Proposed Rule2024-21586
Ocean Carrier Equipment Management Association; Denial of Petition for Delay of Effective Date of the Demurrage and Detention Billing Requirements Final Rule
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
September 24, 2024
Issuing agencies
Federal Maritime Commission
Abstract
The Federal Maritime Commission (FMC) is denying a petition submitted by the Ocean Carrier Equipment Management Association requesting that FMC delay the effective date of the agency's "Demurrage and Detention Billing Requirements" final rule. This document includes the contents of the actual denial with minor modifications to meet publication requirements for the Federal Register.
Full Text
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<title>Federal Register, Volume 89 Issue 185 (Tuesday, September 24, 2024)</title>
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[Federal Register Volume 89, Number 185 (Tuesday, September 24, 2024)]
[Proposed Rules]
[Pages 77787-77789]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-21586]
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FEDERAL MARITIME COMMISSION
46 CFR Part 541
[Docket No. FMC-2024-0010]
Ocean Carrier Equipment Management Association; Denial of
Petition for Delay of Effective Date of the Demurrage and Detention
Billing Requirements Final Rule
AGENCY: Federal Maritime Commission.
ACTION: Denial of petition for rulemaking.
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SUMMARY: The Federal Maritime Commission (FMC) is denying a petition
submitted by the Ocean Carrier Equipment Management Association
requesting that FMC delay the effective date of the agency's
``Demurrage and Detention Billing Requirements'' final rule. This
document includes the contents of the actual denial with minor
modifications to meet publication requirements for the Federal
Register.
DATES: The Commission served an order denying the petition on September
17, 2024.
ADDRESSES: To view background documents or comments received, you may
use the Federal eRulemaking Portal at <a href="http://www.regulations.gov">www.regulations.gov</a> under Docket
No. FMC-2023-0010.
FOR FURTHER INFORMATION CONTACT: David Eng, Secretary; Phone: (202)
523-5725; Email: <a href="/cdn-cgi/l/email-protection#83f0e6e0f1e6f7e2f1fac3e5eee0ade4ecf5"><span class="__cf_email__" data-cfemail="bdced8decfd8c9dccfc4fddbd0de93dad2cb">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION: On May 28, 2024, the date the Federal
Maritime Commission's (Commission or FMC) ``Demurrage and Detention
Billing Requirements'' final rule, 89 FR 14330 (February 26, 2024),
went into effect, the Ocean Carrier Equipment Management Association
(OCEMA) filed with the Commission a petition under 46 CFR 502.51(a) for
an extension of the effective date of the rule by at least 90 days. On
September 17, 2024, the Commission denied the petition for the reasons
below.
I. Background
On June 16, 2022, the Ocean Shipping Reform Act of 2022 (OSRA 2022)
was enacted into law.\1\ Section 7 of the Act prohibits common carriers
from issuing an invoice for demurrage or detention charges unless the
invoice includes specific information required by the statute, and any
additional information required by the Commission through regulation.
OSRA 2022 mandated that the Commission, by June 16, 2023, issue a final
rule ``further defining prohibited practices by common carriers, marine
terminal operators, shippers, and ocean transportation intermediaries
under [46 U.S.C. 41102(c)] regarding the assessment of demurrage or
detention charges.'' \2\
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\1\ Public Law 117-146, 136 Stat. 1272 (2022).
\2\ Section 7, codified at 46 U.S.C. 41102.
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On February 26, 2024, the Commission published the Demurrage and
Detention Billing Requirements final rule in the Federal Register, 89
FR 14330. With certain limited exceptions, the Administrative Procedure
Act (APA) requires rules to have an effective date no sooner than 30
days after publication in the Federal Register, 5 U.S.C. 553(d). The
rule had an effective date of May 28, 2024, 90 days after publication,
except for 46 CFR 541.6 and 541.99.\3\ The effective date of those two
provisions was delayed pending approval of the associated Collection of
Information by the Office of Management and Budget (OMB) as the
Paperwork Reduction Act requires OMB to approve collections of
information before an agency can enforce collection requirements.\4\
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\3\ Section 541.6 sets out substantive requirements for what
billing parties must include in their demurrage and detention
invoices. It added several provisions in addition to those required
by OSRA 2022. While the statutory invoice elements are self-
implementing and immediately became effective upon passage of OSRA
2022, regulated entities were not required to comply with the
additional elements imposed by the Commission until 46 CFR 541.6
went into effect. Section 541.99 is an administrative provision that
provides additional public notice of OMB approval of the collection
of information; it does not impose requirements on the public.
\4\ Paperwork Reduction Act (44 U.S.C. 3501-3521).
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On May 9, 2024, the Commission issued a Correction to the preamble,
89 FR 39569. At page 14336 in the preamble to the February 26, 2024,
final rule, the Commission responded to a comment requesting that the
FMC revise the definition of ``billed party'' to address situations in
which vessel-operating common carriers (VOCCs) enter into written
contracts with motor carriers that use containers in the transportation
of goods. The Commission responded by declining to adopt this proposed
change. The supporting discussion explaining why the request was denied
was intended to explain that the rule only addresses carrier-trucker
relationships on through
[[Page 77788]]
bills of lading. The Commission meant this to be understood in the
context of its statement in the final rule that ``the FMC's
jurisdiction, and thus this rule, would apply only to cargo moved
inland under a through bill of lading and contracts between a VOCC
[and] a motor carrier not based on a through bill of lading would
likely be outside the scope of this rule.'' The Correction amended the
preamble accordingly. The Correction did not amend any of the
regulatory text of the final rule.
On May 14, 2024, following approval of the Collection of
Information by OMB, the Commission announced in the Federal Register
that 46 CFR 541.6 and 541.99 would become effective on May 28, 2024,
the same date as the other provisions of the rule.\5\
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\5\ 89 FR 41895 (When processing the document, the Office of the
Federal Register incorrectly specified the effective date in the
DATES section. As a result, the DATES section read that the
``correction is effective May 14, 2024'', even though the body of
the document itself correctly stated that the provisions would be
effective May 28, 2024. The Office of the Federal Register issued a
correction on May 24, 2024, 89 FR 45772, stating that the DATES
section should have read that the rule was effective on May 28,
2024. The Commission did not receive any questions from the public
concerning this error.).
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II. Petition for Delayed Effective Date
On May 28, 2024, the date the final rule went into effect, the
Commission accepted for filing a petition from OCEMA requesting an
extension of the effective date of the rule by at least 90 days.\6\
Petitioner argues that the requested extension is necessary ``to allow
time for stakeholders to revise their practices based on the revised
guidance provided in the [May 9, 2024] Correction and to address
questions raised by the Correction.'' Petitioner asserts that ``as a
result of an apparent reversal in the FMC's position with regard to the
assessment of detention and demurrage to motor carriers, VOCCs are now
put in a position of needing to unwind and/or further revise the
arrangements they made based on the FMC's previous guidance.'' OCEMA
claims that as a result of the Correction, VOCCs only had 19 days to
prepare to come into compliance with the rule and that they need more
time. It further asserts that the Correction did not fully clarify the
FMC's position with respect to invoicing motor carriers and that
additional time is needed to understand the rule's requirements.
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\6\ 89 FR 14330.
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III. Responses and Public Comment to the Petition
A petitioner seeking the amendment or repeal of an FMC rule must
provide proof of service on all persons named in/that participated in
such a rule,\7\ and those served have the opportunity to respond.\8\
OCEMA provided such proof of service. No replies were filed.
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\7\ 46 CFR 502.51(a) and 502.115.
\8\ 46 CFR 502.21(a).
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On June 10, 2024, the Commission published a notice of filing of
the petition in the Federal Register and solicited comments from the
interested public.\9\ The comment period closed on July 1, 2024.
Seventeen comments were submitted. Sixteen of the commenters said that
the petition should be denied. One commenter, the National Customs
Brokers and Forwarders Association of America (FMC-2024-0010-0018),
proposed that, rather than an extension, the FMC should implement an
interim period of ``informed compliance,'' which would allow all ocean
industry stakeholders to work toward full compliance and assess the
practical applications of these new demurrage and detention billing
requirements. The association noted that such ``informed compliance''
period would mirror U.S. Customs and Boarder Protection practice with
respect to new Customs regulations. Commenters supporting denial of the
petition cited concerns about an extension leading to massive confusion
and a high administrative burden given that the rule has already gone
into effect. Some commenters also said that an extension is not
necessary because carriers are already complying with the rule.
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\9\ 89 FR 48865.
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IV. Analysis
Delay of an effective date of a rule is itself a substantive
rulemaking action that is subject to the requirements of 5 U.S.C. 553
of the Administrative Procedure Act.\10\ This includes the requirement
that an agency must engage in the notice and comment process in
accordance with 5 U.S.C. 553(b)(B) prior to delaying a rule's effective
date unless it finds good cause not to do so.\11\ Section 705 of the
Administrative Procedure Act permits an agency to ``postpone the
effective date'' of a rule, without providing notice-and-comment, if
the agency ``finds that justice so requires.'' However, 5 U.S.C. 705
does not permit an agency to suspend, without notice-and-comment, a
rule that is already in effect.\12\
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\10\ See, e.g., Clean Air Council v. Pruitt, 862 F.3d 1 (D.C.
Cir. 2017) (``EPA's stay, in other words, is essentially an order
delaying the rule's effective date, and this court has held that
such orders are tantamount to amending or revoking a rule.''); see
also FCC v. Fox Television Stations, Inc., 556 U.S. 502 (2009)
(``The [APA] makes no distinction, however, between initial agency
action and subsequent agency action undoing or revising that
action.'').
\11\ E.g., Nat. Res. Def. Council v. Nat'l Highway Traffic
Safety Admin., 894 F.3d 95, 113 (2d Cir. 2018) (``Under the APA,
before promulgating a rule an agency must publish `[g]eneral notice
of proposed rule making . . . in the Federal Register,' as well as
`an opportunity to participate in the rule making through submission
of written data, views, or arguments.' These requirements apply with
the same force when an agency seeks to delay or repeal a previously
promulgated final rule. A basic principle of administrative law is
that `an agency issuing a legislative rule is itself bound by the
rule until that rule is amended or revoked.' Similarly an agency
``may not alter such a rule without notice and comment,'' nor does
the agency have any inherent power to stay a final rule . . . A
significant body of authority reinforces this proposition.''
citations omitted); NRDC v. EPA, 683 F.2d 752, 761-62 (3d Cir. 1982)
(``[S]uspension or delayed implementation of a final regulation
normally constitutes substantive rulemaking under APA Sec. 553.'');
See also FCC v. Fox Television Stations, Inc., 556 U.S. 502, 515
(2009) (``The [APA] makes no distinction . . . between initial
agency action and subsequent agency action undoing or revising that
action.'').
\12\ Ctr. for Biological Diversity v. Regan, 691 F. Supp. 3d 1,
8 (D.D.C. 2023), judgment entered, No. CV 21-119 (RDM), 2024 WL
1591671 (D.D.C. Apr. 12, 2024) (``The Court has also previously
suggested--and now holds--that section 705 permits an agency to
`postpone the effective date' of a rule that has not yet taken
effect, but does not permit an agency to suspend, without notice and
comment, a rule that is already in effect. As the Court explained in
CBD I, that understanding of Section 705 comports with: (1) the D.C.
Circuit's non-precedential decision in Safety-Kleen Corp. v. EPA,
1996 U.S. App. LEXIS 2324, at 2-3 (D.C. Cir. Jan. 19, 1996); (2) the
usual APA rule, which `mandate[s] that agencies use the same
procedures when they amend or repeal a rule as they used to issue
the rule in the first instance;' and (3) the plain language of
Section 705, which does not grant agencies the same broad equitable
authority vested in courts but, rather, merely permits agencies to
`postpone'--that is, `put off for a later time'--agency action that
is subject to judicial review. CBD I, 597 F. Supp. 3d at 204-05
(first quoting Perez v. Mortg. Bankers Ass'n, 575 U.S. 92, 101, 135
S.Ct. 1199, 191 L.Ed. 2d 186 (2015); and then quoting Postpone,
Merriam-Webster Dictionary Online, <a href="https://www.merriam-webster.com/dictionary/postpone">https://www.merriam-webster.com/dictionary/postpone</a> (last visited Mar. 28, 2022)) . . . Court now
holds that an agency's authority to `postpone the effective date' of
a rule ends when the rule takes legal effect.'').
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After thorough review of the petition requesting that the Demurrage
and Detention Billing Requirements final rule's effective date be
delayed, the Commission denies the petition for the following reasons.
1. Delaying the effective date of the Demurrage and Detention
Billing Requirements final rule, as requested by the Petitioner, would
directly impede the explicit instructions of Congress. OSRA 2022
mandated that the Commission issue a final rule ``further defining
prohibited practices by common carriers, marine terminal operators,
shippers, and ocean transportation intermediaries under [46 U.S.C.
41102(c)] regarding the assessment of demurrage or detention charges .
. . not later than [June 16, 2023].'' Despite best efforts, the
[[Page 77789]]
Commission was unable to issue the Demurrage and Detention Billing
Requirements final rule until February 26, 2024. This was in large part
because the agency needed the time, as required by the Administrative
Procedure Act, to carefully analyze and respond to the 191 public
comments submitted on the proposed rule. In the interest of fairness,
based on those public comments, the agency granted an additional 60
days beyond the required 30-day period before the final rule became
effective, with the final rule having an effective date of May 28,
2024. Granting the Petitioner's request--which was not effectively
filed with the Commission until the day the rule went into effect--
would result in pushing the rule's effective date even further beyond
the explicit statutory deadline. Federal Register documents would need
to be drafted, and comments analyzed and responded to. If, after
analyzing comments on a notice of proposed rulemaking, the agency was
to move forward with a final rule to temporarily delay the effective
date, the final, permanent effective date of the rule would most likely
be at least two years past the specified Congressional deadline. Courts
have found that granting significant extensions to rules in direct
contradiction to clear statutory deadlines is ``in excess of statutory
jurisdiction, authority, or limitations, or short of statutory right,''
under 5 U.S.C. 706(2)(C). For example, in Sierra Club v. Pruitt, the
court found that the Environmental Protection Agency violated the
Formaldehyde Act by extending a rule's compliance deadline well beyond
the deadline set out in the statute.\13\
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\13\ 293 F. Supp. 3d 1050, 1060 (N.D. Cal. 2018) (``The clear
purpose of the Act and the plain meaning of its core provisions was
to set expeditious emission compliance standards (not to exceed 180
days past the promulgation of implementing regulations) and to allow
the sell off or use of preexisting noncompliant inventory but to
prohibit stockpiling. This clear purpose and plain meaning cannot be
reconciled with the EPA's suggestion that a year-long extension of
the designated date of manufacture in the sell-through provisions
permissibly leads to a commensurate year-long extension of the
mandatory compliance deadlines. The EPA's interpretation creates
inconsistency within the full text of the Act, renders the 180-day
compliance deadline superfluous, leads to the absurd result of
permitting the perpetual delay of the effectiveness of the
Formaldehyde Rule, and fails to satisfy the stated purpose of the
Act.''); cf. Pennsylvania v. DeVos, 480 F. Supp. 3d 47, 66 (D.D.C.
2020) (``And `when the statute authorizing agency action fails to
specify a timetable for effectiveness of decisions, the agency
normally retains considerable discretion to choose an effective
date.' '' (internal citations omitted).
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2. Petitioner asserts that the Correction created confusion about
what the rule requires of regulated parties, but that claim is
unpersuasive. While the Commission acknowledged in the Correction that
the original preamble language was potentially ``ambiguous'', the
Correction was not a ``reversal'' of position. The Correction was for
the preamble language only; it did not change any of the regulatory
text. The regulatory text is clear and unambiguous: ``A properly issued
invoice is a demurrage or detention invoice issued by a billing party
to: (1) The person for whose account the billing party provided ocean
transportation or storage of cargo and who contracted with the billing
party for the ocean transportation or storage of cargo; or (2) the
consignee.'' 46 CFR 541.4(a). A rule's preamble cannot be used to
create ambiguity and contradict regulatory text.\14\ As summarized by
the U.S. District Court for the District of Columbia in Texas
Children's Hosp. v. Azar: ``To be clear, the preamble to a statute or
rule may be used to help inform the proper interpretation of an
ambiguous text. The preamble cannot, however, be used to contradict the
text of the statute or rule at issue.'' \15\ Furthermore, the comments
submitted in response to this petition are counterweights to
Petitioner's claims. Sixteen of the seventeen comments that were
submitted in response to the Federal Register notice of the filing
petition argued that the petition should be denied and that billing
parties are largely in compliance with the rule.
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\14\ Texas Children's Hosp. v. Azar, 315 F. Supp. 3d 322, 334
(D.D.C. 2018).
\15\ Id. (citations omitted).
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3. Granting the requested delay would lead to greater confusion in
the regulated community than what the Petitioner claims was caused by
the Correction. Because the rule would have to continue in effect until
such time as a delay could be effectuated by rulemaking, the rule would
be in effect at least six months, then be temporarily stayed, and then
go back into effect. As commenters discussed in their submissions, this
has the potential for massive disruption and confusion, as billing
parties switch between systems, and would likely raise questions about
what rules apply to any given transaction.\16\
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\16\ E.g., comments of the Shippers Coalition (FMC-2024-0010-
0001), ContainerPort Group Inc. (FMC-2024-0010-0002), Agriculture
Transportation Coalition (FMC-2024-0010-0011), Intermodal Motor
Carriers Conference (FMC-2024-0010-0012).
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4. By the time such a delay could take effect, after completion of
the required administrative procedures, the Petitioner's justification
for delay would no longer be present, as the Petitioner would have had
ample time to make any necessary adjustments to their practices.
V. Conclusion
For the reasons explained above, the Commission denies the petition
filed by the Ocean Carrier Equipment Management Association for a delay
of the effective date of the Demurrage and Detention Billing
Requirements final rule.
By the Commission.
David Eng,
Secretary.
[FR Doc. 2024-21586 Filed 9-23-24; 8:45 am]
BILLING CODE 6730-02-P
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