Topic of the Week (2/2/24):
Congress wants the FMC to hurry up with the D&D rulemaking (they sent a letter...) and we do a quick refresher on the proposed D&D rulemaking language from Oct 2022.
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 Strategies)
Let's dive in...
1 - The Federal Maritime Commission is still working through three rulemakings. No new movements.
2 - The FMC will host an informal hearing on the Red Sea and Gulf of Aden on February 7 (in person and virtual).
Hearing Schedule:
https://www.fmc.gov/fmc-releases-schedule-for-hearing-on-threats-to-shipping/
3 - The Ocean Shipping Reform Act of 2022 (OSRA 22) co-sponsors, Representative Dusty Johnson (R-SD) and Representative John Garamendi (D-CA) wrote a letter to the FMC urging the FMC to finalize the rule on detention and demurrage billing requirements.
https://dustyjohnson.house.gov/sites/evo-subsites/dustyjohnson.house.gov/files/evo-media-document/letter-to-fmc-on-dd-rulemaking-1.26.2024.pdf
-------------------------------
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Lauren Beagen (00:56):
Did you see?
Congress sent a letter to theFMC telling them to hurry up
with detention and demergerulemaking?
We're gonna talk about it.
Welcome to By Land And By Sea,an attorney, breaking down the
weekend supply chain presentedby the Maritime Professor, me.
I'm Lauren Beagen, founder ofthe Maritime Professor and
Squall Strategies, and I'm yourfavorite maritime attorney.
(01:17):
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 withlegal advice and there is no
attorney-client privilegecreated by this video or this
podcast.
If you need an attorney,contact an attorney.
But before we get into thediscussion of the day, let's go
(01:40):
through my top three stories ofthe week.
Alright, story number one we'vebeen having it on here for a
while.
We're gonna continue to keep iton right.
We're watching the FMC closelyfor the release of any movement
on these three open rule makings.
We haven't seen much movementin a while.
It's 1pm on a Friday afternoon.
Hasn't happened so far.
(02:01):
Remember, the FMC is workingthrough three different rule
makings and one request forinformation.
The three rule makings theywere directed by Congress under
the Ocean Shipping Reform Act of2022 to undertake.
So those rule makings aredefining unreasonable or freezal
to dealer negotiate withrespect to vessel space
accommodations provided by anocean common carrier.
Number two billing practices ofdetention to merge.
(02:22):
We're going to talk a littlebit about that today.
And number three definingunfair, unjustly discriminatory
methods.
So those are the three rulemakings.
Congress is asking the FMC tohurry up on the billing
practices of detention to merge.
That's what we're going to talkabout shortly here.
But the other two definingunreasonable or freezal to
dealer negotiate with respect tovessel space accommodations.
(02:43):
Remember that one reopened fora supplemental notice of
proposed rulemaking.
Those comments closed over thesummer, that was July 2023.
And then this defining unfair,unjustly discriminatory methods.
The commission has said thatthey actually incorporated some
of that into that firstrulemaking that unreasonable or
freezal to dealer negotiate butthey haven't done a dedicated,
(03:03):
standalone rulemaking for thatthird element that Congress
actually asked them to do.
Right, they asked them toundertake these three very kind
of what they thought wasdistinct rule makings and the
FMC has kind of commingled thatthird one into the first one, as
as it made sense to do.
But they still have someelements that they want to hit
(03:24):
that will likely come in a thirdrulemaking this done.
Defining unfair, unjustlydiscriminatory methods we
haven't seen any language.
That doesn't mean they're notworking on it.
I can almost assure you thatthey are.
I'm sure they are, and eachtime Congress tells them to do
something, they're going to takeit seriously, right?
So those three rulemaking arewhat we're waiting on.
We really haven't had a lot ofmovement on any three of them in
a while, at least, certainlyfrom the FMC itself.
(03:47):
And then we have the requestfor information, the RFI that's
from the Maritime TransportationData Initiative.
We're still waiting to see anyadditional movement from that or
additional RFI rounds.
So that's what we're waiting on.
That's kind of our recap ofwhat we look at every week.
But story number two is also FMCrelated.
It's a very FMC day.
Story number two is a reminderof the hearings that are coming
(04:09):
up next week.
It's next week already.
So these are the shippingconditions.
The hearing is the shippingconditions in the Red Sea.
The FMC has announced thatthey're going to be having a
hearing, likely based on thehigh level of interest in what's
going on in the Red Sea.
They're going to be expandingthat to a second day is what
they said, because they've beenso much interest in probably
(04:30):
that hearing that they calledfor this is an informal hearing.
It's not part of a larger thingnecessarily.
It's an informal hearing.
They said that they want toseek the balance of viewpoints
of those presenting.
They also said, if needed,they're going to be inviting,
inviting panelists.
So the deadline to sign up, ifyou were interested in being a
panelist, was the 31st of twodays ago.
(04:51):
They are going to be kind offilling the slots of speakers.
Like I said, they were intendinginitially to have it just on
Wednesday, february 7th.
They said, if needed, theywould continue that on to the
eighth.
That's probably because theygot a lot of interest in this
hearing.
They want to maintain thebalance of the voices so even
though people may not have askedto be on the panel, the FMC
(05:14):
might be going out andsoliciting their involvement.
I think that sounds good, right?
They want to be fair.
They want to make sure that thevoices on the panel are kind of
all different areas of thesupply chains.
They get an accurate, completeview in this, like I said,
informal hearing on the shippingconditions in the Red Sea.
So again, what they're going tobe examining, what they said is
how conditions in the Red Seaand the Gulf of Aden are
(05:37):
impacting commercial shippingand the global supply chains.
The hearing is supposed to allowstakeholders to communicate
with the commission of howoperations have been disrupted
by attacks and commercialshipping steps taken in response
to these events and then theresulting effects.
I think this is going to bepretty interesting.
They're going to be webcastingthis out so you certainly can be
there in person.
(05:57):
It's going to be at the surfacetransportation board in DC, but
they are going to be livestreaming this for those who
can't participate in person.
All the panelists were requiredto be there in person, but you
don't have to be to watch it.
I believe they're going to beputting this on their YouTube
page, but I'll certainly addthat information as I get the
link.
But the FMC, don't forget,they're going to be having this
(06:19):
hearing in less than a week.
It's going to be five days fromnow.
It's next Wednesday, february7th, and potentially Thursday,
february 8th.
All right, story number three sothis is the story about
Congress asking the FMC to hurryup.
So on January 26th, so lastFriday, congressman Dusty
Johnson and Congressman JohnGaramendi wrote a letter to the
(06:42):
FMC urging the FMC to finalizethe rule on detention to merge
billing requirements.
They said, as required by ASRA,the Oceans and Superinformat of
2022, which was actuallyco-sponsored, right by these two
congressmen.
As we know, asra 2022 becamelaw June 16th 2022.
So, look, I've seen a fewpeople mentioning this letter
(07:03):
online.
I don't think it's a huge deal,right?
Sure, I'm playing it up fortoday, but I don't think it's a
huge, huge deal.
Yes, the FMC is very overdue onthe final rule of the D&D
rulemaking.
But in terms of thesecongressmen sending this letter,
they actually sent one lastyear too.
They sent a letter last January2023.
So it almost seems to suggestthat this is like a routine
(07:25):
letter that they send to the FMCencouraging the finalization of
the rulemaking, not to minimizethe fact that the congressmen
are telling them hurry up, guys.
But I don't think that this is.
You know, of course that's whatthe FMC is trying to do.
I don't think that this is theyou must hurry up letter.
The letter in January 2023, itwas actually a little premature,
(07:46):
I would say, as the Oceans andSuperinformat of 22 law had only
required the D&D rulemaking tobe finalized one year from the
date of enactment, so that wasJune 16th 2023.
They sent their letter January23, the first letter, and now
they're sending another letter ayear from that.
But the first letter was kindof preemptive to the deadline of
(08:09):
the D&D rulemaking.
Stated another way, the FMC wassupposed to have finished this
June 16th 2023, one year postthe enactment of Osrow, which
was June 16th 2022.
They didn't do that congress issaying look, hurry up, please.
The letter itself is actuallyprobably mostly what you'd
(08:30):
expect, right, and it doesstress the urgency, but it's not
overly condemning of theextended timeline, right.
So one part that I did findinteresting, though, is the
attention to the marine terminaloperators and ports.
It was a very short letter, itwas just about one page, but
they had like three, maybe fourparagraphs, but they had like
paragraph number two dedicatedto a discussion, a quick
(08:51):
discussion, of marine terminaloperators and ports.
So what this said from thecongressman?
In this letter, mr Stephen AEdwards, chief executive officer
of the Virginia Port Authority,testified on the urgency of
finalizing this critical rulebefore the House Committee
transportation andinfrastructures hearing on
January 17th 2024.
When asked what Congress can doto improve ocean shipping, mr
(09:13):
Edwards implored members of thecommittee to encourage the FMC
to finalize the Dermurge andDetention Rule.
He also testified that marineterminal operators and other
industry participants from topto bottom are eager for a
finalized rule so they cancomply with the intent of the
law.
Of course, right?
Yes, of course.
Of course.
The ports want it done, thecarriers want it done, the
(09:34):
shippers want it done.
Everybody wants this rulefinalized, but it was.
I just note that it wasinteresting that this came from
a port and maybe because theport is a US interest.
It's US based.
This was the Virginia PortAuthority.
But I find it interestingbecause Congressman Ockincloss
of Massachusetts sent a latefiled comment for the detention
(09:58):
Dermurge Dock and we talkedabout this previously that was
sent just this fall, where hesaid in that letter that he
didn't support versions of theOcean Shipping Reform Act of
2022 that included MTOs itsentities to be included in any
rulemaking on Dermurge orDetention Billing Practices, and
he said very plainly that theyshouldn't be included.
(10:19):
He said Marine TerminalOperator should choose whether
to charge Dermurge as well.
So he suggested that theincentive principle is being
misapplied by the FMC.
Didn't say that outright, buthe suggested that, which was
part of what the MTO shouldchoose whether to charge
Dermurge.
He's saying, look, the MTOsshouldn't be beholden to this
incentive rule.
They should be able to choosewhether to charge Dermurge and
(10:42):
when.
So all that to say I'm justinterested, right, like this is
starting to build a kind ofinteresting dynamic.
I'm interested to see if whatmakes it into the final language
, right, will the MTOs beincluded in the detention to
barge billing rulemaking?
I guess we're gonna find out,and hopefully soon.
(11:03):
Look, I would suspect that thiscongressional letter from Dusty
Johnson and John Garamendi mightincrease the urgency of the
final rules release, right,because they sent one in January
23,.
Now there's anyone January 24.
I mean, it just kind of bringsit fresh to the congressman's
(11:25):
mind.
Who enacted this law, who toldthe FMC to do this?
And I can imagine that the FMCis like I know we're trying,
we're trying, but maybeinternally they're like we gotta
get this out.
So all that had me thinkingthat maybe it's time we did a
little refresh of what the lastD&D billing practice is, what
the last round was, the noticeof proposal rulemaking.
(11:47):
We've covered this before.
I think we covered right whenit came out October 2022.
Did you hear that the lastmovement from the commission on
this was October 2022.
We are now in January 24, whichis a little deceptive because
we just right turned the page ofthe year.
It was just 23.
So we're actually just maybe 14months past the last movement
(12:11):
from the agency side.
We've talked about that.
They were addressing thecongressman's concerns, the late
filed comment.
They met.
They had an ex partecommunication that was put into
the docket.
Look, there's been stuffhappening.
But any sort of formal releaseof documents on the agency side
here, kind of in the furtheranceof this rulemaking was really
(12:35):
last done October 2022.
So, and again, we had 180 or socomments filed at the time.
So that's a lot.
So they had a lot to go through.
And then they probably weregetting close this fall and then
had that late filed commentfrom the congressman, aqua Claw,
saying look, take the MTOs andports out of it.
That probably threw a littlewrench into the whole process
(12:57):
and so they had to revise orrevisit or just kind of reassess
whether they were making theright decisions for the next
step, based on and I would argue, hopefully Congress.
Well, that one congressman'sletter and whoever else he had
supporting in it I think it wasa congressman from Texas who
(13:18):
also supported him Babin soweighing and kind of putting
that into the mix of things thatthey're considering.
But then also all the commentsright, 180 comments from the
actual stakeholders in theindustry.
So I think that they neededsome time to kind of digest the
newly submitted right, very latefiled from the fall letter from
(13:39):
the congressman, but then alsowhat they already kind of knew
they had maybe thought about.
So all of this to say let's getinto the meat and potatoes of
the day, I thought it would beappropriate to kind of refresh
what the proposal was at thelast stage for the notice of
proposed rulemaking.
So a little procedural history.
(13:59):
Remember the commission cameout in I believe it was April of
2022, saying they hadn'tadvanced notice of proposed
rulemaking on detention anddemerge.
They were asking questions inthe industry of where they
should go with this rulemaking.
That was before Congress toldthem to do that.
They said we need to tacklethis detention and demerge.
(14:20):
That was, I believe, spring of2022.
I believe it was April of 2022.
So a while ago, almost twoyears ago, the FMC kind of
started this on their own.
Osra passed June of 2022.
They said Congress said look,fmc, you definitely need to hit
this detention and demergerulemaking.
Fmc said thanks for your input,we already are.
It shifted a little bit thefocus on the next round that we
(14:43):
saw.
So the FMC incorporated theOsra requirements into the next
round, which was the notice ofproposed rulemaking, which is
where they start to propose sometext of what they want in the
proposal or what they'resuggesting in the proposal.
And that's the last stage thatwe had the notice of proposed
rulemaking for detention tomerge billing requirements.
(15:04):
Today let's just refresh itpretty quickly.
I mean it's pretty, there's alot going on in the proposal.
I encourage everybody to goback and check it.
Just.
I mean, just stay fresh on it,right?
So the proposed rule was sayingthat it would do four things.
One adopt minimum informationthat common carriers must
(15:24):
include in a demerge anddetention invoice.
That was listed.
Number two add to this listadditional information that must
be included in and with or witha detention to merge invoice.
And so I say that was listed inOsra.
So one was adopt minimuminformation that must be
included.
That was part of the Osra 13requirements.
(15:45):
Two they're saying they'regonna be adding a few things.
Three they're gonna furtherdefine prohibitive practices by
clarifying which parties may beappropriately built for D&D
charges.
And four establish billingpractices that billing parties
must follow when invoicing orD&D charges.
So the rule went through awhole thing of summarizing the
comments that were brought in onthe advanced notice of proposal
(16:07):
.
We'll make that first go around.
But what was actually in theproposal?
That's all I really wanna focuson.
I don't wanna get too down inthe weeds on the procedural
stuff of it, I just wanna kindahit the content.
So they go through a lot ofdefinitions.
The commission defines theterms to emerge into tension
broadly to include any chargeassessed by common carriers and
(16:28):
marine terminal operatorsrelated to the use of marine
terminal space or shippingcontainers.
So just because they includeD&D in their definition as
including MTOs, I think that'sokay, right?
What Congressman Aachenclossand Congressman Babin were
basically saying was we justdon't want the requirements to
be also put on the MTOs.
(16:49):
Okay, let me just keep going onthe content here, right?
So the FMC said in theirproposal the goal is to
encompass all charges having thepurpose or effect of demerge or
detention, regardless of thelabels given to those charges.
Remember, we saw that in theadvanced notice of proposal rule
making two years ago.
They're basically trying to saylook, if you're calling it per
diem or something else, doesn'tmatter if it's falling within
(17:09):
the scope of what is detentionor is demerge, I don't care what
you call it, that's what it is.
So they're trying to kindastreamline that by saying, look,
demerge or detention needs tostart being called that in the
appropriate instance.
So they said, under thisdefinition, a charge assessed by
a common carrier for the use ofcontainers outside of a marine
(17:32):
terminal would fall within thescope of this rule, regardless
of whether the charge was calleddetention, appropriately, or
per diem.
Similarly, a charge assessedbecause a container is taking up
terminal space would fallwithin the scope of this rule,
even if the billing party calledthe charge something other than
to merge.
So they kind of just simplysaid what to merge is taking up
(17:52):
space on the yard or terminaland what detention is the use of
the container outside of amarine terminal.
So they continue to say theproposed rules specifically
limits those definitions toshipping containers and excludes
charges related to otherequipment such as chassis,
because, depending on thecontext, per diem can refer to
(18:14):
containers, chassis or both.
They also say the commissionsupports defining to merge or
detention charges based on whatasset is the source of the
charge land or container, asopposed to the location of a
container inside or outside of aterminal.
The commission discouraged useof terms such as storage and per
diem as synonyms for demurgeddetention because those terms
add additional complexity.
(18:35):
So what we saw throughout theproposed rulemaking, the NPRM,
was the commission really triedto simplify where they could.
There was really an intentionand they kept saying in the
language that they were tryingto simplify things.
So again they go on to alsodefine build party.
(18:55):
So the build party was meaningthe person receiving the
demurged or detention invoiceand who was responsible for the
payment of any encourageddemurged or detention charge.
In the commission's view, thisproposed definition would best
capture the intended scope ofthis term and eliminate any
potential ambiguity to itscoverage.
They go on to explain buildparty a little bit more, where
(19:16):
they said the proposed rulewould define the billing party
as meaning well, that was buildparty.
Then they go on to definebilling party and they kind of
explain these a little bitfurther down in the proposed
rule.
So the billing party, meaningthe VOCC, the NVCC or the MTO
who issues a demurged ordetention invoice, that's the
billing party.
I mean, these are kind of basicbut they make sense.
(19:37):
So they wanted to define buildparty billing party.
Billing dispute would mean anydisagreement with respect to the
validity of the charges or themethod of their invoicing raised
by the build party or theiragent to the billing party.
This proposed definition andmore generally, this proposed
rule does not indicate apreference or requirement for
the format in which a disputemay be raised.
(19:58):
Instead, the commissionproposes a broad definition that
incorporates all types ofdisputes raised by a billing
party, a build party, uponreceiving and demurged or
detention invoice, that's abilling dispute.
So I will add look, the FMCreally encourages dispute
mechanisms away.
For the build party dispute,the charge and not just a junk
mechanism is something that Ithink that the FMC was kind of
(20:20):
trying to get at with theexplanations here.
So, going into a little bitmore of the content, going past
some of the definition, they gointo properly issued invoices.
So under the proposed rule, aproperly issued invoice is
issued only to the person thathas contracted with the billing
party for the carriage of goodor space to store cargo and is
(20:41):
therefore the person responsiblefor the payment of any
encouraged D&D charge.
They clarify that that's oftenthe shipper of records.
So the proposed rule wouldprohibit billing parties from
issuing D&D invoices to personsother than the person for whose
account the billing partyprovided ocean transportation or
storage.
So they're saying look, we justwant this to be streamlined.
(21:05):
They said in the A&PRM, theadvanced notice, the first round
, many commenters described acurrent widespread practice
where the billing party sendsthe invoice to multiple parties,
most of whom are not therecipient of the service, giving
rise to the invoice charge.
So they said that basically,with that current system,
parties who did not negotiatecontract terms with the billing
party are nonetheless bound bythem, and that creates
(21:27):
additional confusion andhardship.
So they said so said in anopposite way.
The FMC wants to see only thedirect contractual relationship
and they said mostly this wasbecause they know the terms of
the contract.
If anything does go wrong andshouldn't need to be disputed,
they want that directcontractual relationship.
That's what they're proposing.
They also say in the currentsystem, invoicing multiple
(21:52):
parties can result induplicative payments, which
further complicates resolvinginvoice disputes, because now
you have multiple payments goingin and so you're creating
multiple new disputes of tryingto get payment back, waivers,
all of those things.
So the commission said that theybelieve prohibiting billing
parties from issuing demergedattention invoices to persons
(22:12):
with whom they do not have agenuine commercial relationship
will similarly benefit thesupply chain.
When D&D invoice disputes doarise, the bill parties in a
better position than thirdparties such as truckers and
customs brokers to analyze theaccuracy of the charge right.
So they said practically theproposed rule would prohibit
billing parties from invoicingmotor carriers or customs
(22:34):
brokers.
Although a motor carrier couldpay on behalf of a billed party,
the motor carrier would not beliable for those charges and
could not be penalized fornon-payment of charges.
They're trying to streamlinethis.
They also said during thisproposed rulemaking stage that
they wanted feedback on that.
They really they wanted a lotof comments to talk about that
(22:55):
and we went through some ofthose comments in subsequent
episodes.
But again, this is kind of arefresher for what's in the
proposal.
As of October 2022.
So you're saying, only theperson who contracted with
Common Carrier for the carriageof goods or storage of goods may
be issued an invoice.
There are a variety of shippingarrangements that allocate risk
(23:18):
, obligations and cost betweenthe ship and the consignee named
on the bill of lading.
Considering these arrangements,the commission, like I said,
was specifically seeking commenton whether it would be
appropriate to also include theconsignee named on the bill of
lading as another person who mayreceive a demergered detention
invoice.
They said, in sum, the proposedrule should simplify the
current system and ensure thatthe person with the most
(23:38):
knowledge about the shipment andwho is in the best position
understand and dispute thecharge receives a D&D invoice.
So again, they really wantedthis to be simplified.
I'm interested to see if thatsticks.
There's so many operationalconsiderations here at play.
But I'm interested to see ifthat sticks, based on the
comments, based on kind of thefeedback of the stakeholders.
(24:01):
Like I said, the FMC seems tobe moving in the spirit of
simplicity.
So minimum billing informationthis is kind of like the root of
this whole rulemaking.
Certainly they were filling inaround it, but this is the
detention to merge billinginvoicing requirements.
So the proposed rule requiresthe 13 items required for an
invoice from ASRA.
I remember those were the datethe container is made available,
(24:24):
the port of discharge, thecontainer number for export
achievements, the earliestreturn date, allowed free time
and days, start date of freetime and date of free time.
This is all under ASRA.
These are the 13 requirementsthe applicable detention to
merge rule in which the dailyrate is based, the applicable
rate or rates per the applicablerule, the total amount do and
(24:45):
the email, telephone number orother appropriate contact
information or request formitigation of fees for questions
or request for mitigation offees.
And then they also slid in thesetwo statements a statement that
the charges are consistent withany of FMC's rules with respect
to detention to merge and astatement that the common
carriers performance did notcause or contribute to the
underlying invoice charges.
That last one I've always kindof taken a little bit issue with
(25:07):
because it says a statementthat the common carriers
performance did not cause orcontribute to the underlying
invoice charges.
The common carrier isn't alwaysthe one issuing the invoice and
so if it's not the commoncarrier issuing the invoice, why
should they say the commoncarrier who's not issuing did
(25:27):
not cause or contribute?
It just feels a little.
I don't know.
I've never loved that one.
It's a little bit unclear, it'sa little bit.
It can be a little bitconfusing there and potentially
a little bit incorrect.
But anyway, so we move on.
So the proposed rule, as the FMCsaid, would also require
billing parties to includeminimum information in addition
(25:49):
to those 13 requirements.
So the FMC would like toinclude specific identifying
timing, rate and disputeresolution information and their
requesting comments on whetherit should require billing
parties to include all theproposed information in demerge
and detention invoices.
If the commenter opposes any ofthe proposed requirements, they
should identify the informationin the obstacles or burden.
(26:11):
So these were what they wereasking for comments on.
If the commenter supports theproposed required information,
they should explain how thespecific information will assist
them in verifying the accuracyof the charge or ascertaining
how the charge was calculated.
And I think that last piece isimportant because they really
were trying to get to accuracyof the invoice, accuracy of the
charges and checking workascertaining how the charge was
(26:34):
calculated.
So identifying information theproposed rule clarifies that
billing parties must onlyinclude ports of discharge for
import shipments, becauseproviding the port of discharge
on a demergered detentioninvoice would be less useful for
exports.
So they're kind of clarifyingsome of the congressional ASRA
language, right.
They said the proposed rulewould also require billing
(26:56):
parties to include the bill oflading number and the basis for
why the bill party was invoicedand thus liable for the charge.
That last one is a little bitinteresting, right, the basis
for why the bill party wasinvoiced.
So that kind of goes back tothat direct contractual
relationship.
Why did they send it to thebill party?
Timing information this waskind of an interesting piece and
(27:18):
I'm going to be interested tosee where they end up on this
whenever the final rule isreleased.
But, like I said, hopefullythat letter from Congress will
scoot things along.
But so timing information in thecontent of the D&D rulemaking,
the proposed rule from October22.
(27:39):
So it says the invoice mustcontain sufficient information
to enable the bill party toidentify the relevant time for
which the charges apply and theapplicable due date for the
invoice charges, including thebilling date, the billing due
date, the allowed free time indays, the start date of free
time, the end date of free timefor imports, the container
(27:59):
availability date, for exports,the earliest return date and the
specific date for which itemerges attention or charge.
So all of that was kind of acombo of Osrum, the 13 invoice
requirements and then theproposed rule modifying a few
right, so modifying and sayingfor imports the container
availability dates and forexports the earliest return date
(28:20):
, which actually Congress dididentify at the earliest return
date under exports.
So the commission continuedOSRA 22 requires the invoices
include the date the containersmade available for export
achievements, the earliestreturn date, and it kind of goes
through a few of the differentthings that OSRA had required.
But it said the proposed ruleclarifies that the billing
parties must only providecontainer availability date for
(28:42):
import shipments.
Like we're saying, theyclarified that piece.
The proposed rule would alsorequire billing parties to
specify the dates for whichdemerge and detention charges
accrued, the billing date andthe billing due date.
And this is where it's kind ofall building up.
This is where it was reallyinteresting, right?
So they were talking about the30 days and the 60 days, but
they also talked about clockstopping events.
(29:04):
So instead of requiring billingparties to identify specific
clock stopping events on D&Dinvoices, the proposed rule
would require the billing partyto identify the specific dates
on which they charge D&D.
So there was some talk aboutclock stopping events and they
didn't actually go intospecifics of what those were and
I think a lot of people wantsome clarity on that.
But I just don't know if it'sgonna come in the D&D what a
(29:26):
clock stopping event is and thejustification for that.
But what this is saying?
Because they're trying to getthe guardrails in place for
billing practices.
They're saying look, just giveus the dates.
If you have a clock stoppingevent, that's fine, but if it
goes Monday to WednesdayThursday was a clock stopping
event and then Friday to Tuesday, then just show us those dates
(29:48):
on the invoice, the only thedates that you are actually
billing for.
Break it up, chunk it up sothat we can see.
The FMC is also proposing in therule to incorporate the intent
of ASRA to shift the burden tobilling parties to justify the
demurgered detention, whileallowing the billing parties to
correct invoices when theintervening events are not
initially known to them.
(30:08):
So they're saying look, theburden is on the billing parties
to justify D&D charges, butthey can also correct invoices.
And so the proposed rule wouldrequire the billing party to
include the invoice, billingdate and payment due date.
And the proposed requirement toinclude the billing date and
the payment due date will enablethe bill party and the
commission to confirm that thebilling parties are adhering to
(30:30):
the proposed billing practicesoutlined in the proposed
language.
And I thought that thisproposed language was
interesting because they don'ttalk about this piece as much in
the text, or they certainlydon't kind of highlight it.
So this is, in the proposedlanguage, the actual text of
what they proposed the rule bechanged to.
(30:52):
So it said section 541.7,.
If you scroll down to the very,very end of the proposed text
you can see where they actuallyput out what the rule is
supposed to look like.
So it's an issuance of D&Dinvoices.
So part A a billing party mustissue a D&D invoice within 30
days from the date on which thecharge was last incurred.
So this is what is new in kindof the FMC's rulemaking from
(31:16):
even the first stage.
They're proposing a 30 day fromwhen the charge was last
incurred to when the invoice hasto arrive If the billing party
does not issue D&D invoiceswithin the required timeframe.
So if the invoice doesn't goout within that 30 days, then
the bill party is not requiredto pay the charge.
Be careful, though, one.
(31:38):
This is still a proposal, thisisn't a rule yet, but that's
kind of interesting.
They're saying look, they'regonna absolve the bill party of
having to pay it, because ifit's after 30 days it's too long
, it took too long.
But subpart B this is what Iwant you to focus on.
Subpart B, if the billing partyinvoices the incorrect party.
(32:00):
So if the invoice goes to theincorrect party, the correct
bill party must receive aninvoice within 30 days from the
date the incorrect partydisputes the charges with the
billing party.
So the carrier issues theinvoice.
Let's say in this example, theysend it to.
Well, okay, we'll use the termsof the FMC.
(32:24):
The billing party issues theinvoice, right, they send it off
.
It goes to a billed party.
Turns out they send it to thewrong person.
The billed party says they filea dispute they say I'm not
paying this, this isn't my stuff.
So the billing party says ooh,all right, yep, that went to the
wrong person.
From the date that thatincorrect billed party received
(32:45):
that invoice and from the datethat they dispute, the billing
party has 30 days to correct it.
So basically, from the momentthat they find out it went to
the wrong person, they have 30days to send it to the correct
person.
So an invoice to the correctbilled party must be issued
within 60 days after the chargeswere last incurred.
(33:05):
So they send it to the wrongperson.
The wrong person said nope, yousend it to the wrong person,
I'm not paying this.
30 days you get from thatmoment to send it to the right
person.
But look, if it's 60 days fromwhen the charge actually
happened.
So let's say they send it tothe wrong person again and then
(33:28):
you get the 30 days.
If it's 60 days from the datethat the charge last occurred to
the wrong person, then theysend it to the wrong person.
The build party the correctbuild party needs to receive it
within 60 days.
If the build party does notreceive the D&D invoice within
the required time frame, thenit's not required to pay the
charge.
Let me say that again Billingparty sends invoice, they send
(33:52):
it to the wrong person.
Wrong person says nope, wrongperson.
From that date the billingparty has 30 days to send it to
the correct person.
But if they mess it up again orfor some reason, more than 60
days has happened from the lastthe last charge To when the
(34:13):
correct person gets it.
The FMC, under this proposedlanguage again proposed language
is saying Then it's notrequired to pay the charge.
The build party, if theyreceive it, if the correct build
party gets the invoice Morethan 60 days because it wasn't
their fault that it kept goingto the wrong person, if it's
more than 60 days under proposedlanguage, the FMC is saying
(34:36):
that it's not required to paythe charge.
That's interesting.
I don't remember that beingreally highlighted the first
round, so again, today's all arefresher.
So what else is in the, whatelse was in this proposed
language that the Congressmanare now saying FMC, hurry up and
send us the final language rateinformation.
They're saying that they needto clarify With sufficient
(35:01):
details so that the bill, thebilling party should provide
sufficient details so that thebuild party is able to locate
the specific rate that shouldapply and confirm that the
invoice includes that specificrate.
They're also saying under theproposed rule, the invoice must
contain sufficient informationto enable the build party to
readily identify A contact towhom they may direct questions
(35:22):
or concerns or their dispute.
Right, so they're saying theproposed rule would require the
invoice to include an email, atelephone number or whatever
contact information forquestions or disputes, a Web
address of a publicly accessibleportion of the billing parties
website that provides a detaileddescription of information or
documentation that the buildparty must provide to
(35:44):
successfully request mitigationor dispute.
So the kind of saying put outthere who to contact, put out
there what information Needs tobe provided.
So that's all up front.
And define time frames thatcomply with the billing
practices on this part.
So they want some clarity overthis butte section.
(36:04):
And that's what they're puttingin this proposal.
Billing practices, again, theproposed 30-day time frame to
issue the D&D invoice.
And then this is the piecethat's important once the
correctly issued invoice goes tothe correct build person, build
party, then the build party has30 days to Basically stake a
(36:26):
dispute.
Right, they have 30 days to saythat they want to dispute the
charges.
So it's interesting, right,this is it's.
I like this 30-day thing.
I think that we're having somesort of a time frame on it
because otherwise it gets tooaging.
So they're saying 30 days fromwhen the last charge happened.
The billing party needs to sendthe invoice.
30 days from when that invoiceis received to the correct build
(36:49):
party.
That build party has to eithersubmit their dispute or pay it.
So, like I said, we have that30 days.
We kind of went at length ofthe, the actual text.
So go check out section 541.7of the proposed text as well,
because that's where they talkabout the Incorrect versus
correct party and thosetimelines.
(37:11):
So today was just a refresher.
Right, all of this is stillproposed language.
This was just generaldiscussion, not legal advice.
This is simply refreshing yourmemory of some of the proposals
we saw in that last notice ofproposed rulemaking, of the
detention Dormage rulemaking,and the reason why we brought
all this up was simply becauseCongressman Dusty Johnson and
(37:33):
congressman John Garamendi senta letter to the FMC telling them
to hurry up.
So it it just kind of.
It just Got in my head thatit's been a while since we last
looked at this and so I thoughtyou might appreciate a look back
.
I know that I did, looking backat all the the language here.
Go take a look yourself.
This is general information,but if you are interested in the
(37:55):
detention to merge rulemaking,I very, very much encourage you
to go check it out yourself.
Go refresh the language in yourown mind so that you know what
the language was at the lastround.
Maybe even go check out some ofthe comments.
There were a lot of comments,but there was some really great
information coming through inthose comments as well.
So, as always, the guidance hereis general for educational
(38:15):
purposes.
It should not be construed bylegal advice directly related to
your matter.
If you need an attorney,contact attorney.
But if you do have specificlegal questions, feel free to
reach out to me at my legalcompany, school strategies.
Otherwise, for the non legalquestions, the e-learning and
general industry information andinsights, come find me at the
maritime professor.
If you like these videos, letme know, comment, like and share
(38:36):
.
If you want to listen to theseepisodes on demand or if you
missed any previous episodes,check out the podcast .
If you prefer to see the video,they live on my YouTube page ,
presented by the maritimeprofessor.
And while you're at it, checkout the website.
And maritime professor, calm.
So until next week.
This is Lauren Beagen, theMaritime Professor and you just
listen to .
See you next time.
Did you see?
Congress sent a letter to theFMC telling them to hurry up
with detention and demergerulemaking?
We're gonna talk about it.
Welcome to By Land And By Sea,an attorney, breaking down the
weekend supply chain presentedby the Maritime Professor, me.
I'm Lauren Beagen, founder ofthe Maritime Professor and
Squall Strategies, and I'm yourfavorite maritime attorney.
(01:17):
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 withlegal advice and there is no
attorney-client privilegecreated by this video or this
podcast.
If you need an attorney,contact an attorney.
But before we get into thediscussion of the day, let's go
(01:40):
through my top three stories ofthe week.
Alright, story number one we'vebeen having it on here for a
while.
We're gonna continue to keep iton right.
We're watching the FMC closelyfor the release of any movement
on these three open rule makings.
We haven't seen much movementin a while.
It's 1pm on a Friday afternoon.
Hasn't happened so far.
(02:01):
Remember, the FMC is workingthrough three different rule
makings and one request forinformation.
The three rule makings theywere directed by Congress under
the Ocean Shipping Reform Act of2022 to undertake.
So those rule makings aredefining unreasonable or freezal
to dealer negotiate withrespect to vessel space
accommodations provided by anocean common carrier.
Number two billing practices ofdetention to merge.
(02:22):
We're going to talk a littlebit about that today.
And number three definingunfair, unjustly discriminatory
methods.
So those are the three rulemakings.
Congress is asking the FMC tohurry up on the billing
practices of detention to merge.
That's what we're going to talkabout shortly here.
But the other two definingunreasonable or freezal to
dealer negotiate with respect tovessel space accommodations.
(02:43):
Remember that one reopened fora supplemental notice of
proposed rulemaking.
Those comments closed over thesummer, that was July 2023.
And then this defining unfair,unjustly discriminatory methods.
The commission has said thatthey actually incorporated some
of that into that firstrulemaking that unreasonable or
freezal to dealer negotiate butthey haven't done a dedicated,
(03:03):
standalone rulemaking for thatthird element that Congress
actually asked them to do.
Right, they asked them toundertake these three very kind
of what they thought wasdistinct rule makings and the
FMC has kind of commingled thatthird one into the first one, as
as it made sense to do.
But they still have someelements that they want to hit
(03:24):
that will likely come in a thirdrulemaking this done.
Defining unfair, unjustlydiscriminatory methods we
haven't seen any language.
That doesn't mean they're notworking on it.
I can almost assure you thatthey are.
I'm sure they are, and eachtime Congress tells them to do
something, they're going to takeit seriously, right?
So those three rulemaking arewhat we're waiting on.
We really haven't had a lot ofmovement on any three of them in
a while, at least, certainlyfrom the FMC itself.
(03:47):
And then we have the requestfor information, the RFI that's
from the Maritime TransportationData Initiative.
We're still waiting to see anyadditional movement from that or
additional RFI rounds.
So that's what we're waiting on.
That's kind of our recap ofwhat we look at every week.
But story number two is also FMCrelated.
It's a very FMC day.
Story number two is a reminderof the hearings that are coming
(04:09):
up next week.
It's next week already.
So these are the shippingconditions.
The hearing is the shippingconditions in the Red Sea.
The FMC has announced thatthey're going to be having a
hearing, likely based on thehigh level of interest in what's
going on in the Red Sea.
They're going to be expandingthat to a second day is what
they said, because they've beenso much interest in probably
(04:30):
that hearing that they calledfor this is an informal hearing.
It's not part of a larger thingnecessarily.
It's an informal hearing.
They said that they want toseek the balance of viewpoints
of those presenting.
They also said, if needed,they're going to be inviting,
inviting panelists.
So the deadline to sign up, ifyou were interested in being a
panelist, was the 31st of twodays ago.
(04:51):
They are going to be kind offilling the slots of speakers.
Like I said, they were intendinginitially to have it just on
Wednesday, february 7th.
They said, if needed, theywould continue that on to the
eighth.
That's probably because theygot a lot of interest in this
hearing.
They want to maintain thebalance of the voices so even
though people may not have askedto be on the panel, the FMC
(05:14):
might be going out andsoliciting their involvement.
I think that sounds good, right?
They want to be fair.
They want to make sure that thevoices on the panel are kind of
all different areas of thesupply chains.
They get an accurate, completeview in this, like I said,
informal hearing on the shippingconditions in the Red Sea.
So again, what they're going tobe examining, what they said is
how conditions in the Red Seaand the Gulf of Aden are
(05:37):
impacting commercial shippingand the global supply chains.
The hearing is supposed to allowstakeholders to communicate
with the commission of howoperations have been disrupted
by attacks and commercialshipping steps taken in response
to these events and then theresulting effects.
I think this is going to bepretty interesting.
They're going to be webcastingthis out so you certainly can be
there in person.
(05:57):
It's going to be at the surfacetransportation board in DC, but
they are going to be livestreaming this for those who
can't participate in person.
All the panelists were requiredto be there in person, but you
don't have to be to watch it.
I believe they're going to beputting this on their YouTube
page, but I'll certainly addthat information as I get the
link.
But the FMC, don't forget,they're going to be having this
(06:19):
hearing in less than a week.
It's going to be five days fromnow.
It's next Wednesday, february7th, and potentially Thursday,
february 8th.
All right, story number three sothis is the story about
Congress asking the FMC to hurryup.
So on January 26th, so lastFriday, congressman Dusty
Johnson and Congressman JohnGaramendi wrote a letter to the
(06:42):
FMC urging the FMC to finalizethe rule on detention to merge
billing requirements.
They said, as required by ASRA,the Oceans and Superinformat of
2022, which was actuallyco-sponsored, right by these two
congressmen.
As we know, asra 2022 becamelaw June 16th 2022.
So, look, I've seen a fewpeople mentioning this letter
(07:03):
online.
I don't think it's a huge deal,right?
Sure, I'm playing it up fortoday, but I don't think it's a
huge, huge deal.
Yes, the FMC is very overdue onthe final rule of the D&D
rulemaking.
But in terms of thesecongressmen sending this letter,
they actually sent one lastyear too.
They sent a letter last January2023.
So it almost seems to suggestthat this is like a routine
(07:25):
letter that they send to the FMCencouraging the finalization of
the rulemaking, not to minimizethe fact that the congressmen
are telling them hurry up, guys.
But I don't think that this is.
You know, of course that's whatthe FMC is trying to do.
I don't think that this is theyou must hurry up letter.
The letter in January 2023, itwas actually a little premature,
(07:46):
I would say, as the Oceans andSuperinformat of 22 law had only
required the D&D rulemaking tobe finalized one year from the
date of enactment, so that wasJune 16th 2023.
They sent their letter January23, the first letter, and now
they're sending another letter ayear from that.
But the first letter was kindof preemptive to the deadline of
(08:09):
the D&D rulemaking.
Stated another way, the FMC wassupposed to have finished this
June 16th 2023, one year postthe enactment of Osrow, which
was June 16th 2022.
They didn't do that congress issaying look, hurry up, please.
The letter itself is actuallyprobably mostly what you'd
(08:30):
expect, right, and it doesstress the urgency, but it's not
overly condemning of theextended timeline, right.
So one part that I did findinteresting, though, is the
attention to the marine terminaloperators and ports.
It was a very short letter, itwas just about one page, but
they had like three, maybe fourparagraphs, but they had like
paragraph number two dedicatedto a discussion, a quick
(08:51):
discussion, of marine terminaloperators and ports.
So what this said from thecongressman?
In this letter, mr Stephen AEdwards, chief executive officer
of the Virginia Port Authority,testified on the urgency of
finalizing this critical rulebefore the House Committee
transportation andinfrastructures hearing on
January 17th 2024.
When asked what Congress can doto improve ocean shipping, mr
(09:13):
Edwards implored members of thecommittee to encourage the FMC
to finalize the Dermurge andDetention Rule.
He also testified that marineterminal operators and other
industry participants from topto bottom are eager for a
finalized rule so they cancomply with the intent of the
law.
Of course, right?
Yes, of course.
Of course.
The ports want it done, thecarriers want it done, the
(09:34):
shippers want it done.
Everybody wants this rulefinalized, but it was.
I just note that it wasinteresting that this came from
a port and maybe because theport is a US interest.
It's US based.
This was the Virginia PortAuthority.
But I find it interestingbecause Congressman Ockincloss
of Massachusetts sent a latefiled comment for the detention
(09:58):
Dermurge Dock and we talkedabout this previously that was
sent just this fall, where hesaid in that letter that he
didn't support versions of theOcean Shipping Reform Act of
2022 that included MTOs itsentities to be included in any
rulemaking on Dermurge orDetention Billing Practices, and
he said very plainly that theyshouldn't be included.
(10:19):
He said Marine TerminalOperator should choose whether
to charge Dermurge as well.
So he suggested that theincentive principle is being
misapplied by the FMC.
Didn't say that outright, buthe suggested that, which was
part of what the MTO shouldchoose whether to charge
Dermurge.
He's saying, look, the MTOsshouldn't be beholden to this
incentive rule.
They should be able to choosewhether to charge Dermurge and
(10:42):
when.
So all that to say I'm justinterested, right, like this is
starting to build a kind ofinteresting dynamic.
I'm interested to see if whatmakes it into the final language
, right, will the MTOs beincluded in the detention to
barge billing rulemaking?
I guess we're gonna find out,and hopefully soon.
(11:03):
Look, I would suspect that thiscongressional letter from Dusty
Johnson and John Garamendi mightincrease the urgency of the
final rules release, right,because they sent one in January
23,.
Now there's anyone January 24.
I mean, it just kind of bringsit fresh to the congressman's
(11:25):
mind.
Who enacted this law, who toldthe FMC to do this?
And I can imagine that the FMCis like I know we're trying,
we're trying, but maybeinternally they're like we gotta
get this out.
So all that had me thinkingthat maybe it's time we did a
little refresh of what the lastD&D billing practice is, what
the last round was, the noticeof proposal rulemaking.
(11:47):
We've covered this before.
I think we covered right whenit came out October 2022.
Did you hear that the lastmovement from the commission on
this was October 2022.
We are now in January 24, whichis a little deceptive because
we just right turned the page ofthe year.
It was just 23.
So we're actually just maybe 14months past the last movement
(12:11):
from the agency side.
We've talked about that.
They were addressing thecongressman's concerns, the late
filed comment.
They met.
They had an ex partecommunication that was put into
the docket.
Look, there's been stuffhappening.
But any sort of formal releaseof documents on the agency side
here, kind of in the furtheranceof this rulemaking was really
(12:35):
last done October 2022.
So, and again, we had 180 or socomments filed at the time.
So that's a lot.
So they had a lot to go through.
And then they probably weregetting close this fall and then
had that late filed commentfrom the congressman, aqua Claw,
saying look, take the MTOs andports out of it.
That probably threw a littlewrench into the whole process
(12:57):
and so they had to revise orrevisit or just kind of reassess
whether they were making theright decisions for the next
step, based on and I would argue, hopefully Congress.
Well, that one congressman'sletter and whoever else he had
supporting in it I think it wasa congressman from Texas who
(13:18):
also supported him Babin soweighing and kind of putting
that into the mix of things thatthey're considering.
But then also all the commentsright, 180 comments from the
actual stakeholders in theindustry.
So I think that they neededsome time to kind of digest the
newly submitted right, very latefiled from the fall letter from
(13:39):
the congressman, but then alsowhat they already kind of knew
they had maybe thought about.
So all of this to say let's getinto the meat and potatoes of
the day, I thought it would beappropriate to kind of refresh
what the proposal was at thelast stage for the notice of
proposed rulemaking.
So a little procedural history.
(13:59):
Remember the commission cameout in I believe it was April of
2022, saying they hadn'tadvanced notice of proposed
rulemaking on detention anddemerge.
They were asking questions inthe industry of where they
should go with this rulemaking.
That was before Congress toldthem to do that.
They said we need to tacklethis detention and demerge.
(14:20):
That was, I believe, spring of2022.
I believe it was April of 2022.
So a while ago, almost twoyears ago, the FMC kind of
started this on their own.
Osra passed June of 2022.
They said Congress said look,fmc, you definitely need to hit
this detention and demergerulemaking.
Fmc said thanks for your input,we already are.
It shifted a little bit thefocus on the next round that we
(14:43):
saw.
So the FMC incorporated theOsra requirements into the next
round, which was the notice ofproposed rulemaking, which is
where they start to propose sometext of what they want in the
proposal or what they'resuggesting in the proposal.
And that's the last stage thatwe had the notice of proposed
rulemaking for detention tomerge billing requirements.
(15:04):
Today let's just refresh itpretty quickly.
I mean it's pretty, there's alot going on in the proposal.
I encourage everybody to goback and check it.
Just.
I mean, just stay fresh on it,right?
So the proposed rule was sayingthat it would do four things.
One adopt minimum informationthat common carriers must
(15:24):
include in a demerge anddetention invoice.
That was listed.
Number two add to this listadditional information that must
be included in and with or witha detention to merge invoice.
And so I say that was listed inOsra.
So one was adopt minimuminformation that must be
included.
That was part of the Osra 13requirements.
(15:45):
Two they're saying they'regonna be adding a few things.
Three they're gonna furtherdefine prohibitive practices by
clarifying which parties may beappropriately built for D&D
charges.
And four establish billingpractices that billing parties
must follow when invoicing orD&D charges.
So the rule went through awhole thing of summarizing the
comments that were brought in onthe advanced notice of proposal
(16:07):
.
We'll make that first go around.
But what was actually in theproposal?
That's all I really wanna focuson.
I don't wanna get too down inthe weeds on the procedural
stuff of it, I just wanna kindahit the content.
So they go through a lot ofdefinitions.
The commission defines theterms to emerge into tension
broadly to include any chargeassessed by common carriers and
(16:28):
marine terminal operatorsrelated to the use of marine
terminal space or shippingcontainers.
So just because they includeD&D in their definition as
including MTOs, I think that'sokay, right?
What Congressman Aachenclossand Congressman Babin were
basically saying was we justdon't want the requirements to
be also put on the MTOs.
(16:49):
Okay, let me just keep going onthe content here, right?
So the FMC said in theirproposal the goal is to
encompass all charges having thepurpose or effect of demerge or
detention, regardless of thelabels given to those charges.
Remember, we saw that in theadvanced notice of proposal rule
making two years ago.
They're basically trying to saylook, if you're calling it per
diem or something else, doesn'tmatter if it's falling within
(17:09):
the scope of what is detentionor is demerge, I don't care what
you call it, that's what it is.
So they're trying to kindastreamline that by saying, look,
demerge or detention needs tostart being called that in the
appropriate instance.
So they said, under thisdefinition, a charge assessed by
a common carrier for the use ofcontainers outside of a marine
(17:32):
terminal would fall within thescope of this rule, regardless
of whether the charge was calleddetention, appropriately, or
per diem.
Similarly, a charge assessedbecause a container is taking up
terminal space would fallwithin the scope of this rule,
even if the billing party calledthe charge something other than
to merge.
So they kind of just simplysaid what to merge is taking up
(17:52):
space on the yard or terminaland what detention is the use of
the container outside of amarine terminal.
So they continue to say theproposed rules specifically
limits those definitions toshipping containers and excludes
charges related to otherequipment such as chassis,
because, depending on thecontext, per diem can refer to
(18:14):
containers, chassis or both.
They also say the commissionsupports defining to merge or
detention charges based on whatasset is the source of the
charge land or container, asopposed to the location of a
container inside or outside of aterminal.
The commission discouraged useof terms such as storage and per
diem as synonyms for demurgeddetention because those terms
add additional complexity.
(18:35):
So what we saw throughout theproposed rulemaking, the NPRM,
was the commission really triedto simplify where they could.
There was really an intentionand they kept saying in the
language that they were tryingto simplify things.
So again they go on to alsodefine build party.
(18:55):
So the build party was meaningthe person receiving the
demurged or detention invoiceand who was responsible for the
payment of any encourageddemurged or detention charge.
In the commission's view, thisproposed definition would best
capture the intended scope ofthis term and eliminate any
potential ambiguity to itscoverage.
They go on to explain buildparty a little bit more, where
(19:16):
they said the proposed rulewould define the billing party
as meaning well, that was buildparty.
Then they go on to definebilling party and they kind of
explain these a little bitfurther down in the proposed
rule.
So the billing party, meaningthe VOCC, the NVCC or the MTO
who issues a demurged ordetention invoice, that's the
billing party.
I mean, these are kind of basicbut they make sense.
(19:37):
So they wanted to define buildparty billing party.
Billing dispute would mean anydisagreement with respect to the
validity of the charges or themethod of their invoicing raised
by the build party or theiragent to the billing party.
This proposed definition andmore generally, this proposed
rule does not indicate apreference or requirement for
the format in which a disputemay be raised.
(19:58):
Instead, the commissionproposes a broad definition that
incorporates all types ofdisputes raised by a billing
party, a build party, uponreceiving and demurged or
detention invoice, that's abilling dispute.
So I will add look, the FMCreally encourages dispute
mechanisms away.
For the build party dispute,the charge and not just a junk
mechanism is something that Ithink that the FMC was kind of
(20:20):
trying to get at with theexplanations here.
So, going into a little bitmore of the content, going past
some of the definition, they gointo properly issued invoices.
So under the proposed rule, aproperly issued invoice is
issued only to the person thathas contracted with the billing
party for the carriage of goodor space to store cargo and is
(20:41):
therefore the person responsiblefor the payment of any
encouraged D&D charge.
They clarify that that's oftenthe shipper of records.
So the proposed rule wouldprohibit billing parties from
issuing D&D invoices to personsother than the person for whose
account the billing partyprovided ocean transportation or
storage.
So they're saying look, we justwant this to be streamlined.
(21:05):
They said in the A&PRM, theadvanced notice, the first round
, many commenters described acurrent widespread practice
where the billing party sendsthe invoice to multiple parties,
most of whom are not therecipient of the service, giving
rise to the invoice charge.
So they said that basically,with that current system,
parties who did not negotiatecontract terms with the billing
party are nonetheless bound bythem, and that creates
(21:27):
additional confusion andhardship.
So they said so said in anopposite way.
The FMC wants to see only thedirect contractual relationship
and they said mostly this wasbecause they know the terms of
the contract.
If anything does go wrong andshouldn't need to be disputed,
they want that directcontractual relationship.
That's what they're proposing.
They also say in the currentsystem, invoicing multiple
(21:52):
parties can result induplicative payments, which
further complicates resolvinginvoice disputes, because now
you have multiple payments goingin and so you're creating
multiple new disputes of tryingto get payment back, waivers,
all of those things.
So the commission said that theybelieve prohibiting billing
parties from issuing demergedattention invoices to persons
(22:12):
with whom they do not have agenuine commercial relationship
will similarly benefit thesupply chain.
When D&D invoice disputes doarise, the bill parties in a
better position than thirdparties such as truckers and
customs brokers to analyze theaccuracy of the charge right.
So they said practically theproposed rule would prohibit
billing parties from invoicingmotor carriers or customs
(22:34):
brokers.
Although a motor carrier couldpay on behalf of a billed party,
the motor carrier would not beliable for those charges and
could not be penalized fornon-payment of charges.
They're trying to streamlinethis.
They also said during thisproposed rulemaking stage that
they wanted feedback on that.
They really they wanted a lotof comments to talk about that
(22:55):
and we went through some ofthose comments in subsequent
episodes.
But again, this is kind of arefresher for what's in the
proposal.
As of October 2022.
So you're saying, only theperson who contracted with
Common Carrier for the carriageof goods or storage of goods may
be issued an invoice.
There are a variety of shippingarrangements that allocate risk
(23:18):
, obligations and cost betweenthe ship and the consignee named
on the bill of lading.
Considering these arrangements,the commission, like I said,
was specifically seeking commenton whether it would be
appropriate to also include theconsignee named on the bill of
lading as another person who mayreceive a demergered detention
invoice.
They said, in sum, the proposedrule should simplify the
current system and ensure thatthe person with the most
(23:38):
knowledge about the shipment andwho is in the best position
understand and dispute thecharge receives a D&D invoice.
So again, they really wantedthis to be simplified.
I'm interested to see if thatsticks.
There's so many operationalconsiderations here at play.
But I'm interested to see ifthat sticks, based on the
comments, based on kind of thefeedback of the stakeholders.
(24:01):
Like I said, the FMC seems tobe moving in the spirit of
simplicity.
So minimum billing informationthis is kind of like the root of
this whole rulemaking.
Certainly they were filling inaround it, but this is the
detention to merge billinginvoicing requirements.
So the proposed rule requiresthe 13 items required for an
invoice from ASRA.
I remember those were the datethe container is made available,
(24:24):
the port of discharge, thecontainer number for export
achievements, the earliestreturn date, allowed free time
and days, start date of freetime and date of free time.
This is all under ASRA.
These are the 13 requirementsthe applicable detention to
merge rule in which the dailyrate is based, the applicable
rate or rates per the applicablerule, the total amount do and
(24:45):
the email, telephone number orother appropriate contact
information or request formitigation of fees for questions
or request for mitigation offees.
And then they also slid in thesetwo statements a statement that
the charges are consistent withany of FMC's rules with respect
to detention to merge and astatement that the common
carriers performance did notcause or contribute to the
underlying invoice charges.
That last one I've always kindof taken a little bit issue with
(25:07):
because it says a statementthat the common carriers
performance did not cause orcontribute to the underlying
invoice charges.
The common carrier isn't alwaysthe one issuing the invoice and
so if it's not the commoncarrier issuing the invoice, why
should they say the commoncarrier who's not issuing did
(25:27):
not cause or contribute?
It just feels a little.
I don't know.
I've never loved that one.
It's a little bit unclear, it'sa little bit.
It can be a little bitconfusing there and potentially
a little bit incorrect.
But anyway, so we move on.
So the proposed rule, as the FMCsaid, would also require
billing parties to includeminimum information in addition
(25:49):
to those 13 requirements.
So the FMC would like toinclude specific identifying
timing, rate and disputeresolution information and their
requesting comments on whetherit should require billing
parties to include all theproposed information in demerge
and detention invoices.
If the commenter opposes any ofthe proposed requirements, they
should identify the informationin the obstacles or burden.
(26:11):
So these were what they wereasking for comments on.
If the commenter supports theproposed required information,
they should explain how thespecific information will assist
them in verifying the accuracyof the charge or ascertaining
how the charge was calculated.
And I think that last piece isimportant because they really
were trying to get to accuracyof the invoice, accuracy of the
charges and checking workascertaining how the charge was
(26:34):
calculated.
So identifying information theproposed rule clarifies that
billing parties must onlyinclude ports of discharge for
import shipments, becauseproviding the port of discharge
on a demergered detentioninvoice would be less useful for
exports.
So they're kind of clarifyingsome of the congressional ASRA
language, right.
They said the proposed rulewould also require billing
(26:56):
parties to include the bill oflading number and the basis for
why the bill party was invoicedand thus liable for the charge.
That last one is a little bitinteresting, right, the basis
for why the bill party wasinvoiced.
So that kind of goes back tothat direct contractual
relationship.
Why did they send it to thebill party?
Timing information this waskind of an interesting piece and
(27:18):
I'm going to be interested tosee where they end up on this
whenever the final rule isreleased.
But, like I said, hopefullythat letter from Congress will
scoot things along.
But so timing information in thecontent of the D&D rulemaking,
the proposed rule from October22.
(27:39):
So it says the invoice mustcontain sufficient information
to enable the bill party toidentify the relevant time for
which the charges apply and theapplicable due date for the
invoice charges, including thebilling date, the billing due
date, the allowed free time indays, the start date of free
time, the end date of free timefor imports, the container
(27:59):
availability date, for exports,the earliest return date and the
specific date for which itemerges attention or charge.
So all of that was kind of acombo of Osrum, the 13 invoice
requirements and then theproposed rule modifying a few
right, so modifying and sayingfor imports the container
availability dates and forexports the earliest return date
(28:20):
, which actually Congress dididentify at the earliest return
date under exports.
So the commission continuedOSRA 22 requires the invoices
include the date the containersmade available for export
achievements, the earliestreturn date, and it kind of goes
through a few of the differentthings that OSRA had required.
But it said the proposed ruleclarifies that the billing
parties must only providecontainer availability date for
(28:42):
import shipments.
Like we're saying, theyclarified that piece.
The proposed rule would alsorequire billing parties to
specify the dates for whichdemerge and detention charges
accrued, the billing date andthe billing due date.
And this is where it's kind ofall building up.
This is where it was reallyinteresting, right?
So they were talking about the30 days and the 60 days, but
they also talked about clockstopping events.
(29:04):
So instead of requiring billingparties to identify specific
clock stopping events on D&Dinvoices, the proposed rule
would require the billing partyto identify the specific dates
on which they charge D&D.
So there was some talk aboutclock stopping events and they
didn't actually go intospecifics of what those were and
I think a lot of people wantsome clarity on that.
But I just don't know if it'sgonna come in the D&D what a
(29:26):
clock stopping event is and thejustification for that.
But what this is saying?
Because they're trying to getthe guardrails in place for
billing practices.
They're saying look, just giveus the dates.
If you have a clock stoppingevent, that's fine, but if it
goes Monday to WednesdayThursday was a clock stopping
event and then Friday to Tuesday, then just show us those dates
(29:48):
on the invoice, the only thedates that you are actually
billing for.
Break it up, chunk it up sothat we can see.
The FMC is also proposing in therule to incorporate the intent
of ASRA to shift the burden tobilling parties to justify the
demurgered detention, whileallowing the billing parties to
correct invoices when theintervening events are not
initially known to them.
(30:08):
So they're saying look, theburden is on the billing parties
to justify D&D charges, butthey can also correct invoices.
And so the proposed rule wouldrequire the billing party to
include the invoice, billingdate and payment due date.
And the proposed requirement toinclude the billing date and
the payment due date will enablethe bill party and the
commission to confirm that thebilling parties are adhering to
(30:30):
the proposed billing practicesoutlined in the proposed
language.
And I thought that thisproposed language was
interesting because they don'ttalk about this piece as much in
the text, or they certainlydon't kind of highlight it.
So this is, in the proposedlanguage, the actual text of
what they proposed the rule bechanged to.
(30:52):
So it said section 541.7,.
If you scroll down to the very,very end of the proposed text
you can see where they actuallyput out what the rule is
supposed to look like.
So it's an issuance of D&Dinvoices.
So part A a billing party mustissue a D&D invoice within 30
days from the date on which thecharge was last incurred.
So this is what is new in kindof the FMC's rulemaking from
(31:16):
even the first stage.
They're proposing a 30 day fromwhen the charge was last
incurred to when the invoice hasto arrive If the billing party
does not issue D&D invoiceswithin the required timeframe.
So if the invoice doesn't goout within that 30 days, then
the bill party is not requiredto pay the charge.
Be careful, though, one.
(31:38):
This is still a proposal, thisisn't a rule yet, but that's
kind of interesting.
They're saying look, they'regonna absolve the bill party of
having to pay it, because ifit's after 30 days it's too long
, it took too long.
But subpart B this is what Iwant you to focus on.
Subpart B, if the billing partyinvoices the incorrect party.
(32:00):
So if the invoice goes to theincorrect party, the correct
bill party must receive aninvoice within 30 days from the
date the incorrect partydisputes the charges with the
billing party.
So the carrier issues theinvoice.
Let's say in this example, theysend it to.
Well, okay, we'll use the termsof the FMC.
(32:24):
The billing party issues theinvoice, right, they send it off
.
It goes to a billed party.
Turns out they send it to thewrong person.
The billed party says they filea dispute they say I'm not
paying this, this isn't my stuff.
So the billing party says ooh,all right, yep, that went to the
wrong person.
From the date that thatincorrect billed party received
(32:45):
that invoice and from the datethat they dispute, the billing
party has 30 days to correct it.
So basically, from the momentthat they find out it went to
the wrong person, they have 30days to send it to the correct
person.
So an invoice to the correctbilled party must be issued
within 60 days after the chargeswere last incurred.
(33:05):
So they send it to the wrongperson.
The wrong person said nope, yousend it to the wrong person,
I'm not paying this.
30 days you get from thatmoment to send it to the right
person.
But look, if it's 60 days fromwhen the charge actually
happened.
So let's say they send it tothe wrong person again and then
(33:28):
you get the 30 days.
If it's 60 days from the datethat the charge last occurred to
the wrong person, then theysend it to the wrong person.
The build party the correctbuild party needs to receive it
within 60 days.
If the build party does notreceive the D&D invoice within
the required time frame, thenit's not required to pay the
charge.
Let me say that again Billingparty sends invoice, they send
(33:52):
it to the wrong person.
Wrong person says nope, wrongperson.
From that date the billingparty has 30 days to send it to
the correct person.
But if they mess it up again orfor some reason, more than 60
days has happened from the lastthe last charge To when the
(34:13):
correct person gets it.
The FMC, under this proposedlanguage again proposed language
is saying Then it's notrequired to pay the charge.
The build party, if theyreceive it, if the correct build
party gets the invoice Morethan 60 days because it wasn't
their fault that it kept goingto the wrong person, if it's
more than 60 days under proposedlanguage, the FMC is saying
(34:36):
that it's not required to paythe charge.
That's interesting.
I don't remember that beingreally highlighted the first
round, so again, today's all arefresher.
So what else is in the, whatelse was in this proposed
language that the Congressmanare now saying FMC, hurry up and
send us the final language rateinformation.
They're saying that they needto clarify With sufficient
(35:01):
details so that the bill, thebilling party should provide
sufficient details so that thebuild party is able to locate
the specific rate that shouldapply and confirm that the
invoice includes that specificrate.
They're also saying under theproposed rule, the invoice must
contain sufficient informationto enable the build party to
readily identify A contact towhom they may direct questions
(35:22):
or concerns or their dispute.
Right, so they're saying theproposed rule would require the
invoice to include an email, atelephone number or whatever
contact information forquestions or disputes, a Web
address of a publicly accessibleportion of the billing parties
website that provides a detaileddescription of information or
documentation that the buildparty must provide to
(35:44):
successfully request mitigationor dispute.
So the kind of saying put outthere who to contact, put out
there what information Needs tobe provided.
So that's all up front.
And define time frames thatcomply with the billing
practices on this part.
So they want some clarity overthis butte section.
(36:04):
And that's what they're puttingin this proposal.
Billing practices, again, theproposed 30-day time frame to
issue the D&D invoice.
And then this is the piecethat's important once the
correctly issued invoice goes tothe correct build person, build
party, then the build party has30 days to Basically stake a
(36:26):
dispute.
Right, they have 30 days to saythat they want to dispute the
charges.
So it's interesting, right,this is it's.
I like this 30-day thing.
I think that we're having somesort of a time frame on it
because otherwise it gets tooaging.
So they're saying 30 days fromwhen the last charge happened.
The billing party needs to sendthe invoice.
30 days from when that invoiceis received to the correct build
(36:49):
party.
That build party has to eithersubmit their dispute or pay it.
So, like I said, we have that30 days.
We kind of went at length ofthe, the actual text.
So go check out section 541.7of the proposed text as well,
because that's where they talkabout the Incorrect versus
correct party and thosetimelines.
(37:11):
So today was just a refresher.
Right, all of this is stillproposed language.
This was just generaldiscussion, not legal advice.
This is simply refreshing yourmemory of some of the proposals
we saw in that last notice ofproposed rulemaking, of the
detention Dormage rulemaking,and the reason why we brought
all this up was simply becauseCongressman Dusty Johnson and
(37:33):
congressman John Garamendi senta letter to the FMC telling them
to hurry up.
So it it just kind of.
It just Got in my head thatit's been a while since we last
looked at this and so I thoughtyou might appreciate a look back
.
I know that I did, looking backat all the the language here.
Go take a look yourself.
This is general information,but if you are interested in the
(37:55):
detention to merge rulemaking,I very, very much encourage you
to go check it out yourself.
Go refresh the language in yourown mind so that you know what
the language was at the lastround.
Maybe even go check out some ofthe comments.
There were a lot of comments,but there was some really great
information coming through inthose comments as well.
So, as always, the guidance hereis general for educational
(38:15):
purposes.
It should not be construed bylegal advice directly related to
your matter.
If you need an attorney,contact attorney.
But if you do have specificlegal questions, feel free to
reach out to me at my legalcompany, school strategies.
Otherwise, for the non legalquestions, the e-learning and
general industry information andinsights, come find me at the
maritime professor.
If you like these videos, letme know, comment, like and share
(38:36):
.
If you want to listen to theseepisodes on demand or if you
missed any previous episodes,check out the podcast .
If you prefer to see the video,they live on my YouTube page ,
presented by the maritimeprofessor.
And while you're at it, checkout the website.
And maritime professor, calm.
So until next week.
This is Lauren Beagen, theMaritime Professor and you just
listen to .
See you next time.
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