed by the proposed rule may require the billing party to collect
additional information and change its billing information technology
system to include all the required information on invoices.
Most of the costs of the rulemaking will be borne by VOCCs and MTOs
as they generally assess demurrage and detention charges, and not
NVOCCs. As discussed above, in most cases, NVOCCs pass through
detention and demurrage charges billed to them on invoices generated by
VOCCs or MTOs. Accordingly, NVOCCs should receive the minimum billing
information required by the proposed rule from either the VOCC or MTO
issuing the invoice.
For these reasons, the Chairman of the Federal Maritime Commission
certifies that this rule will not have a significant economic impact on
a substantial number of small entities.
B. Congressional Review Act
The rule is not a ``major rule'' as defined by the Congressional
Review Act (5 U.S.C. 801 et seq). The rule will not result in: (1) An
annual effect on the economy of $100,000,000 or more; (2) a major
increase in costs or prices; or (3) significant adverse effects on
competition, employment, investment, productivity, innovation, or the
ability of United States-based companies to compete with foreign based
companies. 5 U.S.C. 804(2).
C. National Environmental Policy Act
The National Environmental Policy Act of 1969 (NEPA) (42 U.S.C.
4321-4347) requires Federal agencies to consider the environmental
impacts of proposed major Federal actions significantly affecting the
quality of the human environment, as well as the impacts of
alternatives to the proposed action. When a Federal agency prepares an
environmental assessment, the Council on Environmental Quality (CEQ)
NEPA implementing regulations (40 CFR parts 1500-1508) require it to
``include brief discussions of the need for the proposal, of
alternatives [. . .], of the environmental impacts of the proposed
action and alternatives, and a listing of agencies and persons
consulted.'' 40 CFR 1508.9(b). After an environmental assessment, the
Commission issued a Finding of No Significant Impact (``FONSI''), 87 FR
73278 (Nov. 29, 2022), and explained that the FONSI would become final
10 days after publication unless a petition for review was filed with
FMC by Dec. 9, 2022. (The World Shipping Council and Pacific Merchant
Shipping Association jointly filed a petition for review on December 9,
2022.\297\ FMC denied the petition on January 6, 2023.\298\). The FONSI
and environmental assessment, as well as the petition and the
Commission's denial of the petition are available for inspection in the
docket at www.regulations.gov.
---------------------------------------------------------------------------
\297\ FMC-2022-0066-0162.
\298\ FMC-2022-0066-0278.
---------------------------------------------------------------------------
D. Paperwork Reduction Act
This final rule calls for a collection of information under the
Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). As defined in 5
CFR 1320.3(c), ``Collection of Information'' comprises reporting,
recordkeeping, monitoring, posting, labeling, and other, similar
actions. In compliance with the PRA, the Commission submitted the
proposed information collection to the Office of Management and Budget.
Notice of the information collections was published in the Federal
Register and public comments were invited. 87 FR 62341, 62356 (Oct. 14,
2022). Neither the Commission nor OMB received any comments that
impacted the FMC's burden calculation or provided additional
information to improve the calculation estimate.
The title and description of the information collections, a
description of those who must collect the information, and an estimate
of the total annual burden follow. The estimate covers the time for
reviewing instructions, searching existing sources of data, gathering
and maintaining the data needed, and completing and reviewing the
collection.
Title: 46 CFR Part 541--Demurrage and Detention Billing Requirements
Summary of the Collection of Information: Title 46 U.S.C.
41104(a)(15) and (d)(2), as well as 46 CFR part 541 subpart A, require
demurrage and detention invoices to contain certain additional
information to increase transparency so that billed parties can
identify the containers at issue, the applicable rate, dates for which
charges accrued, and how to dispute charges. Further, 46 U.S.C.
41104(d)(2) and 46 CFR part 541 also require demurrage and detention
invoices to certify that the charges comply with applicable regulatory
provisions and that the invoicing party's behavior did not contribute
to the charges.
Need for Information: The Commission identifies information that
entities must include on demurrage and detention invoices to ensure
compliance with the Shipping Act of 1984, as amended. Specifically, 46
CFR part 541 subpart A implements the billing information requirements
contained in 46 U.S.C. 41104(d)(2) and adds additional minimum
information that billing parties must include on demurrage and
detention invoices.
Frequency: The frequency of demurrage and detention invoices is
determined by the billing party. It is the billing entity's
responsibility to ensure that their demurrage and detention charges
comply with applicable statutory and regulatory provisions. The
Commission estimates that between five and ten percent of all
containers moving in U.S.-foreign trade will receive a demurrage and/or
detention invoice or an estimated range of 1,135,000 and 2,270,000
invoices annually.
Type of Respondents: VOCCs, MTOs, and NVOCCs are required to
include specific information on their demurrage and detention invoices
sent to billed parties.
Number of Annual Respondents: The Commission anticipates an annual
respondent universe of 354 VOCCs and MTOs. The Commission did not
include NVOCCs in its annual respondent universe because in most, if
not all cases, NVOCCs pass through the demurrage and detention charges
it receives to their customers. Because NVOCCs are passing through the
charges, they are not collecting the required minimum information
themselves.
Estimated Time per Response: The Commission estimates a one-time
burden of an estimated 25 hours per respondent to integrate the
required billing information elements into their existing invoicing
system. After this initial burden, the Commission anticipates that the
estimated time to create and retain each demurrage or detention invoice
to be six minutes or 0.1 hours.
Total Annual Burden: The Commission estimates a one-time burden for
respondents to integrate the additional billing information elements,
required by OSRA 2022 and by the proposed rule, into their existing
invoicing system to be 8,850 person-hours and $882,522. After this
initial integration, the Commission estimates the total annual burden
to provide demurrage and detention invoices and to ensure accuracy to
be 113,500-227,000 person-hours and $6,339,020-$12,678,040.
As required by the Paperwork Reduction Act of 1995 (44 U.S.C.
3507(d)), we have submitted a copy of this rule to the Office of
Management
[[Page 14362]]
and Budget (OMB) for its review of the collection of information.
Before the Commission may enforce the collection of information
requirements in this rule, OMB must approve FMC's request to collect
this information. You need not respond to a collection of information
unless it displays a currently valid control number from OMB.
E. Executive Order 12988 (Civil Justice Reform)
This rule meets the applicable standards in E.O. 12988, ``Civil
Justice Reform,'' (61 FR 4729, Feb. 7, 1996) to minimize litigation,
eliminate ambiguity, and reduce burden.
List of Subjects in 46 CFR Part 541
Demurrage and detention; Common carriers; Exports; Imports; Marine
terminal operators.
For the reasons set forth in the preamble, the Federal Maritime
Commission amends title 46 of the CFR by adding part 541 to read as
follows:
0
1. Add part 541 to read as follows:
PART 541--DEMURRAGE AND DETENTION
Sec.
Subpart A--Billing Requirements and Practices
541.1 Purpose.
541.2 Scope and applicability.
541.3 Definitions.
541.4 Properly issued invoice.
541.5 Failure to include required information.
541.6 [Reserved]
541.7 Issuance of demurrage and detention invoice.
541.8 Requests for fee mitigation, refund, or waiver.
541.9-541.99 [Reserved]
Subpart B [Reserved]
Authority: 5 U.S.C. 553; 46 U.S.C. 40101, 40102, 40307, 40501-
40503, 41101-41106, 40901-40904, and 46105; and 46 CFR 515.23.
Subpart A--Billing Requirements and Practices
Sec. 541.1 Purpose.
This part establishes the minimum information that must be included
on or with demurrage and detention invoices. It also establishes
procedures that must be adhered to when invoicing for demurrage or
detention.
Sec. 541.2 Scope and applicability.
(a) This part sets forth regulations governing any invoice issued
by an ocean common carrier, marine terminal operator, or non-vessel-
operating common carrier for the collection of demurrage or detention
charges.
(b) This part does not govern the billing relationships among and
between ocean common carriers and marine terminal operators.
Sec. 541.3 Definitions.
In addition to the definitions set forth in 46 U.S.C. 40102, when
used in this part:
Billed party means the person receiving the demurrage or detention
invoice and who is responsible for the payment of any incurred
demurrage or detention charge.
Billing party means the ocean common carrier, marine terminal
operator, or non-vessel-operating common carrier who issues a demurrage
or detention invoice.
Consignee means the ultimate recipient of the cargo; the person to
whom final delivery of the cargo is to be made.
Demurrage or detention mean any charges, including ``per diem''
charges, assessed by ocean common carriers, marine terminal operators,
or non-vessel-operating common carriers related to the use of marine
terminal space (e.g., land) or shipping containers, but not including
freight charges.
Demurrage or detention invoice means any statement of charges
printed, written, or accessible online that documents an assessment of
demurrage or detention charges.
Person means an individual, corporation, or company, including a
limited liability company, association, firm, partnership, society, or
joint stock company existing under or authorized by the laws of the
United States or of a foreign country.
Sec. 541.4 Properly issued invoices.
(a) A properly issued invoice is a demurrage or detention invoice
issued by a billing party to:
(1) The person for whose account the billing party provided ocean
transportation or storage of cargo and who contracted with the billing
party for the ocean transportation or storage of cargo; or
(2) The consignee.
(b) If a billing party issues a demurrage or detention invoice to
the person identified in paragraph (a)(1) of this section, it cannot
also issue a demurrage or detention invoice to the person identified in
paragraph (a)(2) of this section.
(c) A billing party cannot issue an invoice to any other person.
Sec. 541.5 Failure to include required information.
Failure to include any of the required minimum information in this
part in a demurrage or detention invoice eliminates any obligation of
the billed party to pay the applicable charge.
Sec. 541.6 [Reserved]
Sec. 541.7 Issuance of demurrage and detention invoices.
(a) A billing party must issue a demurrage or detention invoice
within thirty (30) calendar days from the date on which the charge was
last incurred. If the billing party does not issue a demurrage or
detention invoice within thirty (30) calendar days from the date on
which the charge was last incurred, then the billed party is not
required to pay the charge.
(b) If the billing party is a non-vessel-operating common carrier,
then it must issue a demurrage or detention invoice within thirty (30)
calendar days from the issuance date of the demurrage or detention
invoice it received. If such a billing party does not issue a demurrage
or detention invoice within thirty (30) calendar days from the issuance
date of the demurrage or detention invoice it received, then the billed
party is not required to pay the charge.
(c) A non-vessel-operating common carrier (NVOCC) can be both a
billing and billed party in relation to the same charge. When an NVOCC
is acting in both roles, it can inform its billing party that the
charge has been disputed by the NVOCC's billed party. The NVOCC's
billing party must then provide an additional thirty (30) calendar days
for the NVOCC to dispute the charge upon this notice.
(d) If the billing party invoices an incorrect person, the billing
party may issue an invoice to the correct billed party provided that
such issuance is within thirty (30) calendar days from the date on
which the charge was last incurred. If the billing party does not issue
this corrected demurrage or detention invoice within thirty (30)
calendar days from the date on which the charge was last incurred, then
the billed party is not required to pay the charge.
Sec. 541.8 Requests for fee mitigation, refund, or waiver.
(a) The billing party must allow the billed party at least thirty
(30) calendar days from the invoice issuance date to request
mitigation, refund, or waiver of fees from the billing party.
(b) If a billing party receives a fee mitigation, refund, or waiver
request from a billed party, the billing party must attempt to resolve
the request within thirty (30) calendar days of receiving such a
request or at a later date as agreed upon by both parties.
[[Page 14363]]
Sec. 541.9-541.99 [Reserved]
0
2. Delayed indefinitely, add Sec. 541.6 to read as follows:
Sec. 541.6 Contents of invoice.
(a) Identifying information. A demurrage or detention invoice must
be accurate and contain sufficient information to enable the billed
party to identify the container(s) to which the charges apply and at a
minimum must include:
(1) The Bill of Lading number(s);
(2) The container number(s);
(3) For imports, the port(s) of discharge; and
(4) The basis for why the billed party is the proper party of
interest and thus liable for the charge.
(b) Timing information. A demurrage or detention invoice must be
accurate and contain sufficient information to enable the billed party
to identify the relevant time for which the charges apply and the
applicable due date for invoiced charges and at a minimum must include:
(1) The invoice date;
(2) The invoice due date;
(3) The allowed free time in days;
(4) The start date of free time;
(5) The end date of free time;
(6) For imports, the container availability date;
(7) For exports, the earliest return date; and
(8) The specific date(s) for which demurrage and/or detention were
charged.
(c) Rate information. A demurrage or detention invoice must be
accurate and contain sufficient information to enable the billed party
to identify the amount due and readily ascertain how that amount was
calculated and must include at a minimum:
(1) The total amount due;
(2) The applicable detention or demurrage rule (e.g., the tariff
name and rule number, terminal schedule, applicable service contract
number and section, or applicable negotiated arrangement) on which the
daily rate is based; and
(3) The specific rate or rates per the applicable tariff rule or
service contract.
(d) Dispute information. A demurrage or detention invoice must be
accurate and contain sufficient information to enable the billed party
to readily identify a contact to whom they may direct questions or
concerns related to the invoice and understand the process to request
fee mitigation, refund, or waiver, and at a minimum must include:
(1) The email, telephone number, or other appropriate contact
information for questions or request for fee mitigation, refund, or
waiver;
(2) Digital means, such as a URL address, QR code, or digital
watermark, that directs the billed party to a publicly accessible
website that provides a detailed description of information or
documentation that the billed party must provide to successfully
request fee mitigation, refund, or waiver; and
(3) Defined timeframes that comply with the billing practices in
this part, during which the billed party must request a fee mitigation,
refund, or waiver and within which the billing party will resolve such
requests.
(e) Certifications. A demurrage or detention invoice must be
accurate and contain statements from the billing party that:
(1) The charges are consistent with any of the Federal Maritime
Commission's rules related to demurrage and detention, including, but
not limited to, this part and 46 CFR 545.5; and
(2) The billing party's performance did not cause or contribute to
the underlying invoiced charges.
0
3. Delayed indefinitely, add Sec. 541.99 to read as follows:
Sec. 541.99 OMB control number assigned pursuant to the Paperwork
Reduction Act.
The Commission has received Office of Management and Budget
approval for this collection of information pursuant to the Paperwork
Reduction Act of 1995, as amended. The valid control number for this
collection of information is 3072-XXXX.
Subpart B [Reserved]
By the Commission.
David Eng,
Secretary.
[FR Doc. 2024-02926 Filed 2-23-24; 8:45 am]
BILLING CODE 6730-02-P
