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April 12, 2024 44 mins

Topic of the Week (4/12/24):

Now that we’ve had a few weeks with the detention and demurrage rule, let’s talk key takeaways and things I think everyone should be paying attention to. What do I think will have the biggest growing pains? – the 30 calendar days on the invoice for the billed party to pay – stick around and I’ll explain why.

D&D Final Rule:

The Maritime Professorᵀᴹ presents By Land and By Sea - an attorney breaking down the week in supply chain

with Lauren Beagen (Founder of The Maritime Professorᵀᴹ and Squall Strategiesᵀᴹ)

Let's dive in...

1 - Checking in on the Federal Maritime Commission open rulemakings and stakeholder engagement: defining unreasonable refusal to deal or negotiate w/r/t vessel space accommodations provided by an ocean common carrier, defining unfair or unjustly discriminatory methods // MTDI RFIs)

2 - A quick overview of two notable actions at the FMC: Samsung Electronics America cases (still waiting on the replies; all we have are the initial complaints) and the MSC Mediterranean Shipping Company $63M enforcement action (still pending, likely to be appealed; waiting on MSC response due May 3))

Samsung v. COSCO (Samsung Complaint)


Samsung v. OOCL (Samsung Complaint)



3 - United Steelworkers (USW) petition to Office of the U.S. Trade Representative is now supported by SIX United States Senators (Tammy Baldwin (D-WI), Elizabeth Warren (D – MA), John Fetterman (D-PA), Bob Casey (D- PA), Sherrod Brown (D-OH), Mazie Hirono (D-HI))

Tomer Raanan's Article:

USW Petition to USTR:

Letter to USTR from six US Senators:


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Episode Transcript

Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:27):
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oh, oh, oh, oh, oh, oh, oh, oh,oh, oh, oh, oh, oh, oh, oh, oh,
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oh, oh, oh.
I got soul coming through.
Won't stop in the peace and ontop of the world.
Yeah, walk to the beat when yousee me coming next to you.
Everywhere I go, I'm in thespotlight.
This is a good life.
I'm living bold.
This is what it looks like Onthe 16th of the world.

Now that we've had a few weekswith detention and demurrage,
let's talk some key takeawaysand maybe some things that I
think everybody should be payingattention to.
What do I think will have maybeone of the biggest growing
pains of this new final D&D ruleout of the FMC?
I mean maybe the 30 calendardays on the invoice for the

billed party to pay it right, orcertainly ask for a dispute.
Stick around and I'll explainwhat I mean there.
Hi, welcome to, by Land and bySea, an attorney breaking down
the weakened supply chainpresented by the Maritime
Professor me.
I'm Lauren Began, founder ofthe Maritime Professor and Small
Strategies, and I'm yourfavorite maritime attorney.
Join me every week as we walkthrough both ocean transport and

surface transport topics in thewild world of supply chain.
As always, the guidance here isgeneral and for educational
purposes only.
It should not be construed tobe legal advice and there is no
attorney-client privilegecreated by this video or this
If you need an attorney,contact an attorney.
But before we get into thediscussion of the day, let's go
through my top three stories ofthe week.

All right.
Story number one Look, it'sbeen a busy few weeks of travel
so I really haven't done anoverview of the other rules that
we're watching out of the FMC.
I like to periodically check inon it.
Still nothing really to report,and that's okay.
Right, the D&D rule is thefinal rule is out.
We're waiting on the effectivedate to hit May 28th.
But we're also looking for someother rules we have defining

unreasonable refusal to deal andnegotiate with respect to
vessel space accommodationsprovided by an ocean common
That last closed July 2023.
So here we are it's April 24.
So that's nine-ish months thatwe've been waiting since that
one last closed.
I think we'll probably get somemovement on that this summer,

hopefully, or probably hopefully, before the one year date and
maybe even before the two yeardate of ASRA, even though it's
supposed to be done one yearafter within.
Actually, this one's supposedto be done six months after ASRA
Chairman Maffei of the FMC hassaid it's better to get it right
than get it fast.
Chairman Maffei of the FMC hassaid it's better to get it right
than get it fast.
This one is a tricky one.

They've also said that thisrule this defining unfair,
unreasonable refusal tonegotiate kind of started to
edge into the other rule thatwe're waiting on, which is
defining unfair and justlydiscriminatory methods.
We're waiting on independentlanguage on this.
We haven't seen anything comeout from the FMC independently
on this rulemaking.
But, like I said, they havesaid that they included some of

this required rulemakingdiscussion in that unreasonable
if we still negotiate rulemaking.
So it hasn't been not worked on.
Certainly they've been workingon it, right, I think they
started working on all three ofthe rules that were dictated to
them under ASRA 22 when thatpassed, but we're still waiting

on the final rules here.
So defining unreasonablerefusal to deal and negotiate
with respect to vessel spaceaccommodations.
That one I expect it to comeout in a final rule next time we
see something on that.
Defining unfair or unjustlydiscriminatory methods we're
probably going to see that in anotice of proposed rulemaking.
So again we have the advancednotice of proposed rulemaking,

which is way early stage, whichis usually just questions to the
industry, no real language yet.
Then we have notice of proposedrulemaking as kind of the next
stage in the AdministrativeProcedures Act for how to do a
rulemaking Notice of proposedrulemaking.
That's where you start to havesome actual language drafted and

the agency says what do youthink about this?
Here's the language We'd likeweigh in from the industry.
The unreasonable refusal tonegotiate took an additional
step, which is where theycreated a supplemental notice of
proposed rulemaking, which wasanother bite at the apple.
Another notice of proposedrulemaking round, and then
usually what happens next is afinal rule right, and so that's

where I think that unreasonablephysical deal is going to go
into final rule next, definingunfair, unjustly discriminatory
methods like I said, I thinkthat's going to go notice of
proposed rulemaking because Ithink that they have some
preliminary information thatthey don't need to poll the
They don't need to send that outin a question form.
They can start writing somelanguage there, although I think

that one's going to be a trickyone as well, and so they want
to get that right, because it'sanytime you're defining things.
You want to get it right andnot have unintended consequences
So I think the FMC is going tobe careful, cautious, take their
time, but will clearly taketheir time.
They're already taking theirtime right.
We're about a year and a halfalmost two years since Oswald 22

Now that we're in 24, june 16this that date.
So I think we're going to seemovement on both of those before
the June 16th date.
I hope so.
I think that the FMC isprobably hoping so too.
I think they are very aware ofthat June 16th date.
But look, we have the final ruleout for the billing practices
on detention and demurrage.
That one goes into effect May28th.

The information collectionstill has to go through an OMB
That really just has to do witha reduced paperwork act and
making sure that they're notoverly burdening the industry
and the public.
So that's why OMB is reviewingthat information collection
piece of the D&D rule.
But generally everything elseis going into effect May 28th.

So we have about a month and ahalf right before that goes into
final effect.
Recently the FMC put out anotice saying hey, we're
watching everything that's goingon in Baltimore.
Don't forget, d&d rules aren'tin effect yet, but all Shipping
Act rules and regulations are soa little bit confusing, but

basically they were just saying,look, we're paying attention,
we're watching, are so a littlebit confusing, but basically
they were just saying look,we're paying attention, we're
watching, we're making sure thatsurcharges and D&D are moving
in normal due course.
But to remind everybody, d&drules were coming, but that they
don't apply yet.
And so, look, why am I kind oftalking so much about this D&D
We're going to be talking aboutit more in the specifics of the
content in a minute, but Ithink if you had thoughts on the

D&D rule, it's not a closeddoor, right?
It's certainly here, right?
So this is a final rule.
It's been released, it has aneffective date.
That's not to say that youcan't still submit a comment on
The FMC has also made someindication that they're going to
be watching how the D&D ruleskind of get settled into the

industry and kind of out in thewild.
So I don't think that this isthe end of the conversation and
so submitting a comment nowmight not, probably won't stop
Significantly adverse is kind ofthe standard usually used for
direct final rules.
So like if an agency justdecides to not go through the
notice and comment period andjust submit that rule out there,

usually they're lesscontroversial.
Usually it's that significantlyadverse or some sort of
negative comment can stop thatdirect final rule and throw it
into a comment period.
I like to think that a comment,if it was significantly adverse
to even this final rule andthrow it into a comment period,
I like to think that a commentif it was significantly adverse
to even this final rule probablycould create a pause with the

But it would have to besignificantly adverse because
they have gone through quite abit of noticing comment.
So all this to say, you canstill probably submit a comment.
I'm not sure, but I mean wortha try if you really feel
But also another point of doingcomment or kind of conversation
with this is that I think theFMC is still listening.
I think they want to make surethat these rules are not the end

of the conversation, thatthey're going to be watching and
that if there's any kind ofsupplemental rule adjustment
that needs to happen in thefuture that that will be taken
into consideration.
But for now this point is done.
They're moving forward.
May 28th is the billingpractices of detention to merge
and, like we said, it's mostlyabout clarity.
There's clarity coming thatthere are guardrails coming.

They didn't want to get two inthe weeds.
I think in general the FMCdoesn't want to get two in the
They prefer to have case law dothat.
But they wanted to provide someguardrails to the industry
because really there weren'tmany rules around what an
invoice needed to look like.
I mean, there weren't any rulesaround what an invoice needed
to look like in D&D billing.
So here we go, we have it fromOSRA 22.

We have now kind of theinterpretation, the
solidification, the defining theparameters around billing
practices of detention anddemurrage.
May 28th that'll be hitting theindustry so we'll watch for
Like I said, the contents ofthe invoice still has to go
through OMB review.
Still might even align with theMay 28th.

But that's not in the FMC'scourt right now that they're
waiting on OMB.
So we'll see how long thattakes.
The other thing that we'rewatching, since we're kind of
going through this checking backin moment is we're watching the
We saw a request forinformation go out a little bit
I've been hearing that we mightbe getting another request for

information, another RFI roundcoming.
Haven't seen anything yet, butthat's something to keep an eye
out for.
If you're interested in theMTDI, the Maritime
Transportation Data Initiativethat was spearheaded by
Commissioner Carl Bensel, Ithink it's a really interesting
move in the industry and I thinkthat it's something that

everybody should be reallypaying attention to.
So watch for that RFI.
That's why I keep it up there,kind of on par with the other
rulemakings, because I thinkthat this is also something to
be paying attention to.
Nothing there yet, though, butI will certainly let you know
when I see something come up.
So story number two.
Let's keep moving here.
So story number two I wanted totalk a little bit about.

There's been some FMC case law,or or um FMC cases and movement
in the docket.
I should say that I think areworth noting and worth paying
attention to, uh, but it's stilljust one side of the story,
So we have Samsung has beenfiling at least two recent cases
and then we have the uh officeofforcement, which is part of
the Bureau of Enforcement,investigations and Compliance of

the FMC, both having somemovement.
So there's been someinteresting cases and decisions
out of the FMC recently and,like I said, I'm not going to go
into too much detail on themjust yet because they really are
just one side of the story,even on the FMC enforcement side
It's just one side of the storyand I really like to have at
least responses filed so that Ican get a little bit larger of a

conversation to pull from andsee what happened.
But yeah, so Samsung filed twocomplaints with the FMC, one
against OOCL and another againstCostco.
So in these two complaints theyassert that the carriers had
offered store door service and,like I said, this is just the
These are all kind of allegedthings that have been filed from

So the store door service, soessentially saying taking care
of all the intermediatemovements of the goods all the
way to the final door.
But according to the complaint,the carriers were charging
demurrage, detention and othersurcharges on the inland
portions of the movement ofthose goods and they were
charging those to Samsungdespite what the complaint says
essentially is that, despitetheir understanding that those

charges were supposed to be partof the store door terms.
That had been kind ofnegotiated.
And, like I said, I want to bevery careful, because it is
preemptive, to talk about onlycomplaints and not the responses
Responses have not beenreceived here, but I do want to
highlight it because I thinkthat this is interesting.
This may have some implicationsfor inland surcharges and it

might force the FMC to lookcloser and make some kind of
statements, and certainlyjurisdictional statements, on
whether they have jurisdictionin this inland rail jurisdiction
piece of containerized cargomovements.
We've talked about this grayarea before between the FMC and
the Surface Transportation Board, stb.

Stb has said that they for kindof a few different reasons, are
not responsible for that railstorage piece of regulation and
then the FMC mostly, though alittle inconsistently, have said
that they have jurisdictionover, through bills of lading
that cover the inland railstorage detention, to merge the
per diem charges right.
So this case has the potentialto kind of force that discussion

to kind of force thatdiscussion.
There was also some discussionof being charged or recharged
for charges that were alreadypaid.
That's what Samsung is allegingin their complaint here
Recharge for charges alreadypaid.
But I think that the crux ofthese two Samsung cases that
were just filed is really kindof twofold, right?

So is the FMC the regulator ofthe inland storage charge?
I think that that, like I said,is going to be something that
we're going to be seeing.
Hopefully they talk about it,hopefully that's part of
ultimately right, we have a lotof procedural stuff that's going
to happen between now and then,but hopefully that comes into
the ALJ's initial decision andultimately what turns into a

final decision, right?
But the second part the twofoldhere is that D&D charges I
think that we're going to findsome information on D&D charges
when they are out of the shipperor BCO's control and on a
through bill of lading, right,because that's what they're
saying is that Samsung wassaying that they were being
charged even though it was astore door move, as what they're

calling it.
So if Costco or OCL had thecontainers and was responsible
under the agreement right undertheir terms that they agreed to
to move the containers, but thenstill charged detention and
demurrage in the interim, theFMC may have to address that.
And I guess if they're going tobe addressing that, they would
have to be talking about theincentive principle, right,

because that's what was signedinto law under OSRA 22.
And not to further confusethings, but right, but OSRA 22,.
The incentive principle issomething that actually a few
congressmen have called FMC'sapplication of that principle
into question, certainly as itrelates to, like, mtos and ports
They said that they think thatMTOs and ports should have their

own say in how to incentivizethe movement of goods off their
But yeah, so I mean the FMC hasbasically been saying that
holidays and weekends shouldn'tbe included under the incentive
The congressmen are saying,look, sometimes holidays and
weekends are required orimportant and something that the
ports or the MTO should havethe ability to determine.

So look, getting back to kindof the same thing discussion,
The ultimate question on thesecond part being if the BCR or
the shipper, now known under theD&D rule as kind of the build
party, right is not responsiblefor the movement of the goods at
that stage, right?
If the inland part, if thestore door move, if the inland
part is supposed to be on thecarrier, then is the assessment

of the D&D?
If they're being charged D&Dbut they don't have control over
the goods, as they're allegingin this complaint, is that
incentivizing the movement ofthe goods?
Right, because the shippercouldn't or wasn't supposed to
do anything about it.
And that's the point, right.
Incentive principle is supposedto be incentivizing the

movement of the goods.
If you charge somebodysomething, it's supposed to wake
them up and say, oh gosh, Idon't want to keep getting
charged for this, I got to movemy stuff.
So here they have no controlover the movement of the stuff.
What's being alleged right?
This is the complaint they haveno control.
They're saying they had nocontrol over the movement of
stuff and yet they were beingcharged to move the stuff.
So that's.

That's the thing that I think isthis is going to have some
interesting discussions on um,if they weren't responsible for
the movement right, and theassumption that the D&D wouldn't
have had the effect ofincentivizing the movement of
goods, then can Costco or OCL,under these two filed complaints
, properly charge D&D to Samsung?

I mean, to me it seems like theanswer would be no.
But, like I said, this is justthe complaint.
I am so interested to see theresponse here and we'll see.
We'll see what happens.
These are two separate filings,right?
So it's Costco on one and thenOCL on the other, so perhaps
we'll get two very different ormaybe very similar responses,
but this is just the one side,right.

I always want to be verycareful.
I want to be very fair.
We haven't seen these responsesyet and I'm going to be sure to
watch for it and I'll certainlyupdate when they're posted on
the e-doc.
It's on the library e-learninglibrary of the FMC.
The other matter and, like Isaid, this is still just story
number two, but topic number two, I should say the other matter
that I want to just brieflymention is docket 2308.

So this is the FMC's Office ofEnforcement's proceeding against
So this is the case that you,this Office of Enforcement's,
proceeding against MSC.
So this is the case that you.
This is the enforcement actionthat you probably heard about.
Right, this is the 63 millionin civil penalties.
This case was actually initiallystarted August 10th 2023.
So you may have heard of itpreviously and then now we're
hearing about it again.

So it was started August 10th2023 with an issue, issued,
order of investigation andhearing from the office of
enforcement against MSC forpossible violations of the
shipping act and those.
Those violations werespecifically named by by USC
number Um.
But what happened just thismonth and hit the trade press uh
is a filing from the FMC'soffice of enforcement, their

opening brief, which lays outtheir arguments and proposed
That's where we found the over63 million in civil penalties
that's being proposed by theOffice of Enforcement and in
that filing they highlighted thealleged unreasonable and unjust
actions and inactions, they sayin violation of the Shipping

Act, and they listed it out inthree different ways.
So the first one they said wasMSC's alleged I'm going to throw
in alleged right, because thisis just the one side MSC's
alleged ongoing practice ofbroadly wielding its definition
of merchant in its bill oflading to hold underlying third
parties liable for invoicecharges in the absence of such
third parties having privity ofcontract or any beneficial

interest in the cargo andwithout consent by those third
parties to be bound by the termsof MSC's bill of lading.
So that's the first thing thatthey're bringing up.
Two and I'm going to sayalleged again, because this is
just the one side.
This is the FMC side, or Ishould say the Office of
Enforcement side, but this isjust their side.
There will be a response.
Msc's alleged practice ofincorrectly billing

non-operating reefer containersNORs as operating reefers,
resulting in overcharges to itscustomers less free time and
more days of detention.
And number three is MSC'salleged I say alleged failure to
publish NOR, the non-operatingreefer containers in its US
tariff, causing obscurity,uncertainty and the

aforementioned overcharges forthe shipping public around MSC's
rates and charges.
So those are some pretty heftyallegations, right.
And so the way that they workit out, they highlight and they
have a table at the end of theirfiling here where they get to
that $63 million number.
And so they said the firstthing the merchant clause had 18

violations and the penalty perviolation is $73,000.
They had the non-operatingreefer containers.
They had 2,629 number ofviolations.
That's part of this filing fromthe Office of Enforcement.
The penalty per violation is17,609.

So that's over 2,500 numbers ofviolations, right, 2,629.
Penalty per violation is 17,609.
So that is, I mean, the bulk ofthis right.
That's $46 million of a civilpenalty proposed and alleged.
And then the third one, thatfailure to publish rates, that's
798 numbers of violations.

That's $19,609 per violation,that's penalty per violation and
that amounts to 15.6 millionessentially, so that all rounds
up together to be over $63million.
That's $63,256,853.
That is hefty, that is a bigcivil penalty.
But again, this is just oneside, and I want to be very

careful because the news is allover this saying, oh my gosh,
$63 million.
But the story's not over yet.
This is far from over.
We've yet to see MSC's responseand, according to the
scheduling order, that'sactually due out May 3rd.
So we should have MSC'sresponse within the next few
It's going to be interesting tosee how they respond to this.
And this is a conversation,right, this is a legal

conversation, but it's aconversation.
So a little proceduralexplanation here because this
all might be a little bitconfusing.
So the FMC's Office ofEnforcement must bring the
action against the party.
So here, msc, and then theyhave to go through the
administrative law judge for thefinal determination.
So that's what's happening now,right?
So this case is is in front ofthe ALJ of the FMC for review

and then, once the ALJ issuestheir initial decision, then we
go into, kind of the next stage,which might be the FMC can pull
the case, which is called thesua sponte review.
There's also a chance forappeal, right, and we've talked
about that before, where thoseare called exceptions.
So even if we get an initialdecision, it could be pulled for

further review by the FMC, itcould be called for exceptions
by one of the parties.
We're not done here, right,that's the point.
We're not done here, not by along shot.
This that was released is justthe Bureau of Enforcement,
investigations and Compliance,essentially the Office of
This is just one side.
I'm going to update, I'm goingto watch MSC, I'm going to watch

what they weigh in with theirreply.
It's May 3rd, so I'll updatehere once MSC weighs in on this.
One thing that I didn't reallylike, though look, I want to be
fair and I want to just be.
You know that I kind of respondto things as I see them here.

One thing that I didn't reallylike about the Office of
Enforcement's brief is theopening sentence.
It said this proceedinginvolves a titan of the US
shipping industry MediterraneanShipping Company, msc or Swanson
and it's unreasonable andunjust actions and inactions in
violation of the shipping act.
I didn't like that.
They identified them as a titanin that first sentence, right?
I mean, on the one hand, surethey're laying out their case
for why these civil penaltiesshould be applied, and maybe

they're also kind of introducingthe idea of, look, this is a
giant civil penalty that we'regoing to be recommending.
But it's acceptable because thevery first instance they call
them a Titan.
But on the other hand it kind ofseems to introduce a little
drama right off the bat.
I mean, I don't know, titanjust feels a little.
It feels a little off andcertainly not a clearly

definable term, right, in thiscase, I mean they could have
easily just said the largestcarrier by TEU or the largest
carrier of all ocean carriers,or some sort of factually based
Right, I don't know, I guess Ijust prefer kind of
straightforward arguments.
And it wasn't even an argument,it was just a little blip where
they said this proceedinginvolves a titan of the US

shipping industry.
Fine, I just noticed it.
I wanted to mention it, allright, well that.
So that was story number two,topic number two.
So this is story number threenow that we're moving into.
Oh, my goodness, we're already20 minutes in and we're only on
story number three, so it'll goa lot faster here.
All right, so this a few weeksago we talked about the US Steel

Union's filing a petition withthe US Transportation US Trade
Representative's Office, ustr,and they were alleging
discriminatory practices.
That petition was filed inearly March and then USTR
actually has 45 days from thatfiling, which I believe it was
May 12th, to determine whetherto open an investigation.

This would be under Section 301of the Trade Act of 1974.
And just so that this seems alittle familiar, right, this was
the same 301 tariffs thatformer President Trump was using
for his tariff proposals.
So 45 days, so really I meanwe're what?
A month after the filing here,we probably have less than two
weeks until we are going to hearfrom USTR as to whether they're

going to open thisinvestigation or not.
But now it's getting a littlebit more interesting.
So we're seeing that six USsenators are joining the US
steel unions in calling for aninvestigation and also accusing
China of these predatorypractices.
So we have Tammy Baldwin, aDemocrat from Wisconsin, we have
Elizabeth Warren, democrat fromMassachusetts, we have John

Fetterman, democrat fromPennsylvania, bob Casey, a
Democrat from Pennsylvania,sherrod Brown, a Democrat from
Ohio, and Mazie Hirono, aDemocrat from Hawaii.
Those are the six senators thathave joined in on this letter.
So I'm actually in the storynotes.
I'm going to be linking thestory that highlighted this it
was Lloyd's List senior maritimereporter Tomer Renan and also

the letter from the senators andthe original petition to the
USDR so you can go check it, allof this out and see for
yourself, kind of all the allthe conversation that's
happening here, but notably inthe letter the senators say and
I'm going to be reading from theletter now the petition
suggests several remedies whichaim to create the incentives to
encourage the PRC, the People'sRepublic of China, to eliminate

the anti-competitive action ithas taken in its shipbuilding
Most notably, the petition callsfor a fee to be placed on
vessels built in the PRC soChina that docks in US ports,
the proceeds of which would beused to finance a shipbuilding
revitalization fund.
We encourage the USTR to fullyconsider these and other
remedies recommended in thepetition in order to properly
address and discourage the PRC'sunreasonable and discriminatory

So what the petition said andwhat this letter is now
recalling is that the petitionwas calling for a fee to be
placed on vessels built in thePeople's Republic of China that
dock at US ports, so not owned,not operated, but vessels built
in China, so just simply builtin China that call on the US.

I'm interested to see if thatgets legs.
I understand that it soundsgood If that gets legs.
I understand that, that youknow it sounds good, but I'm not

exactly sure how that could gointo effect right and place that
fee on all vessels coming, alloriginally Chinese-built vessels
coming in and docking orcalling at US ports and then
turning those proceeds over toashipbuilding revitalization fund
for the US.
I mean, we got to get moneysomewhere for shipbuilding

I'm not exactly sure if this haslegs, but an interesting,
interesting idea.
I'm going to be watching thiswith with great interest,
certainly to see what if USTRdecides to do an investigation
and certainly if, at the end ofthat investigation, if they
decide that something built in ain a foreign country, but not

necessarily owned or operated,right, the letter and I don't
believe the petition talks aboutthat built or the owned and
operated, it really is justbuilt.
So the other part, theconcluding part of the letter
that I'll read here too, is inclosing we urge you to
expeditiously initiate a fullSection 301 investigation and

consider the relief measuresidentified in the petition to
address the injury that thePRC's policies and actions have
had on our commercialshipbuilding, transportation and
logistics sector.
I think it's interesting Ithink that this is interesting
that we're getting six senatorsjoining in.
It wasn't a bipartisan letter,it was all Democrats on this
Interesting because I thinkthat this would have been an
easy thing to get bipartisansupport on.

But regardless, there's about,like I said, less than two weeks
left probably before the USTReither does nothing or responds
or opens that investigation.
So I'll keep watching.
It's kind of interesting, right.
I mean, anytime there'sengagement right with these

agencies, I love it, I love tosee it, I love to see the
All right, so let's get intothe meeting, for today this is
not going to be a big one, thisis not going to be a ton that
we're going to be covering, butI do have some concerns that I
do want to just bring to yourattention.
Always, this is not legaladvice directly related to your
Always, this is justeducational information.
And these are just some of theobservations that I've made that

I think that are interestingand worth you paying attention
to or everyone paying attentionto.
So the FMC has released, like weknow, the final rule on
detention to merge.
The final rule will becomeeffective on May 28th 2024,
except for that, contents ofinvoice.
So that's section 541.6, andthat's due to the pending OMB
Office of Management BudgetApproval.

So this, as we know, this newrule defines billing practices
for detention and demurrage,with the main purpose of
simplicity and identifying whatis being billed by whom.
So the FMC said, when theyannounced it, what is being
billed by whom?
That is what they really wantedto find out.
And through this final rule,the FMC clarifies who may be

The information to be includedin the invoice is the timeline
for invoicing.
So we're going to be talkingabout tonight or today and
requirements for clear invoicedispute processes.
So key takeaways right, I thinkwe've talked about this before.
Clarity that's a big one.
There wasn't a lot of clarityhere before.
Now we have guardrails, we havejust simple basic clarity.

Timeliness there are now 30calendar days 30 calendar days
for the invoice to be issued andthe dispute resolution filing
and an attempted resolution to adispute filing.
So 30, 30, 30, and the emphasison the direct contractual

So those are my four majortakeaways clarity, timeliness,
dispute resolution process andand it's a B2B, it's a business
to business dispute resolution.
Right, it's not FMC disputeresolution, this is business to
This is like work it outamongst yourself.
And then the fourth one, like Isaid, is that direct
contractual relationship Anyonecan pay the invoice, notably,

but only the direct contractualrelationship or the consignee
can be sent, can be issued theinvoice.
So we have a whole bunch ofstuff that's going to be hitting
May 28th right.
The purpose establishes minimuminformation that must be
The scope identify or includesocean common carriers, marine
terminal operators or NVOCCs.

This was a big one.
This is what I highlighted whenit first dropped.
I think we went live maybe anhour or two after it first
dropped and that was the biggestthing that I just kept talking
about was MTOs did not getremoved.
They stayed in the final rule.
There was talk about maybehaving them removed.
They stayed.
We're getting some definitions.
So defines demerge or detentionas any charges, including per

diem charges assessed by oceancommon carriers, marine terminal
operators, nvoccs related tothe use of marine terminal space
, for example, land, occsrelated to the use of marine
terminal space, for example,land, which is kind of a nod to
that inland part, but certainlythat's demurrage too.
Or shipping containers, but notincluding freight charges.
They talk about properly issuedinvoice, that direct
contractual relationship forproperly issued invoices, also

adding consignee when ultimaterecipient of cargo or final
delivery timelines, and that'swhat we're going to be talking
I'm going to come back to this,but billing party must issue
within 30 calendar days and thenat least 30 calendar days must
be allowed from invoice issuancefor dispute and the disputes
must be attempted to be resolvedwithin 30 days of receipt.
And then the part that we'restill going to be waiting on

hopefully can line up with that.
May 28th effective date is thecontents the invoice content, so
it's identifying information,it's timing information, so
invoice date, if invoice duedate, it's rate information,
it's dispute information andit's certifications.
Now, initially there were 13invoice requirements under ASRA

Invoice requirements under ASRA22.
Those are obviously law becausethey were part of ASRA, so
those are in effect.
Technically, those went intoeffect June 16, 2022.
What we are seeing, what willbe happening with this final

rule and thisyet-to-be-determined effective
date, is those 13 invoicerequirements were actually
expanded to 20 invoicerequirements and some of the
things that were added or kindof expanded I should say it's
not even really an ad, it's anexpansion is like invoice date,
invoice due date, clarifyingsome of that, some of the
dispute information.
So they certainly talked aboutcontact information for dispute
requests, but also the publiclyaccessible website showing

detailed description of info,defined timeframes for dispute
So those are some of thoseadditional seven things, or
expanded seven things that wesaw in the D&D final rule.
But the part that I want to drawyour attention to today is the
timeliness section.
Right, the 30-30-30.
So the billing party must issuewithin 30 calendar days.

So detention to merge, thedetention to merge charge is
done within 30 days of that day.
The issuance of the invoice musthappen.
Right, the billing party mustissue within 30 calendar days.
I keep saying calendar daysbecause it goes quick, right,
calendar days go fast.

And then if there's an NVOCCand this is where I don't want
to get too off topic here, butif there's an NVOCC then they
must issue within 30 calendardays from the issuance date of
the invoice received.
Because, right, sometimes theycan be the bill build party and
sometimes they can be thebilling party.
So they can be the receiver,the build party, but then they

also can be the billing party.
And so this is where it switchesfrom the actual occurrence, the
the demurrage happening.
So that's, the billing partymust issue within 30 calendar
And then, if it's an MV, if itgoes to an MVBOCC, they have 30
calendar days from the issuancedate of the invoice received, so
the issuance date.
So like if they send it in themail and it's like three to five

days later they're, you losethose three to five days.
They have 30 calendar days.
So you see how this starts togo fast and you throw in a
holiday weekend and you'realready down a week almost for
days that you don't have.
So this is the point that I'mtrying to make today, right?
So then you have at least 30calendar days must be allowed

from invoice issuance fordisputes.
So same thing, right?
So invoice issuance.
So if they send it in the mail,if the billing party issues
within 30 days of the lastdemurrage day or detention day,
then they have to allow for atleast 30 calendar days for
But it's from the invoiceissuance date.

So if they send it in the mail,I mean email, right?
Hopefully this is all email anditance date.
So if they send it in the mail,I mean email, right?
Hopefully this is all email andit goes quick.
But if there's paper, ifthere's paper documents, you can
almost bet that it's still inthe maritime industry, right?
First off, let's take care ofthat, guys.
But the other thing is, if theysend it in the mail and it
takes a week to get to you, orthree to five days or whatever
it is.
Those are three to five orseven days that you lose just by

mail movement.
And then if you have some sortof intake of the bills, I mean
you can see how 30 calendar daysgoes really quick.
And then disputes must beattempted to be resolved within
30 calendar days of receipts, sothat one is less concerning,
that one just says, look, try towork it out within 30, make
this a priority, but it's that30 calendar days from issuance

of invoice for disputes to beallowed right.
And so you got to be on top ofit, you have to know.
So what concerns me and this isthe part that I want you to pay
attention to and, like I said,this is not legal advice, this
is just something that I wantyou to pay attention to and,
like I said, this is not legaladvice, this is just something
that I want you to pay attentionto there are plenty of 3PLs or
drayage providers or kind of thepeople who take care of this

kind of stuff for the shipper orthe BCO, and so that's where I
want people paying attention,because no longer is that 3PL
going to be able to be receivingthe invoice or being issued the
The shipper of the BCL will beissued the invoice and they are
going to be receiving it or theconsignee.
It's that direct contractualrelationship.

So I want to read the actualtext of the final rule here.
So section 541.4, properlyissued invoices.
A properly issued invoice is ademurrage or detention invoice
issued by a billing party to andyou have two options here
really the person for whoseaccount the billing party
provide ocean transportation orstorage of cargo and who

contracted with the billingparty for the ocean
transportation or storage ofcargo.
So that direct contractualrelationship or the consignee.
Those are the only two right.
So then, secondly, here so B,if a billing party issues a
demerger detention invoice tothe person identified in
paragraph A1, so that's thatdirect contractual or the
It cannot also issue a demergerdetention invoice to the person

identified in A2.
So, like, if it goes to thedirect contractual, it cannot
also issue to the consignee.
It's not an or or.
It's not an and it's an or.
It's one or the other.
And then the rule doubles downon that by saying, in case you
didn't notice, it's an or.
This cannot also be issued tothe other person of the one two

identified people who areallowed to even receive it.
And then it goes even furtherhere.
C under 541.4 says a billingparty cannot issue an invoice to
any other person.
And I want to be clear here Abilling party cannot issue an
invoice to any other person.
That doesn't necessarily saycan't send it, and that's where

I think it's going to be alittle bit tricky.
But it cannot issue an invoiceto any other person.
So this is important becausewhere it might've been sent
somewhere else I think a lot ofthe system is now going to be
Well, who am I issuing it to,that's who I'm sending it to,
and where it might've been a 3PLor some sort of, I'll take care
of this service.
That might not be the case, andso I want all of these direct

contractual relationship peopleor consignees to be paying
attention to these bills,because come May 28th, and maybe
even before that, but certainlyby May 28th, these invoices and
their issuance are going to begoing to one of two people the
person for whose account thebilling party provided ocean

transportation or storage ofcargo and who contracted with
the billing party for the oceantransportation or storage of
cargo or the consignee.
I just want you to pay attentionto this right.
I want you to kind of take alook back, think about your
I also want you to find yourown legal advice on this.
I want you to, I really urgeyou to make your own legal

This is not legal advice, thisis just general education and
This is something that I'm justsaying pay attention to and do
your own legal review of,because this could have some
operational hiccups and I'd hatefor anybody to miss a bill,
right, because you lose that30-day dispute resolution and

again, that's only for B2B.
You're not going to lose theability to go in front of the
FMC, you will just lose theability to have that easy
business to business.
We have a dispute and we'd liketo work it out, and so I also
want to point out this otherpiece that I think isn't getting

as much attention, andrightfully so.
There's a lot going on here,but I want to point this out
because I think this is alsointeresting.
541.7, so under the proposedrule or final rule, 541.7,
issuance of demerge anddetention invoices D.
If the billing party invoicesan incorrect person, the billing
party may issue an invoice tothe correct billed party so they

can fix that If they send it tothe wrong person.
If they issue to the wrongperson or if they invoice the
wrong person, they can correct.
The billed party, providingthat such issuance is still
within 30 calendar days, iswithin 30 calendar days from the
date on which the charge waslast incurred.
So that same initial 30 days.

They don't get a new 30 days Ifthey can correct that mistake
within those same 30 days.
What I interpret this to say isthey're okay, I mean right.
So, like I said, this is notdirect legal advice, but I'm
saying be careful here, becauseif they issue it to the wrong
person and they correct thatwithin those same 30 days, it

seems like the FMC is sayingthat's okay, that's okay.
If the billing party does notissue this corrected demerge or
detention invoice within 30calendar days from the date on
which the charge was lastincurred, then the billed party
is not required to pay thecharge.
This part, be so careful.
I want to make sure thateverybody is getting legal
advice for that.
Even though the rule says thenthe billed party is not required

to pay the charge.
You got to be dang sure thatyou don't have to pay.
I'm just that part makes me so,so, so nervous.
I think where that will behelpful is when it gets to case
You can then move back andpoint back to this and say, see,
we didn't have to pay it, butto just not be paying invoices.
Just be very careful.

Again, not legal advice, generaldiscussion here.
Consult with your own attorney,right, but consult with your
own attorney before not payinginvoices.
Consult with your own attorneyon how all of this applies to
you, because there's a lot ofnuances involved here.
A lot of things are happeningin a short amount of time and I
just simply want to encourageeveryone to pay attention.

Right, take another look atthis.
Make sure that your billingsystems are ready.
The 30 calendar days calendardays so like Saturday, sunday
calendar days are for thedispute resolution opportunity.
Like I said, that's just B2B,this business to business.
You'll still have the otheropportunities for dispute
resolution with the FMC, butthis B2B mechanism is really

trying to push that expediencyright, like the you guys work it
out feeling.
So that's it for today.
That's what I wanted to cover.
This was a longer podcast thanwhat I thought it might be, but
we had a lot to cover.
We had a lot to catch up on.
Look, tune in every week as wecontinue to break down the D&D
rule periodically we're notgoing to cover it every week,
but periodically as I kind ofnotice things or there's

concerns that I have andcontinue to provide updates
really on just some of thehottest topics in ocean and
surface transportation.
As always, the guidance here isgeneral, for educational
It should not be construed tobe legal advice directly related
to your matter.
I cannot stress that enough.
If you need an attorney,contact an attorney, but if you
do have specific legal questions, feel free to reach out to me.
My legal companies callstrategies Otherwise for the

non-legal questions, thee-learning and the general
industry information andinsights.
Come find me at the MaritimeProfessor.
If you like these videos, letme know, comment, like and share
If you want to listen to theseepisodes on demand, or if you
missed any previous episodes,check out the podcast by Landon
by Sea.
If check out the podcast byLandon by Sea, if you prefer to
see the video, they live on myYouTube page by Landon by Sea,
presented by the MaritimeProfessor, and while you're at

it, check out the websitemaritimeprofessorcom.
So until next week.
This is Lauren Began, theMaritime Professor, and you've
just listened to by Landon bySea.
See you next time.
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