All Episodes

May 10, 2024 37 mins

Topic of the Week (5/10/24):


The Federal Maritime Commission released a correction to their Final Rule on Detention and Demurrage Billing Requirements - what does this change do? We'll discuss.


FMC Final Rule:
https://www.regulations.gov/document/FMC-2022-0066-0286


FMC Final Rule - Correction:
https://www.regulations.gov/document/FMC_FRDOC_0001-0149 (correction)


OSRA 22: 
https://www.congress.gov/117/plaws/publ146/PLAW-117publ146.pdf



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 - Maritime Transportation Data Initiative Request for Information - comments due June 17, 2024 (reminder)


2 - World Shipping Council's statement on their petition filed against the FMC's Final Rule:


https://www.worldshipping.org/news/wsc-seeks-correction-of-contradiction-in-fmc-detention-and-demurrage-final-rule


3 - Four Members of Congress release a Congressional Guide for a National Maritime Strategy.


-------------------------------

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** As always the guidance here is general and for educational purposes only, it should not be construed to be legal advice and there is no attorney-client privilege created by this video or podcast. If you need an attorney, contact an attorney. **


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Episode Transcript

Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
oh, I got soul coming through, flying free skies.
I got soul coming through,won't stop on top of the world.

(00:24):
Can't walk to the beat when yousee me coming next time.
Oh, everywhere I go, I'm in thespotlight.
This is a good life.
Oh, I'm living bold.
This is what it looks like.
I'm a victim of the world.

(00:47):
Whoa, whoa, whoa, whoa, whoa,whoa.
The FMC, the Federal MaritimeCommission, announced that they
would be making a correction totheir final rule on detention
and demurrage billingrequirements.
What was that correction?
It doesn't really changeanything, not a lot.

(01:09):
It explains some things.
It doesn't change final text.
We're going to talk about it.
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 ofMaritime Professor and Squall
Strategies, and I'm yourfavorite maritime attorney.
Join me every week as we walkthrough both ocean transport and

(01:30):
surface transport topics in thewild world of supply chain.
As always, the guidance here isgeneral and for educational
purposes only.
It should not be considered tobe legal advice and there is no
attorney-client privilegecreated by this video or by this
podcast.
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.

(01:50):
All right, story number onejust a quick roundup.
Right, there's a few thingscoming and going, so I'd like to
kind of keep this roundup onthere.
The FMC has three rulemakingsthey're working through.
One is final text release, thatis, the billing practices of
detention to merge, but we'restill waiting on two others.
So we have definingunreasonable refusal to deal or
negotiate with respect to vesselspace accommodations provided

(02:12):
by an ocean common carrier andwe also have defining unfair,
unjustly discriminatory methods.
The first one, the unreasonablerefusal to deal or negotiate,
is still pending from thesupplemental notice of proposed
rulemaking.
So it's still reviewing thecomments that last came in this
one particularly.
Chairman Dan Maffei has saidthat this is a little bit

(02:33):
nuanced and tricky, that theywant to make sure that they get
this one right.
Now, this is definitions.
Anytime there are definitions,new definitions entering the
industry.
I encourage everybody to gocheck out those definitions, see
how it applies to your industryand your corner of the industry
and make sure that it's in linewith either how your operations
go or how you do business,because any definitions can have

(02:57):
long lasting impacts right.
Any new definitions canpotentially have long lasting
impacts and potentially havevery specific, nuanced
operational impacts.
So take a look.
The comment period closed.
It was closed July 2023.
The chairman, dan Maffei, hadsaid recently on a budget
hearing that he expects this tocome out in the next few months.

(03:17):
Fmc is notorious for acceptinglate filed comments.
I don't know if it's going tochange much, but if you go, take
a look at it and you're likewhoa, whoa, whoa, this is a big
deal.
It's still important to haveyour voice heard.
So not legal advice, but take alook at it.
I can't stress that enough.
Take a look at it, just see ifthese definitions line up with
what you're thinking or if theydon't.

(03:38):
So we have that.
Unfair, unjustly discriminatorymethods.
Those are also definitions.
The FNC said that they foldedthat into the unreasonable or
physical deal, but that there'sstill some pieces that remain,
and so we'll be seeing probablya standalone rule on that one.
And the request for informationthe Maritime Transportation Data
Initiative.
They've released RFI 1 andclosed that up, and now we're on

(04:00):
RFI 2, which is the request forinformation Number two.
Those comments are due June 17,2024.
Go take a look at that.
Really, these are moments ofengagement.
These are moments for the FMCasking the industry for
engagement.
This is your time to have aconversation it's going to be
written but to have aconversation with the FMC on how
these things are impacting you.

(04:20):
It's so critically important tostay engaged here and feel
empowered to file comments ifyou have something to say.
Again, not legal advice, but gotake a look at all this All
right.
Story.
Number two this is somethingthat we talked about previously
but I wanted to bring back upright.
So the World Shipping Councilpetition.
So the World Shipping Councilfiled their petition against the

(04:42):
Federal Maritime Commission'sfinal rule in US Court of
Appeals for the DC Circuit.
Essentially in the petitionthey said that the FMC was
exceeding their authority.
But then they also released astatement on their own website
around the same time that wastalking about VOCC and directly
contracted port truckers andbilling.
So I wanted to read the piece,the announcement that the World

(05:06):
Shipping Council had put ontheir own website, just so that
you got to see it right, just sothat you got the language
straight from them on what theysaid when they filed that
petition.
So what they said was Congressdirected the FMC to further
clarify its interpretive rulefor billing, detention and
demurrage, but the final rulecontains a significant internal
contradiction regarding thebilling of motor carriers for
detention and demurrage.

(05:26):
That inconsistency is alreadycreating substantial confusion
and uncertainty for oceancarriers and other industry
participants.
The preamble to the ruleclearly states that an ocean
carrier may invoice a motorcarrier with which it holds a
contract.
The language of the rule itself, however, appears to prohibit
such billing.
So what they're saying is look,they interpreted the rules to
say the ocean carrier caninvoice a motor contract because

(05:48):
if there's a direct contractualrelationship, as the rule kind
of over and over and over itsays, they say the rule in the
preamble says that they continue.
The language of the rule itself.
So the actual text of the rulethat's going to be published,
they said, however, appears toprohibit such billing.
Text of the rule that's goingto be published, they said,
however, appears to prohibitsuch billing.
World Shipping Council askedthe commission to fix this
inconsistency through atechnical correction to the

(06:08):
final rule, but the FMC has notto date done so.
Therefore, world ShippingCouncil is petitioning the DC
Circuit to correct thisinconsistency in order to ensure
regulatory clarity for oceancarriers, their customers and
business partners.
So I had said previously thatthe trade press was reporting
that this is kind of straightfrom the horse's mouth.
Right, they're talking aboutthis direct contractual
relationship between VOCCs andtruckers.

(06:31):
They're saying look, you'retalking about direct contractual
relationship and they said thatthe rule stated, the preamble
of the rule, the discussion ofthe rule, stated that that was
okay.
We're going to talk about thata little bit more as we get into
the meat and potatoes of theday.
But what I wanted to talk aboutnow with this petition was I've

(06:51):
been getting a lot of questionson whether this will impact the
final rule.
So the effective date, right,is May 28th.
This petition has the potentialto impact the final rule but,
honestly, nobody knows right now.
Nobody knows if this is goingto impact that.
And we're 18 days away.
Right, it's May 10th.
May 28th is when this rule goesinto effect, so we're not sure

(07:13):
yet.
So it looks like the briefingschedule for the petition, right
.
So, where they start puttingtogether all their thoughts and
their arguments and so we'llhave a full memo from the World
Shipping Council, a full memofrom the Federal Maritime
Commission.
It looks like all of that backand forth kind of procedural
stuff starts May 20th, and thatwas last check, so it might have

(07:33):
changed or been scooted up.
So we'll see if thisinteraction of the May 28th date
and the schedule beginning justa week before right, eight days
before on May 20th if that'sgoing to change at all and
that's why I kind of threw thatqualifier on like it might have
changed, it might have, it mightscoot up.
But also they want to getplenty of time for people to get

(07:53):
their thoughts together and,you know, put their arguments
out there.
So, look, perhaps the court.
Where, where am I going to belooking?
Perhaps the court's going toissue some guidance on this.
Maybe the court will say look,we're going to stay this rule,
we're going to put a pause onthis rule until we clear this up
.
That could happen.
Also, the Federal MaritimeCommission will probably be the

(08:14):
best direct source.
If you're not following the, ifyou're not as familiar with the
court system, the FMC willlikely make an announcement
saying if this happens, if thecourt puts a pause on it, I can
imagine the FMC will put thatout pretty quickly on their
current events or theirannouncement, saying no, no, no,
everything's paused, hasn'thappened yet, right, but

(08:34):
nobody's really said anythingyet.
Nobody really knows what'sgoing to happen here, but we
have about 18 days for someclarity to come of it.
So right now nothing's changed.
Right now, may 28th is theeffective date of the detention
and submerged billingrequirements rule.
That's all that's been said.
There is a petition that hasthe potential to change that,

(08:56):
but nothing has happened yet.
May 28th is still the date.
I hope that clarified it andI'm going to throw a little
wrench in there.
Remember, the contents of theinvoice piece of the D&D rule is
still under OMB review.
We haven't had any updates onwhether that's been approved or
whether that date of thecontents of the invoice
requirement has been set.

(09:17):
So all of that right, all ofthat to say May 28th is the
effective date of the rule,except for the asterisks of the
contents of the invoice part,and there's a petition that has
the potential to change things.
But that's it, that's it.
That's about as clear as we canmake it.
There's a lot of asterisks,there's a lot of maybe potential

(09:40):
possible, but right now May28th is the rule date.
There's a petition that couldpossibly change it.
That's what we have, all right.
Story number three so switchinggears a little bit here for
congressmen.
So we have a representativeMike Waltz, a Republican from
Florida, senator Mark Kelly, aDemocrat from Arizona, senator
Marco Rubio, a Republican fromFlorida, and Representative John

(10:03):
Garamendi, a Democrat ofCalifornia, released
Congressional Guidance for aNational Maritime Strategy.
It's a report it's a reportthat they want to pass along to
their congressional friends andcolleagues that generally
highlights the maritime prowessof China and how it compares to
the United States, and reallythe most important takeaway that

(10:25):
I took from this is thecritical need of the United
States to take action to addressthe maritime strategy, the
maritime challenges that we haveas a nation and the argument to
be made for increasing themaritime strength.
So that's what I took away fromthis.
They have it's a really shortreport, so if you want, go take
a look at it, but they have 10things Congress can do.

(10:46):
Now I'm just going to read thebolded part.
They have kind of a littleexplanation beyond it, but I'm
just going to read these boldparts, the 10 things that these
four members of Congress right.
So there's congressmen andsenators.
So the first one speeddevelopment of a long-term
national maritime strategy forincremental implementation,
including state and local policyoptions.

(11:07):
The national maritime strategyhas been attempted in different
iterations and certainly longoverdue.
So that would be something thatI'd like that they put that.
Number one speed.
Development of a long-termnational maritime strategy.
That's something that has beentalked about but needs to move
faster and actually happen.
Number two the 10 thingsCongress can do now.

(11:28):
Number two take all measurespossible to expand, develop and
protect the domestic maritimeworkforce, fully funding and
reinvigorating the MaritimeAdministration, the US Coast
Guard, the Federal MaritimeCommission the FMC always gets
forgotten.
Right, they were there, they'reon the list and other federal
agencies that protect, regulateand support the US maritime
industry.
I would actually say, and look,I support all of that, right, I

(11:54):
think that fully funding andthey say reinvigorating, I think
making sure that they have thetools that they need in order to
do their jobs, which includesfunding, right, we certainly
know that on the FMC side theyare stretched so thin they only
have maybe almost 130, 40, up to160 people and a $43 million
budget to do all that they do,and the other agencies certainly

(12:14):
have larger budgets.
But what I wanted to say hereis, if you want to know about
all the agencies that touchmaritime, the Committee on
Maritime Transportation Systems,cmts, is a.
I guess it's an executive levelagency or kind of.
It's not even an agency.
I don't think it's a committee,it's an executive level
committee.
Go take a look at that website.

(12:36):
They have a compendium thattalks about all the different
issues that might touch maritimeand what agencies across all of
the federal government whatagencies might touch maritime
and what agencies across all thefederal government what
agencies might touch it, andthere is even there's a there's
a broad spectrum kind ofsnapshot.
But then they even go down intolike slicing and dicing into
smaller issues.
So go take a look at that,because this mentions three

(12:57):
right Maritime administration,coast Guard and FMC, but that
the CMTS compendium goes intoall of the different agencies
that you wouldn't have eventhought had anything to do with
maritime.
Go check that out.
That's the compendium.
Sorry, side thought there.
That's why you listen right, sothat you get these side
thoughts All right.
The third thing Congress saysthat 10 things that these four

(13:19):
members of Congress say Congressand Senate say that Congress
can do now grow domesticshipbuilding capacity and demand
modern performance expectations.
Shipbuilding is a huge thing.
Number four grow US flagshipping capacity and guarantee
US government cargo duringpeacetime.
Number five urge investment inAmerica, america's maritime
transportation system and inlandwaterways maritime

(13:44):
transportation system and inlandwaterways.
Number six create innovationincubator programs partnered
with industry to lead the worldin innovative and advanced
nuclear energy solutions for themaritime sector.
So that's interesting, right,they're going to be.
They think that we should pushtoward nuclear energy?
That's an interesting one.
And the incubator program, Ithink that's a cool idea, right,
because they want to spurinnovation.
Okay, number seven on their listof 10, conduct assessments of

(14:07):
economic, political and militaryfactors that threaten US
interests in the rapidlychanging polar regions.
That's a good one.
Number eight provide theresources necessary to ensure
our naval forces can defend thefreedom of the seas, prioritize
forward presence readiness andcombat logistics.
Of course, right, any goodmaritime nation is going to have
that naval presence.

(14:28):
Number nine implement rules,policies and resource decisions
to de-risk the US maritimesector from our strategic
competitors.
And number 10, consistent withthe US national security
strategy advance the rule of law, allies partners, trade,
quality of life and universalaccess to the global commons all
unalienable American values.

(14:48):
So I'm not going to go into allthe details of those, I wanted
to just present them in front ofyou so that you could see them,
but those were the 10 in thatpretty short guidance report.
Take a look at it.
It's kind of floating all overmy LinkedIn, I don't know if
you've seen it there, but yeah,it's pretty interesting.
All right, so let's get into themeat and potatoes of the day.
Let's switch back to the FMCagain.

(15:08):
As you know, we mostly talkabout the FMC because that's
where we break things down andtranslate.
But what's going on, right?
So, as we know, the FMCreleased their final rule on
detention and demurrage billingrequirements.
But they were getting somefeedback and I said the FMC was
going to keep paying attention.
They were going to keepengaging with the industry.

(15:29):
They were going to see how thisD&D rule hasn't even fully gone
into effect right, it doesn'tgo in until May 28th.
They wanted to take a minute tostay engaged, listen to how
this rule is reaching the wild,right, how this rule is reaching
the supply chain and theindustry, and so they're taking
under advisement that there'sbeen some question.
So let's start from.

(15:51):
Let's make sure everybody's onthe same page here, right?
So we've talked about this alot.
If you follow me, you certainlyknow everything there is to
know, or everything that we'vetalked about for the FMC final
rule on detention to merge, butthis will become effective May
28th 2024.
So 18 days from now, except thecontents of invoice section
541.6 due to the pending OMBapproval.

(16:12):
But what was this rule trying todo?
It was trying to define billingpractices for detention to
merge with the main purpose ofsimplicity.
The main purpose of simplicity,this is from the text Not the
rule text but the discussiontext and the FMC said they
wanted to identify what is beingbilled by whom.

(16:33):
And so through this final rule,the FMC clarified who may be
invoiced, information to beincluded in invoices, the
timeline for invoicing andrequirements for clear invoice
dispute processes.
So what are the main fourtakeaways that?
I kind of couch them into, it'sclarity right.
I always put that as number one.

(16:53):
They wanted to clarify what washappening with D&D billing
requirements.
Timeliness there are now 30calendar day requirements for
the invoice to be issued and atleast 30 calendar days for the
dispute resolution filing and anattempted resolution to dispute
filing for 30 calendar daysbeyond that.

(17:14):
So the 30-30-30.
It also created an emphasis,kind of in line with that
clarity, an emphasis on thedirect contractual relationship.
Anyone can pay the invoice, butonly the direct contractual
relationship or the consignee,but not both, and nobody else
can be issued the invoice.

(17:34):
So I'm going to say that, again, only the direct contractual
relationship or the consigneecan be issued the invoice.
Anybody else can pay it.
But this is where I caution,industry really needs to pay
attention.
Who is that direct contractualrelationship?
Who will be receiving that fromthe billing party right?

(17:55):
Mostly the ocean common carrier, but who will be receiving that
invoice?
Make sure you know becauseafter 30 calendar days, maybe
the end of June, when all ofthis starts hitting, you don't
want to lose your disputeresolution opportunity.
And again, this disputeresolution opportunity is for
B2B right.
This is for business tobusiness.
This doesn't necessarily, thisdoesn't eliminate the otherwise

(18:17):
available dispute resolutionmechanisms through the FMC.
So that would be like filing aviolation.
That would be filing a lawsuit,a complaint.
That would be the chargecomplaints process.
All of those other things thatthe FMC has available is not
impacted by what happens withthis D&D rulemaking as a general
statement, but it does have adispute resolution filing

(18:42):
procedure, explanation, guidance, I should say within it.
And it really comes down tothat B2B right.
They're trying to make it sothat these don't gum up the FMC
and that they can make a morestreamlined process on the
operational level so that peoplecan work together.
Right, these are long-termrelationships.
So so what happened?

(19:03):
Right, there was some guidance,there was some feedback on what
was happening with this ruleand how it was interpreted.
But you know, before we get intothat substantive subject matter
, I wanted to actually bring myattention, I want to bring your
attention to something that Ihad previously brought up and
this kind of goes back to likethe baseline why is the FMC

(19:26):
doing this rulemaking and whatdid Congress tell them to do
with this rulemaking?
And it goes back to the oceanshipping reform act of 2.0.
So 2022, or, excuse me, osra,osra of 2022.
I say 2.0 sometimes becauseOSRA, actually the first ocean
shipping reform act, happened in1998.

(19:47):
And then ASRA, that happened in2022 was technically 2.0, but
shorthand gets a littleconfusing here so ASRA of 2022.
So in there it said section Bgenerally is the D&D rulemaking,
and what it said was not laterthan 45 days after the enactment
of this act, after Osra 22, theFMC shall initiate a rulemaking

(20:08):
further defining prohibitedpractices by common carriers,
mto, shipper and oceantransportation intermediaries
regarding the assessment ofdemurrage and detention charges.
So the FMC shall issue a finalrule defining such practices not
later than one year after thedate of enactment.
Practices not later than oneyear after the date of enactment
.
Okay, I mean we're almost donetwo years, but that's okay.
Chairman Maffei has said it'sbetter to get it right than get

(20:31):
it fast.
So they've been working throughthe process.
But it's sub part two they wantto draw your attention to.
So where it says contents, itsays the rule under paragraph
one.
So it's saying this D&D ruleunder paragraph one.
So it's saying this D&D ruleshall only seek to further
clarify reasonable rules andpractices related to the

(20:51):
assessment of detention anddemurrage charges to address the
issues identified in the finalrule published on May 18, 2020,
the interpretive rule ondemurrage or detention under the
Shipping Act, including adetermination of which parties
may be appropriately billed forany demurrage, detention or
other similar per-containercharges.
So the Congress, when they putOSRA 22 out, said this needs to

(21:18):
also address or this needs to.
They don't say.
Also, they say shall only seekto further clarify reasonable
rules and practices related toD&D assessment identified in the
final rule of the interpretiverule of demurrage and detention.
So Congress is saying FMC issupposed to clarify the
interpretive rule on demurrageand detention and I look, I

(21:39):
think that they are doing thismostly, but it is interesting
because I don't think thatthey're mentioning that they're
specifically doing this, andperhaps they should.
I guess what I'm thinking isthey're not really going back to
the interpretive rule andsaying, look, here's what was in
the interpretive rule, here'sthe correction or here's where
we're clarifying it, and I thinkthat is an interesting nuance

(22:06):
and just something that I wantedto.
I noticed I was brought to myattention the other day and I
thought that I might just wantto mention it here.
Right?
So I've reviewed theinterpretive rule previously.
May 18, 2020, interpretive rulebut maybe it's time we take
another walk through it again.
Now that we have the finallanguage of the tension to the
merge rule.
It might be time to take a lookat that and to see, okay, what

(22:28):
have they actually changed fromthe interpretive rule?
What have they adopted?
What have they clarified?
How does it compare, right?
So?
But I want to bring that toyour attention because it feels
like it kind of keeps gettingforgotten or lost in the text.
But I mean, I was reading thetext off Az and that's what the
text said is.
It specifically says theinterpretive rule of May 18,
2020.
So just a side thought.

(22:50):
So let's talk about this finalrule correction.
So the FMC this week, like Isaid, issued a final rule
correction.
This was published in theFederal Register on February 26,
2024, concerning demurrage anddetention billing requirements.

(23:12):
This correction providesinformation regarding situations
in which vessel operatingcommon carriers VOCC enter into
written contracts with motorcarriers truckers that use
containers in the transportationof goods.
Okay, so what does all thismean?
What's happening here?
First of all, I just want tomake this clear the final rule
text isn't changing with thiscorrection.

(23:35):
This is simply a correction tothe preamble.
So the background discussioninformation that was provided in
the 100 plus pages of the finalrule document.
So and I say the 100 plus pages, I've mentioned this before If
you just want to know what theactual final text of the rule
will be, just go to the last fewpages of that 100 plus document

(23:56):
, right, like, go to the lastfew pages I think it's the last
four, maybe five and the blackand white law is listed there.
You'll see exactly how it'sgoing to appear in the Code of
Federal Regulations, the CFR,and that's where it is.
If you want the explanation foreverything, the responses to
all the comments, all of that,that's what the other 100 pages

(24:16):
are for.
But the final rule text is justthe last few pages.
So this correction simplychanges a piece of that
discussion, that discussion, thehundred plus pages that it's
discussing.
This is what this correctiondoes.
So there might be some largersignificance, but as it relates
to the final black letter lawthat's going to be published or

(24:39):
that will be effective May 28th,this isn't changing any of that
language.
This is just changing theexplanation.
And, like I was saying, withthe World Shipping Council
petition and what they put ontheir website, they were saying
that there was an inconsistencybetween the explanation and the
final rule text.
So this changes the explanationpart.

(25:02):
So for this change, very simplyput and probably oversimplified,
the FMC said look, we were alittle confusing with how we
explain the relationship betweenVOCCs and truckers, so now
we're clarifying it.
And that's what they're doingwith this correction.
And they're saying andessentially, what the rule
discussed, what the rulediscussion said then, and now
they're saying the actualintention isn't changing, just

(25:25):
how they said it was tooconfusing.
They're saying what the ruleactually discussed is that only
on through bills of lading willinland transport contracts fall
under the FMC jurisdiction orwill those kind of
transportation-related things?
Only if it's on a through billof lading will inland parts fall
under the FMC jurisdiction andtherefore this rule.

(25:47):
Otherwise they're going to beoutside the scope of this rule
and so that's kind of anoversimplification, but that's
kind of what they were saying.
So, state of the opposite whenVOCCs and truckers contract for
services, but when they aren'tin furtherance of a bill of
lading, a through bill of lading, then it won't apply.
So let's get down to the actualtext, right?

(26:07):
So those wereoversimplifications, kind of
interpretation or translation ofit.
But what does the actual textsay?
So here's the new text of thediscussion preamble, and I'm
only going to be quoting the new, actually corrected text here
because the FMC was a littleconfusing on their preamble
previously.
Now when you read it with theexplanation here, you can kind

(26:28):
of read what they were trying todo.
But here's the actual text.
That will be the new text ofthe preamble discussion.
It's just about a paragraph.
So it said the rule makes clearthat demurrage and detention
invoices can only be issued toeither the person for whose
account the billing partyprovided ocean transportation or
storage of cargo, for whoseaccount the billing party
provided ocean transportation orstorage of cargo, so that's

(26:48):
that directly contractedrelationship.
And who contracted with thebilling party for the ocean
transportation or storage ofcargo or the consignee right,
and so that's always been thedirect contractual relationship
or the consignee, not both, andnobody else so issued to either
the person for whose account thebilling party provided ocean
transportation or storage ofcargo and who contracted with

(27:10):
the billing party for the oceantransportation or storage of
cargo, or the consenting, asdiscussed in the NPRM.
So that's the Notice ofProposed Rulemaking.
A primary purpose of this ruleis to stop demergent detention
invoices from being sent toparties who did not negotiate
contract terms for oceantransportation or storage of
cargo with the billing party.
When a VOCC issues a detentionor demurrage invoice, the VOCC

(27:34):
must comply with therequirements of Part 541.
However, in our response to thisspecific comment, we presume
that the FMC's jurisdictionwould apply only to cargo moved
inland under a through bill oflading and that contracts
between a VOCC and a motorcarrier not based on a through
bill of lading would likely beoutside the scope of this rule.

(27:54):
So that's what the correctionis, that's all it is.
They kind of eliminated maybesix or so sentences that were
after that In the originaldiscussion.
They seem to kind of almost saylook, maybe so ends with this
not based on through, but wouldlikely be outside the scope of
the rule.
They almost seem to say in theoriginal language look, maybe

(28:15):
there's a possibility that whena VOCC and trucker contracted in
furtherance of a through-billlading and then they went into a
little bit of discussion on howbuild party as a, as a term is
intentionally vague and that'swhat the FMC they said.
But now they're cleaning it upand eliminating that additional
discussion.
Right, they were kind of sayingpreviously maybe there's a

(28:36):
world and so we don't want to do, we don't want to say too
absolute here, but in doing that, in doing kind of that, that
exercise, it got confusing.
Even me talking about it nowfeels like it's getting a little
confusing.
So what they said, like I saidin the last sentence here of the
corrected language in ourresponse to the specific comment
, we presume that the FMC'sjurisdiction would apply only to

(28:57):
cargo moved inland under athrough bill of lading and that
contracts between a VOCC and amotor carrier not based on a
through bill of lading wouldlikely be outside the scope of
this rule.
So, simply put, vocc and motorcarrier contracts are likely
outside the scope of this rule,like they said.
So why is this interesting?

(29:18):
Well, it's good that theyclarify, it's good that they
clean that up and made it alittle bit more right.
It's law, so they're alwaysgoing to say would likely be
outside the scope of this rule.
What that signals to me is thatthey're going to let case law
figure this out.
Right, if there's anythingthat's in there, they're going
to let the case law figure thisout.
They didn't want to make rulesor make absolute statements in

(29:40):
the preamble, in the discussion,they're saying this is our
interpretation.
But really the the discussion,they're saying this is our
interpretation, but really thelaw that goes in is the law and
the application of that law.
If there's any question, that'swhere the case law, that's
where filing lawsuits andcomplaints happen, and then they
start to drill down and thenthat's where you use.
Remember, in this case, yousaid this that's I mean, that's
the job of a lawyer, right,bringing all these.

(30:01):
You said this once before.
So I think this is the samewith that, all right.
So they've cleaned this up.
They've kind of eliminated that, but maybe sometimes
conversation.
So let's get back to that.
World Shipping Council filedpetition, right, so they filed
this petition against FMC'sfinal rule in the US Court of

(30:21):
Appeals for the DC Circuit.
The petition itself really kindof says exceeding authority,
but then through the publishedannouncement at the same time
they said look, they werelooking at VOCCs and directly
contracted port truckers and thebilling.
So this correction seems toline up with what the World
Shipping Council released whenthey filed their petition.

(30:41):
Right, it's certainly talkingabout the same thing VOCC and
directly contracting withtruckers and motor carriers and
how that billing works, althoughthe filing at the US Court of
Appeals only mentions theexceeding authority argument, or
certainly what I found.
However, this is likely in thesame, because if the FMC was

(31:07):
trying to go for contractsbetween truckers and BOs that
didn't have to do through billof lading, that might actually
put them into exceedingauthority territory.
And so let me say that adifferent way.
They're saying look, inlandstuff.
And this is kind of the largerquestion that is actually still
being asked of Congress.
About a year ago, 77 shippersgot together and said look,
there's a gray area on theinland movement of goods and

(31:31):
certainly the rail stuff, and sothat kind of remains.
I say kind of remains a littlebit gray area.
But that's, I think, the cruxof what's happening here is,
look, if the FMC was trying toget at contracts that didn't
have much to do with the truckerand VOCC relationship through
this kind of delineating andregulatory requirements over

(31:56):
those relationships, if theywere trying to get into
something other than thatthrough bill lading, potentially
they might be in this exceedingauthority territory, right?
I mean, that's kind of theargument, but that's a
discussion for another day.
Right, that's not today.
We're not going to be gettinginto the gray area of all of
that FMC jurisdiction on themoves.
Where does their jurisdiction?
And that gray area remains fornow?

(32:17):
And, like I said, other thanthe 77 shippers that asked
Congress for that, we don't havea lot of clarity there.
And so the FMC kind of reallyrefining and saying, look, when
these, when these contracts areon these through-billed lading,
that's where we touch that part.
So that's the clarification.

(32:37):
But why is the petitionimportant, right?
So I feel like this is allgetting a little confusing so I
want to bring it back around.
So why is this petition ingeneral important and why am I
bringing it back here?
Because if this correctionsolves that exceeding authority
argument, I mean it potentiallydoes right.
If that's what the exceedingauthority argument was, was this

(32:59):
you're getting into inlandtransport?
It's confusing, it's tooconfusing.
We asked for corrections.
They weren't made in the finalrule and it might have been an
interpretation of what theythought the preamble said versus
what the final text said.
Right, I mean that's partlywhat they're saying here.
This correction potentiallycould make that World Shipping

(33:20):
Council petition move, right.
If this correction clarifies it, syncs it up so that the final
text and the preamble now arekind of saying the same thing
and it says look, we're stayingin our lane, we're staying on
through bills of lading,potentially right.
That makes it so that maybe thispetition the potential for it
to scoot the May 28th date or topotentially pause that May 28th

(33:42):
date, maybe it lessens thechance that that'll happen,
right, maybe that will be partof what the US Court of Appeals
for the DC Circuit looks at andsays well, they made this
correction seems to line up.
They're both.
They're all talking about motorcarriers and VOCCs and the
subject matter experts stillremain the industry, right?

(34:03):
I mean, this court likelydoesn't know as much as the
industry surrounding it on thesespecific issues, but that's
what the arguments and that'swhat all the filings are for.
But all this to say, look, thismay lessen the chance that that
May 28th date changes.
And so, look, there's no changeto the May 28th date.

(34:23):
Right now we're all talkingkind of in a speculative what
might happen unless we hearotherwise.
I can't say this enough Rightnow that date is May 28th.
That's the effective date andagain, the effective date of the
rule.
But the contents of invoicesection is TBD.
It's still being reviewed byOMB.

(34:43):
So watch for announcements.
All this to say, watch forannouncements.
That's today's discussion.
It's a nice mix of right.
Today was a nice mix of gettinglost in the weeds and my
attempt to kind of bring us outof the weeds with a little
translation.
But all of this is still veryfluid.
We have 18 days until the FMCfinal rule on the D&D goes into

(35:05):
effect.
That's all we know.
That's the only kind ofofficial thing that we know,
only kind of official thing thatwe know, except for that,
contents of invoice part soclear as mud.
I think it's all right.
I think we'll get through ittogether.
Keep it here.
I'm going to keep track ofeverything.
Keep breaking it down.
There's a lot of moving partsand a lot of things are going to

(35:27):
happen in the next 18 days.
The FMC will certainly let usknow, right, that's going to be
part of their job is making surethat the industry knows if the
rule gets, uh, delayed or stayedor paused or any of that stuff.
Um, I guess it's.
It's kind of similar if you wantto talk about procedural
matters.
It's a little similar to what'sgoing on with the FTC, the
federal trade commission andtheir non-competes, and the uh

(35:48):
chamber of commerce filing apetition against the final rule.
Right, that will likely pausethat.
That's why a lot of people aretalking about the non-competes,
but also saying don't count yourchickens yet.
It's likely to go into a wholelegal battle.
We're kind of in a similarmoment here where the rule has
been questioned, and so now it'sa little bit out of the FMC's
control.
So we'll just see how the courtinterprets.

(36:10):
Did that correction thathappened yesterday solve those
issues?
Does the petition get repealed,right?
I mean, I don't know, there's amillion different things that
could happen here, but, asalways, I got to say this.
As always, the guidance here isgeneral and for educational
purposes.
It should not be construed tobe legal advice directly related
to your matter.
You need an attorney, contactan attorney.

(36:33):
None of this was specific anddirect to your situation.
I can't stress that enough.
This is all just generalspeculation and educational
discussion.
You need an attorney, contactan attorney.
But if you have specific legalquestions, feel free to reach
out to me at my legal company,skoll Strategies.
Otherwise, for the non-legalquestions, for the e-learning
general industry, informationand insights, come find me at

(36:55):
the Maritime Professor.
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 you prefer to see the video,they live on my YouTube page by
Landon by Sea, presented by theMaritime Professor, and while
you're at it, check out thewebsite themaritimeprofessorcom.
So until next week, this isLauren Began, the Maritime
Professor, and you've justlistened to by Land and by Sea.

(37:17):
See you next time.
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