Interpretive Rule on Demurrage and Detention Under the Shipping Act, 48850-48856 [2019-19858]

Agencies

• Federal Maritime Commission

[Federal Register Volume 84, Number 180 (Tuesday, September 17, 2019)]
[Proposed Rules]
[Pages 48850-48856]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-19858]


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FEDERAL MARITIME COMMISSION

46 CFR Part 545

[Docket No. 19-05]
RIN 3072-AC76


Interpretive Rule on Demurrage and Detention Under the Shipping 
Act

AGENCY: Federal Maritime Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Federal Maritime Commission is seeking public comment on 
its interpretation of the Shipping Act prohibition against failing to 
establish, observe, and enforce just and reasonable regulations and 
practices relating to or connected with receiving, handling,

[[Page 48851]]

storing, or delivering property with respect to demurrage and 
detention. Specifically, the Commission is providing guidance as to 
what it will consider in assessing whether a demurrage or detention 
practice is unjust or unreasonable.

DATES: Submit comments on or before: October 17, 2019.

ADDRESSES: You may submit comments, identified by the Docket No. 19-05 
by the following methods:
     Email: [email protected]. Include in the subject line: 
``Docket 19-05, Demurrage & Detention Comments.'' Comments should be 
attached to the email as a Microsoft Word or text-searchable PDF 
document. Only non-confidential and public versions of confidential 
comments should be submitted by email.
     Mail: Rachel E. Dickon, Secretary, Federal Maritime 
Commission, 800 North Capitol Street NW, Washington, DC 20573-0001.
     Instructions: For detailed instructions on submitting 
comments, including requesting confidential treatment of comments, and 
additional information on the rulemaking process, see the Public 
Participation heading of the SUPPLEMENTARY INFORMATION section of this 
document. Note that all comments received will be posted without change 
to the Commission's website, unless the commenter has requested 
confidential treatment.
     Docket: For access to the docket to read background 
documents or comments received, go to the Commission's Electronic 
Reading Room at: https://www2.fmc.gov/readingroom/proceeding/19-05/, or 
to the Docket Activity Library at 800 North Capitol Street NW, 
Washington, DC 20573, 9:00 a.m. to 5:00 p.m., Monday through Friday, 
except Federal holidays. Telephone: (202) 523-5725.

FOR FURTHER INFORMATION CONTACT: Rachel E. Dickon, Secretary; Phone: 
(202) 523-5725; Email: [email protected].

SUPPLEMENTARY INFORMATION:

I. Introduction

    In 2018, the Commission initiated a non-adjudicatory fact-finding 
investigation, Fact Finding Investigation No. 28, into the conditions 
and practices relating to detention, demurrage, and free time.\1\ On 
December 7, 2019, the Commission voted to accept the investigation's 
Final Report, in which the Fact-Finding Officer found that:
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    \1\ Fact Finding Investigation No. 28 Order of Investigation 
(Mar. 5, 2018) (``Order of Investigation''), https://www2.fmc.gov/readingroom/docs/FF%20No.%2028/ff-28_ord2.pdf/.
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     Demurrage and detention are valuable charges when applied 
in ways that incentivize cargo interests to move cargo promptly from 
ports and marine terminals;
     All international supply chain actors could benefit from 
transparent, consistent, and reasonable demurrage and detention 
practices, which would improve throughput velocity at U.S. ports, allow 
for more efficient use of business assets, and result in administrative 
savings; and
     Focusing port and marine terminal operations on notice of 
actual cargo availability would achieve the goals of demurrage and 
detention practices and improve the performance of the international 
commercial supply chain.\2\
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    \2\ Fact Finding Investigation No. 28 Final Report (``Final 
Report''), https://www2.fmc.gov/readingroom/docs/FF%20No.%2028/FF-28_FR.pdf/.
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    Based on the Fact Finding's Final Report, Interim Report,\3\ and 
investigatory record, the Commission is considering incorporating those 
findings in guidance as to the Commission's interpretation of 46 U.S.C. 
41102(c) and 46 CFR 545.4(d) in the context of demurrage and detention. 
Although each Sec.  41102(c) case would continue to be decided on the 
particular facts of the case, the Commission believes that guidance in 
the form of a non-exclusive list of considerations will promote 
fluidity in the U.S. freight delivery system by ensuring that demurrage 
and detention serve their purpose of incentivizing cargo and equipment 
velocity. The proposed interpretive rule will also mitigate confusion, 
reduce and streamline disputes, and enhance competition and innovation 
in business operations and policies. The Commission is issuing this 
notice to obtain public comments on this guidance.
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    \3\ Fact Finding Investigation No. 28 Interim Report (``Interim 
Report''), https://www2.fmc.gov/readingroom/docs/FF%20No.%2028/FF28_int_rpt2.pdf/.
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II. Background

    This notice of proposed rulemaking arises from the Commission's 
Fact Finding Investigation No. 28, which itself derived from repeated 
criticisms of ocean carrier and marine terminal operator demurrage and 
detention practices.\4\ The investigation was nationwide and industry-
wide in scope and involved thousands of pages of written discovery and 
interviews with numerous representatives of cargo interests (shippers 
and consignees), truckers, ocean transportation intermediaries, ocean 
carriers, marine terminal operators, and ports.\5\
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    \4\ See, e.g., Coalition for Fair Port Practices Petition for 
Rulemaking, FMC Dkt. No. P4-16 (Dec. 7, 2016), https://www2.fmc.gov/readingroom/docs/P4-16/P4-16_petition.pdf/; Fed. Mar. Comm'n, U.S. 
Container Port Congestion & Related International Supply Chain 
Issues: Causes, Consequences, and Challenges (July 2015), https://www.fmc.gov/wp-content/uploads/2019/04/PortForumReport_FINALwebAll.pdf; (Fed. Mar. Comm'n Report: Rules, 
Rates, and Practices Relating to Detention, Demurrage, and Free Time 
for Containerized Imports and Exports Moving Through Selected United 
States Ports (Apr. 3, 2015), https://www.fmc.gov/wp-content/uploads/2019/04/reportdemurrage.pdf.
    \5\ Interim Report at 4-5; Final Report at 7-9, 11; Fact Finding 
Investigation No. 28 Order (Dec. 17, 2018), https://www2.fmc.gov/readingroom/docs/FF%20No.%2028/FF-28_Ord.pdf/.
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    The Fact-Finding Officer found that the primary purposes of 
demurrage and detention are to serve as financial incentives to 
encourage the productive use of assets (containers and terminal space) 
and promote optimal cargo velocity through marine terminals.\6\ The 
Fact Finding Officer further found that the U.S. international ocean 
freight delivery system, and American economy, would benefit from: (1) 
``Transparent, standardized language for demurrage and detention 
practices;'' (2) ``Clear, simplified, and accessible demurrage and 
detention billing practices and dispute resolution processes;'' (3) 
``Explicit guidance regarding the types of evidence relevant to 
resolving demurrage and detention disputes;'' and (4) ``Consistent 
notice to cargo interests of container availability.'' \7\
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    \6\ See Final Report at 28-29.
    \7\ Final Report at 32. Although not the subject of this 
rulemaking, current variations in chassis supply models have 
frequently contributed to serious inefficiencies in the freight 
delivery system. Timely and reliable access to roadworthy chassis is 
a source of ongoing and systemic stress to the system.
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III. Summary of Proposed Guidance

    The guidance proposed by the Commission is in the form of an 
interpretive rule.\8\ The proposed rule concerns financial incentives, 
particularly with respect to cargo availability, empty container 
return, notice of availability, and government inspections; accessible 
and user-friendly demurrage and detention policies; and transparent, 
consistent terminology. The following consists of the text of the 
proposed rule and comments on each subparagraph.
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    \8\ An interpretive rule is an agency rule that clarifies or 
explains existing laws or regulations.
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A. Purpose and Scope of Proposed Rule

    The Commission's proposed rule would first specify that its purpose 
is to provide guidance about how the

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Commission will interpret 46 U.S.C. 41102(c) and 46 CFR 545.4(d) in the 
context of demurrage and detention The proposed interpretive rule would 
also make clear that it applies to practices and regulations relating 
to demurrage and detention for containerized cargo. For purposes of 
this rule, demurrage and detention would include any charges, including 
``per diem,'' assessed by ocean common carriers, marine terminal 
operators, or ocean transportation intermediaries (``regulated 
entities'') related to the use of marine terminal space (e.g., land) or 
shipping containers, not including freight charges.
    As for the scope and applicability of the proposed rule, first, it 
defines ``demurrage and detention'' broadly to encompass all charges 
customarily referred to as demurrage, detention, or per diem, however 
defined.\9\ Second, the proposed rule would only apply to containerized 
cargo, including refrigerated (``reefer'') containers. Third, the 
proposed rule makes clear that it applies to charges related to 
shipping containers, not other equipment, such as chassis.\10\
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    \9\ The definitions of the terms ``demurrage,'' ``detention,'' 
and ``per diem'' vary among ocean carriers and marine terminal 
operators. Interim Report at 4 n.3, 5-7; Final Report at 11-12, 30.
    \10\ Although the Fact-Finding Officer in some contexts defined 
``detention'' in terms of ``equipment,'' Interim Report at 5 n.3, 
the reports discussed containers, e.g., Final Report at 30.
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B. Incentive Principle

1. General Incentive Approach
    The Commission proposes that in assessing the reasonableness of 
demurrage and detention practices and regulations, it will consider the 
extent to which demurrage and detention are serving their intended 
purposes as financial incentives to promote freight fluidity.
    To pass muster under Sec.  41102(c), ``a regulation or practice 
must be tailored to meet its intended purpose.'' \11\ The intended 
purposes of demurrage and detention charges are to incentivize cargo 
movement and the productive use of assets (containers and port or 
terminal land)--a point which ocean carriers and marine terminal 
operators have repeatedly emphasized to the Commission.\12\ The 
``incentive principle'' in the proposed rule is merely an application 
of the general Sec.  41102(c) reasonableness standard to the demurrage 
and detention context.
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    \11\ Distribution Services, Ltd. v. Trans-Pac. Freight 
Conference of Japan and Its Member Lines, 24 S.R.R. 714, 722 (FMC 
1988).
    \12\ Interim Report at 2-3; Final Report at 12, 13.
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    As Fact-Finding Investigation No. 28 made clear, demurrage and 
detention are valuable charges when they work--when they are applied in 
ways that incentivize cargo interests to move cargo promptly from ports 
and marine terminals.\13\ When circumstances are such that demurrage 
and detention do not work, i.e., when they do not incentivize cargo 
movement and productive asset use, there is cause to question the 
reasonableness of their application. For instance, if a cargo interest 
or its trucker cannot retrieve cargo from a marine terminal because the 
cargo is not available for retrieval due to circumstances such as 
weather, port or terminal closures, the container is in a closed area, 
or government inspections of the cargo, demurrage would not serve as an 
effective incentive for cargo retrieval.
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    \13\ See, e.g., Final Report at 3, 32.
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    The proposed rule states the incentive principle in general terms, 
but its application will vary depending on the facts of a given case. 
For example, under the incentive principle, absent extenuating 
circumstances, demurrage and detention practices and regulations that 
do not provide for a suspension of charges when circumstances are such 
that demurrage and detention are incapable of serving their purpose 
would likely be found unreasonable.\14\ An example of an extenuating 
circumstance is whether a cargo interest has complied with its 
customary responsibilities, especially regarding cargo retrieval (e.g., 
making appointments, paying freight, submitting required paperwork, 
retaining a trucker). If it has not, this could be factored into the 
analysis. Another application of the incentive principle is if cargo 
cannot be retrieved, or empty containers cannot be returned, due to a 
lack of appointments, demurrage and detention cannot incentivize cargo 
retrieval or equipment return. The Commission may therefore consider in 
the reasonableness analysis how demurrage and detention practices and 
regulations account for the availability of appointments.
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    \14\ There appears to be little appetite for more free time 
generally, and there is reason to question whether, in some 
situations, a one-day extension of free time would adequately 
mitigate one day of cargo unavailability.
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    Particularly significant applications of the incentive principle 
involve cargo availability, empty container return, notice of cargo 
availability, and government inspections, as set forth below.
2. Cargo Availability
    As for particular applications of the ``incentive principle,'' the 
proposed interpretive rule would clarify that the Commission may 
consider in the reasonableness analysis the extent to which demurrage 
practices and regulations relate demurrage or free time to cargo 
availability for retrieval.
    A particularly important context for the incentive principle, and 
one given its own subparagraph in the proposed rule, is cargo 
availability. If cargo interests or truckers cannot pick up their cargo 
within free time, then demurrage cannot serve its incentive purpose. 
Cargo availability is key to demurrage serving its intended function, 
and thus the Commission may consider the relationship between demurrage 
and cargo availability in its analysis under 46 U.S.C. 41102(c).\15\ 
The more a demurrage practice is tailored to cargo availability, the 
less likely the practice is to be found unreasonable.
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    \15\ See Final Report at 3, 26-29; see also id. at 32 
(``Focusing port and marine terminal operations on notice of actual 
cargo availability would achieve the goals of demurrage and 
detention practices and improve the performance of the international 
commercial supply chain.'').
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    In this context, ``cargo availability'' or ``accessibility'' refers 
to the actual ability of a cargo interest or trucker to retrieve its 
cargo. Cargo is not available, for instance, if a cargo interest or 
trucker cannot pick it up because it is in a closed area of a terminal, 
or if the port is closed.\16\ Examples of demurrage practices that are 
expressly linked to container availability, and which the Commission 
would weigh positively in the reasonableness analysis, include: (a) 
Starting the free time clock upon container availability as opposed to 
container discharge from a vessel; (b) public notice of terminal yard 
closures; and (c) stopping a demurrage or free time clock when a 
container is rendered unavailable, such as upon notice of a yard or 
terminal closure or when a trucker cannot get an appointment

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within a reasonable time of it becoming available.\17\
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    \16\ Final Report at 20. ``A container is in an open area when 
it is in an area from which it can be retrieved. In contrast, a 
closed area is a section of a container yard in which a ship is 
being worked. When a container is in a closed area, it cannot be 
retrieved for safety and labor reasons.'' Final Report at 16 n.19. 
Not every marine terminal has open and closed areas. Id. Another 
things that might impact availability is whether a trucker has 
access to a terminal (e.g., has an appointment and there is an 
absence of congestion). Final Report at 20. During the 
investigation, some suggested that a container should be deemed 
unavailable if the wait for truckers outside the terminal gate is 
longer than fifteen minutes or the total wait time for truckers 
(inside and outside the terminal gate) exceeds ninety minutes.
    \17\ Final Report at 16, 20-22.
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3. Empty Container Return
    The proposed interpretive rule would also indicate that absent 
extenuating circumstances, practices and regulations that provide for 
imposition of detention when it does not serve its incentivizing 
purposes, such as when empty containers cannot be returned, are likely 
to be found unreasonable.
    The flip side of cargo availability is empty container return. 
Absent extenuating circumstances, practices and regulations that result 
in detention being imposed when a container cannot be returned weigh 
heavily in favor of a finding of unreasonableness. The paradigmatic 
example is that if the marine terminal designated by an ocean carrier 
refuses to accept empty containers, no amount of detention can 
incentivize the return of those containers. Absent extenuating 
circumstances, assessing detention in such situations, or declining to 
pause the free time or detention clock, would likely be unreasonable. 
Imposing detention in situations of uncommunicated or untimely 
communicated changes in container return location also weighs on the 
side of unreasonableness, as might doing so when there have been 
uncommunicated or untimely communicated notice of terminal closures for 
empties.
4. Notice of Cargo Availability
    Additionally, the Commission would clarify that in assessing the 
reasonableness of demurrage practices and regulations, it may consider 
whether and how regulated entities provide notice to cargo interests 
that cargo is available for retrieval. The Commission would consider 
the type of notice, to whom notice is provided, the format of notice, 
method of distribution of notice, the timing of notice, and the effect 
of the notice.
    This subparagraph promotes aligning cargo retrieval processes 
around notice that cargo is available.\18\ The Commission will consider 
in the reasonableness analysis whether and how regulated entities 
provide notice to cargo interests that cargo is available for 
retrieval. The more notice is calculated to apprise cargo interests 
that cargo is available for retrieval, the more this factor favors a 
finding of reasonableness.
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    \18\ Interim Report at 4 (emphasizing importance of consistent 
notice to shippers of cargo availability); see also id. at 18.
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    The Commission may consider the type of notice. Types of notice 
that are expressly linked to cargo availability will weigh toward 
reasonableness, and include: (a) Notice that cargo is discharged and in 
an open area; (b) notice that cargo is discharged, in an open area, 
free of holds, and proper paperwork has been submitted; and (c) notice 
of all the above and that an appointment is available.
    Other factors include to whom notice is provided, the format and 
method of distribution of notice, the timing of notice, and the effect 
of notice. The more these factors align with the goal of moving cargo 
off terminal property, the less likely demurrage practices would be 
found unreasonable. For instance, while the Commission appreciates that 
many marine terminal operators make container status information 
available on websites and allow users to register to get electronic 
notice of changes in container status, cargo interests have 
persuasively explained the superior merits of ``push notifications'' 
related to cargo availability, including notice of yard closures.\19\ 
Moreover, the Commission will consider how demurrage and detention 
practices account for cargo availability changes, such as when a 
container that is initially available becomes unavailable.\20\ 
Regarding the effect of notice, demurrage practices that link the start 
of free time to notice that a container is available weigh in favor of 
reasonableness, as do practices that guarantee the availability of an 
appointment within a specified time of notice of container 
availability.
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    \19\ Final Report at 20.
    \20\ See Final Report at 29.
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5. Government Inspections
    The Commission is still considering its guidance related to 
government inspections of cargo. Imposition of demurrage and detention 
during government inspections of cargo, and the delays associated with 
such inspections, is a significant problem for cargo interests and 
truckers. Such inspections not only involve cargo interests and 
regulated entities but also government agencies, third-parties, and, in 
some cases, off-terminal facilities. In light of the incentive 
principle, the Commission is considering the following interpretive 
rules:
     In the absence of extenuating circumstances, demurrage and 
detention practices and regulations that provide for the escalation of 
demurrage or detention while cargo is undergoing government inspection 
are likely to be found unreasonable;
     In the absence of extenuating circumstances, demurrage and 
detention practices and regulations that do not provide for mitigation 
of demurrage or detention while cargo is undergoing government 
inspection, such as by waiver or extension of free time, are likely to 
be found unreasonable; or
     In the absence of extenuating circumstances, demurrage and 
detention practices and regulations that lack a cap on the amount of 
demurrage or detention that may be imposed while cargo is undergoing 
government inspection are likely to be found unreasonable.
    The Commission is particularly interested in comments on such 
proposals and other suggestions for handling demurrage and detention in 
the context of government inspections, consistent with the incentive 
principle.

C. Demurrage and Detention Policies

    The Commission further proposes making clear that it may consider 
in the reasonableness analysis the existence and accessibility of 
policies implementing demurrage and detention practices and 
regulations, including dispute resolution policies. In assessing 
dispute resolution policies, the Commission would further consider the 
extent to which they contain information about points of contact, 
timeframes, and corroboration requirements.
1. Existence and Accessibility of Policies
    Cargo interests should be informed of who is being charged, for 
what, by whom, and how disputes can be addressed in a timely 
fashion.\21\ The opacity of current practices encourages disputes and 
discourages competition over demurrage and detention charges. 
Accordingly, the proposed rule would have the Commission consider in 
the reasonableness analysis the existence of policies--whether a 
regulated entity has demurrage and detention policies that reflect its 
practices. The Commission would also consider the accessibility of 
policies--whether and how those policies are made available to cargo 
interests and truckers and the public. The more accessible these 
policies are, the greater this factor weighs against a finding of 
unreasonableness. This factor favors demurrage and detention practices 
and regulations that make policies available in one, easily

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accessible website, whereas burying demurrage and detention policies in 
scattered sections in tariffs would be disfavored.\22\
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    \21\ The Fact-Finding Officer noted that there is a marked lack 
of transparency regarding demurrage and detention practices, 
including billing procedures and dispute resolution processes. 
Interim Report at 2, 4, 5, 10-12; Final Report at 7, 13-18, 29; see 
also Final Report at 32 (emphasizing need for clear, simplified, and 
accessible billing practices and dispute resolution processes and 
explicit guidance on evidence).
    \22\ Interim Report at 17 (Part IV.2a); Final Report at 14, 29-
30.
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    As for dispute resolution policies, not only should they be 
accessible, but the Commission will consider whether they address 
things such as points of contact for disputing charges; time frames for 
raising disputes, for responding to cargo interests or truckers, and 
for resolving disputes; and the types of information or evidence 
relevant to resolving demurrage or detention disputes.\23\ Other 
attributes of dispute resolution policies that will weigh in favor of 
reasonableness include step-by-step instructions for disputing a 
charge, dedicated dispute resolution staff at regulated entities, 
allowing priority appointments or waiving appointments after successful 
dispute resolution or when a container is not available; sufficient 
responses to cargo interests requests for free time extensions or 
waiver; processes for elevating disputes after an initial response; and 
allowing a trucker to continue to do business with a regulated entity 
during the pendency of a dispute.
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    \23\ See Interim Report at 14, 17-18; Final Report at 7-8, 17-
18.
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    As an example, the best practices proposal put forward by the Ocean 
Carrier Equipment Management Association (OCEMA)--and made available on 
OCEMA's website--is a useful model for demurrage and detention dispute 
resolution policies, which each regulated entity would tailor to fit 
its own circumstances.\24\ That model supports including in demurrage 
and detention policies: (1) Points of contact for demurrage and 
detention disputes (names, phone numbers, and email addresses); (2) 
``[a] description of what information is required to be provided by the 
shipper in order to make a detention and/or demurrage dispute claim;'' 
(3) timeframes for raising a dispute and providing a response; and (4) 
that individual entities' dispute resolution processes web pages be 
linked to the OCEMA website.\25\
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    \24\ https://www.ocema.org/OCEMA%20Recommended%20Best%20Practice%20for%20Detention%20and%20Demurrage%20Dispute%20Resolution%20Processes.pdf.
    \25\ Id.
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2. Billing
    The efficacy (and reasonableness) of dispute resolution policies 
also depends on demurrage and detention bills having enough information 
to allow cargo interests to meaningfully contest the charges. Another 
proposal that could promote transparency and alignment of stakeholder 
interests is to tie billing relationships to ownership or control of 
the assets that are the source of charges.\26\ Under this approach, 
marine terminal operators would bill cargo interests directly for use 
of terminal land. Ocean carriers would bill cargo interests directly 
for use of containers.\27\ This approach is also consistent with the 
Commission's preferred definitions of ``demurrage'' and ``detention.'' 
\28\ Moreover, regardless of billing model, ocean carriers should bill 
their customers, rather than imposing charges contractually-owed by 
cargo interests on third parties. The Commission is interested in 
comments on this proposal.
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    \26\ Interim Report at 18 (describing optional billing model).
    \27\ Id.
    \28\ See infra at Part III.E.
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3. Guidance on Evidence
    Dispute resolution policies that lack guidance on corroboration 
requirements, that is, guidance about the types of evidence relevant to 
resolving demurrage and detention disputes, are likely to fall on the 
unreasonable end of the spectrum. Cargo interests and truckers have 
suggested several ideas regarding this topic, which, if implemented by 
regulated entities, would weigh favorably in the Sec.  41102 analysis, 
including: (a) Providing truckers with evidence substantiating trucker 
attempts to retrieve cargo that are thwarted when the cargo is not 
available (e.g., a trouble ticket with information about container and 
container unavailability); and (b) providing cargo interests and 
truckers with log records that track attempts to make appointments. 
Dispute resolution policies should include evidentiary guidance. The 
OCEMA best practices proposal, for example, expressly contemplates such 
guidance.

D. Transparent Terminology

    Finally, according to the proposed interpretive rule, the 
Commission may consider in the reasonableness analysis the extent to 
which regulated entities have defined the terms used in demurrage and 
detention practices and regulations, the accessibility of definitions, 
and the extent to which the definitions differ from how the terms are 
used in other contexts.
    For demurrage and detention practices and regulations to be just 
and reasonable, it must be clear what the terminology means.\29\ 
Accordingly, the Commission will consider in the reasonableness 
analysis whether a regulated entity has defined the material terms of 
the demurrage or detention practice at issue, whether and how those 
definitions are made available to cargo interests, truckers, and the 
public, and how those definitions differ from a regulated entity's past 
use of the terms, how the terms are used elsewhere in the port at 
issue, and how the terms are used in the U.S. trade.
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    \29\ Interim Report at 5-7, 17; Final Report at 11-12, 30, 32.
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    The Commission supports defining demurrage and detention in terms 
of what asset is the source of a charge (land or container) as opposed 
to the location of a container (inside or outside a terminal).\30\ 
Under the former, ``demurrage'' would be a charge related to terminal 
space, and ``detention'' would be a charge related to containers.\31\ 
The Commission strongly discourages the continued use of terms such as 
``storage'' and ``per diem'' in this context because not only do they 
add unnecessary complexity, the Commission has been informed that they 
are inconsistent with international practice.
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    \30\ Interim Report at 6-7; Final Report at 12. This preference 
does not limit the applicability of this rule to demurrage and 
detention so defined. As noted in Part III.A supra, the proposed 
interpretive rule applies however a regulated entity defines these 
types of charges.
    \31\ Interim Report at 6-7; Final Report at 12.
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IV. Public Participation

How do I prepare and submit comments?

    Your comments must be written and in English. To ensure that your 
comments are correctly filed in the docket, please include the docket 
number of this document in your comments.
    You may submit your comments via email to the email address listed 
above under ADDRESSES. Please include the docket number associated with 
this notice and the subject matter in the subject line of the email. 
Comments should be attached to the email as a Microsoft Word or text-
searchable PDF document. Only non-confidential and public versions of 
confidential comments should be submitted by email.
    You may also submit comments by mail to the address listed above 
under ADDRESSES.

How do I submit confidential business information?

    The Commission will provide confidential treatment for identified 
confidential information to the extent allowed by law. If your comments 
contain confidential information, you

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must submit the following by mail to the address listed above under 
ADDRESSES:
     A transmittal letter requesting confidential treatment 
that identifies the specific information in the comments for which 
protection is sought and demonstrates that the information is a trade 
secret or other confidential research, development, or commercial 
information.
     A confidential copy of your comments, consisting of the 
complete filing with a cover page marked ``Confidential-Restricted,'' 
and the confidential material clearly marked on each page. You should 
submit the confidential copy to the Commission by mail.
     A public version of your comments with the confidential 
information excluded. The public version must state ``Public Version--
confidential materials excluded'' on the cover page and on each 
affected page, and it must clearly indicate any information withheld. 
You may submit the public version to the Commission by email or mail.

Will the Commission consider late comments?

    The Commission will consider all comments received before the close 
of business on the comment closing date indicated above under DATES. To 
the extent possible, we will also consider comments received after that 
date.

How can I read comments submitted by other people?

    You may read the comments received by the Commission at the 
Commission's Electronic Reading Room or the Docket Activity Library at 
the addresses listed above under ADDRESSES.

V. Rulemaking Analyses

Regulatory Flexibility Act

    The Regulatory Flexibility Act (codified as amended at 5 U.S.C. 
601-612) provides that whenever an agency is required to publish a 
notice of proposed rulemaking under the Administrative Procedure Act 
(APA) (5 U.S.C. 553), the agency must prepare and make available for 
public comment an initial regulatory flexibility analysis (IRFA) 
describing the impact of the proposed rule on small entities. 5 U.S.C. 
603. An agency is not required to publish an IRFA, however, for the 
following types of rules, which are excluded from the APA's notice-and-
comment requirement: Interpretative rules; general statements of 
policy; rules of agency organization, procedure, or practice; and rules 
for which the agency for good cause finds that notice and comment is 
impracticable, unnecessary, or contrary to public interest. See 5 
U.S.C. 553(b).
    Although the Commission has elected to seek public comment on this 
proposed rule, the rule is an interpretive rule. Therefore, the APA 
does not require publication of a notice of proposed rulemaking in this 
instance, and the Commission is not required to prepare an IRFA.

National Environmental Policy Act

    The Commission's regulations categorically exclude certain 
rulemakings from any requirement to prepare an environmental assessment 
or an environmental impact statement because they do not increase or 
decrease air, water or noise pollution or the use of fossil fuels, 
recyclables, or energy. 46 CFR 504.4. This rule regarding the 
Commission's interpretation of the 46 U.S.C. 41102(c) falls within the 
categorical exclusion for investigatory and adjudicatory proceedings, 
the purpose of which is to ascertain past violations of the Shipping 
Act of 1984. 46 CFR 504.4(a)(22). Therefore, no environmental 
assessment or environmental impact statement is required.

Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521) (PRA) 
requires an agency to seek and receive approval from the Office of 
Management and Budget (OMB) before collecting information from the 
public. 44 U.S.C. 3507. This proposed rule does not contain any 
collections of information as defined by 44. U.S.C. 3502(3) and 5 CFR 
1320.3(c).

Executive Order 12988 (Civil Justice Reform)

    This rule meets the applicable standards in E.O. 12988 titled, 
``Civil Justice Reform,'' to minimize litigation, eliminate ambiguity, 
and reduce burden.

Regulation Identifier Number

    The Commission assigns a regulation identifier number (RIN) to each 
regulatory action listed in the Unified Agenda of Federal Regulatory 
and Deregulatory Actions (Unified Agenda). The Regulatory Information 
Service Center publishes the Unified Agenda in April and October of 
each year. You may use the RIN contained in the heading at the 
beginning of this document to find this action in the Unified Agenda, 
available at https://www.reginfo.gov/public/do/eAgendaMain.

List of Subjects in 46 CFR Part 545

    Antitrust, Exports, Freight forwarders, Maritime carriers, Non-
vessel-operating common carriers, Ocean transportation intermediaries, 
Licensing requirements, Financial responsibility requirements, 
Reporting and recordkeeping requirements.

    For the reasons set forth above, the Federal Maritime Commission 
proposes to amend 46 CFR part 545 as follows:

PART 545--INTERPRETATIONS AND STATEMENTS OF POLICY

0
1. The authority citation for part 545 continues to read as follows:

    Authority:  5 U.S.C. 553; 46 U.S.C. 305, 40307, 40501-40503, 
41101-41106, and 40901-40904; 46 CFR 515.23.

0
2. Add Sec.  545.5 to read as follows:


Sec.  545.5  Interpretation of Shipping Act of 1984-Unjust and 
unreasonable practices with respect to demurrage and detention.

    (a) Purpose. The purpose of this rule is to provide guidance about 
how the Commission will interpret 46 U.S.C. 41102(c) and Sec.  545.4(d) 
in the context of demurrage and detention.
    (b) Applicability and Scope. This rule applies to practices and 
regulations relating to demurrage and detention for containerized 
cargo. For purposes of this rule, demurrage and detention include any 
charges, including ``per diem,'' assessed by ocean common carriers, 
marine terminal operators, or ocean transportation intermediaries 
(``regulated entities'') related to the use of marine terminal space 
(e.g., land) or shipping containers, not including freight charges.
    (c) Incentive Principle. In assessing the reasonableness of 
demurrage and detention practices and regulations, the Commission will 
consider the extent to which demurrage and detention are serving their 
intended purposes as financial incentives to promote freight fluidity.
    (d) Particular Applications of Incentive Principle.--(1) Cargo 
Availability. The Commission may consider in the reasonableness 
analysis the extent to which demurrage practices and regulations relate 
demurrage or free time to cargo availability for retrieval.
    (2) Empty Container Return. Absent extenuating circumstances, 
practices and regulations that provide for imposition of detention when 
it does not serve its incentivizing purposes, such as when empty 
containers cannot be returned, are likely to be found unreasonable.
    (3) Notice of Cargo Availability. In assessing the reasonableness 
of

[[Page 48856]]

demurrage practices and regulations, the Commission may consider 
whether and how regulated entities provide notice to cargo interests 
that cargo is available for retrieval. The Commission may consider the 
type of notice, to whom notice is provided, the format of notice, 
method of distribution of notice, the timing of notice, and the effect 
of the notice.
    (4) Government Inspections.
    (e) Demurrage and Detention Policies. The Commission may consider 
in the reasonableness analysis the existence and accessibility of 
policies implementing demurrage and detention practices and 
regulations, including dispute resolution policies. In assessing 
dispute resolution policies, the Commission may further consider the 
extent to which they contain information about points of contact, 
timeframes, and corroboration requirements.
    (f) Transparent Terminology. The Commission may consider in the 
reasonableness analysis the extent to which regulated entities have 
defined the terms used in demurrage and detention practices and 
regulations, the accessibility of definitions, and the extent to which 
the definitions differ from how the terms are used in other contexts.

    By the Commission.
Rachel Dickon,
Secretary.
[FR Doc. 2019-19858 Filed 9-16-19; 8:45 a.m.]
 BILLING CODE 6731-AA-P