[Federal Register Volume 85, Number 199 (Wednesday, October 14, 2020)]
[Notices]
[Pages 65042-65043]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-22602]


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FEDERAL MARITIME COMMISSION

[Docket No. 20-16]


Notice of Inquiry; Vessel-Operating Common Carrier Definition and 
Application of the Term ``Merchant'' in Bills of Lading

AGENCY: Federal Maritime Commission.

ACTION: Notice of inquiry.

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SUMMARY: The Federal Maritime Commission (``FMC'' or ``Commission'') is 
issuing this Notice of Inquiry (``NOI'') to solicit public comment on 
the practice of vessel-operating common carriers (VOCCs or carrier) 
defining ``Merchant'' in their bills of lading to apply to persons and 
entities with whom the VOCCs may not be in contractual privity. 
Generally, the Commission seeks public comment as to 1) how VOCCs apply 
the term ``Merchant'' in their bills of lading; 2) whether the 
definition, as applied, subjects third parties who are not in 
contractual privity with the carrier to joint or several liability; and 
3) whether carriers have enforced the definition of merchant against 
third parties that have not consented to be bound by, or otherwise 
accept, the terms and conditions of the bill of lading.

DATES: Submit comments on or before November 6, 2020.

ADDRESSES:  Submit comments to: Rachel E. Dickon, Secretary, Federal 
Maritime Commission, [email protected], (email comments at attachments 
preferably in MS Word or PDF), 800 North Capitol Street NW, Room 1046, 
Washington, DC 20573-0001, Phone: 202-523-5725.

FOR FURTHER INFORMATION CONTACT:  Benjamin K. Trogdon, Director, and 
Cory Cinque, Trial Attorney, Bureau of Enforcement, Federal Maritime 
Commission, 800 North Capitol Street NW, Washington, DC 20573-0001, 
Phone: 202-523-5783, Email: [email protected] and [email protected].

SUPPLEMENTARY INFORMATION: 
    Submit Comments: Comments may be submitted by email as an 
attachment (preferably in Microsoft Word or PDF) addressed to 
[email protected] on or before November 6, 2020. Include in the subject 
line: ``Response to FMC NOI--Merchant Clause.'' The Commission will 
provide confidential treatment for comments received to the extent 
permitted by law and will not post comments to the public docket. 
Questions regarding filing or treatment of confidential responses to 
this inquiry should be directed to the Commission's Secretary, Rachel 
E. Dickon, at the telephone number or email provided above. This NOI 
will be made available via the Federal Register and on the Commission's 
website at www.fmc.gov.
    Background:
    The Commission has received information from shipping industry 
participants that VOCCs have defined ``merchant'' in their respective 
bills of lading to include persons or entities who have no beneficial 
interest in the cargo, but rather are providing service as third 
parties on behalf of someone specifically identified on the bill of 
lading. The concerns expressed indicate that VOCCs may be enforcing the 
terms of the bill of lading (including, without

[[Page 65043]]

limitation, collection of freight rates and charges, equipment charges, 
detention and demurrage charges) jointly and severally against entities 
that are not party to, and have not agreed to be bound by the bill of 
lading. The Commission has been advised by third-party logistics 
providers, harbor truckers, stevedores, customs brokers and freight 
forwarders, many of whom have no connection to the cargo or the 
shipment, other than providing service to entities that may own or have 
a proprietary interest in the cargo covered by a VOCC bill of lading, 
that VOCCs seek payment from such third parties for rates and charges 
pursuant to the terms and conditions of the bill of lading. Allegations 
have also been received that VOCCs threaten to discontinue allowing 
such third parties to provide service for future shipments unless 
amounts due on current shipments are paid.
    This issue was raised in Docket No. 19-05, Interpretive Rule on 
Demurrage and Detention Under the Shipping Act by several commenters, 
including the New York New Jersey Freight Forwarders and Customs 
Brokers, the National Customs Brokers and Freight Forwarders 
Association, the Agricultural Transportation Coalition, as well as 
other industry participants since the issuance of the Final Rule. As 
noted in the Final Rule, ``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.'' 85 FR 29638, at 29662 (May 18, 
2020). Several commenters reiterated these concerns. AgTC contended 
that ``carriers should impose detention and/or demurrage on the actual 
exporter or importer customer with whom the carrier has a contractual 
relationship.'' The New York New Jersey Foreign Freight Forwarders & 
Brokers Association asserted that VOCCs 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.'' Id.
    The Commission clarified that one of its goals for the Interpretive 
Rule ``was to emphasize the importance of ocean carriers and marine 
terminal operator bills aligning with contractual responsibilities.'' 
Id. In doing so, the Commission noted that it ``does not believe it is 
appropriate in this interpretive rule to prescribe'' specific billing 
practices, or to address the application of the merchant definition as 
it related to such practices. Id. The Commission further noted it would 
address such issues in the context of particular facts, considering all 
relevant arguments. Although the Commission incorporated reference to 
certain billing practices and regulations in the Final Rule, it 
declined to prescribe specific billing practices or regulations which 
would be deemed reasonable under 46 U.S.C. 41102(c).
    General contract law principles provide that one party cannot 
enforce a contract against another who did not assent to be bound by 
its terms and conditions. This can include situations where one party 
attempts to bind another party with unilaterally defined terms. 
Accordingly, the Commission has determined to request public comment on 
the manner in which VOCCs are defining the term ``Merchant'' and 
enforcing that definition in their bills of lading.
    The purpose of the inquiry is to determine whether such carrier 
enforcement (i.e., seeking to collect freight and other charges) is 
unfairly or unjustly wielded against third parties who have not 
directly contracted with the VOCC nor assented to be bound by the 
contract of carriage. The Commission encourages all interested parties, 
including VOCCs, shippers, ports, maritime terminal operators, ocean 
transportation intermediaries, truckers, stevedores or customs brokers 
to submit comments or to identify information relevant to the manner in 
which VOCCs have applied their respective definitions of ``Merchant.'' 
As part of this NOI, the Commission will also be contacting certain 
VOCCs to provide information about the manner in which they have 
defined and applied their definition of a ``Merchant.''
    The Commission will consider relevant comments submitted by any 
party. Along with comments, commenters should provide their name, 
title/position, contact information (e.g., telephone number and/or 
email address), name and address of the company or other entity and the 
type of company or entity (e.g., carrier, exporter, importer, trade 
association, etc.).
    Responses to the NOI will help the Commission ascertain more 
precisely the practices of VOCCs, including whether they may be 
imposing liability on entities who may not have assented to be bound to 
the terms and conditions of a VOCC's bill of lading, and in determining 
whether additional analyses or action by the Commission may be 
necessary.

    By the Commission.

    Issued: October 7, 2020.
Rachel Dickon,
Secretary.
[FR Doc. 2020-22602 Filed 10-13-20; 8:45 am]
BILLING CODE 6730-02-P