Interpretive Rule on Demurrage and Detention Under the Shipping Act
| Citation | 84 FR 48850 |
| Record Number | 2019-19858 |
| Published date | 17 September 2019 |
| Court | Federal Maritime Commission |
Federal Register, Volume 84 Issue 180 (Tuesday, September 17, 2019)
[Federal Register Volume 84, Number 180 (Tuesday, September 17, 2019)]
[Proposed Rules]
[Pages 48850-48856]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-19858]
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FEDERAL MARITIME COMMISSION
46 CFR Part 545
[Docket No. 19-05]
RIN 3072-AC76
Interpretive Rule on Demurrage and Detention Under the Shipping
Act
AGENCY: Federal Maritime Commission.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Federal Maritime Commission is seeking public comment on
its interpretation of the Shipping Act prohibition against failing to
establish, observe, and enforce just and reasonable regulations and
practices relating to or connected with receiving, handling,
[[Page 48851]]
storing, or delivering property with respect to demurrage and
detention. Specifically, the Commission is providing guidance as to
what it will consider in assessing whether a demurrage or detention
practice is unjust or unreasonable.
DATES: Submit comments on or before: October 17, 2019.
ADDRESSES: You may submit comments, identified by the Docket No. 19-05
by the following methods:
Email: [email protected]. Include in the subject line:
``Docket 19-05, Demurrage & Detention Comments.'' Comments should be
attached to the email as a Microsoft Word or text-searchable PDF
document. Only non-confidential and public versions of confidential
comments should be submitted by email.
Mail: Rachel E. Dickon, Secretary, Federal Maritime
Commission, 800 North Capitol Street NW, Washington, DC 20573-0001.
Instructions: For detailed instructions on submitting
comments, including requesting confidential treatment of comments, and
additional information on the rulemaking process, see the Public
Participation heading of the SUPPLEMENTARY INFORMATION section of this
document. Note that all comments received will be posted without change
to the Commission's website, unless the commenter has requested
confidential treatment.
Docket: For access to the docket to read background
documents or comments received, go to the Commission's Electronic
Reading Room at: https://www2.fmc.gov/readingroom/proceeding/19-05/, or
to the Docket Activity Library at 800 North Capitol Street NW,
Washington, DC 20573, 9:00 a.m. to 5:00 p.m., Monday through Friday,
except Federal holidays. Telephone: (202) 523-5725.
FOR FURTHER INFORMATION CONTACT: Rachel E. Dickon, Secretary; Phone:
(202) 523-5725; Email: [email protected].
SUPPLEMENTARY INFORMATION:
I. Introduction
In 2018, the Commission initiated a non-adjudicatory fact-finding
investigation, Fact Finding Investigation No. 28, into the conditions
and practices relating to detention, demurrage, and free time.\1\ On
December 7, 2019, the Commission voted to accept the investigation's
Final Report, in which the Fact-Finding Officer found that:
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\1\ Fact Finding Investigation No. 28 Order of Investigation
(Mar. 5, 2018) (``Order of Investigation''), https://www2.fmc.gov/readingroom/docs/FF%20No.%2028/ff-28_ord2.pdf/.
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Demurrage and detention are valuable charges when applied
in ways that incentivize cargo interests to move cargo promptly from
ports and marine terminals;
All international supply chain actors could benefit from
transparent, consistent, and reasonable demurrage and detention
practices, which would improve throughput velocity at U.S. ports, allow
for more efficient use of business assets, and result in administrative
savings; and
Focusing port and marine terminal operations on notice of
actual cargo availability would achieve the goals of demurrage and
detention practices and improve the performance of the international
commercial supply chain.\2\
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\2\ Fact Finding Investigation No. 28 Final Report (``Final
Report''), https://www2.fmc.gov/readingroom/docs/FF%20No.%2028/FF-28_FR.pdf/.
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Based on the Fact Finding's Final Report, Interim Report,\3\ and
investigatory record, the Commission is considering incorporating those
findings in guidance as to the Commission's interpretation of 46 U.S.C.
41102(c) and 46 CFR 545.4(d) in the context of demurrage and detention.
Although each Sec. 41102(c) case would continue to be decided on the
particular facts of the case, the Commission believes that guidance in
the form of a non-exclusive list of considerations will promote
fluidity in the U.S. freight delivery system by ensuring that demurrage
and detention serve their purpose of incentivizing cargo and equipment
velocity. The proposed interpretive rule will also mitigate confusion,
reduce and streamline disputes, and enhance competition and innovation
in business operations and policies. The Commission is issuing this
notice to obtain public comments on this guidance.
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\3\ Fact Finding Investigation No. 28 Interim Report (``Interim
Report''), https://www2.fmc.gov/readingroom/docs/FF%20No.%2028/FF28_int_rpt2.pdf/.
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II. Background
This notice of proposed rulemaking arises from the Commission's
Fact Finding Investigation No. 28, which itself derived from repeated
criticisms of ocean carrier and marine terminal operator demurrage and
detention practices.\4\ The investigation was nationwide and industry-
wide in scope and involved thousands of pages of written discovery and
interviews with numerous representatives of cargo interests (shippers
and consignees), truckers, ocean transportation intermediaries, ocean
carriers, marine terminal operators, and ports.\5\
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\4\ See, e.g., Coalition for Fair Port Practices Petition for
Rulemaking, FMC Dkt. No. P4-16 (Dec. 7, 2016), https://www2.fmc.gov/readingroom/docs/P4-16/P4-16_petition.pdf/; Fed. Mar. Comm'n, U.S.
Container Port Congestion & Related International Supply Chain
Issues: Causes, Consequences, and Challenges (July 2015), https://www.fmc.gov/wp-content/uploads/2019/04/PortForumReport_FINALwebAll.pdf; (Fed. Mar. Comm'n Report: Rules,
Rates, and Practices Relating to Detention, Demurrage, and Free Time
for Containerized Imports and Exports Moving Through Selected United
States Ports (Apr. 3, 2015), https://www.fmc.gov/wp-content/uploads/2019/04/reportdemurrage.pdf.
\5\ Interim Report at 4-5; Final Report at 7-9, 11; Fact Finding
Investigation No. 28 Order (Dec. 17, 2018), https://www2.fmc.gov/readingroom/docs/FF%20No.%2028/FF-28_Ord.pdf/.
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The Fact-Finding Officer found that the primary purposes of
demurrage and detention are to serve as financial incentives to
encourage the productive use of assets (containers and terminal space)
and promote optimal cargo velocity through marine terminals.\6\ The
Fact Finding Officer further found that the U.S. international ocean
freight delivery system, and American economy, would benefit from: (1)
``Transparent, standardized language for demurrage and detention
practices;'' (2) ``Clear, simplified, and accessible demurrage and
detention billing practices and dispute resolution processes;'' (3)
``Explicit guidance regarding the types of evidence relevant to
resolving demurrage and detention disputes;'' and (4) ``Consistent
notice to cargo interests of container availability.'' \7\
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\6\ See Final Report at 28-29.
\7\ Final Report at 32. Although not the subject of this
rulemaking, current variations in chassis supply models have
frequently contributed to serious inefficiencies in the freight
delivery system. Timely and reliable access to roadworthy chassis is
a source of ongoing and systemic stress to the system.
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III. Summary of Proposed Guidance
The guidance proposed by the Commission is in the form of an
interpretive rule.\8\ The proposed rule concerns financial incentives,
particularly with respect to cargo availability, empty container
return, notice of availability, and government inspections; accessible
and user-friendly demurrage and detention policies; and transparent,
consistent terminology. The following consists of the text of the
proposed rule and comments on each subparagraph.
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\8\ An interpretive rule is an agency rule that clarifies or
explains existing laws or regulations.
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A. Purpose and Scope of Proposed Rule
The Commission's proposed rule would first specify that its purpose
is to provide guidance about how the
[[Page 48852]]
Commission will interpret 46 U.S.C. 41102(c) and 46 CFR 545.4(d) in the
context of demurrage and detention The proposed interpretive rule would
also make clear that it applies to practices and regulations relating
to demurrage and detention for containerized cargo. For purposes of
this rule, demurrage and detention would include any charges, including
``per diem,'' assessed by ocean common carriers, marine terminal
operators, or ocean transportation intermediaries (``regulated
entities'') related to the use of marine terminal space (e.g., land) or
shipping containers, not including freight charges.
As for the scope and applicability of the proposed rule, first, it
defines ``demurrage and detention'' broadly to encompass all charges
customarily referred to as demurrage, detention, or per diem, however
defined.\9\ Second, the proposed rule would only apply to containerized
cargo, including refrigerated (``reefer'') containers. Third, the
proposed rule makes clear that it applies to charges related to
shipping containers, not other equipment, such as chassis.\10\
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\9\ The definitions of the terms ``demurrage,'' ``detention,''
and ``per diem'' vary among ocean carriers and marine terminal
operators. Interim Report at 4 n.3, 5-7; Final Report at 11-12, 30.
\10\ Although the Fact-Finding Officer in some contexts defined
``detention'' in terms of ``equipment,'' Interim Report at 5 n.3,
the reports discussed containers, e.g., Final Report at 30.
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B. Incentive Principle
1. General Incentive Approach
The Commission proposes that in assessing the reasonableness of
demurrage and detention practices and regulations, it will consider the
extent to which demurrage and detention are serving their intended
purposes as financial incentives to promote freight fluidity.
To pass muster under Sec. 41102(c), ``a regulation or practice
must be tailored to meet its intended purpose.'' \11\ The intended
purposes of demurrage and detention charges are to incentivize cargo
movement and the productive use of assets (containers and port or
terminal land)--a point which ocean carriers and marine terminal
operators have repeatedly emphasized to the Commission.\12\ The
``incentive principle'' in the proposed rule is merely an application
of the general Sec. 41102(c) reasonableness standard to the demurrage
and detention context.
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\11\ Distribution Services, Ltd. v. Trans-Pac. Freight
Conference of Japan and Its Member Lines, 24 S.R.R. 714, 722 (FMC
1988).
\12\ Interim Report at 2-3; Final Report at 12, 13.
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As Fact-Finding Investigation No. 28 made clear, demurrage and
detention are valuable charges when they work--when they are applied in
ways that incentivize cargo interests to move cargo promptly from ports
and marine terminals.\13\ When circumstances are such that demurrage
and detention do not work, i.e., when they do not incentivize cargo
movement and productive asset use, there is cause to question the
reasonableness of their application. For instance, if a cargo interest
or its trucker cannot retrieve cargo from a marine terminal because the
cargo is not available for retrieval due to circumstances such as
weather, port or terminal closures, the container is in a closed area,
or government inspections of the cargo, demurrage would not serve as an
effective incentive for cargo retrieval.
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\13\ See, e.g., Final Report at 3, 32.
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The proposed rule states the incentive principle in general terms,
but its application will vary depending on the facts of a given case.
For example, under the incentive principle, absent extenuating
circumstances, demurrage and detention practices and regulations that
do not provide for a suspension of charges when circumstances are such
that demurrage and detention are incapable of serving their purpose
would likely be found unreasonable.\14\ An example of an extenuating
circumstance is whether a cargo interest has complied with its
customary responsibilities, especially regarding cargo retrieval (e.g.,
making appointments, paying freight, submitting required paperwork,
retaining a trucker). If it has not, this could be factored into the
analysis. Another application of the incentive principle is if cargo
cannot be retrieved, or empty containers cannot be returned, due to a
lack of appointments, demurrage and detention cannot incentivize cargo
retrieval or equipment return. The Commission may therefore consider in
the reasonableness analysis how demurrage and detention practices and
regulations account for the availability of appointments.
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\14\ There appears to be little appetite for more free time
generally, and there is reason to question whether, in some
situations, a one-day extension of free time would adequately
mitigate one day of cargo unavailability.
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Particularly significant applications of the incentive principle
involve cargo availability, empty container return, notice of cargo
availability, and government inspections, as set forth below.
2. Cargo Availability
As for particular applications of the ``incentive principle,'' the
proposed interpretive rule would clarify that the Commission may
consider in the reasonableness analysis the extent to which demurrage
practices and regulations relate demurrage or free time to cargo
availability for retrieval.
A particularly important context for the incentive principle, and
one given its own subparagraph in the proposed rule, is cargo
availability. If cargo interests or truckers cannot pick up their cargo
within free time, then demurrage cannot serve its incentive purpose.
Cargo availability is key to demurrage serving its intended function,
and thus the Commission may consider the relationship between demurrage
and cargo availability in its analysis under 46 U.S.C. 41102(c).\15\
The more a demurrage practice is tailored to cargo availability, the
less likely the practice is to be found unreasonable.
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\15\ See Final Report at 3, 26-29; see also id. at 32
(``Focusing port and marine terminal operations on notice of actual
cargo availability would achieve the goals of demurrage and
detention practices and improve the performance of the international
commercial supply chain.'').
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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.\16\ Examples of demurrage practices that are
expressly linked to container availability, and which the Commission
would weigh positively in the reasonableness analysis, include: (a)
Starting the free time clock upon container availability as opposed to
container discharge from a vessel; (b) public notice of terminal yard
closures; and (c) stopping a demurrage or free time clock when a
container is rendered unavailable, such as upon notice of a yard or
terminal closure or when a trucker cannot get an appointment
[[Page 48853]]
within a reasonable time of it becoming available.\17\
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\16\ Final Report at 20. ``A container is in an open area when
it is in an area from which it can be retrieved. In contrast, a
closed area is a section of a container yard in which a ship is
being worked. When a container is in a closed area, it cannot be
retrieved for safety and labor reasons.'' Final Report at 16 n.19.
Not every marine terminal has open and closed areas. Id. Another
things that might impact availability is whether a trucker has
access to a terminal (e.g., has an appointment and there is an
absence of congestion). Final Report at 20. During the
investigation, some suggested that a container should be deemed
unavailable if the wait for truckers outside the terminal gate is
longer than fifteen minutes or the total wait time for truckers
(inside and outside the terminal gate) exceeds ninety minutes.
\17\ Final Report at 16, 20-22.
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3. Empty Container Return
The proposed interpretive rule would also indicate that absent
extenuating circumstances, practices and regulations that provide for
imposition of detention when it does not serve its incentivizing
purposes, such as when empty containers cannot be returned, are likely
to be found unreasonable.
The flip side of cargo availability is empty container return.
Absent extenuating circumstances, practices and regulations that result
in detention being imposed when a container cannot be returned weigh
heavily in favor of a finding of unreasonableness. The paradigmatic
example is that if the marine terminal designated by an ocean carrier
refuses to accept empty containers, no amount of detention can
incentivize the return of those containers. Absent extenuating
circumstances, assessing detention in such situations, or declining to
pause the free time or detention clock, would likely be unreasonable.
Imposing detention in situations of uncommunicated or untimely
communicated changes in container return location also weighs on the
side of unreasonableness, as might doing so when there have been
uncommunicated or untimely communicated notice of terminal closures for
empties.
4. Notice of Cargo Availability
Additionally, the Commission would clarify that in assessing the
reasonableness of demurrage practices and regulations, it may consider
whether and how regulated entities provide notice to cargo interests
that cargo is available for retrieval. The Commission would consider
the type of notice, to whom notice is provided, the format of notice,
method of distribution of notice, the timing of notice, and the effect
of the notice.
This subparagraph promotes aligning cargo retrieval processes
around notice that cargo is available.\18\ The Commission will consider
in the reasonableness analysis whether and how regulated entities
provide notice to cargo interests that cargo is available for
retrieval. The more notice is calculated to apprise cargo interests
that cargo is available for retrieval, the more this factor favors a
finding of reasonableness.
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\18\ Interim Report at 4 (emphasizing importance of consistent
notice to shippers of cargo availability); see also id. at 18.
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The Commission may consider the type of notice. Types of notice
that are expressly linked to cargo availability will weigh toward
reasonableness, and include: (a) Notice that cargo is discharged and in
an open area; (b) notice that cargo is discharged, in an open area,
free of holds, and proper paperwork has been submitted; and (c) notice
of all the above and that an appointment is available.
Other factors include to whom notice is provided, the format and
method of distribution of notice, the timing of notice, and the effect
of notice. The more these factors align with the goal of moving cargo
off terminal property, the less likely demurrage practices would be
found unreasonable. For instance, while the Commission appreciates that
many marine terminal operators make container status information
available on websites and allow users to register to get electronic
notice of changes in container status, cargo interests have
persuasively explained the superior merits of ``push notifications''
related to cargo availability, including notice of yard closures.\19\
Moreover, the Commission will consider how demurrage and detention
practices account for cargo availability changes, such as when a
container that is initially available becomes unavailable.\20\
Regarding the effect of notice, demurrage practices that link the start
of free time to notice that a container is available weigh in favor of
reasonableness, as do practices that guarantee the availability of an
appointment within a specified time of notice of container
availability.
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\19\ Final Report at 20.
\20\ See Final Report at 29.
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5. Government Inspections
The Commission is still considering its guidance related to
government inspections of cargo. Imposition of demurrage and detention
during government inspections of cargo, and the delays associated with
such inspections, is a significant problem for cargo interests and
truckers. Such inspections not only involve cargo interests and
regulated entities but also government agencies, third-parties, and, in
some cases, off-terminal facilities. In light of the incentive
principle, the Commission is considering the following interpretive
rules:
In the absence of extenuating circumstances, demurrage and
detention practices and regulations that provide for the escalation of
demurrage or detention while cargo is undergoing government inspection
are likely to be found unreasonable;
In the absence of extenuating circumstances, demurrage and
detention practices and regulations that do not provide for mitigation
of demurrage or detention while cargo is undergoing government
inspection, such as by waiver or extension of free time, are likely to
be found unreasonable; or
In the absence of extenuating circumstances, demurrage and
detention practices and regulations that lack a cap on the amount of
demurrage or detention that may be imposed while cargo is undergoing
government inspection are likely to be found unreasonable.
The Commission is particularly interested in comments on such
proposals and other suggestions for handling demurrage and detention in
the context of government inspections, consistent with the incentive
principle.
C. Demurrage and Detention Policies
The Commission further proposes making clear that it may consider
in the reasonableness analysis the existence and accessibility of
policies implementing demurrage and detention practices and
regulations, including dispute resolution policies. In assessing
dispute resolution policies, the Commission would further consider the
extent to which they contain information about points of contact,
timeframes, and corroboration requirements.
1. Existence and Accessibility of Policies
Cargo interests should be informed of who is being charged, for
what, by whom, and how disputes can be addressed in a timely
fashion.\21\ The opacity of current practices encourages disputes and
discourages competition over demurrage and detention charges.
Accordingly, the proposed rule would have the Commission consider in
the reasonableness analysis the existence of policies--whether a
regulated entity has demurrage and detention policies that reflect its
practices. The Commission would also consider the accessibility of
policies--whether and how those policies are made available to cargo
interests and truckers and the public. The more accessible these
policies are, the greater this factor weighs against a finding of
unreasonableness. This factor favors demurrage and detention practices
and regulations that make policies available in one, easily
[[Page 48854]]
accessible website, whereas burying demurrage and detention policies in
scattered sections in tariffs would be disfavored.\22\
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\21\ The Fact-Finding Officer noted that there is a marked lack
of transparency regarding demurrage and detention practices,
including billing procedures and dispute resolution processes.
Interim Report at 2, 4, 5, 10-12; Final Report at 7, 13-18, 29; see
also Final Report at 32 (emphasizing need for clear, simplified, and
accessible billing practices and dispute resolution processes and
explicit guidance on evidence).
\22\ Interim Report at 17 (Part IV.2a); Final Report at 14, 29-
30.
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As for dispute resolution policies, not only should they be
accessible, but the Commission will consider whether they address
things such as points of contact for disputing charges; time frames for
raising disputes, for responding to cargo interests or truckers, and
for resolving disputes; and the types of information or evidence
relevant to resolving demurrage or detention disputes.\23\ Other
attributes of dispute resolution policies that will weigh in favor of
reasonableness include step-by-step instructions for disputing a
charge, dedicated dispute resolution staff at regulated entities,
allowing priority appointments or waiving appointments after successful
dispute resolution or when a container is not available; sufficient
responses to cargo interests requests for free time extensions or
waiver; processes for elevating disputes after an initial response; and
allowing a trucker to continue to do business with a regulated entity
during the pendency of a dispute.
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\23\ See Interim Report at 14, 17-18; Final Report at 7-8, 17-
18.
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As an example, the best practices proposal put forward by the Ocean
Carrier Equipment Management Association (OCEMA)--and made available on
OCEMA's website--is a useful model for demurrage and detention dispute
resolution policies, which each regulated entity would tailor to fit
its own circumstances.\24\ That model supports including in demurrage
and detention policies: (1) Points of contact for demurrage and
detention disputes (names, phone numbers, and email addresses); (2)
``[a] description of what information is required to be provided by the
shipper in order to make a detention and/or demurrage dispute claim;''
(3) timeframes for raising a dispute and providing a response; and (4)
that individual entities' dispute resolution processes web pages be
linked to the OCEMA website.\25\
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\24\ http://www.ocema.org/OCEMA%20Recommended%20Best%20Practice%20for%20Detention%20and%20Demurrage%20Dispute%20Resolution%20Processes.pdf.
\25\ Id.
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2. Billing
The efficacy (and reasonableness) of dispute resolution policies
also depends on demurrage and detention bills having enough information
to allow cargo interests to meaningfully contest the charges. Another
proposal that could promote transparency and alignment of stakeholder
interests is to tie billing relationships to ownership or control of
the assets that are the source of charges.\26\ Under this approach,
marine terminal operators would bill cargo interests directly for use
of terminal land. Ocean carriers would bill cargo interests directly
for use of containers.\27\ This approach is also consistent with the
Commission's preferred definitions of ``demurrage'' and ``detention.''
\28\ Moreover, regardless of billing model, ocean carriers should bill
their customers, rather than imposing charges contractually-owed by
cargo interests on third parties. The Commission is interested in
comments on this proposal.
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\26\ Interim Report at 18 (describing optional billing model).
\27\ Id.
\28\ See infra at Part III.E.
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3. Guidance on Evidence
Dispute resolution policies that lack guidance on corroboration
requirements, that is, guidance about the types of evidence relevant to
resolving demurrage and detention disputes, are likely to fall on the
unreasonable end of the spectrum. Cargo interests and truckers have
suggested several ideas regarding this topic, which, if implemented by
regulated entities, would weigh favorably in the Sec. 41102 analysis,
including: (a) Providing truckers with evidence substantiating trucker
attempts to retrieve cargo that are thwarted when the cargo is not
available (e.g., a trouble ticket with information about container and
container unavailability); and (b) providing cargo interests and
truckers with log records that track attempts to make appointments.
Dispute resolution policies should include evidentiary guidance. The
OCEMA best practices proposal, for example, expressly contemplates such
guidance.
D. Transparent Terminology
Finally, according to the proposed interpretive rule, the
Commission may consider in the reasonableness analysis the extent to
which regulated entities have defined the terms used in demurrage and
detention practices and regulations, the accessibility of definitions,
and the extent to which the definitions differ from how the terms are
used in other contexts.
For demurrage and detention practices and regulations to be just
and reasonable, it must be clear what the terminology means.\29\
Accordingly, the Commission will consider in the reasonableness
analysis whether a regulated entity has defined the material terms of
the demurrage or detention practice at issue, whether and how those
definitions are made available to cargo interests, truckers, and the
public, and how those definitions differ from a regulated entity's past
use of the terms, how the terms are used elsewhere in the port at
issue, and how the terms are used in the U.S. trade.
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\29\ Interim Report at 5-7, 17; Final Report at 11-12, 30, 32.
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The Commission supports defining demurrage and detention in terms
of what asset is the source of a charge (land or container) as opposed
to the location of a container (inside or outside a terminal).\30\
Under the former, ``demurrage'' would be a charge related to terminal
space, and ``detention'' would be a charge related to containers.\31\
The Commission strongly discourages the continued use of terms such as
``storage'' and ``per diem'' in this context because not only do they
add unnecessary complexity, the Commission has been informed that they
are inconsistent with international practice.
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\30\ Interim Report at 6-7; Final Report at 12. This preference
does not limit the applicability of this rule to demurrage and
detention so defined. As noted in Part III.A supra, the proposed
interpretive rule applies however a regulated entity defines these
types of charges.
\31\ Interim Report at 6-7; Final Report at 12.
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IV. Public Participation
How do I prepare and submit comments?
Your comments must be written and in English. To ensure that your
comments are correctly filed in the docket, please include the docket
number of this document in your comments.
You may submit your comments via email to the email address listed
above under ADDRESSES. Please include the docket number associated with
this notice and the subject matter in the subject line of the email.
Comments should be attached to the email as a Microsoft Word or text-
searchable PDF document. Only non-confidential and public versions of
confidential comments should be submitted by email.
You may also submit comments by mail to the address listed above
under ADDRESSES.
How do I submit confidential business information?
The Commission will provide confidential treatment for identified
confidential information to the extent allowed by law. If your comments
contain confidential information, you
[[Page 48855]]
must submit the following by mail to the address listed above under
ADDRESSES:
A transmittal letter requesting confidential treatment
that identifies the specific information in the comments for which
protection is sought and demonstrates that the information is a trade
secret or other confidential research, development, or commercial
information.
A confidential copy of your comments, consisting of the
complete filing with a cover page marked ``Confidential-Restricted,''
and the confidential material clearly marked on each page. You should
submit the confidential copy to the Commission by mail.
A public version of your comments with the confidential
information excluded. The public version must state ``Public Version--
confidential materials excluded'' on the cover page and on each
affected page, and it must clearly indicate any information withheld.
You may submit the public version to the Commission by email or mail.
Will the Commission consider late comments?
The Commission will consider all comments received before the close
of business on the comment closing date indicated above under DATES. To
the extent possible, we will also consider comments received after that
date.
How can I read comments submitted by other people?
You may read the comments received by the Commission at the
Commission's Electronic Reading Room or the Docket Activity Library at
the addresses listed above under ADDRESSES.
V. Rulemaking Analyses
Regulatory Flexibility Act
The Regulatory Flexibility Act (codified as amended at 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. 5 U.S.C.
603. An agency is not required to publish an IRFA, however, for the
following types of rules, which are excluded from the APA's notice-and-
comment requirement: Interpretative rules; general statements of
policy; rules of agency organization, procedure, or practice; and rules
for which the agency for good cause finds that notice and comment is
impracticable, unnecessary, or contrary to public interest. See 5
U.S.C. 553(b).
Although the Commission has elected to seek public comment on this
proposed rule, the rule is an interpretive rule. Therefore, the APA
does not require publication of a notice of proposed rulemaking in this
instance, and the Commission is not required to prepare an IRFA.
National Environmental Policy Act
The Commission's regulations categorically exclude certain
rulemakings from any requirement to prepare an environmental assessment
or an environmental impact statement because they do not increase or
decrease air, water or noise pollution or the use of fossil fuels,
recyclables, or energy. 46 CFR 504.4. This rule regarding the
Commission's interpretation of the 46 U.S.C. 41102(c) falls within the
categorical exclusion for investigatory and adjudicatory proceedings,
the purpose of which is to ascertain past violations of the Shipping
Act of 1984. 46 CFR 504.4(a)(22). Therefore, no environmental
assessment or environmental impact statement is required.
Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521) (PRA)
requires an agency to seek and receive approval from the Office of
Management and Budget (OMB) before collecting information from the
public. 44 U.S.C. 3507. This proposed rule does not contain any
collections of information as defined by 44. U.S.C. 3502(3) and 5 CFR
1320.3(c).
Executive Order 12988 (Civil Justice Reform)
This rule meets the applicable standards in E.O. 12988 titled,
``Civil Justice Reform,'' to minimize litigation, eliminate ambiguity,
and reduce burden.
Regulation Identifier Number
The Commission assigns a regulation identifier number (RIN) to each
regulatory action listed in the Unified Agenda of Federal Regulatory
and Deregulatory Actions (Unified Agenda). The Regulatory Information
Service Center publishes the Unified Agenda in April and October of
each year. You may use the RIN contained in the heading at the
beginning of this document to find this action in the Unified Agenda,
available at http://www.reginfo.gov/public/do/eAgendaMain.
List of Subjects in 46 CFR Part 545
Antitrust, Exports, Freight forwarders, Maritime carriers, Non-
vessel-operating common carriers, Ocean transportation intermediaries,
Licensing requirements, Financial responsibility requirements,
Reporting and recordkeeping requirements.
For the reasons set forth above, the Federal Maritime Commission
proposes to amend 46 CFR part 545 as follows:
PART 545--INTERPRETATIONS AND STATEMENTS OF POLICY
0
1. The authority citation for part 545 continues to read as follows:
Authority: 5 U.S.C. 553; 46 U.S.C. 305, 40307, 40501-40503,
41101-41106, and 40901-40904; 46 CFR 515.23.
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2. Add Sec. 545.5 to read as follows:
Sec. 545.5 Interpretation of Shipping Act of 1984-Unjust and
unreasonable practices with respect to demurrage and detention.
(a) Purpose. The purpose of this rule is to provide guidance about
how the Commission will interpret 46 U.S.C. 41102(c) and Sec. 545.4(d)
in the context of demurrage and detention.
(b) Applicability and Scope. This rule applies to practices and
regulations relating to demurrage and detention for containerized
cargo. For purposes of this rule, demurrage and detention include any
charges, including ``per diem,'' assessed by ocean common carriers,
marine terminal operators, or ocean transportation intermediaries
(``regulated entities'') related to the use of marine terminal space
(e.g., land) or shipping containers, not including freight charges.
(c) Incentive Principle. In assessing the reasonableness of
demurrage and detention practices and regulations, the Commission will
consider the extent to which demurrage and detention are serving their
intended purposes as financial incentives to promote freight fluidity.
(d) Particular Applications of Incentive Principle.--(1) Cargo
Availability. The Commission may consider in the reasonableness
analysis the extent to which demurrage practices and regulations relate
demurrage or free time to cargo availability for retrieval.
(2) Empty Container Return. Absent extenuating circumstances,
practices and regulations that provide for imposition of detention when
it does not serve its incentivizing purposes, such as when empty
containers cannot be returned, are likely to be found unreasonable.
(3) Notice of Cargo Availability. In assessing the reasonableness
of
[[Page 48856]]
demurrage practices and regulations, the Commission may consider
whether and how regulated entities provide notice to cargo interests
that cargo is available for retrieval. The Commission may consider the
type of notice, to whom notice is provided, the format of notice,
method of distribution of notice, the timing of notice, and the effect
of the notice.
(4) Government Inspections.
(e) Demurrage and Detention Policies. The Commission may consider
in the reasonableness analysis the existence and accessibility of
policies implementing demurrage and detention practices and
regulations, including dispute resolution policies. In assessing
dispute resolution policies, the Commission may further consider the
extent to which they contain information about points of contact,
timeframes, and corroboration requirements.
(f) Transparent Terminology. The Commission may consider in the
reasonableness analysis the extent to which regulated entities have
defined the terms used in demurrage and detention practices and
regulations, the accessibility of definitions, and the extent to which
the definitions differ from how the terms are used in other contexts.
By the Commission.
Rachel Dickon,
Secretary.
[FR Doc. 2019-19858 Filed 9-16-19; 8:45 a.m.]
BILLING CODE 6731-AA-P
