[Federal Register Volume 85, Number 96 (Monday, May 18, 2020)]
[Rules and Regulations]
[Pages 29638-29666]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-09370]


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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: Final rule.

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SUMMARY: The Federal Maritime Commission is clarifying 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, storing, 
or delivering property with respect to demurrage and detention. 
Specifically, the Commission is providing guidance as to what it may 
consider in assessing whether a demurrage or detention practice is 
unjust or unreasonable.

DATES: This final rule is effective May 18, 2020.

FOR FURTHER INFORMATION CONTACT: Rachel E. Dickon, Secretary; Phone: 
(202) 523-5725; Email: [email protected].

SUPPLEMENTARY INFORMATION: 

I. Introduction

    On September 17, 2019, the Commission published proposed guidance, 
in the form of an interpretive rule, about factors it may consider when 
assessing the reasonableness of demurrage and detention practices and 
regulations under 46 U.S.C. 41102(c) \1\ and 46 CFR 545.4(d).\2\ The 
rule followed years of complaints from U.S. importers, exporters, 
transportation intermediaries, and drayage truckers that ocean carrier 
and marine terminal operator demurrage and detention practices unfairly 
penalized shippers, intermediaries, and truckers for circumstances 
outside their control.\3\ These complaints led the Commission to open a 
Fact Finding Investigation that substantiated many of these concerns. 
Based on the investigation and previous experience with demurrage and 
detention issues, the Commission developed guidance and sought comment 
in a Notice of Proposed Rulemaking (NPRM).\4\ The interpretive rule was 
intended to reflect three general principles:
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    \1\ Section 41102(c) represents the recodification of section 
10(d)(1) of the Shipping Act of 1984. Some authorities cited herein 
refer to section 41102(c) while others refer to section 10(d)(1). 
For ease of reading, we will generally refer to section 41102(c) in 
analyzing these authorities.
    \2\ Notice of Proposed Rulemaking: Interpretive Rule on 
Demurrage and Detention Under the Shipping Act, 84 FR 48850 (Sept. 
17, 2019).
    \3\ The term ``ocean carrier'' in this document refers to ocean 
common carriers subject to 46 U.S.C. 41102(c). See 46 U.S.C. 
40102(18). Although the rule focuses on the practices of ocean 
carriers, i.e., vessel-operating common carriers, and marine 
terminal operators as defined in the Shipping Act, section 41102(c) 
also applies to ocean transportation intermediaries, and some 
entities, specifically, non-vessel operating common carriers, are 
both ``common carriers'' and ``ocean transportation 
intermediaries.'' 46 U.S.C. 40102(17), (20).
    \4\ 84 FR at 48850-56.

    1. Importers, exporters, intermediaries, and truckers should not 
be penalized by demurrage and detention practices when circumstances 
are such that they cannot retrieve containers from, or return 
containers to, marine terminals because under those circumstances 
the charges cannot serve their incentive function.
    2. Importers should be notified when their cargo is actually 
available for retrieval.
    3. Demurrage and detention policies should be accessible, clear, 
and, to the extent possible, use consistent terminology.\5\
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    \5\ See 84 FR at 48851-53; Fact Finding Investigation No. 28 
Final Report at 32 ((Dec. 3, 2018) (Final Report), https://www2.fmc.gov/readingroom/docs/FF%20No.%2028/FF-28_FR.pdf.


[[Page 29639]]


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    The NPRM attempted to provide guidance on these principles while 
making sure that the proposed interpretive rule was flexible enough to 
account for the variety of marine terminal operations nationwide and to 
allow for innovative commercial solutions to commercial problems.
    Consequently, instead of prescribing practices that ocean carriers 
and marine terminal operators must adopt or avoid, the Commission's 
proposed rule was a non-exclusive list of factors that the Commission 
may consider when assessing the reasonableness of demurrage and 
detention practices under 46 U.S.C. 41102(c) and 46 CFR 545.4(d). Each 
section 41102(c) case would continue to be decided on its particular 
facts, and the rule would not foreclose parties from raising, or the 
Commission from considering, factors beyond those listed in the rule.
    The Commission received just over one hundred comments to the NPRM, 
the vast majority of which supported the Commission's rule. In 
particular, American importers, exporters, intermediaries, and truckers 
urged that the Commission adopt it, and, in many instances, implored 
the Commission to do more. Ocean carriers and their marine terminal 
operator partners opposed the proposed guidance on legal and policy 
grounds.
    Having considered the comments, the Commission adopts the rule as 
set forth in the NPRM, with a few minor changes. In particular, the 
Commission is revising the regulatory text to: (1) Adopt a policy 
regarding demurrage and detention practices and government inspections; 
and (2) to make clear that the rule does not preclude the Commission 
from considering additional factors outside those specifically 
listed.\6\ Importantly, the rule is not intended to, and cannot, solve 
every demurrage and detention problem or quell all disputes. Rather, it 
reflects the Commission's finding that all segments of the industry 
will benefit from advance notice of how the Commission will approach 
the ``reasonableness'' inquiry under section 41102(c). The Commission 
continues to believe that such guidance 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, and 
that the interpretive rule will also mitigate confusion, reduce and 
streamline disputes, and enhance competition and innovation in business 
operations and policies.
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    \6\ The Commission is also making minor changes in the final 
rule, described in more detail below. The Commission has also made 
technical formatting changes to the paragraph levels in the final 
regulatory text.
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II. NPRM and Summary of Comments

A. Background

    Although the rule is derived from Commission's Fact Finding 
Investigation No. 28, that investigation itself was just the 
Commission's latest attempt to reconcile shipper and trucker complaints 
about ocean carrier and marine terminal operator demurrage and 
detention practices with the latter groups' insistence that the 
transportation system was working well and that Commission action was 
unnecessary.
    The Commission's recent focus on demurrage and detention began in 
2014, when the Commission hosted four regional port forums regarding 
congestion in the international ocean supply system.\7\ These forums 
were catalyzed in part by severe winter weather and the expiration of 
the labor agreement covering most West Coast port workers. Although 
demurrage and detention were not the focus of the forums, shipper and 
trucker discontent with free time, demurrage, and detention practices 
was ``palpable.'' \8\
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    \7\ See Fed. Mar. Comm'n, 2014 Port Forums, https://www.fmc.gov/about-the-fmc/2014-public-port-forums/; 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 at 3 (April 3, 2015) (FMC Demurrage 
Report), https://www.fmc.gov/wp-content/uploads/2019/04/reportdemurrage.pdf.
    \8\ Fed. Mar. Comm'n, Report, U.S. Container Port Congestion & 
Related International Supply Chain Issues: Causes, Consequences & 
Challenges at 75 (July 2015) (FMC Congestion Report), https://www.fmc.gov/wp-content/uploads/2019/04/PortForumReport_FINALwebAll.pdf.
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    In response, Commission staff issued a report, subsequently 
published by the Commission in 2015, that compiled shipper concerns 
about demurrage and detention, examined potential private-sector 
approaches to addressing those concerns, and surveyed possible ways the 
Commission could serve as a catalyst for those efforts.\9\ Among other 
things, the report noted that: (1) It appeared that ocean carriers, 
rather than marine terminal operators, generally control demurrage and 
detention practices; and (2) there was little uniformity in demurrage 
and detention terminology or the circumstances under which ocean 
carriers would waive, refund, or otherwise mitigate demurrage and 
detention, making comparisons across the industry difficult.\10\ The 
report also noted ``shippers' perceptions that demurrage charges are 
not serving to speed the movement of cargo, the purpose for which those 
charges had originally been intended.'' \11\
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    \9\ FMC Demurrage Report at 1.
    \10\ FMC Demurrage Report at 2,4, 32.
    \11\ FMC Demurrage Report at 44.
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    Aggrieved shippers, intermediaries, and truckers took action in 
2016 by petitioning the Commission to adopt a rule specifying certain 
circumstances under which it would be unreasonable for ocean carriers 
or marine terminal operators to collect demurrage or detention.\12\ The 
petitioners were chiefly concerned that although demurrage and 
detention are intended to incentivize efficient cargo retrieval and 
container return, ``these charges did not abate consistently even 
though shippers, consignees, and drayage providers had no control over 
the events that cause[d] the ports to be inaccessible and prevented 
them from retrieving their cargo or returning equipment.'' \13\ 
Petitioners argued that not only were current ocean carrier and marine 
terminal demurrage and detention practices unjust and unreasonable, but 
permitting ocean carriers and marine terminal operators to levy these 
charges even when cargo and equipment could not be retrieved or 
returned weakened any incentive for them to address port congestion and 
their own operational inefficiencies.\14\ The Commission received 
numerous comments on the petition and held two days of public hearings.
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    \12\ Coalition for Fair Port Practices Petition for Rulemaking, 
FMC No. P4-16, Ex. A (Dec. 7, 2016) (Pet. P4-16). Petitioners' rule 
would ``essentially revive rules that the Commission had in place 
for the port of New York for over 40 years.'' Id. at 32.
    \13\ Pet. P4-16 at 3.
    \14\ Pet. P4-16 at 4-5 (``But the incentive placed upon ocean 
common carriers and marine terminal operators to address port 
congestion is weakened if they can levy demurrage, detention, and 
per diem charges against parties who have no influence over the 
operations and conditions that prevent shippers, consignees, and 
drayage providers from promptly picking up cargo and returning 
equipment.'').
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    In light of the petition, comments, and testimony, on March 5, 
2018, the Commission launched a non-adjudicatory fact finding 
investigation into ``current conditions and practices of vessel 
operating common carriers and marine terminal operators, and U.S. 
demurrage, detention, and per diem charges.'' \15\ In so doing, the 
Commission acknowledged the petitioners' concerns, highlighted the 
nationwide scope of the Commission's jurisdiction and the variety of 
demurrage and detention practices across the country, and recognized 
that

[[Page 29640]]

``[t]he international ocean liner trade has changed dramatically over 
the last fifty years, driven in large part by the advent of 
containerization.'' \16\ The Commission named Commissioner Rebecca F. 
Dye the Fact Finding Officer and charged her with developing a record 
on five subjects related to demurrage and detention: (a) Comparative 
commercial conditions and practices in the United States vis-[agrave]-
vis other maritime nations; (b) tender of cargo; (c) billing practices; 
(d) practices regarding delays caused by intervening events; and (e) 
dispute resolution practices.\17\ The Commission stated it would use 
the resulting record and Fact Finding Officer's recommendation to 
determine its policies with respect to demurrage and detention.\18\
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    \15\ Conditions and Practices Related to Detention, Demurrage, 
and Free Time in Int'l Oceanborne Commerce, 1 F.M.C.2d 1 (FMC 2018) 
(Order of Investigation), https://www2.fmc.gov/readingroom/docs/FF%20No.%2028/ff-28_ord2.pdf/.
    \16\ Id. at 2.
    \17\ Id. at 2-3.
    \18\ Id. at 2.

The Fact Finding Investigation lasted 17 months and involved written 
discovery, field interviews, and group discussions with industry 
leaders.\19\ The investigation revealed a situation marked by: (1) 
Increasing demurrage and detention charges even after controlling for 
weather and labor events; (2) complexity; and (3) a lack of clarity and 
consistency regarding demurrage and detention practices, policies, and 
terminology.\20\ On December 3, 2018, the Fact Finding Officer found 
that:
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    \19\ In the first phase of the investigation, the Fact Finding 
Officer (FFO) obtained information and documents from twenty-three 
ocean carriers and forty-four marine terminal operators and 
operating ports, as well as importers, exporters, truckers, and 
intermediaries. Final Report at 7-8. In the investigation's second 
phase, the FFO met in-person and telephonically with representatives 
from a cross section of the industry, including over twenty-five 
ports and marine terminal operators. Id. at 11. In the third phase, 
the FFO met with stakeholders in groups to discuss the feasibility 
of implementing some of the recommendations from the first two 
investigatory phases. Letter from Rebecca F. Dye, Commissioner, to 
Michael A. Khouri, Chairman, Daniel B. Maffei, Commissioner, Louis 
E. Sola, Commissioner, Federal Maritime Commission (Aug. 27, 2019) 
(FF28 Letter).
    \20\ Fact Finding Investigation No. 28 Interim Report at 5-14 
(Sept. 4, 2018) (Interim Report), https://www2.fmc.gov/readingroom/docs/FF%20No.%2028/FF28_int_rpt2.pdf/; Final Report at 25, 29-30.
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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.\21\
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    \21\ Final Report at 32.
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    The Fact Finding Officer further found that the U.S. international 
ocean freight delivery system, and American economy, would benefit 
from:
    [ssquf] Transparent, standardized language for demurrage and 
detention practices;
    [ssquf] Clear, simplified, and accessible demurrage and detention 
billing practices and dispute resolution processes;
    [ssquf] Explicit guidance regarding the types of evidence relevant 
to resolving demurrage and detention disputes;
    [ssquf] Consistent notice to cargo interests of container 
availability; and
    [ssquf] An FMC Shipper Advisory Board.\22\
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    \22\ Final Report at 32.
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    The Fact Finding Officer ultimately recommended that the 
Commission: (a) Implement the guidance from the investigation's Final 
Report in an interpretive rule; (b) establish a Shipper Advisory Board; 
and (c) continue to support the FFO's work with stakeholders in 
Memphis.\23\ As to the first recommendation, the Fact Finding Officer 
emphasized the ``longstanding principle that practices imposed by 
tariffs, which are implied contracts by law, must be tailored to meet 
their intended purpose.'' \24\ Accordingly, the Fact Finding Officer 
explained, ``when incentives such as demurrage and detention no longer 
function because shippers are prevented from picking up cargo or 
returning containers within time allotted,'' absent extenuating 
circumstances, ``charges should be suspended.'' \25\ The Fact Finding 
Officer also recommended that the Commission make clear in its proposed 
guidance that it may consider other factors in the ``reasonableness 
inquiry'' under section 41102(c), including the ``existence, 
accessibility, and transparency of demurrage and detention policies, 
including dispute resolution policies (and related concepts such as 
clear bills and evidence guidelines), and clarified language.'' \26\
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    \23\ FF28 Letter at 1.
    \24\ FF28 Letter at 1.
    \25\ FF28 letter at 2.
    \26\ FF28 Letter at 2.
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B. Notice of Proposed Rulemaking and Comments

    The Commission adopted the Fact Finding Officer's recommendation on 
September 6, 2019, and on September 13, 2019, issued its proposed 
guidance in an NPRM.\27\ The proposed rule took the form of a non-
exclusive list of factors that the Commission may consider when 
assessing the reasonableness of demurrage and detention regulations and 
practices under 46 U.S.C. 41102(c).\28\ Consistent with Commission 
caselaw on section 41102(c), the chief consideration was whether ocean 
carrier and marine terminal operator practices are tailored to meet 
their intended purposes.\29\ In the case of demurrage and detention, 
the rule stated, this means considering the extent to which demurrage 
and detention serve their purposes as financial incentives to promote 
freight fluidity.\30\ The rule also set forth illustrations of how the 
Commission might apply this principle, and additional considerations 
the Commission might weigh, in various contexts, e.g., empty container 
return.\31\ The Commission discussed government inspections in the NPRM 
but deferred issuing guidance with respect to that issue until it 
received industry comment.
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    \27\ See Fed. Mar. Comm'n, Commission Approves Dye's Final 
Recommendations on Detention and Demurrage (Sept. 6, 2019), https://www.fmc.gov/commission-approves-dyes-final-recommendations-on-detention-and-demurrage/; Fed. Mar. Comm'n, Proposed Interpretive 
Rule on Demurrage and Detention Issued (Sept. 13, 2019), https://www.fmc.gov/proposed-interpretive-rule-on-demurrage-and-detention-issued/.
    \28\ 84 FR at 48855-48856.
    \29\ 84 FR at 48852.
    \30\ 84 FR at 48855.
    \31\ 84 FR at 48855-48856.
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    The industry responded to the NPRM with over one hundred 
comments.\32\ Most commenters supported the proposed guidance.\33\ This 
support came primarily from importers, exporters, transportation 
intermediaries, and truckers, large and small, and their trade 
associations, from across the United States. To the extent their 
comments departed from the rule, it was to ask the Commission to do 
more: To be more prescriptive and require ocean carriers to take 
certain actions and refrain from others, to apply the proposed guidance 
to more situations and contexts than described expressly in the NPRM, 
and to consider more

[[Page 29641]]

circumstances as justifying mitigation of demurrage and detention.
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    \32\ In promulgating this final rule and as discussed below, the 
Commission has considered all comments filed on or before the 
comment deadline of October 31, 2019, as well as all comments filed 
between November 1, 2019 and March 31, 2020. Although we received 
additional comments in April 2020, it was not possible to consider 
these comments given the drafting schedule for the final rule.
    \33\ Approximately 60 commenters expressly supported the 
proposed guidance, and another 20 commenters supported the proposed 
guidance implicitly or in part.
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    In contrast, ocean carriers, marine terminal operators, chassis 
lessors, and cooperative working agreements of ocean carriers and 
marine terminal operators \34\ opposed the rule. Also opposing the rule 
were trade associations such as the World Shipping Council (WSC), a 
trade group representing the interests of approximately 90 percent of 
the global liner vessel capacity, whose members include companies such 
as China COSCO Shipping Corporation, Mediterranean Shipping Company, 
and A.P. M[oslash]ller-Maersk.\35\ They argued that the Commission 
lacks the authority to issue the rule, and that the rule is 
unnecessary, costly, burdensome, and unfair to ocean carriers and 
marine terminal operators.
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    \34\ The Ocean Carrier Equipment Management Association (OCEMA) 
(FMC Agreement No. 011284), the Port of New York and New Jersey 
Sustainable Services Agreement (PONYNJSSA) (FMC Agreement No. 
201175), and the West Coast MTO Agreement (WCMTOA) (FMC Agreement 
No. 201143) are cooperative working agreements filed with the 
Commission under the Shipping Act.
    \35\ http://www.worldshipping.org/about-the-council/member-corporations.
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III. Discussion of Particular Issues

A. General Legal Challenges to Rule

    Ocean carrier and marine terminal operators raise a number of legal 
objections to the rule, many of which are based on misinterpretations 
of the guidance.\36\ WSC describes the rule as ``prescrib[ing] sweeping 
new standards that would make ocean carriers financially responsible 
for circumstances beyond their control'' and ``impose significant 
regulatory costs on carriers in order to comply with those standards.'' 
\37\ Similarly, the National Association of Waterfront Employers (NAWE) 
contends that the rule ``would require wholesale changes in the way 
ocean carriers and marine terminal operators do business.'' \38\ And 
the Pacific Merchant Shipping Association (PMSA) insists that the 
NPRM's ``rigid standards of reasonableness'' ``seek[ ] to mandate a 
`perfect world.' '' \39\
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    \36\ The Institute of International Container Lessors' (IICL) 
argument that ``the FMC had no jurisdiction to permit the chassis 
management limited liability corporations that were formed by the 
ocean carriers to become parties to FMC agreements with resultant 
antitrust immunity'' is beyond the scope of this rulemaking.
    \37\ WSC at 2; see also id. at 4 (describing rule as a ``blanket 
rule'').
    \38\ NAWE at 8. NAWE represents marine terminal operators. Id. 
at 1.
    \39\ PMSA at 1, 4. PMSA is an association of marine terminal 
operators and ocean carriers. Id. at 1.
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    These characterizations bear little resemblance to the proposed 
rule.\40\ The rule consists of a non-exclusive list of factors for the 
Commission to consider when determining whether demurrage and detention 
practices are ``just and reasonable'' under 46 U.S.C. 41102(c).\41\ And 
aside from the general incentive principle, which the proposed rule 
indicated the Commission will consider,\42\ the particular applications 
of that principle and other factors listed are things the Commission 
may consider. The Commission also sought in the preamble of the NPRM to 
give a sense of how those factors might weigh in particular contexts 
\43\ and gave some examples of the attributes of demurrage and 
detention practices that might, in the abstract, weigh favorably or 
unfavorably in the analysis.\44\
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    \40\ WSC implicitly concedes that the rule does not set forth 
requirements by using the adverb ``effectively'' when portraying 
what it believes the guidance would do. See WSC at 10 (``The NPRM 
effectively prohibits . . . .''); id. at 11 (``the NPRM effectively 
requires . . .''); cf. (``This new interpretation of reasonableness 
would essentially require . . . .'').
    \41\ 84 FR at 48851, 48855-56; see also FF28 Letter at 2 (noting 
that interpretive rule includes factors that the Commission may 
consider as contributing to the reasonableness inquiry).
    \42\ 84 FR at 48855-56. As noted in the NPRM, the ``incentive 
principle'' is simply another way of stating the preexisting test 
for reasonableness under section 41102(c): Whether a regulation or 
practice is ``tailored to meet its intended purpose.'' Id. at 48852 
(quoting Distribution Servs. Ltd. v. Trans-Pac. Freight Conference 
of Japan and Its Member Lines, 24 S.R.R. 714, 722 (FMC 1988)).
    \43\ E.g., 84 FR at 48852; see also id. 48853 (``The more notice 
is calculated to apprise cargo interests that cargo is available for 
retrieval, the more this factor favors a finding of 
reasonableness.''); id. (``The more these factors align with the 
goal of moving cargo off terminal property, the less likely 
demurrage practices would be found unreasonable.'').
    \44\ 84 FR at 48852 (listing ``[e]xamples of demurrage practices 
that are expressly linked to container availability and which the 
Commission would weigh positively in the reasonableness analysis''); 
id. at 48853 (``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.''); id. (``[D]emurrage practices that link the 
start of free time to notice that a container is available weigh in 
favor of reasonableness. . . . .''); id. at 48854 (listing 
attributes of dispute resolution policies that will weigh in favor 
of reasonableness).
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    The Commission emphasized that although the factors in the proposed 
rule would guide its analysis, ``each section 41102(c) case would 
continue to be decided on the particular facts of the case.'' \45\ The 
application of the ``incentive principle,'' the Commission reiterated, 
would ``vary depending on the facts of a given case.'' \46\ Moreover, 
the Commission specified that the illustrations of how the factors 
might apply in the NPRM were subject to ``extenuating circumstances.'' 
\47\ In other words, the Commission would consider any additional or 
countervailing arguments or evidence raised by the parties in a 
particular case.
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    \45\ 84 FR at 48851.
    \46\ 84 FR at 48852.
    \47\ 84 FR at 48855 (``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.''); id. at 48853 (framing guidance as ``[a]bsent 
extenuating circumstances'').
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    It appears from ocean carrier and marine terminal operator 
comments, however, that some may have misunderstood the nature of the 
proposed rule. Consequently, the final rule includes a new paragraph 
confirming that nothing in the rule precludes the Commission from 
considering other factors, arguments, and evidence in addition to the 
ones specified.
1. APA Considerations
    Turning to the ocean carriers and marine terminal operators' 
specific legal objections, these commenters first argue that despite 
the Commission characterizing the proposed rule as guidance and 
interpretive, it is actually a legislative rule subject to all the 
Administrative Procedure Act's (APA) rulemaking requirements.\48\ 
Because the Commission did not comply with these requirements, they 
argue, the rule violates the APA.
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    \48\ WSC at 6.
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    The APA's notice-and-comment requirements apply to legislative 
rules, not ``interpretative rules, general statements of policy, or 
rules of agency organization, procedure, or practice.'' \49\ A 
legislative rule is ``[a]n agency action that purports to impose 
legally binding obligations or prohibitions on regulated parties--and 
that would be the basis for an enforcement action for violations of 
those obligations or requirements.'' \50\ Interpretive rules and policy 
statements, in contrast, are explanatory in nature; they do not impose 
new obligations.\51\ The key consideration is whether the rule has 
``legal effect,'' which courts assess by asking:
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    \49\ 5 U.S.C. 553(b).
    \50\ Nat'l Mining Ass'n v. McCarthy, 758 F.3d 243, 251 (D.C. 
Cir. 2014).
    \51\ Id. at 252. Although the Commission refers to its guidance 
as an interpretive rule, whether it is an ``interpretive rule'' or 
``general statement of policy'' within the meaning of the APA is not 
relevant to WSC's argument that the rule is legislative.

    (1) Whether in the absence of the rule there would not be an 
adequate legislative basis for enforcement action or other agency 
action to confer benefits or ensure the performance of

[[Page 29642]]

duties, (2) whether the agency has published the rule in the Code of 
Federal Regulations, (3) whether the agency has explicitly invoked 
its general legislative authority, or (4) whether the rule 
effectively amends a prior legislative rule. If the answer to any of 
these questions is affirmative, we have a legislative, not an 
interpretive rule.\52\
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    \52\ Am. Mining Cong. v. Mine Safety & Health Admin., 995 F.2d 
1106, 1112 (D.C. Cir. 1993).

    None of the factors support treating the Commission's non-exclusive 
list of considerations as a legislative rule. WSC argues that the rule 
meets the first prong because it ``without question proposes new, 
enforceable obligations on carriers with respect to detention 
practices.'' \53\ According to WSC, the rule and NPRM would require 
substantial changes in how carriers operate, and ``the proposed rule 
would create new grounds for reparations actions.'' \54\
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    \53\ WSC at 4.
    \54\ WSC at 5.
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    The rule does not, however, have ``legal effect'' within the 
meaning of the American Mining test. The rule could not be the basis 
for a Commission enforcement action or a private party reparation 
action. There are no ``requirements'' or mandates or dictates in the 
rule for an ocean carrier to violate. In other words, one cannot bring 
an action based on the rule alone--the basis for any legal action would 
be section 41102(c). Similarly, the rule does not subject regulated 
entities to any new legal authority. They were already subject to 
section 41102(c)'s requirement that their practices be ``just and 
reasonable.'' Further, the NPRM makes clear that each demurrage and 
detention case under section 41102(c) would be decided on its own 
facts, and the Commission is adding a provision to the final rule to 
expressly reflect that the Commission may consider additional factors, 
arguments, and evidence presented in individual cases. A set of factors 
issued as guidance does not constitute a legislative rule.\55\
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    \55\ Cf. Inv. Co. Inst. v. CFTC, 720 F.3d 370, 381 (D.C. Cir. 
2013) (noting that guidance in form of a seven-factor test was not 
subject to the APA's notice-and-comment provision).
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    Moreover, that the industry might rely on the guidance in the 
Commission's rule, and that ocean carriers and marine terminal 
operators might feel ``pressure to voluntarily conform'' does not make 
the rule legislative.\56\ The Commission is issuing guidance in part to 
mitigate confusion about how the Commission may apply section 41102(c) 
with respect to demurrage and detention.\57\ Providing advance notice 
``facilitates long range planning within the regulated industry, and 
allows the public a chance to contemplate an agency's views before 
those views are applied to particular factual circumstances.'' \58\ 
Commission guidance will not only help ocean carriers and marine 
terminal operators avoid section 41102(c) liability, but it will also 
raise awareness of shipper, intermediary, and trucker obligations. The 
``mere fact'' that an interpretive rule could have a ``substantial 
impact does not transform it into a legislative rule.'' \59\
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    \56\ Sec. Indus. & Fin. Mkts. Ass'n v. CFTC, 67 F. Supp. 3d 373, 
422 (D.D.C. 2014). In determining that the agency issuance was a 
policy statement as opposed to a legislative rule, the court 
reasoned that ``[p]ractical consequences, such as the threat of 
having to defend itself in an administrative hearing should the 
agency actually decide to pursue enforcement pursuant to the 
policies within the Cross-Border Action are insufficient to bring an 
agency's conduct under [the Court's] purview.'' Id. (internal 
quotation marks omitted).
    \57\ 84 FR at 48851.
    \58\ Sec. Indus., 67 F. Supp. 3d at 422 (internal quotation 
marks and citations omitted).
    \59\ Cent. Texas Tel. Coop. v. FCC, 402 F.3d 205, 214 (D.C. Cir. 
2005).
---------------------------------------------------------------------------

    Additionally, the rule is not legislative because the Commission 
published the NPRM in the Federal Register and because the final rule 
will be codified in the Code of Federal Regulations (CFR). While 
publication in the CFR is a factor courts look at, it is based on a 
presumption, \60\ and publication or its absence is nothing more than a 
``snippet of evidence of agency intent''; it is not determinative.\61\ 
The Commission customarily publishes non-legislative rules in the CFR 
in a part titled ``Interpretations and Statements of Policy.'' \62\ For 
instance, the Commission published an interpretive rule regarding 
section 41102(c) in the CFR as recently as December 2018.\63\ Here, the 
Commission reasoned that publication in the Federal Register and CFR 
was not only consistent with its normal practice, but would promote 
public notice of the guidance.\64\
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    \60\ Am. Mining Cong., 995 F.2d at 1109 (``Second, an agency 
presumably intends a rule to be legislative if it has the rule 
published in the Code of Federal Regulations . . . .).
    \61\ Health Ins. Ass'n of Am. v. Shalala, 23 F.3d 412, 423 (D.C. 
Cir. 1994).
    \62\ 46 CFR part 545.
    \63\ Final Rule: Interpretive Rule, Shipping Act of 1984, 83 FR 
64478 (Dec. 17, 2018).
    \64\ Cf. Am. Mining Cong., 995 F.2d at 1112 (``The protection 
that Congress sought to secure by requiring notice and comment for 
legislative rules is not advanced by reading the exemption for 
`interpretive rule' so narrowly as to drive agencies into pure ad 
hocery--an ad hocery, moreover, that affords less notice, or less 
convenient notice, to affected parties.'').
---------------------------------------------------------------------------

    The Commission's guidance also does not qualify as a legislative 
rule under the final two American Mining criteria. The Commission did 
not invoke its general legislative authority to issue its interpretive 
rule. The Commission's authority to issue interpretive rules and policy 
statements derives from the APA.\65\ The only reference to the 
Commission's general rulemaking authority under 46 U.S.C. 305 in the 
NPRM copies the preexisting authority citation for part 545 of the 
Commission's regulations.\66\ And the Commission's rule does not amend 
any prior legislative rule.
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    \65\ See Splane v. W., 216 F.3d 1058, 1066 (Fed. Cir. 2000) 
(``[A]n agency's statutory authority to issue interpretive rules is 
implicit in sections 552(a)(1) and 553 of title 5.''). Because the 
source of the Commission's authority to issue guidance is the APA 
and 46 U.S.C. 41102(c), the National Federation of Independent 
Business's argument that 46 U.S.C. 305 does not grant the Commission 
power to prescribe regulations to implement section 41102(c) is 
unpersuasive. Nat'l Fed. Ind. Business at 2-3. Moreover, as 
described in further detail in Part III.A.2, infra, the Commission 
has the authority to prescribe regulations under section 41102(c). 
The commenter also correctly points out that the Commission could 
achieve results similar to the rule via adjudication. Id. at 3. The 
choice whether to proceed via adjudication or rulemaking, however, 
``lies primarily in the informed discretion of the administrative 
agency.'' SEC v. Chenery Corp., 332 U.S. 194, 203 (1947).
    \66\ 84 FR at 48855.
---------------------------------------------------------------------------

    Because the Commission's guidance is not a legislative rule, APA 
requirements applicable solely to legislative rules are inapplicable 
here. That said, commenters' APA-related arguments are unpersuasive. 
The primary distinction under the APA between legislative rules on one 
hand and interpretive rules and statements of policy on the other is 
that the former require notice and comment while the latter do not.\67\ 
While not required to engage in notice-and-comment rulemaking, the 
Commission nonetheless provided notice and requested comment on the 
proposed rule in this case, and ocean carriers, marine terminal 
operators, importers, exporters, intermediaries, and truckers also had 
the opportunity to weigh in on possible Commission action during the 
Fact Finding No. 28 investigation.
---------------------------------------------------------------------------

    \67\ 5 U.S.C. 553.
---------------------------------------------------------------------------

    WSC argues that the Commission failed in the NPRM to discuss the 
record in detail or link the evidentiary record to the 
``reasonableness'' standard under section 41102(c).\68\ But the 
principles in the interpretive rule flow directly from information the 
Commission received during the Fact Finding No. 28 investigation and 
described in the Fact Finding reports, which the Commission cited in 
the NPRM. The Commission focused on the ``incentive principle'' because 
section 41102(c) requires that regulations and practices be tailored to 
meet their intended purpose,\69\ and because fact finding participants 
repeatedly told the Commission that demurrage and detention were 
incentive

[[Page 29643]]

charges.\70\ The Commission's guidance emphasizes cargo availability 
and notice thereof because ocean carrier and marine terminal operators 
generally agreed that their carrier obligations were related to the 
concepts of reasonable notice of cargo availability and reasonable 
opportunity to retrieve cargo, and because the ``issue most frequently 
discussed during Phase Two was notice of container availability and the 
relationship between container availability and demurrage free 
time.\71\ The Commission's guidance focused on the existence, clarity, 
content, and accessibility of demurrage and detention dispute 
resolution and billing practices, and demurrage and detention 
terminology, because the Commission's review of ocean carrier and 
marine terminal operator records (some of which are public, e.g., 
tariffs) and discovery responses showed that the practices were rife 
with complexity, inconsistency, lack of transparency, and 
variability.\72\
---------------------------------------------------------------------------

    \68\ WSC at 6-8.
    \69\ Distribution Servs., 24 S.R.R. at 722.
    \70\ Final Report at 12 (``Importantly, almost every Phase Two 
respondent characterized demurrage as an incentive, to get 
containers out of the terminal.''); Interim Report at 2-3.
    \71\ Interim Report at 9; Final Report at 18.
    \72\ Interim Report at 5-6, 10-11, 12, 14; see also Final Report 
at 11-18.
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    WSC's objection appears to be that the Commission did not cite or 
discuss the specific documents it reviewed during the Fact Finding 
Investigation. The Commission does not, however, typically make public 
its investigatory records in such proceedings.\73\ Additionally, most 
ocean carriers and marine terminal operators requested confidentiality 
for the responses and documents they submitted to the Commission during 
Phase One of the investigation. The Commission assumes that WSC is not 
suggesting that the Commission should ignore those requests for 
confidentiality.
---------------------------------------------------------------------------

    \73\ See, e.g., Order of Investigation (authorizing the fact 
finding officer to hold public or nonpublic sessions); 46 CFR 
502.291.
---------------------------------------------------------------------------

    Several ocean carrier and marine terminal operator commenters also 
argue that the Commission's rule would depart from Commission precedent 
without adequate explanation.\74\ The rule, however, with a few 
exceptions explained in more detail below, is consistent with the 
Commission's approach to applying section 41102(c) and its predecessors 
(i.e., section 17 of the Shipping Act of 1916). Further, the commenters 
provide no support for their suggestion that the Commission cannot 
change agency precedent via an interpretive rule.\75\ Commission 
precedent is not ``binding'' on the Commission--the Commission can 
change course in a subsequent case.\76\ NAWE has not explained why 
Commission could not also change course via an interpretive rule,\77\ 
especially when the Commission recently did so in a 2018 interpretive 
rule that ocean carriers and MTOs supported.\78\
---------------------------------------------------------------------------

    \74\ Am. Ass'n of Port Authorities at 2; NAWE at 5-6; OCEMA at 
5; PMSA at 8-9; WCMTOA at 7, 8, 12; WSC at 8, 13.
    \75\ NAWE at 6 n.2 (asserting that ``the NPRM raises additional 
legal issues in that it seeks to change binding precedent through a 
non-binding, interpretative rule'').
    \76\ See Gen. Am. Transp. Corp. v. ICC, 872 F.2d 1048, 1060 
(D.C. Cir. 1989) (``It seems to us presumptively reasonable that a 
controlling principle announced in one adjudication may be modified 
in a subsequent adjudication . . . .''); id. (``As we have said 
before, `adjudicatory decisions do not harden into ``rules'' which 
cannot be altered or reversed except by rulemaking simply because 
they are longstanding.' '') (quoting Chisholm v. FCC, 538 F.2d 349, 
365 (D.C. Cir. 1976)).
    \77\ Cf. Health Ins. Ass'n, 23 F.3d at 424-25 (noting that 
disincentivizing the issuance of interpretive rules would lead to 
the ``ironic result'' that ``the entities affected by the agency's 
interpretations would be left more in the dark than before, for 
clues to the agency's reading of the relevant texts would emerge 
only on an ad hoc basis'').
    \78\ See Final Rule: Interpretive Rule, Shipping Act of 1984, 83 
FR 64478, 64478 (Dec. 17, 2018); NPRM: Interpretive Rule, Shipping 
Act of 1984, 83 FR 45367, 45367-68 (Sept. 7, 2018).
---------------------------------------------------------------------------

    Many of these same commenters further contend that the interpretive 
rule would shift the burden of proof in section 41102(c) cases in 
violation of the APA.\79\ But nothing in the rule changes the burden of 
proof. Under the APA and Commission regulations, ``the proponent of a 
rule or order has the burden of proof.'' \80\ This burden of persuasion 
does not shift, even if the burden of producing evidence does in some 
cases.\81\ In a section 41102(c) case, the complainant has the burden 
of persuading the Commission that a practice or regulation is unjust or 
unreasonable, and if that burden is met, the burden of refuting that 
conclusion is on the respondent.\82\ In all instances, the complainant 
bears the ultimate burden of proving unreasonableness.\83\
---------------------------------------------------------------------------

    \79\ NAWE at 6 (``Here, the NPRM would have the effect of 
shifting the burden of proof from a complaining shipper, receiver or 
motor carrier to the marine terminal operator, which would be 
required to overcome the presumption of unreasonableness effectively 
established by the NPRM and demonstrate the reasonableness of 
assessing the charge in that situation.''); Am. Ass'n of Port 
Authorities at 2; OCEMA at 2-3; WCMTOA at 5 n.2.
    \80\ 5 U.S.C. 556(d); 46 CFR 502.203.
    \81\ Maher Terminals, LLC v. Port Auth. of N.Y. & N.J., FMC Case 
No. 08-03, 2014 FMC LEXIS 35, at *41-*43 (FMC 2014), remanded on 
other grounds, Maher Terminals, LLC v. Fed. Mar. Comm'n, 816 F.3d 
888 (D.C. Cir. 2016).
    \82\ Maher Terminals, 2014 FMC LEXIS at *35 (citing River 
Parishes Co. v. Ormet Primary Aluminum Corp., 28 S.R.R. 751, 765 
(FMC 1999)); Exclusive Tug Arrangements in Port Canaveral, Fla., 29 
S.R.R. 1199, 1222 (ALJ 2003).
    \83\ Id. at *42.
---------------------------------------------------------------------------

    The rule does not change that framework. A complainant would still 
have the burden of proving all the elements of a section 41102(c) claim 
under 46 CFR 545.4, including proving by a preponderance of the 
evidence that the demurrage or detention practice or regulation at 
issue is ``unjust or unreasonable.'' It is true that the rule might 
help a complainant prove that element by giving guidance about what 
sort of arguments and evidence the Commission is likely to find 
relevant. Setting forth factors that the Commission might consider in a 
case, however, does not shift the burden of proof.\84\
---------------------------------------------------------------------------

    \84\ In Maher Terminals, LLC v. Port Auth. of NY. & N.J., for 
instance, the Commission listed a number of factors it would 
consider in determining whether a respondent granted an unreasonable 
preference, and in so doing it did not change the burden of proof. 
FMC Case No. 08-03, 2016 FMC LEXIS 61 *9-*11 (FMC Oct. 26, 2016).
---------------------------------------------------------------------------

2. Statutory Authority
    Another objection raised by commenters is that the Commission lacks 
authority under the Shipping Act to issue the interpretive rule.\85\ 
Commenters point out that section 17 of the Shipping Act of 1916, the 
predecessor of section 41102(c), stated that not only must regulated 
entities establish, observe, and enforce just and reasonable 
regulations and practices relating to or connected with the receiving, 
handling, storing, or delivering of property, but also the Commission, 
upon finding that any such regulation or practice is unjust or 
unreasonable, may determine, prescribe, and order enforced a just and 
reasonable regulation or practice.\86\ The Shipping Act of 1984, 
however, replaced this language with: ``No common carrier, ocean 
freight forwarder, or marine terminal operator may fail to establish, 
observe, and enforce just and reasonable regulations and practices 
relating to or connected with receiving, handling, storing, or 
delivering property.'' \87\ According to commenters, by removing the 
second sentence of section 17 of the 1916 Act'' from its 1984 
equivalent, Congress ``eliminated the Commission's

[[Page 29644]]

authority to determine, prescribe and order enforcement of a just and 
reasonable regulation or practice.'' \88\
---------------------------------------------------------------------------

    \85\ NAWE at 3-4 (``Because the NPRM would have the effect of 
specifying those regulations and practices which are reasonable and 
those which are not, it is beyond the scope of the Commission's 
authority under the Shipping Act and would be unlawful.''); WSC at 
10-11.
    \86\ Shipping Act, 1916, Public Law 64-260, 17, 39 Stat. 728, 
734-35 (1916).
    \87\ Shipping Act of 1984, Public Law 98-237, 10(d)(1), 98 Stat. 
67, 89 (1984). This is substantially similar to how the statute 
appears today. 46 U.S.C. 41102(c).
    \88\ NAWE at 4.
---------------------------------------------------------------------------

    This argument misses the mark, however, because the rule does not 
determine, prescribe, or order enforcement of a reasonable practice; 
that is, it does not prescribe specific practices that regulated 
entities must adopt.\89\ The Commission avoided doing so because it did 
not want to inhibit stakeholders from developing new and better 
practices. Consequently, even if the differences between section 17 of 
the 1916 Act and section 41102(c) removed some Commission authority, 
the present rule is not implicated.
---------------------------------------------------------------------------

    \89\ Put differently, the Commission is not saying ``regulated 
entities must do X;'' it is saying ``here are factors the Commission 
may apply when determining whether Y practices are unreasonable.''
---------------------------------------------------------------------------

    In addition, although the Commission has not elected to issue a 
legislative rule in this case, the Commission disagrees with the 
contention that it lacks the authority to issue rules prohibiting 
practices or regulations determined to be unjust or unreasonable. The 
Commission has broad general rulemaking authority under 46 U.S.C. 305, 
which provides that the Commission ``may prescribe regulations to carry 
out its duties and powers.'' \90\ The Commission has relied on this 
authority and section 41102(c) to issue regulations prohibiting certain 
practices determined to be unjust and unreasonable,\91\ and the D.C. 
Circuit has affirmed this authority.\92\
---------------------------------------------------------------------------

    \90\ This section represents a recodification of two similarly 
worded provisions, section 201(c) of the Merchant Marine Act of 
1936, Public Law 74-835, and section 17(a) of the Shipping Act of 
1984. See H.R. Rep. No. 109-170, at 28 (2005)
    \91\ See, e.g., NPRM: Filing of Tariffs by Marine Terminal 
Operators Exculpatory Provisions, 51 FR 15655 (Apr. 25, 1986) 
(``Tariff provisions that exculpate or otherwise relieve marine 
terminal operators from liability for their own negligence, or that 
would impose upon others the obligation to indemnify or save 
harmless the terminals from liability for their own negligence, are, 
as a rule, unjust and unreasonable and, therefore, contrary to the 
provisions of section 17 of the Shipping Act, 1916 and section 
10(d)(1) of the Shipping Act of 1984.''); NPRM: Exemption of Certain 
Marine Terminal Services Arrangements, 56 FR 22384, 22387-22388 (May 
15, 1991) (concluding that the differences between section 17 of the 
1916 Act and section 10(d)(1) of the 1984 Act did not preclude the 
Commission from requiring filing of marine terminal operator 
tariffs, and relying on section 10(d)(1) and section 17 of the 1984 
Act as authority to continue those requirements); See also 46 CFR 
515.32(d); 46 CFR 515.41(c); 46 CFR 525.2(a)(1).
    \92\ See Nat'l Customs Brokers & Forwarders Ass'n v. United 
States, 883 F.2d 93, 98-101 (D.C. Cir. 1989); id. at 100 (``We 
uphold the FMC's constant rule on the ground that the Commission, in 
the reasonable exercise of its rulemaking authority, may interpret 
section 10(d)(1) to prohibit forwarder discrimination in the charges 
billed to customers.'').
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3. Shipping Act Purposes
    A few marine terminal operator and ocean carrier commenters further 
claim that the rule is inconsistent with the purposes of the Shipping 
Act because it represents ``extreme government intrusion into the 
market'' and discriminates against ocean carriers and marine terminal 
operators by placing all risk on them.\93\ The purposes of the Shipping 
Act are to:
---------------------------------------------------------------------------

    \93\ NAWE at 9-10; WSC at 11-12; Ports Am. At 2-3.
---------------------------------------------------------------------------

     Establish a nondiscriminatory regulatory process for the 
common carriage of goods by water in the foreign commerce of the United 
States with a minimum of government intervention and regulatory costs;
     Provide an efficient and economic transportation system in 
the ocean commerce of the United States that is, insofar as possible, 
in harmony with, and responsive to, international shipping practices;
     Encourage the development of an economically sound and 
efficient liner fleet of vessels of the United States capable of 
meeting national security needs; and
    Promote the growth and development of United States exports through 
competitive and efficient ocean transportation and by placing a greater 
reliance on the marketplace.\94\
---------------------------------------------------------------------------

    \94\ 46 U.S.C. 40101.
---------------------------------------------------------------------------

    The Commission fails to see how issuing an interpretive rule while 
declining calls for more prescriptive regulation,\95\ represents 
``extreme government intrusion.'' It is unclear based on the comments 
whether there is anything the Commission could do regarding demurrage 
and detention that ocean carriers and marine terminal operations would 
not object to as overly intrusive regulation.\96\ That one purpose of 
the Shipping Act is to minimize government intervention does not mean 
that the Commission may abandon its duty to prevent unreasonable 
practices under section 41102(c).
---------------------------------------------------------------------------

    \95\ E.g., Pet. P4-16, Ex. A.
    \96\ E.g. WCMTOA at 3 (``Any proposed change to the current 
model introduces risk that cargo dwell times on the terminals will 
increase, effectively reducing terminal throughput capacity causing 
increased non-compensated costs to MTOs''); WSC at 12-13 (``Those 
charges and the way each line build[s] them and use[s] them creates 
real competition among carriers and should not be regulated because 
these would distort those factors in the marketplace.'') (citing 
testimony of Paolo Magnani, an ocean carrier executive).
---------------------------------------------------------------------------

    Nor is the interpretive rule discriminatory within the meaning of 
the Shipping Act. There is nothing discriminatory about the Commission 
describing factors that would help ensure that ocean carriers and 
marine terminal operators comply with their preexisting duty under 
section 41102(c) to ensure their practices are reasonably tailored to 
match their purposes. Further, the ``discrimination'' the Shipping Act 
is concerned with is discrimination by ocean carriers and marine 
terminal operators against shippers and others in the industry, not so-
called discrimination by the Commission against the entities it 
oversees.\97\ This general purpose aligns with the more specific 
mandate in section 41102(c) that the Commission determine the 
reasonableness of certain carrier and marine terminal operator 
practices. In sum, it is consistent with the purposes of the Shipping 
Act for the Commission to address the concerns of American importers, 
exporters, intermediaries, and truckers.
---------------------------------------------------------------------------

    \97\ ``The primary purpose of the shipping laws administered by 
the FMC is to protect the shipping industry's customers, not members 
of the industry,'' Boston Shipping Ass'n v. Fed. Mar. Comm'n, 706 
F.2d 1231, 1238 (1st Cir. 1983), and the Act ``exists in large 
measure to protect shippers and other persons from unreasonable or 
discriminatory carrier practices,''50 Mile Container Rules'' 
Implementation by Ocean Common Carriers Serving U.S. Atl. & Gulf 
Coast Ports, 24 S.R.R. 411, 457-58 (FMC 1987). See also Credit 
Practices of Sea-Land Service, Inc., 25 S.R.R. 1308, 1313 (FMC 1990) 
(``The Commission most recently recognized this policy in stating 
that `[t]he prevention of economic discrimination is at the heart of 
the regulatory scheme established by Congress in the 1984 Act.' '') 
(emphasis added).
---------------------------------------------------------------------------

4. Executive Orders
    Two commenters assert that the Commission's interpretive rule 
violates various executive orders. First, NAWE argues that ``[b]y 
specifying the behavior or manner of compliance that regulated entities 
should adopt rather than performance objectives, the NPRM violates 
Executive Order 12866.'' \98\ Executive Order 12866, titled 
``Regulatory Planning and Review,'' was issued in 1993. It sets forth 
several ``principles of regulation,'' one of which is that ``[e]ach 
agency shall identify and assess alternative forms of regulation and 
shall, to the extent feasible, specify performance objectives, rather 
than specifying the behavior or manner of compliance that regulated 
entities must adopt.'' \99\ According to NAWE, the ``effect of the NPRM 
is to require regulated entities to engage in specific behavior,'' 
contrary to the executive order.\100\
---------------------------------------------------------------------------

    \98\ NAWE at 6.
    \99\ Exec. Order No. 12866, Sec.  1(b)(8), 51 FR 51735, at 51736 
(Oct. 4, 1993).
    \100\ NAWE at 7-8.
---------------------------------------------------------------------------

    The Commission's guidance is not inconsistent with Executive Order 
12866. As in initial matter, the order does not apply to the 
Commission. It expressly excludes from its scope

[[Page 29645]]

``independent regulatory agencies'' such as the Commission.\101\ 
Further, as explained above, the rule is not specifying behavior that 
regulated entities must adopt; it is describing a non-exclusive list of 
factors the Commission will consider in evaluating the reasonableness 
of demurrage and detention practices.
---------------------------------------------------------------------------

    \101\ Exec. Order No. 12866 Sec.  3(b), 51 FR at 51737; 44 
U.S.C. 3502(5).
---------------------------------------------------------------------------

    Additionally, in light of NAWE's arguments that the proposed rule 
is too prescriptive, the Commission is perplexed by NAWE's assertion 
that the Commission should instead specify ``performance objectives,'' 
a much more intrusive undertaking. That is, rather than its traditional 
approach to section 41102(c), NAWE would apparently prefer the 
Commission set, and assess compliance with, performance metrics. 
Examples of such metrics commonly used to assess cargo fluidity include 
container dwell time, truck turn time, and gate moves. Some commenters 
would welcome that approach.\102\ But others have approached 
performance objectives with caution.\103\
---------------------------------------------------------------------------

    \102\ Nat'l Retail Sys. at 1 (requesting ``KPI's for terminal 
operators to be agreed upon with the import community (drayage) 
terminal operators''); Transways Motor Express at 1 (``Free time 
should be extended on all cargo at a terminal when service levels 
(turn times/congestion) fall below an acceptable level''); 
Transworld Logistics & Shipping Servs. (``As far as ports go it[']s 
important each terminal be certified with a capacity like in any 
other industry, this capacity should be based on the standard of 
efficiency and the turnaround time.'').
    \103\ The Final Report of the Commission's Supply Chain 
Innovation Initiative noted that the Initiative excluded two 
subjects ``infrastructure investment and port performance metrics.'' 
Commissioner Rebecca F. Dye, Supply Chain Innovation Initiative 
Final Report at 16 (Dec. 5, 2017), https://www.fmc.gov/wp-content/uploads/2019/03/SCITFinalReport-reduced.pdf. The Final Report 
pointed out that the Commission ``did not want to duplicate or 
impede efforts by local port performance task forces to address 
supply chain bottlenecks or to second-guess the decisions of port 
officials.'' Id. at 2
---------------------------------------------------------------------------

    The other executive order mentioned by commenters is Executive 
Order 13777, titled ``Enforcing the Regulatory Reform Agenda.'' \104\ 
Issued in 2017, this Executive Order's purpose was to ``lower 
regulatory burdens on the American people by implementing and enforcing 
regulatory reform.'' \105\ WSC asserts that the ``NPRM's imposition of 
additional regulatory costs and burdens is in direct contrast with the 
Executive Order.'' \106\
---------------------------------------------------------------------------

    \104\ Exec. Order No. 13777, 82 FR 12285 (Mar. 1, 2017).
    \105\ Id. at 12285.
    \106\ WSC at 12 n.3.
---------------------------------------------------------------------------

    Executive Order 13777, like Executive Order 12866, is not binding 
on the Commission.\107\ The Commission has, however, voluntarily 
undertaken regulatory reform efforts consistent with the spirt of the 
order.\108\ There is no evidence that the rule on demurrage and 
detention is outdated, unnecessary, or otherwise interferes with 
regulatory reform initiatives and policies. The Commission's 
interpretive rule is consistent with the goals of regulatory reform and 
Congress's mandate that the Commission protect U.S. shippers and their 
agents from unreasonable practices.
---------------------------------------------------------------------------

    \107\ Fed. Mar. Comm'n, FMC Regulatory Reform, https://www.fmc.gov/regulatory-reform/, (last visited Apr. 5, 2020) (noting 
that ``as an independent regulatory agency the FMC is not required 
to comply with the recent regulatory reform executive orders'').
    \108\ Id.; Notice of Inquiry: Regulatory Reform Initiative, 85 
FR 25221 (June 1, 2017).
---------------------------------------------------------------------------

5. Filed Rate Doctrine
    A few commenters question whether statements in the NPRM that the 
Commission may consider whether demurrage or detention practices 
provide for mitigation of charges when cargo cannot be retrieved, or 
containers returned, can be reconciled with the ``filed rate 
doctrine.'' The ``filed rate doctrine'' ``provides that any entity 
required to file tariffs governing the rates, terms, and conditions of 
service must adhere strictly to those terms.'' \109\ Commenters argue 
that the rule might require ocean carriers to deviate from their 
tariffs in contravention of this doctrine.\110\
---------------------------------------------------------------------------

    \109\ Muzorori v. Can. State Africa Lines, Inc., 2016 FMC LEXIS 
45 at *71 n.62 (FMC July 14, 2016) (Khouri, Commissioner, 
dissenting).
    \110\ IICL at 9-10 (``Failure of a carrier to collect its tariff 
charges could be viewed as a violation of the Shipping Act . . . 
.What circumstances would allow a carrier to waive some or all of 
the charges required to be paid under applicable rules?); Int'l 
Logistics at 1 (``I do not think it is fair to say the ocean lines 
are responsible for the problems associated with billing port 
storage and container per diem when they are required by your tariff 
requirements to bill everyone according to their published 
tariff.''); cf. National Customs Brokers and Forwarders Association 
of America (NCBFAA) at 15 (``Carriers often decline mitigation 
citing FMC regulations that necessitate that they must apply all 
tariffed charges without exception, which is of course not a 
reasonable construction of the Shipping Act's requirements.'').
---------------------------------------------------------------------------

    This issue involves reconciling two different prohibitions in the 
Shipping Act. The Shipping Act incorporates the filed rate doctrine by 
prohibiting common carriers from providing service in the liner trade 
that is ``not in accordance with the rates, charges, classifications, 
rules, and practices contained in a'' published tariff.\111\ The 
Shipping Act also, however, prohibits common carriers from failing ``to 
establish, observe, and enforce just and reasonable regulations and 
practices relating to or connected with receiving, handling, storing, 
or delivering property.'' \112\ If a practice (or the absence of a 
practice) in a tariff is ``unreasonable'' under the latter prohibition, 
it is no defense to rely on the former. ``The [filed rate] doctrine is 
meant to preserve the integrity of filed tariff laws, not to provide 
carriers with an irrebuttable excuse for alleged violations of the 
Act.'' \113\
---------------------------------------------------------------------------

    \111\ 46 U.S.C. 41104(a)(2)(A).
    \112\ 46 U.S.C. 41102(c).
    \113\ Total Fitness Equipment, Inc. v. Worldlink Logistics, 
Inc., 1998 FMC LEXIS 18 *26-27 (FMC Dec. 10, 1998); id. at *26 
(``The filed rate doctrine does not function as a carte blanche to 
justify whatever action a carrier believes is appropriate.'').
---------------------------------------------------------------------------

    Nor does the Shipping Act necessarily require common carriers to 
apply all tariffed charges without exception. Section 41104 requires 
that ocean carriers provide service in accordance with their rules and 
practices. Those rules and practices can provide ocean carriers with 
the flexibility to mitigate charges (by waiver, refund, or free time 
extension) in appropriate cases. During the Fact Finding Investigation, 
``[m]ost VOCCs and MTOS stated that they have a policy for extending 
free time or waiving or otherwise mitigating demurrage and detention 
caused by circumstances outside of the control of cargo interests or 
truckers,'' and several provided tariffs reflecting such policies.\114\ 
Similarly, the Commission has permitted deviations from tariff rates 
when parties settle bona fide disputes.\115\ While there is some 
tension between the filed rate doctrine and encouraging regulated 
entities to mitigate demurrage and detention under certain 
circumstances, the Commission is equipped to distinguish legitimate 
resolution of demurrage and detention disputes from sham settlements 
and illegal rebates.
---------------------------------------------------------------------------

    \114\ Interim Report at 12; see also FMC Demurrage Report at 18 
(``There are exceptions to the application of demurrage fees known 
sometimes as ``stop the clock'' provisions.''); id. at 33 
(``Carriers may ``stop the clock,'' waive, reduce or compromise fees 
relating to congestion if they have the flexibility to do so under 
their tariff or service contract.''). But see Interim Report at 12 
(``[S]everal produced tariffs that specifically state that free time 
is not automatically extended for events outside the terminal's 
control, including labor strikes or weather, and at least one said 
that in those circumstances free time would not be adjusted.'').
    \115\ Univ. Cargo Mgmt., Inc. v. Hyundai Merchant Marine Co., 
1996 FMC LEXIS 57, *21-22 (ALJ Dec. 11 1996) (``[T]he Commission 
long ago began to allow parties in cases involving disputes over the 
proper rating under filed tariffs to settle their disputes even 
though this meant that shippers ended up paying something less than 
what the filed rate otherwise required.'').
---------------------------------------------------------------------------

B. General Policy Comments to Rule

    The commenters also raised several policy issues relating to the 
rule in general rather than specific sections. These comments fall into 
several general categories: (a) The desirability of

[[Page 29646]]

guidance, (b) the specificity of guidance, (c) the consequences of 
guidance, and (d) the Uniform Intermodal Interchange and Facilities 
Access Agreement.
1. Desirability of Guidance
    The Commission issued the rule after a hearing on a petition and a 
Fact Finding Investigation. It did so after determining that guidance 
in the form of a non-exclusive list of factors will promote fluidity in 
the U.S. freight delivery system, mitigate confusion, reduce and 
streamline disputes, and enhance competition and innovation in business 
operations and policies. As noted by the petitioners in Docket No. P4-
16, guidance will help regulated entities avoid incurring liability 
under section 41102(c) and will encourage shippers, intermediaries, and 
truckers to examine their practices as well.\116\
---------------------------------------------------------------------------

    \116\ Pet. P4-16 at 22-23.
---------------------------------------------------------------------------

    A few commenters, however, assert that Commission guidance is not 
necessary because the current freight delivery system is working,\117\ 
commercial solutions to demurrage and detention issues are 
adequate,\118\ and complaints by shippers, intermediaries, and truckers 
are not subject to cross examination and could contain hyperbole.\119\
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    \117\ E.g., Ports Am. at 4 (``There is no showing in the 
Commission's fact-finding or rationale expressed for the proposed 
rule that suggests this is a material problem in the industry. This 
is demonstrated conclusively by the virtually total absence of 
Commission complaint proceedings for many decades.'').
    \118\ E.g., Ports Am. at 3 (``As the Commission found, when 
major disruptions occur, such as storms or labor disputes, the 
terminals work out waivers or other suitable accommodations in 
individual cases. Terminals are already highly disincentivized by 
the marketplace from having disputes with their customer vessel 
operators and their shippers.''); PONYNJSSA at 3 (``The PONYNJSSA 
has long made available at their own cost commercial solutions to 
provide enhanced cargo information and transparency.); PMSA at 4-5 
(``[I]t appears from the Commission's report that the free market 
has voluntarily addressed the conditions raised in its NPRM.'').
    \119\ IICL at 2 (``We note, however, that statements and 
contentions by interested parties are generally reflections of the 
problems they have had; they have not been subjected to cross-
examination; they may be true or partially true; they may reflect a 
single occurrence or many; they may be legally admissible or 
inadmissible; they frequently contain hyperbole.'').
---------------------------------------------------------------------------

    The majority of the commenters, however, advocate for the proposed 
rule's prompt adoption.\120\ Although the freight delivery system works 
in the sense that cargo gets delivered, the notion that there are no 
problems is belied by the consistent complaints of shippers, 
intermediaries, and carriers.\121\ In light of these complaints, the 
Commission cannot assume that the lack of Shipping Act proceedings 
about demurrage and detention means these complaints are illusory or 
hyperbolic.\122\ There a number of reasons why a particular shipper, 
trucker, or intermediary might not file a formal complaint with the 
Commission, including relatively low amounts in dispute as compared to 
litigation costs, fear of retaliation from ocean carriers, or the 
absence of Commission guidance on section 41102(c).\123\
---------------------------------------------------------------------------

    \120\ E.g., Letter from 67 Organizations to Michael A. Khouri, 
Chairman, Fed. Mar. Comm'n (Mar. 16, 2020) (``urg[ing] the 
Commission to promptly adopt the rule as published which will assist 
the maritime industry in evaluating the fairness of these charges 
and resolving potential disputes'').
    \121\ See Part II, supra.
    \122\ Shippers, intermediary, and trucker comments are no more 
self-interested than comments from ocean carriers, marine terminal 
operators, or chassis providers.
    \123\ Pet. P4-16 at 23 (``Ambiguity has a chilling effect on 
valid claims.'').
---------------------------------------------------------------------------

    As for commercial solutions, to the extent that they adequately 
resolve demurrage and detention issues, then the Commission's guidance 
will arguably have little effect. Commenters correctly note that the 
Fact Finding Investigation revealed that most ocean carriers have 
policies for extending free time or mitigating demurrage and detention 
charges caused by circumstances outside the control of cargo interests 
or truckers.\124\ But not all did, and a shipper's right under the 
Shipping Act to be free from unreasonable practices under section 
41102(c) does not turn on the identity of the regulated entity at 
issue. Further, several ocean carriers noted that their policies give 
them the discretion to waive demurrage under certain 
circumstances.\125\ But if application of demurrage in those 
circumstances would be unreasonable, a shipper, intermediary, or 
trucker should not have to rely on an ocean carrier or marine terminal 
operator's discretion for a remedy. In other words, while the 
Commission prefers commercial solutions to demurrage and detention 
problems, the Fact Finding record showed that commercial solutions are 
only adequate from the perspective of ocean carriers and marine 
terminal operators. \126\
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    \124\ Interim Report at 12.
    \125\ Interim Report at 12.
    \126\ WCMTOA points out that in the FMC Congestion Report, the 
Commission's Bureau of Trade Analysis stated that at the FMC port 
forums, ``[w]ith appropriate leadership and support, constant 
encouragement, and a willingness to cooperate, industry 
stakeholders' thoughtful insights and expressions of concern seemed 
to demonstrate that the intermodal industry itself is well-capable 
of accurately diagnosing the problems and crafting enduring 
solutions.'' WCMTOA at 4 (quoting FMC Congestion Report at 7). While 
that may have been the case at the port forums in 2014, the record 
in Fact Finding No. 28 suggested that demurrage and detention 
collections have only increased since then, Interim Report at 7-8, 
and shipper complaints have not abated.
---------------------------------------------------------------------------

2. Specificity of Guidance
    The second category of policy-related comments relate to the 
specificity of the rule. On one hand, some commenters argue that the 
rule is too broadly applicable and prescriptive and ignores the 
complexity of the transportation system.\127\ According to these 
commenters, ``[t]he NPRM's approach, which seeks to impose nationwide 
standards for all terminals and carriers, fails to reflect the nuances 
of the hundreds and thousands of different factual situations,'' and 
``tries to mandate standards that may not be feasible or cost effective 
for many situations.'' \128\ The commenters also argue a ``national 
standard such as the NPRM'' is inconsistent with the Commission's 
statement that it would continue to consider the facts of each 
case.\129\
---------------------------------------------------------------------------

    \127\ E.g., IICL at 10 (noting that ``while the FMC is well-
intentioned,'' ``in IICL Providers' view the Interpretive Rule 
presents more problems than it attempts to resolve because the 
problems at issue exist at many levels and across multiple 
jurisdictions''); PMSA at 3 (``The NPRM is a broad-brush approach to 
a very complex subject.'').
    \128\ PMSA at 3; see also WCMTOA at 5 (``The NPRM seeks to 
mandate the same practices nationwide, without regard to geography, 
terminal configuration (including operating ports vs. landlord 
ports), cargo volumes, and other local conditions.'').
    \129\ WCMTOA at 5 n. 2 (``If each case depends on an analysis of 
the facts of each case, as has historically been the case under 
Section 10(d)(1) cases, it is unnecessary, and in fact counter-
productive, to have a national standard such as in the NPRM.''); 
Nat'l Fed. of Indep. Business at 3; PMSA at (arguing that the NPRM 
erodes the ``broad and fact-specific'' standard of section 
41102(c)''). WCMTOA also states that the rule, even if just 
guidance, might cause stakeholders to adjust their practices in 
light of the guidance to avoid regulatory risk. According to WCMTOA, 
this might mean that no cases are filed and the specific facts of 
cases are not reached. WCMTOA at 5 n.2. WCMTOA does not, however, 
explain why this would be a problem.
---------------------------------------------------------------------------

    On the other hand, many commenters request that the Commission be 
more specific and prescriptive. WSC argues that Commission did not 
provide enough guidance on how the rule would apply in specific 
situations,\130\ and takes issue with the Commission not stating, for 
instance, what the proper format, method, or timing of notice of cargo 
availability would be.\131\ Likewise,

[[Page 29647]]

several shipper, intermediary, and trucker commenters want the 
Commission to do more--to declare certain practices unreasonable or to 
require various practices. For example, these commenters would have the 
rule:
---------------------------------------------------------------------------

    \130\ WSC at 15-16.
    \131\ WSC at 16; see also id. at 18-19 (asserting that 
references to ``extenuating circumstances'' in NPRM are so vague as 
to be useless in shedding any light on what particular circumstances 
would counter-balance those situations that the NPRM would deem 
likely unreasonable); NAWE at 13-14 (describing hypothetical 
questions that NPRM does not address); Ocean Network Express at 1-2 
(listing hypotheticals); SSA Marine (asserting that because the list 
of factors is non-exclusive, ``there could be any number of 
circumstances brought to the FMC depending on what it views as 
`unreasonable' '').
---------------------------------------------------------------------------

     Require that regulated entities extend free time when an 
ocean carrier requires an empty container to be returned to a location 
other than where it was retrieved; \132\
---------------------------------------------------------------------------

    \132\ See Part III.G., infra. Moreover, one commenter suggests 
that street turns should be cheaper than returning a container to 
the terminal. Transways Motor Express at 1.
---------------------------------------------------------------------------

     Specify what information ocean carriers or marine terminal 
operators must provide to shippers and their agents regarding cargo 
availability; \133\
---------------------------------------------------------------------------

    \133\ See Part III.H, infra.
---------------------------------------------------------------------------

     Mandate specific requirements for ocean carrier and marine 
terminal operator dispute resolution and billing processes, such as 
timeframes and internal appeals processes; \134\
---------------------------------------------------------------------------

    \134\ See Part III.K and Part III.L, infra.
---------------------------------------------------------------------------

     Prescribe reasonable free time periods; \135\
---------------------------------------------------------------------------

    \135\ E.g., Int'l Fed. of Freight Forwarders Ass'ns at 10 
(``FIATA would appreciate guidance on fair and reasonable free 
periods that are in line with market developments of higher 
peaks.'') cf. John S. Connor Global Logistics at 3 (``Further to 
this understanding of availability, there must be a clear and 
consistent method for calculating Free Time'' and ``[a]ll parties 
(carriers, MTOs, rail operators) that provide Free Time should be 
utilizing the same method of calculation''); New Direx, Inc. 
(``[F]ree time would not count on days when the terminal or rail 
yards are not open.'').
---------------------------------------------------------------------------

     Define uniform demurrage and detention terminology; \136\
---------------------------------------------------------------------------

    \136\ John S. Connor Global Logistics at 6.
---------------------------------------------------------------------------

     Specify that all cargo on a bill of lading be available 
before demurrage accrues on any container; \137\
---------------------------------------------------------------------------

    \137\ CV Int'l, Inc. at 1; Shapiro at 1.
---------------------------------------------------------------------------

     Set caps on the levels of, or total amount of, demurrage 
or detention that may be charged.\138\
---------------------------------------------------------------------------

    \138\ E.g. Int'l Fed. of Freight Forwarders Ass'ns at 7; Int'l 
Motor Freight at 2 (``Finally, the rates we are charged for per diem 
and demurrage need to be looked at. Every year, per diem charges 
increase, regardless of the economic climate, for the same container 
that sits out year after year.''); Nat'l Retail Sys. at 1; 
Thunderbolt Global Logistics, LLC at 2 (``We feel that ocean 
carriers use detention charges as a profit center. There should be a 
formula for detention charges that can be applied across the board 
by all carriers at all ports.'').
---------------------------------------------------------------------------

    These comments do not justify withdrawing or substantially altering 
the rule. The Commission proposed general guidance in the form of 
factors because the operations of industry stakeholders are too varied 
nationwide, and the risk of inhibiting commercial innovation is too 
great, for the Commission to prescribe or prohibit specific practices, 
at least in this rulemaking.\139\ Nor is issuing guidance inconsistent 
with case-by-case adjudication, especially when the Commission 
expressly states that it will continue to consider all arguments raised 
in an individual case.\140\
---------------------------------------------------------------------------

    \139\ WCMTOA points out that in the FMC Congestion Report, the 
Commission's Bureau of Trade Analysis stated that the ``idea here is 
not to recommend or suggest `best practices' '' regarding congestion 
and that it would ``be invidious for the Commission to declare `best 
practices.' '' WCMTOA at 6 (quoting FMC Congestion Report at 10). 
The Commission generally agrees with the idea that it should not be 
telling regulated entities what the ``best practices'' are. But the 
Commission is authorized and required to determine what practices 
are unreasonable, and it is thus appropriate for the Commission to 
provide guidance about what sorts of practices might or might not 
trend in that direction.
    \140\ The suggestion that case-by-case adjudication means 
analyzing every case in a vacuum could result in inconsistent agency 
decisionmaking.
---------------------------------------------------------------------------

    It was because the Commission was issuing guidance applicable to 
all regulated entities within its purview that the Commission declined 
to issue a legislative rule or the rule proposed by the petitioners in 
Docket No. P4-16.\141\ It is also why the Commission's rule is not as 
granular as some commenters would prefer, even if many of the proposals 
suggested by shippers, truckers, and intermediaries appear to have 
merit.
---------------------------------------------------------------------------

    \141\ That rule would have ``essentially revive[d] rules that 
the Commission had in place for the port of New York for over 40 
years.'' Pet. P4-16 at 32. But those rules only applied to one 
port--the Commission's guidance here must be flexible enough to 
account for operations at all ports and marine terminals within the 
Commission's jurisdiction.
---------------------------------------------------------------------------

    The Commission understands that there may be questions about how 
the rule would apply in practice. Regarding ``extenuating 
circumstances'' specifically,\142\ the Commission used that phrase as a 
way of indicating that it would consider all arguments raised by the 
parties, including those involving considerations not listed in the 
rule. As to what these ``extenuating circumstances'' could be, the NPRM 
specified one: ``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 paperwork, retaining a trucker). If it has not, 
this could be factored into the analysis.'' \143\ Many of the arguments 
raised by ocean carriers and regulated entities about things such as 
cost, technical feasibility, and the conduct of shippers, 
intermediaries, and truckers are issues that could be raised as 
``extenuating circumstances'' in a particular case.\144\
---------------------------------------------------------------------------

    \142\ WSC at 19.
    \143\ 84 FR at 48852. WCMTOA and PMSA read this incorrectly to 
mean that a shipper who was sloppy in its paperwork or did not pay 
its freight would get extra free time under the rule. WCMTOA at 12; 
PMSA at 6. The statement in the NPRM means the opposite: If a 
shipper does not pay its freight, or does not submit timely or 
correct paperwork, it would likely have difficulty showing that the 
application of demurrage or detention because of resulting delays 
was unreasonable.
    \144\ WSC at 16 (discussing technical feasibility of practices); 
WCMTOA at 11-12.
---------------------------------------------------------------------------

    The guidance was drafted with the complexity and variety of the 
U.S. freight delivery system in mind. Further refinement of the 
Commission's approach would be accomplished by adjudication. Comments 
by ocean carriers and marine terminal operators suggesting that the 
rule is fatally flawed because it does not address every fact pattern 
that could possibly arise set a standard that no Commission guidance 
could possibly meet. But, as the Commission noted at the outset, the 
inability of the Commission to solve every problem does not justify 
doing nothing.\145\
---------------------------------------------------------------------------

    \145\ For instance, SSA Marine Inc. points out that 
``[r]equiring that demurrage be waived when a terminal fails to 
provide appointments is not a panacea to solve congestion.'' The 
Commission is not attempting, however, to provide a panacea; rather 
it is providing guidance in an effort to ensure that marine terminal 
operator and ocean carrier practices involving demurrage and 
detention are reasonable.
---------------------------------------------------------------------------

3. Consequences of Guidance
    Ocean carrier and marine terminal operator commenters also contend 
that the rule would have a number of deleterious consequences. They 
argue that the rule is impracticable,\146\ that it ignores the costly 
burden it would impose on ocean carriers and marine terminal operators 
and others,\147\ that it limits contract flexibility and risk 
allocation.\148\ Additionally, these commenters contend that the rule 
could lead to an ``explosion of time-consuming and expensive 
litigation,'' \149\ increased container dwell time; \150\ and chassis 
shortages.\151\
---------------------------------------------------------------------------

    \146\ NAWE at 12; OCEMA at 4; Ocean Network Express at 1-2; SSA 
Marine at 2; Ports Am. at 2-3; WCMTOA at 5, 10-11.
    \147\ IICL at 3; NAWE at 8; OCEMA at 4; Ocean Network Express at 
3; WSC at 12; WCMTOA at 5; Am. Ass'n Port Auth. at 2.
    \148\ OCEMA at 3; Ports Am. at 2-3; WSC at 11, 12; Am. Ass'n 
Port Auth. at 2.
    \149\ SSA Marine at 2; WCMTOA at 5 n.2 (asserting that rule 
``will encourage an explosion of litigation by shippers and truckers 
who do not want to pay demurrage or detention''); see also NAWE at 
13.
    \150\ Ocean Network Express at 2; WO at 1, 3
    \151\ IICL at 3. This commenter argues that if a carrier waives 
or deviates from the provisions in its bill of lading, ``it could 
theoretically'' void its protection and indemnity insurance. This 
concern is on its face speculative and was not raised by ocean 
carrier commenters themselves.
---------------------------------------------------------------------------

    Some of these comments, particularly those about the practicability 
and costliness of the rule, are based on

[[Page 29648]]

unwarranted assumptions about what the rule does. These arguments are 
belied by the text of the rule. For instance, commenters insist that 
the practical difficulties of starting demurrage free time based on 
cargo availability instead of vessel discharge of a container are 
insurmountable.\152\ Even assuming that is true, the rule does not go 
so far as to require this change.\153\ Statements in the NPRM that 
certain practices might weigh favorably in the analysis do not mandate 
their adoption, and the rule cannot reasonably be read as doing 
so.\154\ The same goes for commenters' assumptions that the rule 
requires things like starting and stopping the free time clock each 
time a container becomes unavailable on a minute-by-minute basis \155\ 
or waiving a full day of demurrage due to a container being unavailable 
for less than an entire day \156\ or implementing new information 
technology systems \157\ or creating new dispute resolution teams.\158\ 
The rule, in its final form, makes clear that parties will have ample 
opportunity to argue the merits of any such practices should their 
absence be challenged as section 41102(c) violations. And, to 
reiterate, the standard under section 41102(c) is reasonableness, not 
exacting precision.
---------------------------------------------------------------------------

    \152\ NAWE at 13; Ports Am. at 3; WSC at 15-16.
    \153\ 84 FR at 48855 (stating that the Commission may consider 
``the extent to which demurrage practices or regulations relate 
demurrage or free time to cargo availability'').
    \154\ 84 FR at 48852.
    \155\ NAWE at 13; OCEMA at 4. A few commenters assert without 
citation that free time contemplates that there are ``pockets within 
that time where units will be unavailable for various reasons.'' 
Ocean Network Express at 1; OCEMA at 4. The Commission would make 
clear that the reasonableness of free time turns on the needs of a 
shipper or its agent. Investigation of Free Time Practices--Port of 
San Diego, 9 F.M.C. 525, 539 (FMC 1966). Relatedly, a frequent 
complaint of ocean carriers and marine terminal operators is that 
shippers wait until the last free day to retrieve cargo and that the 
rule does not account for whether there might be other times within 
the free time that a shipper could have retrieved its cargo. E.g. 
WCMTOA at 11. Shippers and cargo interests are entitled to 
reasonable demurrage free time, and it is unclear why regulated 
entities would have the right to determine unilaterally when within 
that free time period shippers or their agents should pick up their 
cargo.
    \156\ Ocean Network Express at 1.
    \157\ NAWE at 15; OCEMA at 4; WSC at 12; WCMTOA at 4.
    \158\ WSC at 12.
---------------------------------------------------------------------------

    Additionally, fears of an explosion of litigation due to the rule 
are speculative. If, as ocean carriers and marine terminal operators 
claim, commercial solutions have been adequate to address demurrage and 
detention problems, then the Commission's guidance will not lead to 
lawsuits. There have historically been very few formal Shipping Act 
complaints filed regarding demurrage and detention. If the issuance of 
guidance results in more disputes because shippers are better able to 
challenge unreasonable practices, that is a feature, not a bug, of the 
rule. An increase in valid claims is not a negative result, and 
guidance is just as likely to reduce disputes because it allows parties 
to better assess the merits of a dispute before resorting to 
litigation. At present, there is little to no guidance on demurrage and 
detention and section 41102(c) in the containerization context.\159\
---------------------------------------------------------------------------

    \159\ Two commenters point out that some of the practices 
mentioned in the NPRM regarding notice would require ``significant 
additional sharing of information between the terminal and the 
carriers and clear guidelines as to who bears what responsibility.'' 
Ocean Network Express at 2; WSC at 16. The Commission does not 
believe this would be a negative consequence of the proposed rule.
---------------------------------------------------------------------------

    Similarly speculative are concerns about increased container dwell 
time and chassis shortages. The rule might result in an increase in 
free time extensions, but extending free time is just one way to 
mitigate demurrage and detention charges. Additionally, the rule's 
primary focus is situations where demurrage and detention do not work 
because cargo cannot move. Not charging a penalty because a container 
cannot move would not appear to increase its dwell time.
    As for inhibiting the freedom to allocate risk by contract, this is 
discussed in more detail below. That said, commenters appear to object 
to the rule because it would ``interfere with private and lawful 
commercial arrangements'' wherein ocean carriers and shippers have 
negotiated free time.\160\ But whether commercial arrangements are 
lawful is the point. Ocean carriers and marine terminal operators (and 
ocean transportation intermediaries) do not have an unbounded right to 
contract for whatever they want. They are limited by the prohibitions 
of the Shipping Act, one of which is section 41102(c). Although the 
general trend in the industry has been deregulatory, Congress retained 
section 41102(c) when it enacted the Ocean Shipping Reform Act in 
1998.\161\ In this sense, ocean carriers and marine terminal operators 
are no different from participants in other regulated industries.
---------------------------------------------------------------------------

    \160\ OCEMA at 3 (arguing the rule would deprive both shippers 
and ocean carriers of the ability to negotiate for competitive 
terms); Ports Am. at 3; Am. Ass'n of Port Auth. at 2 (claiming rule 
would ``effectively prohibit private parties from negotiating how 
the risk of events beyond either's control . . . are to be 
allocated, putting all the burden completely on the terminal 
operator and or/carrier''); WSC at 10-11 (describing rule as 
substantially restricting parties from defining the commercial terms 
and conditions of their own contractual relationships'').
    \161\ Ocean Shipping Reform Act of 1998, Public Law 105-258, 112 
Stat. 1902. (May 1, 1999).
---------------------------------------------------------------------------

    Ocean carriers and marine terminal operators benefit, however, from 
limited antitrust immunity for their agreements with their 
competitors,\162\ and they are also the beneficiaries of cargo lien law 
\163\ and law regarding tariffs and published marine terminal 
schedules, all of which may affect the negotiating playing field vis-
[agrave]-vis shippers, intermediaries, and truckers. Whatever their 
merits, both tariffs and marine terminal schedules share elements of 
contracts of adhesion: \164\ they are presented on a take-it-or-leave-
it basis, without the chance for much negotiation.\165\ And, like 
contracts of adhesion, the terms of tariffs and marine terminal 
schedules ``may be drafted with a view to protect to the maximum degree 
the enterprise that propounds the form, thus minimizing the realization 
of the reasonable expectations of the adhering party.'' \166\
---------------------------------------------------------------------------

    \162\ 46 U.S.C. 40307.
    \163\ See infra note 365.
    \164\ See Huffman v. Sticky Fingers, Case No. 2:05-2108-DCN-GCK, 
2005 U.S. Dist. LEXIS 55481, at *26-*27 (D.S.C. at Dec. 20, 2005) 
(defining a contract of adhesion as ``a standard form contract 
offered on a take-it-or-leave-it basis'' where the terms are ``not 
negotiable''--``an offeree faced with such a contract has two 
choices: Complete adherence or outright rejection'').
    \165\ See AgTC at 3 (``The opportunity to negotiate is a myth . 
. . .'').
    \166\ 1 Corbin on Contracts Sec.  1.4 (2020).
---------------------------------------------------------------------------

    This is not to say that shippers and intermediaries do not 
negotiate certain aspects of demurrage and detention, such as free 
time, in service contracts. But many, if not, most, shippers lack 
significant bargaining power as compared to ocean carriers. The same 
goes for intermediaries and truckers.\167\ Under such circumstances, 
there is reason for the Commission to carefully scrutinize arguments 
that shippers, intermediaries, and truckers have the ability 
meaningfully to negotiate contractual terms relating to demurrage and 
detention.\168\
---------------------------------------------------------------------------

    \167\ See Pet. of the World Shipping Council for an Exemption 
From Certain Provisions of the Shipping Act of 1984, As Amended, For 
a Rulemaking Proceeding, 1 F.M.C.2d 504, 514 (FMC 2019) (``VOCCs 
hold market power through the antitrust immunity secured pursuant to 
their filed agreements as well as their ability to discuss and 
coordinate freight rates and/or vessel capacity and services. . . . 
Because VOCCs have stronger negotiating positions, they are able to 
set service contract terms and conditions with NVOCCs; indeed, the 
majority of service contracts on file with the Commission use 
boilerplate terms and conditions written by the VOCC.'').
    \168\ In prohibiting certain exculpatory provisions in marine 
terminal schedules under section 41102(c), the Commission rejected 
the argument ``that there is nothing unreasonable, and hence 
unlawful, about a terminal operator and user agreeing upon a 
liability-shifting arrangement after an arms-length negotiation over 
the terms and conditions for the use of such facilities. Final Rule: 
Filing of Tariffs by Marine Terminal Operators Exculpatory 
Provisions, 51 FR 46668, 46668 (Dec. 24, 1986). Given the vastly 
unequal bargaining power between the parties in that instance, the 
Commission saw ``little validity to the suggestion advanced in some 
comments that `free market forces' exist and should govern the 
promulgation of liability provisions in terminal tariffs.''

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[[Page 29649]]

    Suffice it to say, ocean carriers and marine terminal operators do 
not have an inviolate right to contract with their customers free from 
government scrutiny, and there is reason to question whether demurrage 
and detention practices are normally the subject of arms-length 
negotiation between parties with remotely equal bargaining power.\169\ 
Consequently, that the guidance in the rule, when applied in a case, 
might put some limits on the ability of ocean carriers or marine 
terminal operators to impose, or negotiate, demurrage and detention 
practices vis-[agrave]-vis shippers, intermediaries, and truckers, is 
not itself a reason not to issue guidance. For the same reasons, ocean 
carrier and marine terminal operator arguments that they are being 
treated unfairly by the rule are taken with a grain of salt, though the 
Commission agrees that shippers, intermediaries, and truckers have an 
equally important role to play in enhancing the efficiency of the 
transportation system.\170\
---------------------------------------------------------------------------

    \169\ See, e.g., Mohawk Global Logistics at 10 (``These 
[detention] transactions are in many cases much more than arm's 
reach away, billed by a terminal, to a trucker that is contracted to 
a consignee, not necessarily related to the NVOCC, whose detention 
free time is added to the contract by the ocean carrier.'').
    \170\ E.g., WSC at 18 (arguing that a ``common thread'' in the 
NPRM is that it is completely one-sided). In a similar vein, WCMTOA 
requests that the Commission apply the incentive principle in the 
rule to shippers and truckers. WCMTOA 11-12. Most of WMCTOA's 
suggestions, however, would effectively limit shipper free time 
without any regard to whether it represents a reasonable amount of 
time to retrieve cargo. Moreover, the Commission does not have 
authority over shippers or truckers under section 41102(c), and the 
impetus for the fact finding and the NPRM were complaints about 
ocean carrier and marine terminal operator practices.
---------------------------------------------------------------------------

4. The Uniform Intermodal Interchange and Facilities Access Agreement
    The final general category of policy comments involved the Uniform 
Intermodal Interchange and Facilities Access Agreement (UIIA). The UIIA 
``is a multimodal negotiated interchange agreement that serves as the 
standard interchange agreement for most intermodal equipment 
interchanges except chassis.''\171\ Generally, it governs relationships 
between signatory ocean carriers and truckers. Some commenters pointed 
out that the UIIA has provisions related to empty container return, 
billing, and billing disputes, and expressed concern that the rule 
could potentially conflict with this.\172\ Others noted problems with 
the UIIA or the extent to which other parties adhere to it.\173\
---------------------------------------------------------------------------

    \171\ FMC Congestion Report at 27; see also Joni Casey, Letter: 
The UIIA and Street Turn Fees, Transport Topics (Feb. 19, 2019), 
(``[T]he UIIA is the only standard industry contract that governs 
the interchange of equipment between intermodal trucking companies 
and equipment providers such as ocean carriers, railroads and 
leasing companies.''), https://www.ttnews.com/articles/letter-clarifying-uiia-and-ianas-role.
    \172\ OCEMA at 4; Ocean Network Express at 3-4; WSC at 17.
    \173\ IMC Companies at 2 (arguing that UIIA billing process may 
conflict with service contract language); S. Counties Express at 4 
(``Terminals do not have appointments to receive an empty container, 
steamship line holds the motor carrier responsible until unit has a 
secured appointment and terminates the container. UIIA violation, no 
agreement in place.'').
---------------------------------------------------------------------------

    A few points about the UIIA. First, not all ocean carriers and 
truckers are parties to the UIIA. In addition, although there is a 
standard UIIA agreement, many terms are dictated by each equipment 
provider's addendum to the UIIA, which is defined as the provider's 
``schedule of economic and commercial terms not appropriate for 
inclusion in the uniform Agreement and other terms and conditions of 
Equipment use.'' \174\
---------------------------------------------------------------------------

    \174\ UIIA Sec.  B.2; see also Casey, supra note 175 (``Notably, 
to comply with antitrust law, the UIIA cannot include or dictate 
economic and commercial terms that are specific to each equipment 
provider. Such terms are handled through individual addenda to the 
UIIA.'').
---------------------------------------------------------------------------

    Because not all ocean carriers or truckers participate in the UIIA, 
and because ocean carrier practices may be contained in their addenda 
as opposed to the standard UIIA itself, the Commission cannot simply 
assume that the processes outlined in the UIIA sufficiently address 
concerns about ocean carrier detention practices vis-[agrave]-vis 
truckers. This is especially true given complaints that participants do 
not always abide by the terms of the UIIA or the addenda. That said, 
the UIIA has been in effect for decades and was negotiated with the 
participation of carriers, truckers, and railroads.\175\ Ocean carrier 
practices, whether incorporated in the UIIA or not, are within the 
Commission's purview under section 41102(c).\176\ To the extent UIIA 
terms or conditions are relevant to determining the reasonableness of 
particular detention practices, nothing precludes parties from raising 
these issues in individual cases.
---------------------------------------------------------------------------

    \175\ PMSA at 14.
    \176\ PMSA asserts that the Commission ``probably does not have 
jurisdiction'' to ``mandate wholesale changes that are inconsistent 
with the UIIA.'' PMSA at 14. PMSA cites no authority for this 
proposition. To the contrary, ocean carrier demurrage and detention 
practices and regulations are within the Commission's jurisdiction 
under section 41102(c).
---------------------------------------------------------------------------

C. Purpose of Rule

    The first paragraph of the proposed interpretive rule in the NPRM 
describes its purpose: To provide guidance about how the Commission 
will interpret 46 U.S.C. 41102(c) and 46 CFR 545.4(d) in the context of 
demurrage and detention.\177\ None of the comments specifically 
addressed this paragraph of the rule, and the Commission will include 
it without change in the final rule.
---------------------------------------------------------------------------

    \177\ 84 FR at 48851-52, 48855.
---------------------------------------------------------------------------

D. Applicability and Scope of Rule

    The next paragraph of the rule outlines its applicability and 
scope. The rule applies to practices and regulations relating to 
demurrage and detention for containerized cargo. For purposes of the 
rule, demurrage and detention includes 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.\178\
---------------------------------------------------------------------------

    \178\ 84 FR at 48852, 48855
---------------------------------------------------------------------------

    In the NPRM, the Commission explained that the reference to 
containerized cargo included cargo in refrigerated (reefer) 
containers.\179\ Given that the lack of standard terminology in the 
industry,\180\ the rule defines ``demurrage'' and ``detention'' broadly 
to cover all charges customarily referred to as demurrage, detention, 
or per diem.\181\ The rule specifically limits these definitions to 
``shipping containers'' to exclude charges related to other equipment, 
such as chassis, because depending on the context, ``per diem'' can 
refer to containers, chassis, or both.\182\
---------------------------------------------------------------------------

    \179\ 84 FR at 48852.
    \180\ Interim Report at 5-7, 17; Final Report at 11-13, 30.
    \181\ 84 FR at 48852.
    \182\ For instance, commenters such as International Motor 
Freight and Wheaton Grain Inc. refer to container charges in terms 
of per diem rather than detention. Int'l Motor Freight at 2; Wheaton 
Grain Inc. at 1. Similarly, the UIIA defines per diem as charges 
related to ``equipment,'' which includes containers and chassis. See 
UIIA Sec.  B.22.
---------------------------------------------------------------------------

    Commenters did not object to limiting the rule to containerized 
cargo, to defining demurrage and detention broadly, or to including 
reefer cargo within the rule's ambit. And while some commenters believe 
that the Commission's guidance should account

[[Page 29650]]

for chassis availability \183\ or the interests of chassis 
lessors,\184\ none argued that the scope of the rule should be enlarged 
to include charges imposed by chassis owners.\185\
---------------------------------------------------------------------------

    \183\ See Part III.F, infra.
    \184\ IICL at 2.
    \185\ Section 41102(c) does not cover chassis providers who do 
not otherwise fall within the definition of a regulated entity under 
the Shipping Act.
---------------------------------------------------------------------------

    Commenters did, however, raise questions about the scope of the 
rule. Several commenters urged that the rule apply to export shipments 
as well as imports, and they raised issues unique to exports, such as 
rolled bookings due to vessel and schedule changes and ocean carrier 
changes to container return cutoff dates and insufficient notice of 
such changes.\186\
---------------------------------------------------------------------------

    \186\ See Florida Customs Brokers & Forwarders Ass'n; IMC 
Companies at 2; John S. Connor Global Logistics at 7; Int'l Fed. Of 
Freight Forwarders Ass'ns at 7; Miami Global Lines; New England 
Groupage; New York New Jersey Foreign Freight Forwarders and Brokers 
Ass'n (NYNJFFF&BA) at 5.
---------------------------------------------------------------------------

    To be clear, the rule is not limited to import shipments and 
applies to export shipments as well. In particular, the guidance on the 
incentive principle, demurrage and detention policies, and transparent 
terminology would apply in situations involving exports. The NPRM 
preamble focused on import issues because imports were the focus of the 
Fact Finding Investigation and most of the complaints.
    Another scope-related comment involved the application of the rule 
outside of marine terminals. The American Cotton Shippers Association 
noted that ocean carriers, ``responding to the demands of consumers, 
have crafted service contracts that incorporate inland movements and 
services'' and ``[t]hus the reasonableness of detention and demurrage 
practices and regulations, as they apply to inland movements in point-
to-point service contracts, have an equally significant impact on the 
fluidity of all ocean-borne trade.'' \187\ It urges that the rule 
account for the inland components of ocean-borne shipping transactions 
and apply to point-to-point service contracts.\188\ Similarly, IMC 
Companies believes there is a ``gray area of jurisdiction'' in 
intermodal shipping, and requests ``greater clarity directed to ocean 
carriers['] intermodal shipments moving on a through bill of lading 
with regard to application of the incentive principles the FMC has 
outlined.'' \189\
---------------------------------------------------------------------------

    \187\ Am. Cotton Shippers Ass'n at 7-8.
    \188\ Am. Cotton Shippers Ass'n at 8.
    \189\ IMC Companies at 3-4.
---------------------------------------------------------------------------

    Nothing in the rule limits its scope to shipping activities 
occurring at ports or marine terminals. Rather, section 41102(c) 
concerns ocean carrier, marine operator, and ocean transportation 
intermediary practices and regulations ``relating to or connected with 
receiving, handling, storing, or delivering property.'' Ocean carrier 
demurrage and detention practices are subject to section 41102(c) and 
Commission oversight, regardless of whether the practices relate to 
conduct at ports or inland, with some caveats. First, not everything an 
ocean carrier or marine terminal operator does is within the 
Commission's purview--an ocean carrier or marine terminal operator must 
be acting as a common carrier or marine terminal operator as defined by 
the Shipping Act with respect to the conduct at issue.\190\ This is 
often not a difficult question, but the further one gets away from the 
terminal, the more complicated the inquiry may become, and it is not a 
question that can always be answered in the abstract.\191\
---------------------------------------------------------------------------

    \190\ See, e.g., Auction Block Co. v. Fed. Mar. Comm'n, 606 Fed. 
Appx. 347, 348 (9th Cir. 2015) (``The Commission reasonably 
concluded that it makes little sense to bring into its regulatory 
ambit all facilities operated by an entity merely because a single 
one of them is connected to international marine transportation.''); 
Crocus Investments, LLC v. Marine Transp. Logistics, Inc., 1 
F.M.C.2d 403, 415 (FMC 2019) (``The approach supported by the text 
of section 41102(c) and Commission caselaw asks: was the respondent 
acting as a regulated entity with respect to the conduct at 
issue?'').
    \191\ Crocus, 1 F.M.C.2d at 415 (noting that determining whether 
respondent is a regulated entity, in this case an ocean 
transportation intermediary, is a ``fact-intensive analysis'' taking 
into account statutory definitions and evidence about the parties' 
conduct during the relevant time frame).
---------------------------------------------------------------------------

    Second, the Commission must be careful not to encroach into the 
jurisdiction of other agencies, such as the Surface Transportation 
Board, which is itself considering issuing guidance to railroads 
similar to that in the Commission's rule.\192\
---------------------------------------------------------------------------

    \192\ Surface Transp. Bd., Policy Statement on Demurrage and 
Accessorial Rules and Charges (STB Oct. 4, 2019), https://
www.stb.gov/decisions/readingroom.nsf/UNID/
F844367E52874F138525848C0042BFB3/$file/47133.pdf. STB's proposed 
policy statements also references the incentive principle:
    First, demurrage rules and charges are not reasonable when they 
do not serve to incentivize the behavior of shippers and receivers 
to encourage the efficient use of rail assets. In other words, 
charges should not be assessed in circumstances beyond the shipper's 
or receiver's reasonable control. It follows, then, that revenue 
from demurrage charges should reflect reasonable financial 
incentives to advance the overarching purpose of demurrage and that 
revenue is not itself the purpose.'' Second, transparency and mutual 
accountability by both rail carriers and the shippers and receivers 
they serve are important factors in the establishment and 
administration of reasonable demurrage and accessorial rules and 
charges.
    Id. at 21.
---------------------------------------------------------------------------

    Commenters were also concerned about railroads and railyards.\193\ 
To be clear, section 41102(c) of the Shipping Act applies to common 
carriers, marine terminal operators, and ocean transportation 
intermediaries. The Commission is without authority to address 
practices of railroads or rail facilities unless they fall within one 
of those statutory definitions. That said, if the practice at issue 
relates to rail but is nonetheless an ocean carrier practice, e.g., is 
contained in an ocean carrier tariff or service contact, then the 
guidance in the rule would likely apply.
---------------------------------------------------------------------------

    \193\ Aluminum Bahrain (``The rail carrier and the yard itself 
made sure that every container paid extra for the chassis and for 
detention''); APL Logistics (``APL Logistics seeks clarification 
whether the proposed interpretive rule applies to railroad terminals 
when an international shipment passes through a marine terminal 
operator and is then transported to its final destination via rail 
on a through bill of lading''); Global Fairways LLC (complaining 
about rail practices and ocean carriers not providing sufficient 
information); IMC Companies; Wheaton Grain.
---------------------------------------------------------------------------

    In sum, the rule is not limited, in its language or intent, to 
import shipments, nor is it limited solely to ocean carrier practices 
related to conduct at marine terminals. The precise outer bounds of the 
Commission's authority, however, is a subject better resolved in the 
context of a particular factual scenario. Consequently, the Commission 
will adopt paragraph (b) of the proposed rule in the final rule with 
only grammatical changes that do not affect its substance.
    It is important to emphasize, however, the Commission's focus here 
is on practices related to charges imposed by regulated entities on 
shippers, intermediaries, and truckers and not the contractual 
relationships between ocean carriers and marine terminal operators. 
Ocean carriers must provide adequate terminal facilities.\194\ It 
appears that most carriers accomplish this by ``contract[ing] for the 
facilities of another person such as a terminal operator, in which case 
the terminal operator is in effect the agent of the carrier.'' \195\ 
This relationship--how marine terminal operators are compensated by 
ocean carriers for use of their terminal facilities--is not the primary 
concern of the guidance in the rule, even if marine terminal operators 
are compensated by carriers via charges called ``wharf demurrage'' or 
``terminal demurrage.'' \196\ The rule might be relevant to that 
compensation if marine

[[Page 29651]]

terminal charges to ocean carriers are passed on to shippers and their 
agents via demurrage.\197\ In those instances, however, the Commission 
would be assessing the reasonableness of ocean carrier demurrage 
practices vis-[agrave]-vis shippers, intermediaries, and truckers, not 
marine terminal operator practices with respect to ocean carriers.
---------------------------------------------------------------------------

    \194\ Final Report at 27; Boston Shipping Ass'n v. Port of 
Boston Marine Terminal Ass'n, 10 F.M.C. 409, 415 (FMC 1967).
    \195\ Boston Shipping Ass'n, 10 F.M.C. at 415.
    \196\ This should allay some of the concerns raised by 
commenters like the American Association of Port Authorities that 
the rule would prevent marine terminal operators from being 
compensated for use of terminal space. Am. Ass'n of Port Auth. at 2.
    \197\ Interim Report at 16 (``The VOCC's tariff rates and 
practices may also directly pass through or refer to those of the 
relevant port authority's or MTO's schedule.'').
---------------------------------------------------------------------------

E. Incentive Principle

    The main thrust of the rule is that although demurrage and 
detention are valid charges when they work, when they do not, there is 
cause to question their reasonableness.\198\ This derives from the 
well-established principle that to pass muster under section 41102(c), 
a regulation or practice must be tailored to meet its intended 
purpose,\199\ that is, ``fit and appropriate for the end in view.'' 
\200\ The Commission determined that because the purpose of demurrage 
and detention are to incentivize cargo movement, it will consider in 
the reasonableness analysis under section 41102(c) the extent to which 
demurrage and detention are serving their intended purposes as 
financial incentives to promote freight fluidity.\201\
---------------------------------------------------------------------------

    \198\ 84 FR at 48852.
    \199\ 84 FR a 48852 (citing Distribution Servs. Ltd. v. Trans-
Pac. Freight Conference of Japan and Its Member Lines, 24 S.R.R. 
714, 722 (FMC 1988)).
    \200\ Distribution Servs., 24 S.R.R. at 722 (quoting Port of San 
Diego, 9 F.M.C. at 547).
    \201\ 84 FR at 48852, 48855.
---------------------------------------------------------------------------

    The Commission explained in the NPRM that practices imposing 
demurrage and detention when such charges are incapable of 
incentivizing cargo movement, such as when a trucker arrives at a 
marine terminal to retrieve a container but cannot do so because it is 
in a closed area or the port is shutdown, might not be reasonable.\202\ 
Similarly, the Commission stated, ``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 not serving their purpose would likely be found 
unreasonable.'' \203\
---------------------------------------------------------------------------

    \202\ See 84 FR at 48852.
    \203\ 84 FR at 48852.
---------------------------------------------------------------------------

    The commenters did not dispute that demurrage and detention 
practices must be tailored to meet their purpose. But several 
commenters objected to the rule because: (1) Demurrage and detention 
serve purposes other than acting as financial incentives for cargo 
movement, (2) the rule will disincentivize cargo movement, (3) the rule 
might conflict with the principle of once-in-demurrage-always-in-
demurrage, and (4) the rule unfairly allocates risks better allocated 
by contract.
1. Purposes of Demurrage and Detention
    The Commission stated in the NPRM that 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).'' 
This understanding was based on what shippers, ocean carriers, and 
marine terminal operators told the Commission.\204\ Many commenters 
agreed that the ``incentive principle'' is ``supported by law and 
Shipping Act policies'' and assert that charges should be mitigated 
when efficiency incentives cannot be achieved.\205\ Commenters also 
recognized that ``the primary purpose of detention and demurrage is to 
provide an incentive for cargo interests to remove their cargo from the 
terminal promptly or to return equipment in a timely manner.'' \206\
---------------------------------------------------------------------------

    \204\ 84 FR at 12 (citing Interim Report at 2-3; Final Report at 
12, 13).
    \205\ E.g., Wal Mart at 1 (``Wal Mart has also experienced abuse 
of such charges in ways that do not incentivize efficient movement 
and therefore applauds FMC's identification of efficient cargo 
movement as the key consideration in assessing reasonableness of 
demurrage and detention practices under 46 U.S.C. 41102(c).''); Cal. 
Cartage Co. at 1; Dreisbach Enter. at 1.
    \206\ SSA Marine at 1; Nat'l Indus. Transp. League at 5 
(``Demurrage and detention practices should be applied to serve 
their intended purpose, with correct financial incentives to promote 
freight fluidity.''); NCBFAA at 5.
---------------------------------------------------------------------------

    Several commenters asserted, however, that demurrage and detention 
serve other legitimate purposes. Ocean carriers argued that demurrage 
and detention function to compensate them for costs associated with 
their equipment.\207\ Marine terminal operators asserted that these 
charges are appropriate to compensate terminal operators for the use of 
terminal space.\208\ Shippers and intermediaries, too, indicated that 
demurrage and detention have a compensatory element.\209\ As a few 
commenters pointed out, the Final Report in Fact Finding Investigation 
No. 28 noted that ``some cases refer to demurrage also serving a 
compensatory purpose.'' \210\ Additionally, some commenters asserted 
that demurrage and detention actually serve an illegitimate purpose: 
serving as a revenue stream for ocean carriers and marine terminal 
operators.\211\
---------------------------------------------------------------------------

    \207\ OCEMA at 2; WCMTOA at 8-9.
    \208\ Am. Ass'n Port Auth. at 2; NAWE at 10-11; WCMTOA at 2-3.
    \209\ E.g., Am. Coffee Corp. at 2; Int'l Fed. of Freight 
Forwarders Ass'ns at 1-2; Nat'l Indus. Transp. League at 13; Sea 
Shipping Line at 2; see also IICL at 2.
    \210\ Final Report at 28 n.36.
    \211\ AgTC at 3 (``It is also clear that the penalties have now 
become a significant revenue source for the carriers.''); Mohawk 
Global Logistics at 5; NCBFAA at 7; Lee Hardeman Customs Broker, 
Inc. at 1 (arguing that demurrage and detention are ``CLEARLY 
revenue streams from frequently unreasonable application of them''); 
Bunzl Int'l Servs. Inc. at 1; Int'l Motor Freight at 2; The Judge 
Org. at 1; Mondelez Int'l at 2; Thunderbolt Global Logistics at 2; 
Transp. Intermediaries Ass'n at 4; Retail Indus. Leaders Ass'n at 2; 
see also Free Time and Demurrage Charges at New York, 3 U.S.M.C. 86, 
107 (FMC 1948) (NYI) (``We hold, however, that demurrage charges at 
penal levels are not justifiable by reference to a carrier's need 
for revenue.'').
---------------------------------------------------------------------------

    Historically, the Commission recognized that demurrage has ``penal 
elements which are designed to encourage the prompt movement of cargoes 
off the piers'' and includes a compensatory element which accounts for 
``the use of the pier facilities, for watchmen, fire protection, etc., 
on the cargo not picked up during free time.'' \212\ It is important to 
specify, however, what this compensatory aspect of demurrage 
traditionally meant. To the extent demurrage had a compensatory aspect, 
it was to reimburse ocean carriers for costs incurred after free time 
expired--``costs'' in this context meant additional costs associated 
with cargo remaining on a pier after free time.\213\ In other words, 
demurrage and detention are not the mechanism by which ocean carriers 
recover all costs related to their equipment,\214\ and the Commission 
cannot assume that these charges are the primary method by which ocean 
carriers recover their capital investment and container costs, as some 
commenters suggest.\215\
---------------------------------------------------------------------------

    \212\ In re Free Time and Demurrage Practices on Inbound Cargo 
at New York Harbor, 9 S.R.R. 860, 864 (1967) (NYII); NYI, 3 U.S.M.C. 
at 107.
    \213\ NYII, 9 S.R.R. at 864.
    \214\ For example, in the ``ideal'' situation, where a container 
is retrieved and returned with free time, an ocean carrier would 
collect no demurrage or detention. The Commission cannot assume that 
in this preferred scenario that ocean carriers would have to absorb 
their equipment costs. Rather, they presumably recover their 
equipment costs in other ways, such as in their freight rate.
    \215\ WSC at 9 (``From the carrier's perspective, detention 
charges are structured to serve as a recovery mechanism for the 
capital investment and cost of the container, including repair, 
maintenance, and leasing, as well as opportunity costs associated 
with not having the equipment available for revenue-producing cargo 
transport.'').
---------------------------------------------------------------------------

    A second point is that Commission in Free Time and Demurrage 
Charges at New York assumed that the minimum demurrage charge in that 
case--the first period demurrage--represented a compensatory charge for 
that period.\216\ This assumption was based on Commission caselaw 
requiring ocean carriers to charge at least compensatory

[[Page 29652]]

demurrage.\217\ Given that that this caselaw pre-dated 
containerization, its precedential value is an open question, and in 
the absence of evidence establishing the extent to which ocean carrier 
demurrage or detention are compensatory, the Commission cannot assume 
that demurrage and detention have compensatory aspects in every case. 
As noted above, however, the rule does not preclude ocean carriers and 
marine terminal operators from arguing and producing evidence regarding 
the compensatory aspects of demurrage and detention in individual 
cases.
---------------------------------------------------------------------------

    \216\ NYI, 9 U.S.M.C. at 109.
    \217\ NYI, 9 U.S.M.C. at 93, 109.
---------------------------------------------------------------------------

    Accordingly, because the participants in Fact Finding Investigation 
No. 28 and the commenters consistently emphasized the utility of 
demurrage and detention in incentivizing cargo movement and productive 
asset use, the Commission continues to understand demurrage and 
detention as primarily being financial incentives to promote freight 
fluidity. That said, the Commission is amending the final rule to 
recognize that the demurrage and detention might have other purposes. 
First, the Commission is adding the word ``primary'' to the ``Incentive 
Principle'' paragraph of the rule. Second, the Commission is adding a 
new ``Non-Preclusion'' paragraph of the interpretive rule, which 
confirms that the Commission may consider additional factors, 
arguments, and evidence in addition to the factors specifically listed 
in the rule. This would include arguments and evidence that demurrage 
and detention have purposes other than as financial incentives.\218\
---------------------------------------------------------------------------

    \218\ Shippers, intermediaries, and truckers do not necessarily 
oppose ocean carriers and marine terminal operators recovering, in 
certain circumstances, legitimate costs. Mohawk Global Logistics at 
6 (noting that in government hold situations, ``[t]here should be 
compensation to both the terminals and the carriers in these 
cases.''); Agregar Consultoria at 1. Nor do most of them deny that 
demurrage and detention have a necessary place in ocean commerce. 
E.g., Mohawk Global Logistics at 2. Their primary concern is 
avoiding ``punitive'' demurrage and detention. John S. Connor Global 
Logistics at 1; AgTC at 1; ContainerPort Group at 1; Mohawk Global 
Logistics at 6-7.
---------------------------------------------------------------------------

2. Incentives
    Ocean carrier and marine terminal operators also object to the 
``incentive principle'' on the grounds that it will effectively 
disincentivize cargo movement and equipment return. According to NAWE: 
``If the cargo interest knows that its free time will be extended 
because of terminal closure due to a force-majeure-type situation, the 
cargo interest is not incentivized to retrieve its cargo before the 
event.'' \219\ Some commenters also suggest that the rule would permit 
shippers to get extra free time by withholding the payment of freight 
or by being careless with paperwork.\220\
---------------------------------------------------------------------------

    \219\ E.g., NAWE at 11; see also OCEMA at 4; WCMTOA at 1, 10. A 
``force majeure'' clause is a contract provision that excuses a 
party's performance of contractual obligations when certain 
circumstances arise outside the party's control, making performance 
inadvisable, impracticable, or impossible. 14 Corbin on Contract 
Sec.  74.19. These clauses usually list circumstances that trigger 
the clause, such as acts of God, fires, floods, labor disputes, etc. 
Id. Presumably, commenters use the phrase ``force majeure'' as 
shorthand for events outside their control.
    \220\ WCMTOA at 12; PMSA at 6.
---------------------------------------------------------------------------

    As to the former concern, the Commission does not believe that 
shippers will be disincentivized from retrieving their cargo in a 
timely fashion. This assumes that shippers are willing to run the risk 
of paying demurrage charges on the off chance a ``force majeure'' event 
occurs. Moreover, shippers have commercial incentives to get their 
cargo off terminal, including ``contractual delivery deadlines and 
perishable condition time limits.'' \221\ In addition, one could easily 
argue the flip side of the commenters' position, namely that the 
ability of ocean carriers and marine terminal operators to collect 
demurrage even if it is impossible for a shipper to retrieve cargo or a 
truck to return equipment might disincentivize ocean carriers and 
marine terminal operators from acting efficiently.\222\
---------------------------------------------------------------------------

    \221\ AgTC at 4. Truckers likely have commercial and other 
incentives to return equipment in a timely fashion. It may be true 
that some ``importer-consignees operate on small margins of profit, 
and because public warehouse charges are generally higher than 
demurrage charges, some consignees tend to use the piers as 
warehouses.'' NYII, 9 S.R.R. at 864. But this possibility is 
insufficient reason to ignore the incentive principle.
    \222\ Cf. EMO Trans Atlanta, GA USA at 1 (``To ask the 
forwarding community to pay the price for operational issues of 
ports and carriers must stop.'') F.O.X. Intermodal Corp. at 1 
(arguing that ``terminals directly benefit from their inability to 
service the truckers in a timely fashion''); The Judge Organization 
at 1 (same).
---------------------------------------------------------------------------

    As for concerns that shippers will game the system to get more free 
time, the rule presupposes that shippers, intermediaries, and truckers 
have complied with their customary obligations, including those 
involving cargo retrieval.\223\ Any evidence that these obligations 
were not met can be raised in the context of a case. Relatedly, the 
National Industrial Transportation League requests that the Commission 
``clarify that not making an advance payment of freight charges, where 
the parties have a credit arrangement in place, should not be viewed as 
failure to comply with customary cargo interest responsibilities.'' 
\224\ The Commission agrees that as a general matter, paying freight in 
advance may not necessarily be a ``customary cargo interest 
responsibility'' if a shipper or intermediary has a credit arrangement 
with an ocean carrier, but such determinations will depend on the facts 
of each case and the specific arrangements between the shipper and 
carrier.
---------------------------------------------------------------------------

    \223\ 84 FR at 48852.
    \224\ Nat'l Indus. Transp. League at 6.
---------------------------------------------------------------------------

3. Once-in-Demurrage, Always-in-Demurrage
    Ocean carriers and marine terminal operators further urge the 
Commission to reaffirm that notwithstanding the rule, the principle of 
``once-in-demurrage, always-in-demurrage'' still governs.\225\ 
According to these commenters, under this principle shippers ``bear the 
risk of any disability that arises after free time has ended.'' \226\ 
In other words, once free time ends, it would not be unreasonable to 
impose demurrage on a shipper even if the shipper is unable to retrieve 
the container due to circumstances outside the shipper's, or anyone's, 
control. Conversely, other commenters request that the Commission 
expressly overrule the once-in-demurrage, always-in-demurrage 
principle.\227\
---------------------------------------------------------------------------

    \225\ J. Peter Hinge at 3; NAWE at 14 n.5; OCEMA at 5; PMSA at 
7-8.
    \226\ WCMTOA at 9 (``If any final rule is adopted, it should 
make clear that it is reasonable for a terminal operator to charge 
demurrage if a container becomes unavailable for any reason after 
free time has expired.''); NAWE at 14 n.5.
    \227\ Green Coffee Ass'n at 2 (``We also contend that the 
demurrage clock should be suspended during ``non-accessible'' 
periods when the container may already be incurring demurrage 
charges thus eliminating the practice of `once in demurrage, always 
in demurrage.' ''); Commodity Supplies, Inc. at 2 (same, but for 
detention).
---------------------------------------------------------------------------

    As an initial matter, it is useful to describe the legal context 
before and after the expiration of free time.\228\ Prior to the 
expiration of free time, there are two relevant legal principles in 
play relevant to demurrage. First, as part of its transportation 
obligation, an ocean carrier must allow a shipper a ``reasonable 
opportunity to retrieve its cargo,'' i.e., free time.\229\ Free time is 
``free'' because during this time period, an ocean carrier cannot 
assess any demurrage.\230\ Nor can marine terminal

[[Page 29653]]

costs be shifted to a shipper during free time, even in the event of a 
strike.\231\ Second, during free time ocean carriers remain subject to 
section 41102(c)'s reasonableness standard: its practices must be 
tailored to meet their purposes.
---------------------------------------------------------------------------

    \228\ The caselaw involves demurrage, but similar concepts would 
apply in detention context.
    \229\ Final Report at 27 (citing Port of San Diego, 9 F.M.C. at 
539).
    \230\ NYII, 9 S.R.R. at 874 (noting obligation to ``tender for 
delivery free of assessments of any demurrage''); NYI, 3 U.S.M.C. at 
101 (``This is an obligation which the carrier is bound to discharge 
as a part of its transportation service, and consignees must be 
afforded fair opportunity to accept delivery of cargo without 
incurring liability for penalties.'').
    \231\ Boston Shipping Ass'n, 10 F.M.C. at 416 (``No one would 
argue that the carrier should pay the terminals' cost of providing 
the pier for the free time period itself.''); id. at 417 (``We would 
place the burden upon him who at the time of the strike owes an 
undischarged obligation to the cargo. Thus, where the cargo is in 
free time and a strike occurs, it is the vessel which has yet to 
discharge its full obligation to tender for delivery and it is to 
the vessel that the terminal is at this point in time supplying the 
attendant facilities and services.'').
---------------------------------------------------------------------------

    Once free time expires, however, the first of these legal 
principles drops away because the transportation obligation of the 
carrier has ended.\232\ At that point, ocean carriers can, and should, 
charge demurrage. As the Commission recognized in the NPRM, demurrage 
is a valuable charge when it incentivizes prompt cargo movement.\233\ 
Ocean carriers remain subject, however, to section 41102(c) and its 
requirement that demurrage practices be tailored to meet their 
purposes--acting as financial incentives for cargo and equipment 
fluidity. If demurrage cannot act as an incentive for cargo and 
equipment fluidity because, for instance, a marine terminal is closed 
for several days due to a storm, charging demurrage in such a 
situation, even if a container is already in demurrage, raises 
questions as to whether such demurrage practices are tailored to their 
intended purpose in accordance with section 41102(c).
---------------------------------------------------------------------------

    \232\ Boston Shipping Ass'n, 10 F.M.C. at 417; NYII, 9 S.R.R. at 
874.
    \233\ 84 FR at 48852.
---------------------------------------------------------------------------

    The ocean carrier and marine terminal operator commenters have two 
answers: precedent and incentives.\234\ According to the commenters, 
Boston Shipping Association stands for the proposition that it is 
``reasonable for a carrier to continue assessing demurrage against 
cargo that had exceeded free time when a strike broke out, thus 
precluding pick up.'' \235\ Commenters rely on a single quotation: 
``Thus, in our view, it is only just and reasonable that the consignee, 
who has failed to avail himself of the opportunity to pick up his cargo 
during free time, should bear the risk of any additional charges 
resulting from a strike occurring after free time has expired.'' \236\
---------------------------------------------------------------------------

    \234\ NAWE at 14 n.5; OCEMA at 5; PMSA at 7-8; WCMTOA at 9.
    \235\ OCEMAT at 5.
    \236\ 10 F.M.C. at 417-18.
---------------------------------------------------------------------------

    But this quotation must be read in context. The question in Boston 
Shipping Association was who should be responsible, the ocean carrier 
or the consignee, for paying the terminals' cost: ``Thus, where the 
terminal is the intermediate link between the carrier and the shipper 
or consignee, one of these two persons must pay the terminal's cost of 
providing the services rendered.'' \237\ The Commission held that 
during free time, this burden was on the ocean carrier; once free time 
expired, it was on the shipper. The Commission in Boston Shipping 
Association said nothing about the penalty aspect of demurrage. At 
most, it stands for the proposition that once free time ends, a shipper 
may be responsible for any compensatory aspect of demurrage.
---------------------------------------------------------------------------

    \237\ 10 F.M.C. at 417 (emphasis added); id. (``It is therefore 
just and reasonable to require the vessel to pay the cost of the 
supervening strike which renders the discharge of that 
responsibility impossible.'') (emphasis added).
---------------------------------------------------------------------------

    This interpretation of Boston Shipping Association is consistent 
with the New York cases. In Free Time and Demurrage Charges at New 
York, the Commission held that even after free time expired, levying 
penal demurrage charges when a consignee, for reasons beyond its 
control, could not remove cargo from a pier was unjust and 
unreasonable:

    When property lies at rest on a pier after free time has 
expired, and consignees, through reasons beyond their control, are 
unable to remove it, the penal element of demurrage charges assessed 
against such property has no effect in accelerating clearance of the 
pier. To the extent that such charges are--penal, i.e., in excess of 
a compensatory level--they are a useless and consequently unjust 
burden upon consignees, and a source of unearned revenue to 
carriers.\238\
---------------------------------------------------------------------------

    \238\ NYI, 3 U.S.M.C. at 107.

    The Commission further held, however, that in such circumstances, 
the ocean carrier is entitled to fair compensation for sheltering and 
protecting the cargo.\239\ The Commission reached a similar conclusion 
almost 20 years later in In re Free Time and Demurrage Practices on 
Inbound Cargo at New York Harbor, explaining that ``[d]uring 
longshoremen's strikes affecting even a single pier, the penalty 
element of demurrage affords no incentive to remove cargo from the pier 
because the consignee cannot do so for reasons entirely beyond his 
control.'' \240\
---------------------------------------------------------------------------

    \239\ Id. at 107-108.
    \240\ 9 S.R.R. at 875. The Commission reiterated that ocean 
carriers were entitled to compensation for use of their piers during 
longshoremen's strikes for cargo in demurrage when strike began and 
also allowed the assessment of demurrage (penal and compensatory) 
after the end of a strike, despite post-strike congestion, on 
containers in demurrage when the strike began. Id. at 877, 880.
---------------------------------------------------------------------------

    To the extent, then, that these pre-containerization cases are 
relevant, they stand for the proposition that insofar as demurrage is a 
penalty i.e., an incentive to retrieve cargo, it is unreasonable to 
assess it on cargo ``in demurrage.'' This is consistent with the 
guidance in the rule. And, while those cases allowed ocean carriers to 
recover certain costs, as noted above, the rule does not preclude the 
Commission from considering whether demurrage and detention have some 
compensatory aspect when determining the reasonableness of specific 
practices in individual cases.
    As for incentives, the commenters' second argument in favor of 
``once-in-demurrage, always-in-demurrage'' is that it provides an 
incentive for shippers and truckers to retrieve cargo and return 
equipment during free time. According to PMSA, ``[i]f a cargo interest 
knows that if it does not pick up cargo or return equipment during the 
original free time period, it will be subject to charges even if a no-
fault event occurs during the demurrage/per diem, it will have a strong 
incentive to pick up the cargo during the original free time, promoting 
container velocity.'' \241\
---------------------------------------------------------------------------

    \241\ PMSA at 8.
---------------------------------------------------------------------------

    This is a corollary to the argument that the rule disincentivizes 
shippers from retrieving containers during free time. As noted above, 
shippers and truckers have commercial reasons for wanting to get 
containers off-terminal or returned in a timely fashion.\242\ Moreover, 
the prospect of having to pay demurrage or detention alone is an 
incentive. And, as noted above, once-in-demurrage, always-in-demurrage 
may also lessen the incentive for ocean carriers and marine terminal 
operators to perform efficiently.
---------------------------------------------------------------------------

    \242\ E.g., AgTC at 4,
---------------------------------------------------------------------------

    The Commission therefore does not agree with some commenters' 
arguments that it is always a reasonable practice to charge detention 
and demurrage after free time regardless of cargo availability or the 
ability to return equipment. The rule and the principles therein apply 
to demurrage and detention practices regardless of whether containers 
at issue are ``in demurrage'' or ``in detention.'' That is, in 
assessing the reasonableness of demurrage and detention practices, the 
Commission will consider the extent to which demurrage and detention 
are serving their intended primary purposes as financial incentives to 
promote freight fluidity, including how demurrage and detention are 
applied after free time has expired.

[[Page 29654]]

4. Risk Allocation
    Finally, ocean carriers and marine terminal operators argue that 
the rule unfairly allocates all risks in force majeure situations to 
ocean carriers and marine terminal operators and prevents allocation of 
those risks by contract.\243\ Commenters refer to ``risk related to 
fluctuations in terminal fluidity,'' ``risk and all of the attendant 
costs related to events beyond their control,'' \244\ and ``the entire 
financial responsibility for no-fault situations.'' \245\ Similarly, 
NAWE's states that ``the NPRM would legally mandate that all risk of 
demurrage/detention costs in force majeure-type situations be placed on 
terminals and carriers.'' \246\
---------------------------------------------------------------------------

    \243\ Am. Ass'n of Port Auth. at 2 (``However, the proposed rule 
would effectively prohibit private parties from negotiating over how 
the risk of events beyond either's control (such as weather event or 
actions of a third party) are to be allocated, putting all the 
burden completely on the terminal operator and/or carrier.''); see 
also NAWE at 11; OCEMA at 2-3; PMSA at 6; Ports Am. at 5;
    \244\ OCEMA at 2-3.
    \245\ PMSA at 6.
    \246\ NAWE at 11.
---------------------------------------------------------------------------

    The Commission interprets these comments as saying that in a 
``force majeure'' situation, e.g., a port is completely closed due to 
weather, commenters incur costs related to containers and terminal 
property, and if they cannot charge demurrage or detention, they have 
to absorb those costs. Again, part of the problem is that the 
commenters treat a factor in the reasonableness analysis--the incentive 
principle--as creating bright line rule, and they further assume the 
Commission would be incapable of exercising common sense when applying 
the factors. As explained above, nothing precludes the Commission from 
considering whether demurrage and detention have some compensatory 
aspect when determining the reasonableness of specific practices in 
individual cases.

F. Cargo Availability

    In addition to describing how section 41102(c) may apply in the 
demurrage and detention context--the incentive principle--the 
Commission in the NPRM also sought to explain how that principle might 
work in particular contexts. First, the Commission clarified that it 
may consider in the reasonableness analysis the extent to which 
demurrage practices and regulations relate demurrage or free time to 
cargo availability for retrieval.\247\ If, the Commission stated, 
shippers or truckers cannot pick up cargo within free time, then 
demurrage cannot serve its incentive purpose.\248\ Put slightly 
differently, if a free time practice is not tailored so as to provide a 
shipper a reasonable opportunity to retrieve its cargo, it is not 
likely to be reasonable.\249\
---------------------------------------------------------------------------

    \247\ 84 FR at 48852, 488555.
    \248\ 84 FR at 48852.
    \249\ 84 FR at 48852 (``The more a demurrage practice is 
tailored to cargo availability, the less likely the practice is to 
be found unreasonable.'').
---------------------------------------------------------------------------

    The Commission emphasized that concepts such as cargo availability 
or accessibility refer to the actual availability of cargo for 
retrieval by a shipper or trucker. The Commission did not go so far as 
to define what availability means, but it said that certain practices 
would weigh favorably in the reasonableness analysis, including 
starting free time upon container availability and stopping a demurrage 
or free time clock when a container is rendered unavailable, such as 
when a trucker cannot get an appointment within free time.
    There was significant support for the Commission's guidance from 
shippers, truckers, and intermediaries, and the Commission will include 
the language on container availability from the proposed rule in the 
final rule. A number of commenters request bright line rules. For 
instance, several commenters argue that free time should not start 
until a container is available, and that starting free time before 
availability should be deemed an unreasonable practice.\250\ Others 
assert that free time and demurrage and detention clocks should stop 
when containers become non-accessible due to situations beyond the 
control of shipper or trucker.\251\ Still others request that the 
Commission define ``container availability,'' \252\ that the Commission 
expressly address things like terminal hours of operation vis-[agrave]-
vis free time,\253\ appointment systems,\254\ and that the concept of 
availability should include chassis availability.\255\
---------------------------------------------------------------------------

    \250\ E.g., Dow Chemical Co. at 2 (``Free time should be tied to 
actual cargo availability and not vessel arrival since efficient 
cargo pickup cannot be incentivized if the cargo may not yet be 
available.''); Am. Cotton Shippers Ass'n at 4; Am. Coffee Corp. at 
2; Commodity Supplies at 1; CV Int'l at 1; Harbor Trucking Ass'n at 
1-2; Int'l Fed. of Freight Forwarders Ass'ns at 2; John S. Connor 
Global Logistics at 2; New Direx Inc. at 1; NYNJFFF&BA at 4; Retail 
Indus. Leaders Ass'n at 2; Transp. Intermediaries Ass'n at 4.
    \251\ E.g., Nat'l Indus. Transp. League at 8 (``The League 
agrees wholeheartedly that the reasonableness of demurrage practices 
and charges, including free time rules, should be related to actual 
physical availability of the cargo.''); Am. Cotton Shippers Ass'n at 
4; Commodity Supplies at 2; Int'l Fed. of Freight Forwarders Ass'ns 
at 2; John S. Connor Global Logistics at 2
    \252\ E.g. EMO Trans Atlanta, GA USA at 1; FedEx Trade Networks, 
Inc. at 1; Int'l Motor Freight at 1.
    \253\ E.g., Mondelez Int'l at 1 (``All free time should be 
defined as business days as not all ports allow pick up/return on 
weekends.''); Rio Tinto at 1.
    \254\ E.g., Retail Indus. Leaders Ass'n at 2 (``A terminal's 
volume of appointment times and appointment availability are a 
critical component of cargo owners' ability to collect cargo. It is 
essential to consider the details of a terminal's appointment 
system, including availability and time frames of appointments, when 
assessing if fees are justified.''); Harbor Trucking Ass'n at 2 
(``Important to consider the workings of terminal appointment 
systems in evaluating reasonableness--should be some minimum period 
of appointment availability.'').
    \255\ E.g., Am. Cotton Shippers Ass'n at 5; CV Int'l, Inc. at 1; 
John Steer Co. at 1; John S. Connor Global Logistics, Inc. at 2-3; 
Yusen Logistics (Americas) Inc. at 1. But see Thunderbolt Global 
Logistics at 1 (``The lack of an available chassis should not be 
considered a requirement of availability unless the steamship line 
is supplying the chassis as part of their contract of carriage.'').
---------------------------------------------------------------------------

    As explained in the NPRM, it makes sense that if free time 
represents a reasonable opportunity for a shipper to retrieve a 
container, it should be tied, to the extent possible, to cargo 
availability, and the Commission recognizes the merits of that 
approach. But the Commission will not in this general interpretive rule 
make a finding that failure to start free time upon ``availability'' is 
necessarily unreasonable. The operational environments and commercial 
conditions at terminals across the country vary significantly, and in 
some situations, there might not be much difference between tying free 
time to vessel discharge and tying it to availability.\256\ For similar 
reasons, while the Commission will consider in the reasonableness 
analysis how demurrage and detention practices address interruptions in 
availability during free time, requiring specific ``stop-the-clock'' 
procedures is beyond the scope of this rulemaking.\257\ The Commission 
is sympathetic to shipper, intermediary, and trucker arguments that 
bright line rules will be more beneficial to them and would be clearer 
than the Commission's factor-based approach. But imposing bright line 
rules could inhibit the development of better solutions.
---------------------------------------------------------------------------

    \256\ See Final Report at 21-22.
    \257\ Accordingly, many ocean shipper and marine terminal 
operator concerns about the ``unworkability'' of the rule are 
unfounded. See NAWE at 12-13; WMCTOA at 10-11.
---------------------------------------------------------------------------

    As for defining ``container availability,'' the Commission declines 
to do so here, as it can vary by port or marine terminal. 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).\258\

[[Page 29655]]

Depending on the facts of the case, the Commission may consider things 
such as appointment systems and appointment availability and trucker 
access to the terminal, i.e., congestion.\259\
---------------------------------------------------------------------------

    \258\ 84 FR at 48853; Final Report at 20.
    \259\ 84 FR at 48852-53; id. at 48852 n.16; Final Report at 20. 
That the Commission in an appropriate case could consider 
appointment systems and appointment availability is by no means a 
requirement that all terminals must adopt appointment systems. 
Contra WCMTOA at 11; SSA Marine, Inc. at 2.
---------------------------------------------------------------------------

    The chassis situation is more complicated. It is undeniable that 
chassis availability impacts the ability of a shipper or a trucker to 
remove a container from a port.\260\ But the Commission has held that 
``[p]ersons importing merchandise may reasonably be assumed to have, or 
be able promptly to obtain, the equipment needed to receive it,'' and, 
therefore, ``[i]t is not necessary, in fixing free time, to allow for 
delays that may be encountered in the procurement of equipment.'' \261\ 
Additionally, chassis supply models vary. Sometimes a trucker provides 
his or her own chassis. Sometimes chassis are provided via third-party 
chassis providers, over whom the Commission does not have authority 
under section 41102(c). And, although ocean carriers in many cases sold 
their chassis fleets, sometimes they substantially affect chassis 
availability via chassis pools owned by ocean carrier agreements such 
as OCEMA.\262\ Ocean carriers also exert control over chassis via ``box 
rules,'' under which ocean carriers determine which chassis a trucker 
must use in a carrier haulage situation.\263\ According to the 
Agriculture Transportation Coalition (AgTC), ``carriers' `box rules' 
limit availability of chassis, forcing trucker to `hunt' for a 
container brand designated by the carrier, and cannot use other 
containers more conveniently located.'' \264\
---------------------------------------------------------------------------

    \260\ 84 FR at 48851 at n.7 (``Current variations in chassis 
supply models have frequently contributed to serious inefficiencies 
in the freight delivery system.''); id. (``Timely and reliable 
access to roadworthy chassis is a source of ongoing and systemic 
stress to the system.'').
    \261\ NYI, 3 U.S.M.C. at 100.
    \262\ Inst. of Int'l Container Lessors at 7.
    \263\ See Bill Mongelluzzo, Box rules hold back interoperable 
chassis pools: truckers, JOC.com (Dec. 12, 2019) (defining ``box 
rules'').
    \264\ AgTC at 5.
---------------------------------------------------------------------------

    Suffice it to say, the assumption in Free Time and Demurrage 
Charges at New York that a shipper is able promptly to obtain 
equipment'' might, in the case of a trucker and chassis, in some 
circumstances, no longer be valid.\265\ Accordingly, the Commission 
may, in an appropriate case, consider chassis availability in the 
analysis. In doing so the Commission would be especially careful to 
analyze how the chassis supply model at issue relates to the primary 
incentive purpose of demurrage and detention.
---------------------------------------------------------------------------

    \265\ NYI, 3 U.S.M.C. at 100. To be clear, the Commission agrees 
in general with the assumption that a shipper or its agent has or 
can obtain the equipment necessary to retrieve cargo. In ordinary 
circumstances, a shipper could not escape liability for demurrage 
because it is unable to procure a trucker or because its trucker 
cannot obtain a chassis. There could, however, be circumstances when 
the Commission could consider chassis availability in the 
reasonableness analysis.
---------------------------------------------------------------------------

G. Empty Container Return

    The second application of the incentive principle discussed in the 
rule is empty container return.\266\ The rule states 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.\267\ The Commission explained that such 
practices, absent extenuating circumstances, weigh heavily in favor of 
a finding of unreasonableness, because if an ocean carrier directs a 
trucker to return a container to a particular terminal, and that 
terminal refuses to accept the container, no amount of detention can 
incentivize its return.\268\ In addition to refusal to accept empty 
containers, the Commission listed additional situations where 
imposition of detention might weigh toward unreasonableness, such as 
uncommunicated or untimely communicated changes in container return, or 
uncommunicated or untimely communicated notice of terminal closures for 
empty containers.\269\
---------------------------------------------------------------------------

    \266\ 84 FR at 48853, 48855.
    \267\ 84 FR at 48855.
    \268\ 84 FR at 48853; see also id. (``Absent extenuating 
circumstances, assessing detention in such situations, or declining 
to pause the free time or detention clock, would likely be 
unreasonable.'').
    \269\ 84 FR at 48853.
---------------------------------------------------------------------------

    Most of the comments about this aspect of the rule were 
supportive.\270\ Several commenters suggest additional ideas. Some 
argue that an ocean carrier should grant more detention free time when 
the carrier requires an empty to be returned to a location other than 
where it was retrieved, or when a marine terminal operator requires an 
appointment to return an empty container.\271\ Commenters also raised 
issues with marine terminal ``dual move'' requirements.\272\ In the 
import context, a ``dual move'' is where a trucker drops off an empty 
container and picks up a loaded container on the same trip to a 
terminal. Mohawk Global Logistics described some of the issues that 
arise when a marine terminal operator requires a dual move to return an 
empty container:
---------------------------------------------------------------------------

    \270\ E.g., A.N. Deringer, Inc. at 1 (``If we cannot return a 
container because the terminal will not take it, detention should 
not accrue.''); Int'l Fed. of Freight Forwarders Ass'ns at 2; Mohawk 
Global Logistics at 7; NYNJFFF&BA at 3; Transp. Intermediaries Ass'n 
at 4; Transways Motor Express at 1; Yupi at 1; NCBFAA at 7.
    \271\ E.g., Best Transp. at 2; F.O.X. Intermodal Corp. at 1; 
Int'l Motor Freight at 1 (``All empty equipment should be returned 
to the marine terminal it was picked up from in order to increase 
truck efficiency and reduce the number of chassis splits.''); Mohawk 
Global Logistics at 7 (``Some carriers argue the containers should 
be returned to a different facility, but typically they are more 
distant, or also closing down.''); S. Counties Express at 2.
    \272\ E.g. Mohawk Global Logistics at 7; S. Counties Express at 
2 (``Empties only being received as a `dual transaction' when the 
motor carrier has no load to pull from the terminal. Steamship line 
charges motor carrier for not returning the empty and pulling a 
load.''); Quik Pick Express, LLC (``Typically, this is due to 
terminals only receiving empty containers as part of a dual 
transaction. If our company does not have an import container to 
extract from that terminal, we are unable to bring them our empty. 
We have no viable option to return the container, but are still 
faced with Detention charges by the Steamship line.'').

    When winding down peak season, there are typically more empty 
containers being returned than full containers available to pick up, 
so single empty returns are more commonly needed, and without 
inbound loads, dual moves are hard to effect. When terminals go for 
days without accepting single moves, the trucker is stuck holding 
the container, usually on a chassis that is being charged for daily, 
and in a storage yard that is also charging daily. When a few single 
slots open up, everyone scrambles to get there with empties, quickly 
closing the yard down again.\273\
---------------------------------------------------------------------------

    \273\ Mohawk Global Logistics at 7.

    Changes in return location, and requiring dual moves, are certainly 
practices that the Commission could review under section 41102(c) in 
light of the guidance in rule.\274\ While the rule does not discuss the 
extension of free time when containers must be returned to a different 
terminal than that from which they were retrieved, the approach may 
have merit. The NPRM referred to the similar situation when container 
return location changes and the change is not communicated in a timely 
fashion.\275\ The Commission is particularly concerned about the 
reasonableness of dual move requirements, or more specifically, an 
ocean carrier imposing detention when a trucker's inability to return a 
container within free time is due to it not being able to satisfy a 
dual move requirement.\276\ Although the

[[Page 29656]]

CommCission assumes there are operational reasons for dual move 
requirements, they effectively tie a trucker's ability to avoid charges 
to doing additional business with a carrier or at a terminal. In an 
appropriate case, the Commission would carefully scrutinize such 
practices.\277\
---------------------------------------------------------------------------

    \274\ Assuming the other elements of a section 41102(c) case are 
met.
    \275\ 84 FR at 48853.
    \276\ As between ocean carriers and marine terminal operators, 
in this context the focus would likely be on ocean carrier 
practices. See FMC Demurrage Report at 7 (``For the return of their 
empty containers, VOCCs instruct the consignees and terminal 
operators who serve them when, where, and how this equipment can be 
returned.'').
    \277\ Some commenters also asserted that off-terminal empty 
container storage areas should have the same hours as marine 
terminals. Int'l Motor Freight at 1; Transways Motor Express at 1. 
While that is something regulated entities may consider, delving 
into the hours of operation of particular facilities is beyond the 
scope of the rule, which is to provide general guidance.
---------------------------------------------------------------------------

    The National Customs Brokers and Forwarders Association of America 
(NCBFAA) also advocates that the Commission ``expand'' the rule to 
reflect the railroad concept of constructive delivery of empty 
containers.\278\ Under this approach, the detention clock should stop 
once a container ``has been or could be delivered back to the port, 
VOCC or CY [container yard], but for the recipient's inability or 
unwillingness to receive the asset.'' \279\ The Commission views this 
approach as one option an ocean carrier could use to mitigate detention 
under circumstances where the charges cannot serve their primary 
purpose of incentivizing freight fluidity. To the extent that NCBFAA is 
suggesting that the Commission should adopt the constructive delivery 
principle, the Commission believes that importing this concept from the 
railroad context is something better addressed in the context of a 
specific case or a future proceeding devoted to that topic, so that it 
can receive comments and arguments from all sides.
---------------------------------------------------------------------------

    \278\ NCBFAA at 7.
    \279\ NCBFAA at 7.
---------------------------------------------------------------------------

    In sum, the Commission is adopting this paragraph of the rule 
without modification.

H. Notice of Cargo Availability

    The rule also states that in assessing the reasonableness of 
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 rule further states that 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. This factor reflects that: (1) 
Ocean carriers are obligated under their contracts of carriage to give 
notice to consignees so that they have a reasonable opportunity to 
retrieve the cargo; (2) that notification practices must be reasonably 
tailored to fit their purposes under section 41102(c); and (3) the 
notion that aligning cargo retrieval processes with the availability of 
cargo will promote efficient removal of cargo from valuable terminal 
space.\280\
---------------------------------------------------------------------------

    \280\ Final Report at 18-20, 27-28; Interim Report at 9, 18; 84 
FR at 98853 (``The more these factors align with the goal of moving 
cargo off terminal property, the less likely demurrage practices 
would be found unreasonable.'').
---------------------------------------------------------------------------

    In applying this factor, the most important consideration is the 
extent to which any notice is calculated to apprise shippers and their 
agents that a container is available for retrieval.\281\ The Commission 
explained that the type of notice is important--types of notice that 
are expressly linked to cargo availability weigh favorably in the 
analysis--and listed examples.\282\ The Commission also noted the 
merits of ``push notifications'' of cargo availability, notifying users 
of changes in container availability, linking free time to notice of 
availability, and appointment guarantees.\283\ The Commission stopped 
short, however, of specifying any particular form of notice.
---------------------------------------------------------------------------

    \281\ 84 FR at 48853.
    \282\ 84 FR at 48853 (``[n]otice that cargo is discharged and in 
an open area,'' ``notice that cargo is discharged, in an open area, 
free of holds, and proper paperwork has been submitted,'' and 
``notice of all of the above and that an appointment is 
available.'').
    \283\ 84 FR at 48853.
---------------------------------------------------------------------------

    The comments about this paragraph of the rule were generally of two 
types. Shippers, intermediaries, and truckers strongly support notice 
of cargo availability and urged that the Commission require such notice 
and specify what information a notice must contain.\284\ Marine 
terminal operators opposed the Commission requiring any particular type 
of notice.\285\
---------------------------------------------------------------------------

    \284\ E.g., Mohawk Global Logistics at 2; NCBFAA at 13; 
Airforwarders Ass'n at 1; ContainerPort Group at 1; CV Int'l, Inc. 
at 2; FedEx Trade Networks, Inc. at 1-2; Florida Customs Brokers & 
Forwarders Ass'n at 1; Int'l Fed. of Freight Forwarders Ass'ns at 2; 
John S. Connor Global Logistics at 3-4; Thunderbolt Global Logistics 
at 2; cf. Int'l Logistics; ContainerPort Group.
    \285\ PMSA at 5-6; WCMTOA at 10-11. In contrast, WSC argues that 
the rule is too vague in this regard because the Commission did not 
specify ``what it considers to be the proper format, method, or 
timing'' of notice.'' WSC at 16.
---------------------------------------------------------------------------

    The substantial supportive comments bolster the Commission's belief 
that consistent notice that cargo is actually available for retrieval 
would provide significant benefits to ocean freight delivery system, 
especially if that notice is tied to free time.\286\ As pointed out by 
a commenter, notice of availability ``would serve the important 
function of clearly identifying when the cargo is truly available for 
pick up and thus when the free time clock should start and end.'' 
\287\The Commission remains concerned that legacy forms of notice might 
not be providing shippers with a reasonable opportunity to retrieve 
cargo.\288\ Those concerns militate in favor of the Commission keeping 
``notice'' as a factor in its guidance.
---------------------------------------------------------------------------

    \286\ In NYI, the Commission declined to require that free time 
start upon issuance of a notice of availability. NYI, 3 U.S.M.C. at 
105-06. The Commission noted that ``[c]onsignees are universally 
apprised of the arrival of vessels'' and reasoned that 
``[i]nsistence upon a notice of availability would subject the 
carriers to extra work and expense that would be largely futile and 
which appears quite unjustifiable.'' Id. at 106. The advent of 
containerization and the technological advances that have occurred 
over the past 72 years raise serious questions as to the continuing 
validity of these conclusions. As the Fact Finding Officer found, 
and shippers, intermediaries, and trucker commenters persuasively 
asserted, notices of availability would have benefits. Final Report 
at 19-20.
    \287\ NYNJFFF&BA at 4.
    \288\ Final Report at 19 (noting that some terminal operators as 
well as cargo interests ``believed that vessel arrival is a poor 
proxy for notice that a container is available''); see also Transp. 
Intermediaries Ass'n at 4 (``TIA supports tying free time to actual 
cargo availability and not to vessel arrival: As FMC points out, 
demurrage cannot incentivize efficient cargo pickup if the cargo is 
not truly available yet.'').
---------------------------------------------------------------------------

    That said, the Commission is not requiring specific types of 
notice. The Commission's guidance is intended to apply to a wide 
variety of terminal conditions. What constitutes appropriate notice in 
one situation might not in another. Ocean carrier and marine terminal 
operator customers have varied needs, and the Commission is wary of 
asking regulated entities to develop tools that their customers are 
unwilling to use.\289\ Consequently, while the Commission may consider 
the factors listed in the NPRM in the analysis, it is not requiring any 
specific form of notice.
---------------------------------------------------------------------------

    \289\ Final Report at 19 (``In other words, the terminal 
operators stated, they are being asked to create tools that are not 
effective for the market.'').
---------------------------------------------------------------------------

    Marine terminal operators argue that by noting the merits of things 
like ``push notifications'' and updates regarding container status, the 
Commission is ``requiring'' marine terminal operators to do these 
things. This is based on an misreading of the NPRM.\290\ The marine 
terminal operators also make a number of claims about the costliness 
and technical feasibility and necessity of some of the 
suggestions.\291\ These are

[[Page 29657]]

arguments that the commenters would be free to make if relevant in a 
particular case.
---------------------------------------------------------------------------

    \290\ WCMTOA insists that the NPRM ``seeks to mandate the 
optimum level and type of notice for all terminal operators and 
carries in all circumstances.'' WCMTOA at 11. The language of the 
rule, however, belie WCMTOA's inferences.
    \291\ PMSA at 10-11 (noting that few industry players use push 
notifications because existing technology does not accommodate 
them.''); PONYNJSSA (``[T]he NPRM suggests that if such a system 
does not `push' relevant information, then such a system might not 
be considered a reasonable notice of cargo availability.'').
---------------------------------------------------------------------------

    Further, in describing things likely to be found reasonable, the 
Commission was reacting to what it heard from shippers, intermediaries, 
and truckers during the Fact Finding Investigation, and pointing out 
their potential advantages. The Commission mentioned the ``type'' of 
notice because notice related to cargo availability was, in some 
circumstances, more aligned with the ability to retrieve the cargo than 
notice of vessel arrival.\292\ But that is not necessarily the case at 
all ports or at all terminals or for all shippers.\293\ The Commission 
referred ``to whom'' notice would be provided as a consideration 
because truckers and others said that efficient retrieval of cargo 
could be enhanced if they were directly notified.\294\ As for the 
notice format and distribution method, the Commission commented on push 
notifications because truckers explained that even when marine terminal 
operators provide container status information on websites, truckers 
would have to continuously monitor or ``scrape'' the websites to know 
when a container would be ready.\295\ And as for appointment 
availability and notice, the Commission was noting the potential 
advantages of an idea proposed during the Fact Finding Investigation 
wherein once an appointment is made, a marine terminal operator would 
guarantee that the container would be available at the appointed time. 
If for some reason the marine terminal could not honor the appointment, 
it would accommodate the trucker in some other way, such as restarting 
free time, giving priority to a new appointment, or waiving the need 
for an appointment. The Commission, based on the Fact Finding Officer's 
reports, noted in the NPRM that these were potentially valuable ideas, 
but they were not intended to be the only ideas.\296\
---------------------------------------------------------------------------

    \292\ E.g., Transworld Logistics & Shipping Servs., Inc. at 3 
(``It must be mentioned here that the arrival notice which is a 
courtesy information cannot be confused or construed to replace a 
cargo availability notice.'').
    \293\ Yupi at 1.
    \294\ There was significant discussion during the investigation 
about who should be providing notice related to cargo availability. 
Ocean carriers have a notice obligation under their contracts of 
carriage, which they purport to fulfil by providing notice of vessel 
arrival. See Final Report at 27. Otherwise, notice about container 
status is typically provided by marine terminal operators. The 
difficulty is that the entity in the best position to know about 
container status--the marine terminal operator--is not necessarily 
privy to information about who should receive notice, which is 
information the carrier has via bills of lading and other shipping 
documents. The solution would seem to involve better coordination 
between ocean carriers and the marine terminal operators with whom 
they contract to provide terminal facilities.
    \295\ E.g. Harbor Trucking Ass'n (``Notice must be timely and 
readily accessible to the contracting party or its designee, must 
provide clear information as to when and where cargo may be 
retrieved, and `push notices' are favored.''); Mohawk Global 
Logistics at 2 (``Truckers must proactively and continuously po[re] 
over multiple websites to check on availability of containers they 
have been assigned.''). But see PMSA at 10-11 (arguing that there is 
little difference between getting a push notification and 
``accessing the website or app to get the information at the 
shipper's or trucker's convenience'').
    \296\ For instance, the International Federation of Freight 
Forwarders Associations advocates ``advance notice of cargo 
availability.'' Int'l Fed. of Freight Forwarders Ass'ns at 3-4; see 
also Mondelez Int'l at 1 (``If the carriers could advise even within 
a few days prior to vessel arrival that the cargo will be ready at a 
certain date for pickup it would allow for more efficient planning 
and appointment making instead of a constant scramble.'').
---------------------------------------------------------------------------

    WCMTOA claims that the Commission ``would seem to impose a 
requirement for a terminal operator to update cargo interests on a 
minute-by-minute basis as to the availability status of individual 
containers.'' \297\ But nothing in the rule requires ``minute-by-minute 
updates'' of changes in container status. Rather, the Commission may 
consider whether and how notice of changes in cargo availability is 
provided, with the focus being how well ocean carrier and marine 
terminal operator practices are reasonably tailored to their 
purposes.\298\
---------------------------------------------------------------------------

    \297\ WCMTOA at 12.
    \298\ Volkswagenwerk Aktiengesellschaft v. Fed. Mar. Comm'n, 390 
U.S. 261, 295 (1968) (``Of course charges need only be `reasonably' 
related to benefits, and not perfectly or exactly related . . . .'') 
(Harlan, J, concurring).
---------------------------------------------------------------------------

    In light of the foregoing, the Commission is adopting the language 
regarding notice of cargo availability without change.

I. Government Inspections

    The Commission acknowledged in the NPRM that significant demurrage 
and detention issues involve government inspections of cargo.\299\ Such 
inspections not only involve shippers, intermediaries, truckers, and 
marine terminal operators, but also government agencies, third-parties, 
and off-terminal facilities, such as centralized examination 
stations.\300\ The Commission sought comment on three proposals, and 
any other suggestions for ``handling demurrage and detention in the 
context of government inspections, consistent with the incentive 
principle.'' \301\ The Commission's proposals were:
---------------------------------------------------------------------------

    \299\ 84 FR at 48853.
    \300\ A ``centralized examination station'' is ``a privately 
operated facility, not in the charge of a Customs officer, at which 
merchandise is made available to Customs officers for physical 
examination.'' 19 CFR 118.1. CESs are established by port directors, 
and a CES operator agrees to, among other things, ``[p]rovide 
adequate personnel and equipment to ensure reliable service for the 
opening, presentation for inspection, and closing of all types of 
cargo designated for examination by Customs.'' 19 CFR 118.2, 
118.4(b). CES operators have the option of providing transportation 
for merchandise to the CES. 19 CFR 118.4(l). CES operators are 
obliged to perform in accordance with reasonable requirements 
imposed by a port director. 19 CFR 118.4(k). A port director may 
propose to cancel an agreement to operate a CES if the operator 
fails to comply with its Sec.  118.4 obligations. 19 CFR 118.21.
    \301\ 84 FR at 48853.

    (a) 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;
    (b) 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 inspections, such as by waiver or extension of free time, 
are likely to be found unreasonable; or
    (c) 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.\302\
---------------------------------------------------------------------------

    \302\ 84 FR at 48853.

    Option B is the most popular option among the shipper, 
intermediary, and trucker commenters.\303\ This option is essentially a 
restatement of the general incentive principle. 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.'' \304\ Option B simply treats ``government inspections 
of cargo'' as a type of circumstance, like a port closure due to 
weather, where demurrage and detention may not be serving their 
incentive function.
---------------------------------------------------------------------------

    \303\ E.g., Commodity Supplies Inc. at 2; Harbor Trucking Ass'n 
at 2; Dow Chemical Co. at 2; FedEx Trade Networks at 2; Green Coffee 
Ass'n at 2; Int'l Ass'n of Movers at 2; Meat Import Council of 
America at 3; Nat'l Retail Fed. at 2.
    \304\ 84 FR at 48852.
---------------------------------------------------------------------------

    A few commenters support Option C, wherein there would be a cap on 
the amount of demurrage or detention that could be imposed while cargo 
is undergoing government inspection. Most of these commenters tie this 
cap to costs incurred by regulated entities

[[Page 29658]]

related to the inspections.\305\ As explained by one commenter, the cap 
would be ``akin to a compensatory component of a demurrage or detention 
charge that does not include the penal component of the charge.'' \306\ 
Few commenters prefer Option A.\307\ As for ocean carrier and marine 
terminal operator commenters, they object to any change to the status 
quo, under which, they assert, ``carriers and terminals are not 
required to extend free time based on delays in the availability of 
cargo resulting from government inspections.'' \308\
---------------------------------------------------------------------------

    \305\ E.g., CV Int'l at 2 (``There should be a cap to the 
potential D/D charges resulting from government holds: perhaps a 
level that corresponds clearly to the true cost or income lost on 
the container or storage space during the hold period.''); Dow at 2; 
Int'l Ass'n of Movers at 2; Nat'l Indus. Transp. League at 13; 
Thunderbolt Global Logistics (cap for detention, demurrage should be 
waived).
    \306\ Nat'l Indus. Transp. League at 13.
    \307\ CV Int'l at 2 (``Accelerated D/D charges should not be 
permitted for cargo under government hold.''); Meat Import Council 
of Am. at 3; John S. Connor Global Logistics at 5 (``[W]e do not 
believe it is appropriate for the carriers and/or MTO operators to 
escalate charges (i.e., impose penalty demurrage) in these 
situations.'').
    \308\ NAWE at 15; see also OCEMA at 5; PMSA at 9-10; WCMTOA at 
6-9; WSC at
---------------------------------------------------------------------------

    Some commenters also suggest different proposals, including 
disallowing any demurrage or detention during government inspections, 
so long as correct customs entries had been made,\309\ extending free 
time for five days, after which demurrage during a hold could 
accrue,\310\ disallowing demurrage and detention during government 
inspections and restarting free time clock from zero after 
inspection,\311\ and a Container Inspection Fund, funded by a fee on 
containers, used to defray ocean carrier and marine terminal operator 
costs incident to inspections as well as to pay for demurrage and 
detention.'' \312\ The objective of the latter proposal would be spread 
the costs of inspections among a ``wider constituency'' because 
``[g]overnmental inspections and holds are performed for the benefit of 
the shipping community as a whole and society at large, not just for 
the individual shipper involved in a particular inspection.'' \313\ For 
similar reasons, Mohawk Global Logistics suggests ``assign[ing] the 
true cost of the resources as a `special government hold' demurrage or 
detention charges or cap the fee at 25% assuming the punitive aspect 
being removed is 75%, or thereabouts.'' \314\
---------------------------------------------------------------------------

    \309\ FedEx Trade Networks at 2.
    \310\ Emo Trans Atlanta, GA USA at 1.
    \311\ AgTC at 6.
    \312\ Sea Shipping Line at 2; Sefco Export Management Co. at 2 
(``The proposal for a Container Inspection Fund is one of the rare 
out of the box suggestions that I have come across that might 
actually do some good.'').
    \313\ Sea Shipping Line at 2.
    \314\ Mohawk Global Logistics at 6.
---------------------------------------------------------------------------

    The Commission has determined that, consistent with precedent, 
reasonableness should be assessed by considering whether demurrage and 
detention serve their intended purposes. As noted above, when shippers 
cannot retrieve cargo from a terminal, it is hard to see how demurrage 
or detention serve their primary incentive purpose. The question is, 
why shouldn't that principle apply during government inspections of 
cargo? In other words, why are government inspections different from 
any other circumstance where a shipper cannot retrieve its cargo?
    Ocean carriers and marine terminal operators argue that it is 
permissible to treat government inspections differently under 
Commission precedent. They also argue that to extend free time during 
government inspections or to not charge demurrage and detention during 
them disincentivizes shippers, for instance, to properly submit 
paperwork. Finally, they argue that ocean carriers and marine terminal 
operators incur costs during government inspections, and those costs 
are most appropriately allocated to shippers because they are the only 
ones with any control of whether inspections happen and how they 
proceed. In contrast, they argue, marine terminal operators and ocean 
carriers have no control over whether containers are inspected or how 
long inspections last.
    Although Commission caselaw supports these commenters' arguments, 
that caselaw pre-dates, and does not reflect, the Commission's modern 
interpretation of section 41102(c). In Free Time and Demurrage Charges 
at New York, the Commission held that ocean carriers are not required 
to extend free time to account for government inspections of 
cargo.\315\ Delays related to government inspections, the Commission 
stated, ``are not factors that carriers are required to consider in 
fixing the duration of free time.'' \316\ The Commission in that case 
cited no precedent. It reasoned that allowing free time to run during 
government inspections was permissible because delays related to 
government inspections were not attributable to ocean carriers or 
related to their operations.\317\ The Commission reaffirmed this 
principle in 1967, finding that ``inspection delays are occasioned by 
factors other than those relating to the obligation of the carrier.'' 
\318\
---------------------------------------------------------------------------

    \315\ NYI, 3 U.S.M.C. at 96, 99; id. at 101 (holding that ``the 
carriers, in determining the duration of free time, are not obliged 
to take account of delays in the removal of cargo which arise from 
the causes hereinabove discussed.'').
    \316\ 3 U.S.M.C. at 96.
    \317\ 3 U.S.M.C. at 96; id. at 99 (``As regarding either 
commodity, the sampling is not an operation required in connection 
with delivery by the carriers. Therefore, it can provide no valid 
ground to contend that free time allowed is unjust or 
unreasonable.'').
    \318\ NYII, 9 S.R.R. at 880.
---------------------------------------------------------------------------

    Subsequently, however, the Supreme Court held that to determine 
reasonableness under section 41102(c)'s predecessor, one should look at 
how well charges correlate to their benefits.\319\ And the Commission 
later held in Distribution Services that in the context of a carrier's 
terminal practices, ``a regulation or practice must be tailored to meet 
its intended purpose.'' \320\ The reasoning regarding government 
inspections in Free Time and Demurrage Charges at New York, which did 
not consider whether free time and demurrage practices were tailored to 
meet their intended purposes, is inconsistent with the analytical 
framework of these more recent cases. Consequently, Commission 
precedent does not bar the Commission from applying the incentive 
principle to government inspections--it supports its application.\321\
---------------------------------------------------------------------------

    \319\ Volkswagenwerk, 390 U.S. at 282.
    \320\ Distribution Servs., 24 S.R.R. at 722.
    \321\ NAWE also cites Truck & Lighter Unloading Practices at New 
York Harbor, 12 F.M.C. 166 (FMC 1969) for the proposition that 
terminal operators are only responsible for delays within their 
control. NAWE at 5-6. This case did not discuss Volkswagenwerk, 
however, and pre-dated Distribution Services. Moreover, the context 
was very different. Truck & Lighter in involved truck detention. In 
contrast to the issues here, at the time, marine terminals were 
required to compensate truckers for delays. 12 F.M.C. at 170 
(requiring adoption of a rule that ``will compensate the truckers 
for unusual truck delays caused by or under the control of the 
terminals''). The Commission said that marine terminals only had to 
pay a fee (truck detention) when delays were within their control. 
Id. at 171. Here, however, it is shippers, intermediaries, and 
truckers who are arguing that they should not have to pay a fee 
(demurrage and detention) due to delays outside their control. In 
other words, Trucker & Lighter does not stand for the proposition 
that marine terminal operators can impose fees when delays are 
outside of their control.
---------------------------------------------------------------------------

    Nor do the incentives at play suggest that government inspections 
should be treated specially under the rule. According to WCMTOA: ``If 
the terminal operator or carrier may not reasonably impose demurrage 
during a government inspection or include such periods in free time the 
importer/exporter will have no incentive to avoid or minimize 
government inspections by ensuring that its paperwork is complete and 
accurate, that it properly loads and

[[Page 29659]]

secures its cargo in a container and that it carefully verifies the 
nature, quantity, safety, or labelling of its cargo.'' \322\ This 
argument is unpersuasive. First, there are numerous incentives other 
than avoiding demurrage that motivate shippers to avoid or minimize 
government inspections. Not only are there examination costs, but 
government inspections delay cargo from reaching its intended 
destination and may result in cargo damage.\323\ Second, under the 
rule, the Commission may consider the extent to which a shipper 
complies with its customary responsibilities. These responsibilities 
include things like submitting complete, accurate, and timely 
paperwork.\324\
---------------------------------------------------------------------------

    \322\ WCMTOA at 7.
    \323\ AgTC at 6; NCBFAA at 8; NYNJFFF&BA at 6; Int'l Fed. of 
Freight Forwarders Ass'ns at 4.
    \324\ See, e.g., WCMTOA at 6.
---------------------------------------------------------------------------

    Marine terminal operators and ocean carriers also point out that 
they suffer costs due to government inspections despite having no 
control over inspections.\325\ The Commission does not disagree, nor do 
shippers, intermediaries, or truckers. As one commenter noted, 
``government holds [impose on marine terminal operators and ocean 
carriers] a hardship, too.'' \326\ Shippers, however, also incur costs 
due to inspections, and their control over an inspection is limited. 
Shippers cannot always control whether their cargo is inspected, for 
instance,\327\ nor can they exert much control of the timeliness of 
examinations.\328\
---------------------------------------------------------------------------

    \325\ WCMTOA at 6 (``Government inspections of containers are 
never caused by the terminal operator, and never relate to the MTO's 
facility or operations.''); id. at 7-8; NAWE at 16; OCEMA at 5; PMSA 
at 9-10
    \326\ Mohawk Global Logistics at 6.
    \327\ E.g., Meat Import Council of Am. at 3 (``All imported meat 
is subject to 100% inspection by the U.S. Department of Agriculture 
. . .'').
    \328\ Int'l Ass'n of Movers at 2 (``Delays are typically 
experienced because of a backlog or lack of CBP manpower, required 
to be present during the intensive exams.'').
---------------------------------------------------------------------------

    In sum, none of these features of government inspections 
distinguish them from other circumstances that prevent shippers from 
retrieving cargo. That said, the complexity of government inspections 
and the variety of types of government inspections militate against 
adopting a single approach in the Commission's guidance.\329\ 
Consequently, the final rule does not incorporate any of the language 
options proposed in the NPRM. Instead, the rule makes clear that the 
Commission may consider the incentive principle in the government 
inspection context as it would in any other context. Additionally, 
given ocean carrier and marine terminal operator concerns about 
disincentivizing shippers from complying with the customary 
obligations, the final rule includes language expressly indicating that 
the Commission may consider extenuating circumstances. Specifically, 
the final rule states that in assessing the reasonableness of demurrage 
and detention practices in the context of government inspections, the 
Commission may consider the extent to which demurrage and detention are 
serving their intended purposes and may also consider any extenuating 
circumstances. If circumstances demonstrate the need for more specific 
guidance in this regard, especially as to specific ports or terminals 
or specific types of inspections, the Commission can refine these 
principles via adjudication or further rulemaking.
---------------------------------------------------------------------------

    \329\ WCMTOA at 7 (``The proposals would impose a single 
approach to a complicated area involving a wide variety of 
inspections.''); PMSA at 9 (``It is difficult to mandate a single 
approach to inspections because there are so many types of 
inspections and inspection situations.''); id. (describing VACIS/X-
ray inspection, Radioactive Portal Monitor inspections, and tailgate 
inspections).
---------------------------------------------------------------------------

J. Demurrage and Detention Policies

    Although the incentive principle and its applications were the 
focus of the rule, the Commission's guidance also included ``other 
factors that the Commission may consider as contributing to the 
reasonableness inquiry.'' \330\ The first ``other factor'' is the 
existence and accessibility of policies implementing demurrage and 
detention practices and regulations.\331\ This factor was based on the 
Fact Finding Officer's finding that there existed a marked lack of 
transparency regarding demurrage and detention practices, including 
dispute resolution processes and billing procedures.\332\ The 
Commission reasoned in the NPRM that ``[t]he opacity of current 
practices encourages disputes and discourages competition over 
demurrage and detention charges,'' and stated that shippers, 
intermediaries, and agents ``should be informed of who is being 
charged, for what, by whom, and how disputes can be addressed in a 
timely fashion.'' \333\
---------------------------------------------------------------------------

    \330\ FF28 Letter at 2.
    \331\ 84 FR at 48856.
    \332\ Interim Report at 3 (noting that the record supports 
consideration of the benefits of ``[c]larity, simplification, and 
accessibility regarding demurrage and detention (a) billing 
practices and (b) dispute resolution processes''); id. at 2, 4, 10-
12; Final Report at 13 (``The Phase Two meetings also reinforced the 
value of making demurrage and detention billing and dispute 
resolution policies and practices more transparent and accessible to 
cargo interest and truckers.''); id. at 14-18, 29; FF28 Letter at 2.
    \333\ 84 FR at 48853.
---------------------------------------------------------------------------

    This paragraph of the rule first considers the existence of 
demurrage and detention policies, that is, ``whether a regulated entity 
has demurrage and detention policies that reflect its practices.'' 
\334\ There was little comment on this aspect of the rule, but what 
there was supports the Commission's approach.\335\ The Commission is 
therefore retaining this language about the ``existence'' of policies 
in the final rule.
---------------------------------------------------------------------------

    \334\ 84 FR at 48853.
    \335\ OCEMA at 6 (``As noted in the NPRM, OCEMA has encouraged 
its members to publish their demurrage and detention policies and 
related dispute resolution processes either directly or via link on 
the OCEMA website.'').
---------------------------------------------------------------------------

    The rule also refers to the accessibility of policies. The 
Commission stated in the NPRM that it would consider in the 
reasonableness analysis ``whether and how those policies are made 
available to cargo interests and truckers and the public.'' \336\ ``The 
more accessible these policies are'' the Commission explained, ``the 
greater this factor weighs against a finding of unreasonableness.'' 
\337\ The Commission went on to note that ``[t]his factor favors 
demurrage and detention practices and regulations that make policies 
available in one, easily accessible website, whereas burying demurrage 
and detention policies in scattered sections in tariffs would be 
disfavored.'' \338\
---------------------------------------------------------------------------

    \336\ 84 FR at 48853.
    \337\ 84 FR at 48853.
    \338\ 84 FR at 48853-54.
---------------------------------------------------------------------------

    Although commenters agree that demurrage and detention policies 
should be accessible,\339\ ocean carriers and marine terminal operators 
object to this aspect of the rule on the grounds that it is 
inconsistent with statutory and regulatory provisions regarding 
publication of tariffs and marine terminal operator schedules.\340\ As 
these commenters point out, the Shipping Act requires a common carrier 
to ``keep open to public inspection in an automated tariff system, 
tariffs showing all its rates, charges, classifications, rule, and 
practices.'' \341\ The Act also requires that a tariff be ``made 
available electronically to any person . . . through appropriate access 
from remote locations.'' \342\ A marine terminal

[[Page 29660]]

operator, may, but is not required to, ``make available to the public a 
schedule of rates, regulations, and practices.'' \343\ A schedule 
``made available is enforceable by an appropriate court as an implied 
contract without proof of actual knowledge of its provisions.'' \344\ 
Similarly, a shipper is presumed to have knowledge of tariff 
rules.\345\ The Commission's regulations regarding tariffs and marine 
terminal schedules are found in 46 CFR parts 520 and 525.
---------------------------------------------------------------------------

    \339\ OCEMA at 6; Int'l Fed. of Freight Forwarders Ass'ns at 5 
(``Policies should be transparent and easily available on web pages 
which should be identified in the cargo notification.'').
    \340\ NAWE at 16-17; PMSA at 12-13; Ports America 8-9; WSC at 
17.
    \341\ 46 U.S.C. 40501(a)(1); see also 46 U.S.C. 40501(b)(4) 
(requiring tariff to ``state separately each terminal or other 
charge . . . and any rules that in any way change, affect, or 
determine any part of the total of the rates or charges'').
    \342\ 46 U.S.C. 40501(c).
    \343\ 46 U.S.C. 40501(f).
    \344\ 46 U.S.C. 40501(f).
    \345\ Kraft Foods v. Moore McCormack Lines, 17 FMC 320, 323 n.4 
(FMC 1974).
---------------------------------------------------------------------------

    According to these commenters, the Commission's statement 
disfavoring demurrage and detention policies buried in scattered 
sections in tariffs and favoring policies in easily accessible websites 
is inconsistent with the above Shipping Act and Commission provisions. 
``To the extent the NPRM purports to add any requirements beyond those 
set forth in the statute and Part 525 of the regulations,'' a commenter 
argues, ``such requirements would be unlawful.'' \346\
---------------------------------------------------------------------------

    \346\ NAWE at 17; PMSA at 12 (``[T]he Commission has no 
authority to require non-tariff publication of rates and charges, 
however desirable it might be from a customer service 
standpoint.'').
---------------------------------------------------------------------------

    The Commission continues to believe that the ocean freight delivery 
system would benefit from ocean carriers and marine terminal operators 
making their demurrage and detention policies available in easily 
accessible websites, in addition to their inclusion in ocean carrier 
tariffs and MTO schedules. And the Commission notes that unlike ocean 
carrier tariffs, marine terminal operator schedules are not required to 
be made public.
    But commenters' points are well-taken, and the Commission would 
avoid any interpretation of section 41102(c) that would be inconsistent 
with other Shipping Act provisions or Commission regulations or that 
would subject regulated entities to incompatible requirements. 
Consequently, to the extent the Commission considers the 
``accessibility'' of demurrage and detention policies under section 
41102(c), the factor will not be construed or weighed such that 
compliance with the minimum tariff and schedule obligations under the 
Shipping Act or the Commission's regulations would tend toward a 
finding of unreasonableness. On the other hand, providing additional 
accessibility above and beyond the minimum tariff and schedule 
requirements would weigh in favor of a finding of reasonableness.
    The Commission also remains concerned about the opacity of tariffs 
and marine terminal operator schedules. They tend to be complicated and 
difficult to navigate even for those in the industry (let alone, say, 
household goods shippers or others less familiar with international 
ocean shipping). Although section 41102(c) and this interpretive 
rulemaking might not be the right vehicle for addressing these 
concerns, the Commission may consider in an appropriate case whether an 
ocean carrier tariff is ``clear and definite'' as required by 46 CFR 
520.7(a)(1). The Commission could also assess whether a tariff is 
adequately searchable.\347\ Moreover, the Commission is charged with 
interpreting what it means for a tariff to be kept ``open to public 
inspection,'' what it means for a tariff to be ``available 
electronically'' through ``appropriate access,'' and what it means for 
a marine terminal schedule to be ``made available to the public.''
---------------------------------------------------------------------------

    \347\ 46 CFR 520.6.
---------------------------------------------------------------------------

    The Commission is making two minor, non-substantive changes to this 
paragraph of the rule. The first sentence of the paragraph stated that 
the Commission may consider the existence and accessibility of 
demurrage and detention policies. The final rule makes explicit that 
the Commission's analysis is not limited to those two factors and that 
it may also consider the content and clarity of any policies. That the 
Commission would consider the content of demurrage and detention 
policies reflecting demurrage and detention practices is implicit in 
the rule--the proposed rule stated that the Commission may consider 
certain aspects about dispute resolution policies, in other words, the 
content of those policies.\348\ As for clarity, the Commission 
emphasized in the NPRM the importance of shippers, intermediaries, and 
truckers knowing what they are being charged for and by whom.\349\ 
Adding the word ``clarity'' to the guidance is consistent with that 
emphasis, and appears unobjectionable.\350\
---------------------------------------------------------------------------

    \348\ 84 FR at 48856. Further, given the Commission's ability to 
determine the reasonableness of demurrage and detention practices, 
it would also have the ability to assess the content of policies 
reflecting those practices.
    \349\ 84 FR at 48853; see also FF28 Letter at 2 (noting that 
under the proposed interpretive rule, the Commission could consider 
the ``transparency of demurrage and detention policies'').
    \350\ OCEMA at 6 (``OCEMA has long supported the notion of 
clarity and accessibility with regard to detention and demurrage 
practices.'').
---------------------------------------------------------------------------

K. Dispute Resolution Policies

    The rule indicates that the Commission is particularly interested 
in demurrage and detention dispute resolution policies, and 
consequently, the Commission may consider the extent to which they 
contain information about points of contact, timeframes, and 
corroboration requirements.\351\ The Commission explained that it may 
consider in ascertaining reasonableness under section 41102(c) whether 
ocean carrier and marine terminal operator demurrage and detention 
dispute resolution policies ``address things such as points of contact 
for disputing charges; time frames for raising disputes, responding to 
cargo interests or truckers, and for resolving disputes; and the types 
of information and evidence relevant to resolving demurrage or 
detention disputes.'' \352\ Based on discussions with stakeholders 
during all three phases of the Fact Finding Investigation, the 
Commission listed examples of attributes of dispute resolution policies 
that, while not required, would weigh toward reasonableness.\353\ The 
Commission cited a best practices proposal put forward by OCEMA as a 
useful model for dispute resolution policies.\354\
---------------------------------------------------------------------------

    \351\ 84 FR at 48856.
    \352\ 84 FR at 48854 (citing Interim Report at 14-17-18; Final 
Report at 7-8. 17-18).
    \353\ 84 FR at 48854 (citing favorably ``step-by-step 
instructions for disputing a charge, dedicated dispute resolution 
staff at regulated entities, allowing priority appointments after 
successful dispute resolution or when a container is not available; 
sufficient responses to cargo interests request 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'').
    \354\ 84 FR at 48854.
---------------------------------------------------------------------------

    There was little substantive objection to this part of the 
rule.\355\ WSC protests that the Commission did not acknowledge the 
fact-specific nature of dispute resolution policies.\356\ But the 
Commission expressly acknowledged in the NPRM that each regulated 
entity would tailor its dispute resolution policies to fit its own 
circumstances.\357\ Further, the list of dispute resolution policy 
characteristics in the NPRM is a common-sense list of ideas raised 
during the Fact Finding Investigation. For example, during the third 
phase of the investigation, shippers, intermediaries, and truckers 
pointed out that demurrage or detention waivers or free time extensions 
were often met with a negative response without any

[[Page 29661]]

explanation or the ability to raise the issue to higher level 
management.
---------------------------------------------------------------------------

    \355\ In fact, the UIIA provides a default dispute resolution 
process. UIIA H.1.
    \356\ WSC at 17 (``In addition, the Commission does not 
acknowledge or address the fact-specific nature of all dispute 
resolution policies, which are created by each individual 
carrier.'').
    \357\ 84 FR at 48854 (stating that OCEMA provided a useful model 
``which each regulated entity would tailor to fit its own 
circumstances'').
---------------------------------------------------------------------------

    Shippers, intermediaries, and truckers, like WSC, would also like 
specific guidance on what sort of attributes dispute resolution 
policies must have to pass muster.\358\ The former suggest that the 
Commission should set specific timeframes for dispute resolution and 
billing,\359\ processes for internal appeals of disputes within an 
ocean carrier or marine terminal operator,\360\ and points of contact 
with actual authority to settle disputes.\361\ They also argue in favor 
of ocean carriers and marine terminal operators suspending charges 
during disputes about those charges,\362\ allowing cargo to move freely 
during disputes,\363\ and not ``shutting out'' truckers, 
intermediaries, or consignees from doing business with an ocean carrier 
or marine terminal operator simply because a trucker, intermediary, or 
consignee is engaged in a dispute with an ocean carrier or marine 
terminal operator.\364\
---------------------------------------------------------------------------

    \358\ WSC at 17-18 (arguing that the Commission does not provide 
any guidance on what would render an appeals process sufficient). 
Some shippers, intermediaries, and truckers would also prefer more 
specific guidance in this regard
    \359\ E.g., Am. Cotton Shippers Ass'n at 7; Int'l Fed. of 
Freight Forwarders Ass'ns at 6; Best Transp. at 2; CVI Int'l at 2; 
EMO Trans Atlanta, GA USA at 1; Mohawk Global Logistics at 8; Nat'l 
Indus. Transp. League at 15; Shapiro at 2.
    \360\ VLM Foods USA Ltd. at 1; FedEx Trade Networks & Brokerage, 
Inc. at 2.
    \361\ E.g., Florida Customs Brokers & Forwarders Ass'n at 1; 
Int'l Fed. of Freight Forwarders Ass'ns at 5; VLM Foods USA Ltd. at 
1.
    \362\ E.g., Int'l Fed. of Freight Forwarders Ass'ns at 5 (noting 
that once a merchant pays an ocean carrier, the carrier has ``no 
motivation to look into such disputes delaying related refunds 
unreasonably'' and that a more reasonable practice would be to 
suspend payment of disputed charges pending resolution of the 
dispute); Mondelez Int'l at 2; Transp. Intermediaries Ass'n at 5.
    \363\ E.g., NCBFAA at 16-17 (noting that ``pay now/argue later'' 
``uses coercion as a means to extract money from NVOCCs'' and 
arguing that there should be mechanism allowing for release of cargo 
to NVOCCS without requiring them to first pay disputed demurrage or 
detention charges); CV Int'l at 2; FedEx Trade Networks Transport & 
Brokerage Inc. at 2; Container Port Group at 1; Transworld Logistics 
& Shipping Services Inc. at 5; Mohawk Global Logistics at 10.
    \364\ E.g. AgTC (``Many truckers own one truck, are immigrants 
in their first job in this country, may not have command of the 
English. They have no way to defend themselves from being locked 
out--its bullying.''); Mohawk Global Logistics (``In the case of 
detention charges billed and disputed after the fact, the terminals 
collecting on behalf of the carriers will frequently shut out 
truckers from access to their terminals when coming to pick up 
another unrelated container, again compelling payment before 
resolution.''); NYNJFFF&BA at 7 (``What is most important is that it 
should be considered unreasonable for a carrier to freeze all 
activity with the cargo owner or its subcontractors such as truckers 
and OTIS when there is a dispute on one shipment.''); VLM Foods Inc. 
at 1, (``Truckers and consignees should be able to obtain access to 
the containers and continue doing business with a carrier even if 
there is a pending dispute OR outstanding charges to their 
account.'').
---------------------------------------------------------------------------

    The Commission recognizes the merits of most \365\ of these 
proposals, and when considering the totality of the circumstances in a 
section 41102(c) case involving demurrage and detention, the inclusion 
of such proposals in ocean carrier and marine terminal operator dispute 
resolution policies would likely weigh in favor of reasonableness and 
against a violation. In fact, application of these proposals could 
likely reduce the need for formal disputes and thereby enhance 
operational efficiency.\366\ But for the Commission to require specific 
dispute resolution policies to include them, or to conclusively state 
that the absence of them makes a policy unreasonable, is beyond the 
scope of this rulemaking.\367\ Accordingly, the Commission is retaining 
the language about dispute resolution policies in the final rule, with, 
as explained above, the clarification that the Commission may consider 
the content and clarity of demurrage and detention policies under 
section 41102(c).\368\ The Commission further notes that the practice 
of ``shutting out'' truckers, intermediaries, or consignees from ocean 
carrier systems or terminals not only appears to impede efficient cargo 
movement,\369\ but raises potentially serious concerns under other 
sections of the Shipping Act.\370\
---------------------------------------------------------------------------

    \365\ The idea that regulated entities should suspend charges 
pending a dispute or allow cargo to move freely runs up against the 
long-established lien law. Ocean carriers have maritime liens on 
cargo they transport. Petra Pet Inc. v. Panda Logistics, Ltd., FMC 
Case No. 11-14, 2012 FMC LEXIS 33, at *43-*44 (ALJ Aug. 14, 2012), 
aff'd 2013 FMC LEXIS 37, at *17-*18 (FMC Oct. 31, 2013) (quoting 
Bernard & Weldcraft Welding Equip. v. Supertrans Int'l, Inc., 29 
S.R.R. 1348, 1356 n.14 (ALJ 2003)). A carrier loses the lien if it 
surrenders the cargo. Id. But in any case, the Commission would need 
to examine precisely the lien at issue. See Adenariwo v. BDP Int'l, 
FMC Case No. 1921(I), 2014 FMC LEXIS 46, at *3 (FMC Feb. 20, 2014), 
vacated on other grounds Adenariwo v. Fed. Mar. Comm'n, 808 F.3d 73 
(D.C. Cir. 2015); Petra Pet at *43-*44.
    \366\ Some commenters suggested that demurrage and detention 
disputes be subject to binding arbitration. See NYNJFFF&BA (``The 
NYNJFF&BA would like to suggest that disputes that cannot be easily 
solved between the parties be decided by binding decision of an 
impartial arbitrator. Perhaps more authority can be given to CADRS 
or parties incorporate the use of arbitrators in their contracts and 
agreements.''); Transworld Logistics & Shipping Services Inc. at 5.
    \367\ Part III.B.2, supra.
    \368\ See Part.III.J, supra.
    \369\ NYNJFFF&BA at 7 (explaining that locking out an 
intermediary can affect cargo of unrelated shipments handled by that 
intermediary and ``when carriers threaten to cutoff truckers from 
picking up any containers for any of their customers all shippers 
are affected when detention is not paid for one of them due to a 
dispute'').
    \370\ See 46 U.S.C. 41104(a)(3) (prohibition against carrier 
retaliation), 41104(a)(10) (prohibition against carrier unreasonably 
refusing to deal or negotiate), and 41106(3) (prohibition against 
marine terminal operator refusing to deal or negotiate). Assessing 
the lawfulness of ``lock out'' practices, however, under these 
provisions is beyond the scope of this rulemaking.
---------------------------------------------------------------------------

L. Billing

    The rule text does not address ocean carrier or marine terminal 
operator billing or invoicing practices. In the NPRM, however, the 
Commission noted that 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.'' \371\ The Commission also pointed out that one 
idea that could promote transparency and the alignment of stakeholder 
interests was to tie billing relationships to ownership or control of 
the assets that are the source of the charges.\372\ Additionally, the 
Commission noted that ocean carriers should bill their customers rather 
than imposing charges contractually-owed by cargo interests on third 
parties.
---------------------------------------------------------------------------

    \371\ 84 FR at 48854.
    \372\ 84 FR at 48854.
---------------------------------------------------------------------------

    The Commission received a number of comments about billing and 
invoices. There was little dispute that demurrage and detention bills 
should have enough information for those receiving the bills to assess 
their accuracy and validity.\373\ There was significant comment, 
however, about the idea that demurrage and detention be billed based on 
who owns the asset at issue. Under this approach, ``[o]cean carriers 
would bill cargo interest directly for the use of containers,'' and 
``marine terminal operators would bill cargo interest directly for use 
of terminal land.'' \374\ This idea was mentioned in both Fact Finding 
No. 28 reports.\375\
---------------------------------------------------------------------------

    \373\ NCBFAA at 17 (``For anyone to, first, understand and, 
second, contest disputed charges, it must be clear what is being 
billed and by whom.'').
    \374\ 84 FR at 48854.
    \375\ Interim Report at 18; Final Report at 26 n.26.
---------------------------------------------------------------------------

    Although this billing model is not included in the rule, and the 
Commission did not suggest adopting it as part of the reasonableness 
analysis under section 41102(c),\376\ the comments about this model are 
mostly negative because most commenters preferred billing relationships 
tied to the entity with whom contractual relationships exist.\377\ 
Typically, the

[[Page 29662]]

commenters point out, there is no direct commercial mechanism for 
shippers to negotiate demurrage provisions directly with marine 
terminal operators, since shippers contract instead directly with ocean 
carriers.\378\ And few shippers or intermediaries want to receive 
separate invoices from ocean carriers and marine terminal 
operators.\379\ Marine terminal operators and ocean carriers also 
prefer that billing be tied to contractual relationships.\380\ In light 
of these comments, the Commission does not intend to consider the use 
or nonuse of this billing model in determining the reasonableness of 
demurrage and detention policies.
---------------------------------------------------------------------------

    \376\ The Commission did not, as OCEMA insists, ``propose[ ] to 
limit billing practices by function such that terminal would bill 
solely for land use and ocean carriers would bill for equipment 
use.'' OCEMA at 7.
    \377\ See, e.g., Best Transp. At 2; Nat'l Indus. Transp. League 
at 16; Nat'l Retail Fed. at 2; NYNJFFF&BA at 10-11; Harbor Trucking 
Ass'n at 2; NAWE at 20. But see Int'l Fed. of Freight Forwarders 
Ass'ns at a 6 (``Shipping lines should only charge to the merchant 
for the demurrage of their containers. The terminals should charge 
the merchant directly for the space used in their terminals.''); 
NCBFAA at 17-18 (advocating for billing tied to party having 
ownership or control of assets as it ``allows for greater 
transparency, consistency, prevents double billing, and eliminate 
confusion as to who and what the charges are for'').
    \378\ Nat'l Indus. Transp. League at 16; see also Nat'l Retail 
Fed. at 2 (``Instead, we endorse the view, espoused by Coalition for 
Fair Port practices that disputes over detention and demurrage 
should [be] between the ocean carrier and the BCO, simply because 
the commercial relationship exists only between the BCO and the 
ocean carrier.'').
    \379\ E.g., Int'l Logistics, Inc at 2; Am. Coffee Corp. at 3.
    \380\ NAWE at 20; Pac. Merchant Shipping Ass'n at 13-15; WSC at 
17 (``The Commission's interpretation of reasonable billing 
practices would require separate invoices by MTOs and carriers.'').
---------------------------------------------------------------------------

    The Commission's emphasis in the NPRM that ocean carriers bill the 
correct party reflected concerns raised by truckers that they were 
being required to pay charges that were more appropriately charged to 
others. Commenters reiterate these concerns. AgTC contends that 
``carriers should impose detention and/or demurrage on the actual 
exporter or importer customer with whom the carrier has a contractual 
relationship.'' \381\ In contrast, the New York New Jersey Foreign 
Freight Forwarders & Brokers Association and others assert that 
truckers should be accountable for detention under the UIIA.\382\ It 
also argues that ocean carriers define the term ``merchant'' in their 
bill of lading too broadly, resulting in parties being billed for 
demurrage and detention ``regardless of whether they are truly in 
control of the cargo when the charges were incurred.''
---------------------------------------------------------------------------

    \381\ AgTC at 7; see also IMC Companies (``In turn, ocean 
carriers on carrier haulage should bill their shippers for 
detention/per diem directly given motor carriers are not party to 
the service contract. Motor carriers are also not party to service 
contract exceptions on merchant haulage moves, and therefore any 
exceptions under service contract should require billing by ocean 
carrier directly to their shipper.''); J. Peter Hinge (``Therefore, 
it must be made crystal clear also in the context of the 
Commission's findings that when you say `Ocean carriers would bill 
cargo interests directly for use of containers,' the `cargo 
interest' is the consignee on the Ocean carrier's B/L as opposed to 
truckers and ultimate consignees on an NVOCC B/L.''); Mondelez Int'l 
at 2 (``The long-established rule of terminals and carriers billing 
the truckers for demurrage and detention (per diem) is a 
hardship.'').
    \382\ NTNJFFF&BA at 9 (``Where detention is concerned the 
steamship lines routinely have ignored the [UIIA], which holds the 
trucker accountable for the charges incurred when equipment is not 
returned on time.''); see also PMSA at 13 (``Specifically, equipment 
charges (detention or per diem) are generally assessed against motor 
carriers, not cargo interests, under the provisions of the 
[UIIA].'').
---------------------------------------------------------------------------

    To clarify, the Commission's goal in the NPRM was to emphasize the 
importance of ocean carriers and marine terminal operator bills 
aligning with contractual responsibilities.\383\ This does not mean, 
however, that every billing mistake is a section 41102(c) violation. 
Section 41102(c) applies to acts or omissions that occur on a normal, 
customary, and continuous basis.\384\ Further, billing mistakes can 
presumably be addressed under contract law or other legal 
theories.\385\
---------------------------------------------------------------------------

    \383\ 84 FR at 48854.
    \384\ 46 CFR 545.4(b).
    \385\ See, e.g., 83 FR 64479 (``Matters that may previously have 
been brought under section 41102(c) however, can still find 
resolution in other provisions or regulations of the Shipping Act or 
be adjudicated as matters of contract law, agency law, or admiralty 
law.'').
---------------------------------------------------------------------------

    As for the arguments that ocean carriers' billing practices are 
unreasonable because carrier bills of lading, tariffs, service 
contracts, or the UIIA assigns responsibility for charges to the wrong 
parties, the Commission believes that whatever the merit of these 
arguments, they are better addressed in the context of specific fact 
patterns rather than in this interpretive rule, the purpose of which is 
to provide general guidance about how the Commission will apply section 
41102(c). Likewise, shippers, intermediaries, and truckers identify 
ocean carrier and marine terminal operator practices that they believe 
raise reasonableness issues. These commenters urge the Commission to 
require, or address in the rule:
     Billing timeframes. Many commenters assert that ocean 
carriers and marine terminal operators should issue demurrage or 
detention bills or invoices within specified timeframes.\386\
---------------------------------------------------------------------------

    \386\ See, e.g., Crane Worldwide Logistics (suggests a ``defined 
invoicing period''); Int'l Fed. of Freight Forwarders Ass'ns at 6; 
Mohawk Global Logistics at 8; Shapiro at 2.
---------------------------------------------------------------------------

     Advance payment of charges. Several commenters suggest 
that it is unreasonable for ocean carriers or marine terminal operators 
to require advance payment of charges before cargo is released, 
especially when: (a) The regulated entity and the customer have 
negotiated credit arrangements; \387\ or (b) when the charges are 
disputed.
---------------------------------------------------------------------------

    \387\ See, e.g., The Evans Network of Companies at 1 (asserting 
that there is ``no need for advance payment of all charges here 
credit has been agreed to between the shipper and ocean carrier'' 
and that ``pre-payment should not apply to disputed charges''); 
FedEx Trade Networks Transport & Brokerage Inc. (``[W]e feel that it 
is essential that cargoes not be `Held Hostage' for the immediate 
payment of demurrage or detention charges.''); Retail Indus. Leaders 
Ass'n at (``Similarly, where shippers and carriers have agreed to 
credit terms as a part of an existing, contracted business 
relationship, there is no basis for requiring advance payment of all 
charges prior to release of cargo'').
---------------------------------------------------------------------------

    As to billing and invoice timeframes, the Commission believes that 
having time frames and abiding by them would be a positive development. 
It is beyond the scope of this guidance, though, for the Commission to 
decide what those timeframes should be.\388\ Similarly, in the 
abstract, it is not immediately clear why an ocean carrier or marine 
terminal operator would require payment of demurrage before releasing 
cargo if there is a credit arrangement involved. But specific 
situations may not so simple. As noted above, ocean carriers have liens 
on cargo that they can lose if they surrender the cargo.\389\
---------------------------------------------------------------------------

    \388\ See Part III.B.2, supra. The Commission notes, however, 
that the standard UIIA agreement requires equipment providers to 
invoice motor carriers for ``Per Diem, Container Use, Chassis Use/
Rental and/or Storage Ocean Demurrage charges within sixty (60) days 
from the date on which the Equipment was returned.'' UIIA Sec.  
E.6(c).
    \389\ See supra note 365.
---------------------------------------------------------------------------

    While the Commission does not believe it is appropriate in this 
interpretive rule to prescribe timeframes, let alone specific ones, or 
mandate that ocean carriers or marine terminal operators release cargo 
prior to payment when credit arrangements are involved, the Commission 
may address such issues in the context of particular facts, considering 
all relevant arguments. To reflect this, the Commission is including a 
reference to demurrage and detention billing practices and regulations 
in the final rule.

M. Guidance on Evidence

    The rule paragraph on demurrage and detention policies mentions 
``corroboration requirements'' because the Fact Finding record 
demonstrated that the international ocean freight delivery system would 
benefit from ``[e]xplicit guidance regarding the types of evidence 
relevant to resolving demurrage and detention disputes.'' \390\ In the 
NPRM, the Commission stated that ``[d]ispute resolution policies that 
lack guidance about the types of evidence relevant to resolving

[[Page 29663]]

demurrage and detention disputes, are likely to fall on the 
unreasonable end of the spectrum.'' \391\ The Commission then listed 
examples of ideas proposed by shippers and truckers that could be 
incorporated into dispute resolution policies. The Commission noted 
that the OCEMA best practices proposal expressly contemplates that 
member dispute resolution policies include such guidance.\392\
---------------------------------------------------------------------------

    \390\ Final Report at 17-18.
    \391\ 84 FR at 48854.
    \392\ 84 FR at 48854.
---------------------------------------------------------------------------

    Most of the comments about this aspect of the rule reflect 
disagreement about who should bear the burden of providing evidence 
relevant to demurrage and detention issues. WSC contends that the 
Commission's statements in the NPRM ``would require carriers to supply 
truckers with evidence that truckers possess in several 
circumstances.'' \393\ Rather, the Commission stated that ``[p]roviding 
truckers with evidence substantiating trucker attempts to retrieve 
cargo that are thwarted when the cargo is not available'' is an idea 
that, if implemented by an ocean carrier or marine terminal operator, 
would weigh favorably in a reasonableness analysis.\394\ By listing 
examples of ideas that would weigh favorably--ideas suggested by 
shippers and truckers--the Commission was not mandating a specific 
practice.
---------------------------------------------------------------------------

    \393\ WSC at 18.
    \394\ 84 FR at 48854.
---------------------------------------------------------------------------

    In contrast, other commenters assert that shippers and truckers 
should not have to prove that they do not owe demurrage and detention, 
rather ``[t]he entity billing the fees should prove they are owed, as 
it is with any other business on Earth.'' \395\ Another commenter 
points out it would be helpful if truckers have geo-fencing data 
available to demonstrate attempts (and wait times) to retrieve cargo 
and log records of attempts to make appointments.\396\
---------------------------------------------------------------------------

    \395\ Nat'l Retail Fed. at 3 (noting it ``continue[d] to be 
concerned that MTOs and carriers may develop transparent policies 
that place the evidentiary onus on cargo interests,'' and arguing 
that ``MTOs and carriers should have an obligation to provide 
information in instances where a BCO or its agent attempts to make 
an appointment but is unable to, or where truckers arrive at the 
terminal only to discover that cargo is not available''); A.N. 
Deringer Inc. at 1; Green Coffee Ass'n.
    \396\ John S. Connor Global Logistics at 6.
---------------------------------------------------------------------------

    When the Commission discussed ``corroboration requirements'' in 
demurrage and detention dispute resolution policies, and ``guidance 
about the types of evidence relevant to resolving demurrage and 
detention disputes,'' \397\ it was referring to informal dispute 
resolution among ocean carriers, marine terminal operators, shippers, 
intermediaries, and truckers, in the form of requests for free time 
extensions or waiver of charges.\398\ The Commission was not referring 
to who should bear the burden of producing evidence in a lawsuit in 
court or a Shipping Act action before the Commission.\399\
---------------------------------------------------------------------------

    \397\ 84 FR at 48854.
    \398\ See Final Report at 17 (``The Phase Two respondents 
generally agreed that cargo interests seeking a demurrage waiver or 
free time extension should substantiate their arguments with 
corroborating documentation and that having guidelines could resolve 
disputes more efficiently.'').
    \399\ The UIIA, for instance, requires equipment providers to 
provide truckers documentation reasonably necessary to support 
invoices, whereas in other situations the UIIA requires the trucker 
to provide documentation supporting a claim. UIIA Sec.  E.6(d), (e).
---------------------------------------------------------------------------

    The Commission's point was that disputes about demurrage and 
detention might be resolved more efficiently if a shipper or trucker 
knows in advance what type of documentation or other evidence an ocean 
carrier or marine terminal operator needs to see to grant a free time 
extension or waiver. If an ocean carrier or marine terminal operator 
provides things like trouble tickets or log records to its customers or 
their agents, so much the better. Dispute resolution policies that 
contain guidelines on corroboration will weigh favorably in the 
totality of the reasonableness analysis. It would seem to be in the 
best interests of ocean carriers and marine terminal operators to 
provide this sort of guidance and to avoid imposing onerous evidentiary 
requirements on their customers, as legitimate disputes that do not get 
resolved informally can lead to formal action in the form of Shipping 
Act claims or calls for additional Commission regulation.

N. Transparent Terminology

    Paragraph (e) of the proposed rule states that 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.\400\ The Commission started with the basic principle 
that for demurrage and detention practices to be just and reasonable, 
it must be clear what the relevant terminology means.\401\ 
Consequently, as the Commission explained, it would consider in the 
reasonableness analysis: (a) Whether a regulated entity has defined the 
material terms of the demurrage or detention practice at issue; (b) 
whether and how those definitions are made available to cargo 
interests, truckers, and the public; and (c) 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.\402\
---------------------------------------------------------------------------

    \400\ 84 FR at 48856.
    \401\ 84 FR at 48854.
    \402\ 84 FR at 48854.
---------------------------------------------------------------------------

    The Commission also supported defining demurrage and detention in 
terms of what asset is the source of the charge (land or container) as 
opposed to the location of a container (inside or outside a terminal). 
The Commission discouraged use of terms such as ``storage'' and ``per 
diem'' as synonyms for demurrage and detention because these terms add 
additional complexity and are apparently inconsistent with 
international practice.\403\
---------------------------------------------------------------------------

    \403\ 84 FR at 48854.
---------------------------------------------------------------------------

    Shippers, intermediary, and trucker commenters strongly support the 
rule's emphasis on clear language.\404\ And those who otherwise opposed 
the Commission's rule did not object to the principle that the 
definitions of terms used in demurrage and detention practices should 
be clear.\405\ To better reflect this emphasis on clarity, the 
Commission is including the term ``clearly'' in paragraph (e) of the 
final rule.
---------------------------------------------------------------------------

    \404\ See, e.g., Am. Cotton Shippers Ass'n; Harbor Trucking 
Ass'n; NCBFAA; Retail Industry Leaders Ass'n.
    \405\ NAWE at 18; OCEMA at 6.
---------------------------------------------------------------------------

    Moreover, no commenters object to the notion that regulated 
entities should define material terms like ``demurrage'' and 
``detention.'' \406\ As NCBFAA points out, if shippers do not know what 
a charge means, they cannot ``ascertain the nature of the charge and if 
it is justified.'' \407\ There are no substantive comments on the 
``accessibility'' portion of this paragraph. The focus on 
accessibility, however, runs into some of the same issues addressed 
above regarding the accessibility of demurrage and detention policies: 
existing statutory and regulatory provisions regarding the publication 
and contents of common carrier tariffs and marine

[[Page 29664]]

terminal operator schedules.\408\ Consequently, to the extent the 
Commission considers the ``accessibility'' of demurrage and detention 
definitions under section 41102(c), the factor will not be construed or 
weighed such that minimum compliance with the applicable tariff and 
schedule requirements would tend toward a finding of unreasonableness. 
On the other hand, providing additional accessibility of such 
definitions above and beyond the requirements will be viewed favorably 
in any reasonableness analysis.
---------------------------------------------------------------------------

    \406\ Additionally, ocean common carrier tariffs must contain 
all ``rates, charges, classifications, rules, and practices between 
all points or ports on its own route and on any through 
transportation route that has been established.'' 46 U.S.C. 
40501(a); see also 46 CFR 520.4 (requiring tariffs to state 
``separately each terminal or other charge, privilege, or facility 
under the control of the carrier or conference and any rules or 
regulations that in any way change, affect, or determine any part of 
the aggregate of the rates or charges).
    \407\ NCBFAA at 18.
    \408\ See Part III.J, supra.
---------------------------------------------------------------------------

    The most commented upon aspect of the rule regarding terminology 
was the clause stating that the Commission would consider in the 
reasonableness analysis the ``extent to which the definitions differ 
from how the terms are used in other contexts,'' i.e., how the 
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. The rationale was that the more a regulated 
entity's definitions of demurrage and detention differ from how it had 
used the terms and how the terms were used in the industry, the more 
important it was for the regulated entity to ensure that the 
definitions were clear. Further, considering how the terms were used 
elsewhere would encourage consistent demurrage and detention 
terminology, which was in line with the Fact Finding Officer's finding 
that standardized demurrage and detention language would benefit the 
freight delivery system.\409\
---------------------------------------------------------------------------

    \409\ Final Report at 3, 30, 32.
---------------------------------------------------------------------------

    In their comments, shippers, intermediaries, and truckers largely 
support consistent or standardized demurrage and detention 
terminology.\410\ Ocean carrier and marine terminal operator 
commenters, however, object to the Commission considering in the 
reasonableness analysis how terms were used in the past and elsewhere 
in a port or U.S. trade.\411\ They argue that the Commission should 
assess the transparency of terminology based on the face of demurrage 
and detention documents, and that the rule would chill innovation or 
improvements in technology; ignores differences between carriers and 
marine terminal operators that result in different terminology; 
indicates a Commission preference for uniformity over competition; 
could increase risk that regulated entities could be accused by the 
Department of Justice or private plaintiffs of engaging in concerted 
activity; and would ``add to confusion within the industry by requiring 
ocean carriers to abandon familiar, existing terminology in favor of 
some undefined standard.'' \412\
---------------------------------------------------------------------------

    \410\ E.g., Am. Coffee Corp.; Green Coffee Ass'n; Am. Cotton 
Shipper's Ass'n; Harbor Trucking Ass'n; IMC Companies; Meat Import 
Council of America; Nat'l Indus. Transp. League; NYNJFFF&BA Retail 
Indus. Leaders Ass'n.
    \411\ NAWE at 18-20; OCEMA at 6; WSC at 17.
    \412\ OCEMA at 6; see also NAWE at 19.
---------------------------------------------------------------------------

    Despite these criticisms, the Commission is not deleting this 
portion of the rule. The NPRM merely proposed that one factor that the 
Commission may consider in combination with other factors in the 
reasonableness analysis is how terms are used in light of how they are 
used elsewhere. The Commission, by issuing this guidance, is not 
requiring regulated entities to change their current terminology, and 
the primary consideration when it comes to the clarity of terminology 
would be the definitional documents themselves. Moreover, this guidance 
does not mean that the Commission would find a section 41102(c) 
violation simply because an ocean carrier or marine terminal operator 
changed its terminology. The Commission is capable of distinguishing 
between a regulated entity simply changing its terminology, which would 
in most cases would not raise any issues, and a regulated entity using 
its own terminology inconsistently. Likewise, regulated entities are 
free to use terminology that differs from that used in a particular 
port or the U.S. trade generally, so long as they make it clear what 
the terms mean. While the commenters do not explain how operational 
differences between, say, marine terminal operators, would result in 
different definitions of demurrage and detention, the proposed guidance 
does not mean that the Commission would ignore such differences if 
raised in a case.
    As for the competitive concerns, the Fact Finding Officer's reports 
indeed indicate a preference for standardized or consistent demurrage 
and detention terminology, stating that it would benefit the industry 
and American economy.\413\ The Commission finds unpersuasive the claim 
that ocean carriers and marine terminal operators compete on the basis 
of the demurrage and detention terminology they use, and these 
commenters provide no support for the contention that they are at risk 
of antitrust prosecution or litigation due to their choice of 
terminology.
---------------------------------------------------------------------------

    \413\ Interim Report at 17; Final Report at 32.
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    At the end of the day, the Commission's proposed guidance in this 
regard is intended to provide advance notice that if ocean carriers or 
marine terminal operators use terms that are unclear, or use terms 
inconsistently, and as a consequence confuse or mislead shippers, 
intermediaries, or truckers, the Commission may take that into account 
as part of the reasonableness analysis under section 41102(c). Although 
the Commission believes that consistent demurrage and detention 
language would be beneficial, and encourages it, the rule should not be 
construed to mandate it.\414\
---------------------------------------------------------------------------

    \414\ The Commission in the NPRM supported certain definitions 
of ``demurrage'' and ``detention'' and discouraged other terms such 
as storage or per diem. Although some commenters support the 
Commission's definitions, others did not. Moreover, one commenter 
noted that some ocean carriers use alternative terms such as 
``storage'' or ``per diem'' to distinguish these charges from 
terminal demurrage. OCEMA at 6. While the Commission believes that, 
based on the Fact Finding Investigation, the definitions it 
suggested have merit, and that terms like storage and per diem could 
potentially cause confusion, use or nonuse of those definitions 
would not affect the reasonableness analysis.
---------------------------------------------------------------------------

O. Carrier Haulage

    Finally, it is worth highlighting comments about ``carrier 
haulage,'' because, while not specifically the subject of the 
Commission's rule, the topic was mentioned by several commenters. In a 
carrier haulage arrangement, also referred to as ``store door'' 
delivery or a ``door move'' or ``door-to-door'' transportation, the 
ocean carrier is responsible for arranging transport of a container 
from the terminal to another location, such as a consignee warehouse. 
In other words, the ocean carrier provides drayage trucking.\415\ In 
contrast, in a ``merchant haulage'' arrangement, also known as CY 
(container yard) or port-to-port transportation, the shipper makes the 
trucking arrangements.\416\
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    \415\ FMC Congestion Report at 9, 18.
    \416\ Id. at 9, 18.
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    Some commenters argue that ocean carriers should not be able to 
charge shippers demurrage or detention on carrier haulage moves because 
in those situations the ocean carrier, not the shipper or consignee, is 
responsible for ensuring that containers are timely retrieved from the 
terminal and delivered to the appropriate location.\417\

[[Page 29665]]

As one commenter maintained: ``Of late carriers have started billing 
importers for truck capacity issues at gateway ports (on carrier door 
moves) which, should immediately stop as the carrier is obliged to 
honor the terms of the `door bill of lading.' '' \418\ In contrast, 
truckers argue that ``ocean carriers on carrier haulage should bill 
their shippers directly given motor carriers are not party to the 
[service] contract.'' \419\
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    \417\ Mohawk Global Logistics at 9; Samaritans Int'l of Waxhaw 
(``Many times the freight line is in control of door to door 
delivery, by lack of coordination container are not moved in a 
timely fashion, Once again they charge us demurrage for their lack 
of efficiency.''); W. Overseas Corp. at (describing situation in 
which ocean carrier was unable to find a trucker on a door move 
resulting in imposition of demurrage on importer because the carrier 
``had a provision in their tariff that allowed this to happen'' and 
arguing that ``[t]he whole point in making these books a door move 
was'' so that the ocean carrier would make the delivery 
arrangements'').
    \418\ Transworld Logistics & Shipping Servs. Inc. at 4.
    \419\ Harbor Trucking Ass'n at 2. It is possible that those 
comments can be reconciled, if the former is referring to demurrage 
and the latter, detention.
---------------------------------------------------------------------------

    Also of interest is the comment that ``[d]uring recent terminal 
congestion, reports indicated that shipping lines charged demurrage to 
merchants who arranged the transport in merchant haulage but waived the 
charges for merchants for whom they arranged the transport in carrier 
haulage.'' \420\ The commenter asserts that when arranging haulage, 
ocean carriers in carrier haulage are competing with entities such as 
ocean transportation intermediaries.\421\ Because, the commenter 
asserted, markets are less efficient when entities have the power to 
levy unreasonable charges on their competitors, the Commission's 
guidance should make clear that ``containers in merchant haulage and 
carriers haulage be treated alike.'' \422\
---------------------------------------------------------------------------

    \420\ Int'l Fed. of Freight Forwarders Ass'ns at 7.
    \421\ Id.
    \422\ Id.
---------------------------------------------------------------------------

    Although the rule does not address these specific situations, the 
Commission has concerns about them, especially charging shippers 
demurrage on carrier haulage moves, under section 41102(c) and will 
closely scrutinize them in an appropriate case. Additionally, insofar 
as ocean carriers are not fulfilling contractual obligations, shippers 
may have additional remedies.\423\
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    \423\ See 83 FR at 64479 (noting that shippers may have remedies 
outside the Shipping Act for some complaints, under principles of 
contract law, agency law, or admiralty law).
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IV. Rulemaking Analyses

Congressional Review Act

    The rule is not a ``major rule'' as defined by the Congressional 
Review Act, codified at 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).

Regulatory Flexibility Act

    The Regulatory Flexibility Act (codified as amended at 5 U.S.C. 
601-612) provides that whenever an agency promulgates a final rule 
after being 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 a final regulatory 
flexibility analysis (FRFA) describing the impact of the rule on small 
entities. 5 U.S.C. 604. An agency is not required to publish a FRFA, 
however, for the following types of rules, which are excluded from the 
APA's notice-and-comment requirement: interpretive 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 elected to seek public comment, the rule is 
an interpretive rule. Therefore, the APA did not require publication of 
a notice of proposed rulemaking in this instance, and the Commission is 
not required to prepare a FRFA.

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 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 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 in the preamble, the Federal Maritime 
Commission amends 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.


0
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, the terms demurrage and detention 
encompass 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.

[[Page 29666]]

    (c) Incentive principle--(1) General. 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 primary purposes as financial 
incentives to promote freight fluidity.
    (2) Particular applications of incentive principle--(i) 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.
    (ii) 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.
    (iii) Notice of cargo availability. In assessing the reasonableness 
of 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.
    (iv) Government inspections. In assessing the reasonableness of 
demurrage and detention practices in the context of government 
inspections, the Commission may consider the extent to which demurrage 
and detention are serving their intended purposes and may also consider 
any extenuating circumstances.
    (d) Demurrage and detention policies. The Commission may consider 
in the reasonableness analysis the existence, accessibility, content, 
and clarity of policies implementing demurrage and detention practices 
and regulations, including dispute resolution policies and practices 
and regulations regarding demurrage and detention billing. 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.
    (e) Transparent terminology. The Commission may consider in the 
reasonableness analysis the extent to which regulated entities have 
clearly 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.
    (f) Non-Preclusion. Nothing in this rule precludes the Commission 
from considering factors, arguments, and evidence in addition to those 
specifically listed in this rule.

    By the Commission.
Rachel Dickon,
 Secretary.
[FR Doc. 2020-09370 Filed 5-15-20; 8:45 am]
BILLING CODE 6730-02-P