S3.E15 - FMC Final Rule on D&D - Correction Published

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

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

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

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

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

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

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

Let's dive in...

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

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

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

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

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

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Transcript

Speaker 1: 0:01

oh, I got soul coming through, flying free skies. I got soul coming through, won't stop on top of the world. Can't walk to the beat when you see me coming next time. Oh, everywhere I go, I'm in the spotlight. This is a good life. Oh, I'm living bold. This is what it looks like. I'm a victim of the world. Whoa, whoa, whoa, whoa, whoa, whoa.

Speaker 1: 0:56

The FMC, the Federal Maritime Commission, announced that they would be making a correction to their final rule on detention and demurrage billing requirements. What was that correction? It doesn't really change anything, not a lot. It explains some things. It doesn't change final text. We're going to talk about it.

Speaker 1: 1:15

Hi, welcome to, by Land and by Sea, an attorney breaking down the weakened supply chain presented by the Maritime Professor Me. I'm Lauren Began, founder of Maritime Professor and Squall Strategies, and I'm your favorite maritime attorney. Join me every week as we walk through both ocean transport and surface transport topics in the wild world of supply chain. As always, the guidance here is general and for educational purposes only. It should not be considered to be legal advice and there is no attorney-client privilege created by this video or by this podcast. If you need an attorney, contact an attorney. But before we get into the discussion of the day, let's go through my top three stories of the week. All right, story number one just a quick roundup. Right, there's a few things coming and going, so I'd like to kind of keep this roundup on there.

Speaker 1: 1:58

The FMC has three rulemakings they're working through. One is final text release, that is, the billing practices of detention to merge, but we're still waiting on two others. So we have defining unreasonable refusal to deal or negotiate with respect to vessel space accommodations provided by an ocean common carrier and we also have defining unfair, unjustly discriminatory methods. The first one, the unreasonable refusal to deal or negotiate, is still pending from the supplemental notice of proposed rulemaking. So it's still reviewing the comments that last came in this one particularly. Chairman Dan Maffei has said that this is a little bit nuanced and tricky, that they want to make sure that they get this one right.

Speaker 1: 2:37

Now, this is definitions. Anytime there are definitions, new definitions entering the industry. I encourage everybody to go check out those definitions, see how it applies to your industry and your corner of the industry and make sure that it's in line with either how your operations go or how you do business, because any definitions can have long lasting impacts right. Any new definitions can potentially have long lasting impacts and potentially have very specific, nuanced operational impacts. So take a look. The comment period closed. It was closed July 2023.

Speaker 1: 3:12

The chairman, dan Maffei, had said recently on a budget hearing that he expects this to come out in the next few months. Fmc is notorious for accepting late filed comments. I don't know if it's going to change much, but if you go, take a look at it and you're like whoa, whoa, whoa, this is a big deal. It's still important to have your voice heard. So not legal advice, but take a look at it. I can't stress that enough. Take a look at it, just see if these definitions line up with what you're thinking or if they don't. So we have that. Unfair, unjustly discriminatory methods. Those are also definitions. The FNC said that they folded that into the unreasonable or physical deal, but that there's still some pieces that remain, and so we'll be seeing probably a standalone rule on that one.

Speaker 1: 3:53

And the request for information the Maritime Transportation Data Initiative. They've released RFI 1 and closed that up, and now we're on RFI 2, which is the request for information Number two. Those comments are due June 17, 2024. Go take a look at that. Really, these are moments of engagement. These are moments for the FMC asking the industry for engagement. This is your time to have a conversation it's going to be written but to have a conversation with the FMC on how these things are impacting you. It's so critically important to stay engaged here and feel empowered to file comments if you have something to say. Again, not legal advice, but go take a look at all this All right. Story. Number two this is something that we talked about previously but I wanted to bring back up right.

Speaker 1: 4:38

So the World Shipping Council petition. So the World Shipping Council filed their petition against the Federal Maritime Commission's final rule in US Court of Appeals for the DC Circuit. Essentially in the petition they said that the FMC was exceeding their authority. But then they also released a statement on their own website around the same time that was talking about VOCC and directly contracted port truckers and billing. So I wanted to read the piece, the announcement that the World Shipping Council had put on their own website, just so that you got to see it right, just so that you got the language straight from them on what they said when they filed that petition. So what they said was Congress directed the FMC to further clarify its interpretive rule for billing, detention and demurrage, but the final rule contains a significant internal contradiction regarding the billing of motor carriers for detention and demurrage.

Speaker 1: 5:26

That inconsistency is already creating substantial confusion and uncertainty for ocean carriers and other industry participants. The preamble to the rule clearly states that an ocean carrier may invoice a motor carrier with which it holds a contract. The language of the rule itself, however, appears to prohibit such billing. So what they're saying is look, they interpreted the rules to say the ocean carrier can invoice a motor contract because if there's a direct contractual relationship, as the rule kind of over and over and over it says, they say the rule in the preamble says that they continue. The language of the rule itself. So the actual text of the rule that's going to be published, they said, however, appears to prohibit such billing. Text of the rule that's going to be published, they said, however, appears to prohibit such billing. World Shipping Council asked the commission to fix this inconsistency through a technical correction to the final rule, but the FMC has not to date done so. Therefore, world Shipping Council is petitioning the DC Circuit to correct this inconsistency in order to ensure regulatory clarity for ocean carriers, their customers and business partners.

Speaker 1: 6:21

So I had said previously that the trade press was reporting that this is kind of straight from the horse's mouth. Right, they're talking about this direct contractual relationship between VOCCs and truckers. They're saying look, you're talking about direct contractual relationship and they said that the rule stated, the preamble of the rule, the discussion of the rule, stated that that was okay. We're going to talk about that a little bit more as we get into the meat and potatoes of the day. But what I wanted to talk about now with this petition was I've been getting a lot of questions on whether this will impact the final rule. So the effective date, right, is May 28th. This petition has the potential to impact the final rule but, honestly, nobody knows right now. Nobody knows if this is going to impact that. And we're 18 days away. Right, it's May 10th. May 28th is when this rule goes into effect, so we're not sure yet.

Speaker 1: 7:13

So it looks like the briefing schedule for the petition, right. So, where they start putting together all their thoughts and their arguments and so we'll have a full memo from the World Shipping Council, a full memo from the Federal Maritime Commission. It looks like all of that back and forth kind of procedural stuff starts May 20th, and that was last check, so it might have changed or been scooted up. So we'll see if this interaction of the May 28th date and the schedule beginning just a week before right, eight days before on May 20th if that's going to change at all and that's why I kind of threw that qualifier on like it might have changed, it might have, it might scoot up. But also they want to get plenty of time for people to get their thoughts together and, you know, put their arguments out there.

Speaker 1: 7:58

So, look, perhaps the court. Where, where am I going to be looking? Perhaps the court's going to issue some guidance on this. Maybe the court will say look, we're going to stay this rule, we're going to put a pause on this rule until we clear this up. That could happen. Also, the Federal Maritime Commission will probably be the best direct source. If you're not following the, if you're not as familiar with the court system, the FMC will likely make an announcement saying if this happens, if the court puts a pause on it, I can imagine the FMC will put that out pretty quickly on their current events or their announcement, saying no, no, no, everything's paused, hasn't happened yet, right, but nobody's really said anything yet. Nobody really knows what's going to happen here, but we have about 18 days for some clarity to come of it. So right now nothing's changed.

Speaker 1: 8:45

Right now, may 28th is the effective date of the detention and submerged billing requirements rule. That's all that's been said. There is a petition that has the potential to change that, but nothing has happened yet. May 28th is still the date. I hope that clarified it and I'm going to throw a little wrench in there. Remember, the contents of the invoice piece of the D&D rule is still under OMB review. We haven't had any updates on whether that's been approved or whether that date of the contents of the invoice requirement has been set. So all of that right, all of that to say May 28th is the effective date of the rule, except for the asterisks of the contents of the invoice part, and there's a petition that has the potential to change things. But that's it, that's it. That's about as clear as we can make it. There's a lot of asterisks, there's a lot of maybe potential possible, but right now May 28th is the rule date. There's a petition that could possibly change it. That's what we have, all right.

Speaker 1: 9:48

Story number three so switching gears a little bit here for congressmen. So we have a representative Mike Waltz, a Republican from Florida, senator Mark Kelly, a Democrat from Arizona, senator Marco Rubio, a Republican from Florida, and Representative John Garamendi, a Democrat of California, released Congressional Guidance for a National Maritime Strategy. It's a report it's a report that they want to pass along to their congressional friends and colleagues that generally highlights the maritime prowess of China and how it compares to the United States, and really the most important takeaway that I took from this is the critical need of the United States to take action to address the maritime strategy, the maritime challenges that we have as a nation and the argument to be made for increasing the maritime strength. So that's what I took away from this. They have it's a really short report, so if you want, go take a look at it, but they have 10 things Congress can do. Now I'm just going to read the bolded part. They have kind of a little explanation beyond it, but I'm just going to read these bold parts, the 10 things that these four members of Congress right. So there's congressmen and senators.

Speaker 1: 11:00

So the first one speed development of a long-term national maritime strategy for incremental implementation, including state and local policy options. The national maritime strategy has been attempted in different iterations and certainly long overdue. So that would be something that I'd like that they put that. Number one speed. Development of a long-term national maritime strategy. That's something that has been talked about but needs to move faster and actually happen. Number two the 10 things Congress can do now.

Speaker 1: 11:28

Number two take all measures possible to expand, develop and protect the domestic maritime workforce, fully funding and reinvigorating the Maritime Administration, the US Coast Guard, the Federal Maritime Commission the FMC always gets forgotten. Right, they were there, they're on the list and other federal agencies that protect, regulate and support the US maritime industry. I would actually say, and look, I support all of that, right, I think that fully funding and they say reinvigorating, I think making sure that they have the tools that they need in order to do their jobs, which includes funding, right, we certainly know that on the FMC side they are stretched so thin they only have maybe almost 130, 40, up to 160 people and a $43 million budget to do all that they do, and the other agencies certainly have larger budgets. But what I wanted to say here is, if you want to know about all the agencies that touch maritime, the Committee on Maritime Transportation Systems, cmts, is a. I guess it's an executive level agency or kind of. It's not even an agency. I don't think it's a committee, it's an executive level committee. Go take a look at that website. They have a compendium that talks about all the different issues that might touch maritime and what agencies across all of the federal government what agencies might touch maritime and what agencies across all the federal government what agencies might touch it, and there is even there's a there's a broad spectrum kind of snapshot. But then they even go down into like slicing and dicing into smaller issues. So go take a look at that, because this mentions three right Maritime administration, coast Guard and FMC, but that the CMTS compendium goes into all of the different agencies that you wouldn't have even thought had anything to do with maritime. Go check that out. That's the compendium. Sorry, side thought there. That's why you listen right, so that you get these side thoughts All right.

Speaker 1: 13:15

The third thing Congress says that 10 things that these four members of Congress say Congress and Senate say that Congress can do now grow domestic shipbuilding capacity and demand modern performance expectations. Shipbuilding is a huge thing. Number four grow US flag shipping capacity and guarantee US government cargo during peacetime. Number five urge investment in America, america's maritime transportation system and inland waterways maritime transportation system and inland waterways. Number six create innovation incubator programs partnered with industry to lead the world in innovative and advanced nuclear energy solutions for the maritime sector. So that's interesting, right, they're going to be. They think that we should push toward nuclear energy? That's an interesting one. And the incubator program, I think that's a cool idea, right, because they want to spur innovation.

Speaker 1: 14:03

Okay, number seven on their list of 10, conduct assessments of economic, political and military factors that threaten US interests in the rapidly changing polar regions. That's a good one. Number eight provide the resources necessary to ensure our naval forces can defend the freedom of the seas, prioritize forward presence readiness and combat logistics. Of course, right, any good maritime nation is going to have that naval presence. Number nine implement rules, policies and resource decisions to de-risk the US maritime sector from our strategic competitors. And number 10, consistent with the US national security strategy advance the rule of law, allies partners, trade, quality of life and universal access to the global commons all unalienable American values. So I'm not going to go into all the details of those, I wanted to just present them in front of you so that you could see them, but those were the 10 in that pretty short guidance report. Take a look at it. It's kind of floating all over my LinkedIn, I don't know if you've seen it there, but yeah, it's pretty interesting.

Speaker 1: 15:04

All right, so let's get into the meat and potatoes of the day. Let's switch back to the FMC again. As you know, we mostly talk about the FMC because that's where we break things down and translate. But what's going on, right? So, as we know, the FMC released their final rule on detention and demurrage billing requirements. But they were getting some feedback and I said the FMC was going to keep paying attention. They were going to keep engaging with the industry. They were going to see how this D&D rule hasn't even fully gone into effect right, it doesn't go in until May 28th. They wanted to take a minute to stay engaged, listen to how this rule is reaching the wild, right, how this rule is reaching the supply chain and the industry, and so they're taking under advisement that there's been some question. So let's start from. Let's make sure everybody's on the same page here, right? So we've talked about this a lot. If you follow me, you certainly know everything there is to know, or everything that we've talked about for the FMC final rule on detention to merge, but this will become effective May 28th 2024. So 18 days from now, except the contents of invoice section 541.6 due to the pending OMB approval.

Speaker 1: 16:12

But what was this rule trying to do? It was trying to define billing practices for detention to merge with the main purpose of simplicity. The main purpose of simplicity, this is from the text Not the rule text but the discussion text and the FMC said they wanted to identify what is being billed by whom. And so through this final rule, the FMC clarified who may be invoiced, information to be included in invoices, the timeline for invoicing and requirements for clear invoice dispute processes. So what are the main four takeaways that?

Speaker 1: 16:48

I kind of couch them into, it's clarity right. I always put that as number one. They wanted to clarify what was happening with D&D billing requirements. Timeliness there are now 30 calendar day requirements for the invoice to be issued and at least 30 calendar days for the dispute resolution filing and an attempted resolution to dispute filing for 30 calendar days beyond that. So the 30-30-30. It also created an emphasis, kind of in line with that clarity, an emphasis on the direct contractual relationship. Anyone can pay the invoice, but only the direct contractual relationship or the consignee, but not both, and nobody else can be issued the invoice. So I'm going to say that, again, only the direct contractual relationship or the consignee can be issued the invoice. Anybody else can pay it. But this is where I caution, industry really needs to pay attention. Who is that direct contractual relationship? Who will be receiving that from the billing party right? Mostly the ocean common carrier, but who will be receiving that invoice? Make sure you know because after 30 calendar days, maybe the end of June, when all of this starts hitting, you don't want to lose your dispute resolution opportunity. And again, this dispute resolution opportunity is for B2B right. This is for business to business.

Speaker 1: 18:13

This doesn't necessarily, this doesn't eliminate the otherwise available dispute resolution mechanisms through the FMC. So that would be like filing a violation. That would be filing a lawsuit, a complaint. That would be the charge complaints process. All of those other things that the FMC has available is not impacted by what happens with this D&D rulemaking as a general statement, but it does have a dispute resolution filing procedure, explanation, guidance, I should say within it. And it really comes down to that B2B right. They're trying to make it so that these don't gum up the FMC and that they can make a more streamlined process on the operational level so that people can work together. Right, these are long-term relationships. So so what happened? Right, there was some guidance, there was some feedback on what was happening with this rule and how it was interpreted.

Speaker 1: 19:12

But you know, before we get into that substantive subject matter, I wanted to actually bring my attention, I want to bring your attention to something that I had previously brought up and this kind of goes back to like the baseline why is the FMC doing this rulemaking and what did Congress tell them to do with this rulemaking? And it goes back to the ocean shipping reform act of 2.0. So 2022, or, excuse me, osra, osra of 2022. I say 2.0 sometimes because OSRA, actually the first ocean shipping reform act, happened in 1998. And then ASRA, that happened in 2022 was technically 2.0, but shorthand gets a little confusing here so ASRA of 2022.

Speaker 1: 19:56

So in there it said section B generally is the D&D rulemaking, and what it said was not later than 45 days after the enactment of this act, after Osra 22, the FMC shall initiate a rulemaking further defining prohibited practices by common carriers, mto, shipper and ocean transportation intermediaries regarding the assessment of demurrage and detention charges. So the FMC shall issue a final rule defining such practices not later than one year after the date of enactment. Practices not later than one year after the date of enactment. Okay, I mean we're almost done two years, but that's okay. Chairman Maffei has said it's better to get it right than get it fast. So they've been working through the process.

Speaker 1: 20:35

But it's sub part two they want to draw your attention to. So where it says contents, it says the rule under paragraph one. So it's saying this D&D rule under paragraph one. So it's saying this D&D rule shall only seek to further clarify reasonable rules and practices related to the assessment of detention and demurrage charges to address the issues identified in the final rule published on May 18, 2020, the interpretive rule on demurrage or detention under the Shipping Act, including a determination of which parties may be appropriately billed for any demurrage, detention or other similar per-container charges. So the Congress, when they put OSRA 22 out, said this needs to also address or this needs to. They don't say. Also, they say shall only seek to further clarify reasonable rules and practices related to D&D assessment identified in the final rule of the interpretive rule of demurrage and detention. So Congress is saying FMC is supposed to clarify the interpretive rule on demurrage and detention and I look, I think that they are doing this mostly, but it is interesting because I don't think that they're mentioning that they're specifically doing this, and perhaps they should.

Speaker 1: 21:50

I guess what I'm thinking is they're not really going back to the interpretive rule and saying, look, here's what was in the interpretive rule, here's the correction or here's where we're clarifying it, and I think that is an interesting nuance and just something that I wanted to. I noticed I was brought to my attention the other day and I thought that I might just want to mention it here. Right? So I've reviewed the interpretive rule previously. May 18, 2020, interpretive rule but maybe it's time we take another walk through it again. Now that we have the final language of the tension to the merge rule. It might be time to take a look at that and to see, okay, what have they actually changed from the interpretive rule? What have they adopted? What have they clarified? How does it compare, right? So? But I want to bring that to your attention because it feels like it kind of keeps getting forgotten or lost in the text. But I mean, I was reading the text off Az and that's what the text said is. It specifically says the interpretive rule of May 18, 2020. So just a side thought.

Speaker 1: 22:50

So let's talk about this final rule correction. So the FMC this week, like I said, issued a final rule correction. This was published in the Federal Register on February 26, 2024, concerning demurrage and detention billing requirements. This correction provides information regarding situations in which vessel operating common carriers VOCC enter into written contracts with motor carriers truckers that use containers in the transportation of goods. Okay, so what does all this mean? What's happening here?

Speaker 1: 23:29

First of all, I just want to make this clear the final rule text isn't changing with this correction. This is simply a correction to the preamble. So the background discussion information that was provided in the 100 plus pages of the final rule document. So and I say the 100 plus pages, I've mentioned this before If you just want to know what the actual final text of the rule will be, just go to the last few pages of that 100 plus document, right, like, go to the last few pages I think it's the last four, maybe five and the black and white law is listed there. You'll see exactly how it's going to appear in the Code of Federal Regulations, the CFR, and that's where it is. If you want the explanation for everything, the responses to all the comments, all of that, that's what the other 100 pages are for. But the final rule text is just the last few pages.

Speaker 1: 24:21

So this correction simply changes a piece of that discussion, that discussion, the hundred plus pages that it's discussing. This is what this correction does. So there might be some larger significance, but as it relates to the final black letter law that's going to be published or that will be effective May 28th, this isn't changing any of that language. This is just changing the explanation. And, like I was saying, with the World Shipping Council petition and what they put on their website, they were saying that there was an inconsistency between the explanation and the final rule text. So this changes the explanation part.

Speaker 1: 25:02

So for this change, very simply put and probably oversimplified, the FMC said look, we were a little confusing with how we explain the relationship between VOCCs and truckers, so now we're clarifying it. And that's what they're doing with this correction. And they're saying and essentially, what the rule discussed, what the rule discussion said then, and now they're saying the actual intention isn't changing, just how they said it was too confusing. They're saying what the rule actually discussed is that only on through bills of lading will inland transport contracts fall under the FMC jurisdiction or will those kind of transportation-related things? Only if it's on a through bill of lading will inland parts fall under the FMC jurisdiction and therefore this rule. Otherwise they're going to be outside the scope of this rule and so that's kind of an oversimplification, but that's kind of what they were saying. So, state of the opposite when VOCCs and truckers contract for services, but when they aren't in furtherance of a bill of lading, a through bill of lading, then it won't apply.

Speaker 1: 26:05

So let's get down to the actual text, right? So those were oversimplifications, kind of interpretation or translation of it. But what does the actual text say? So here's the new text of the discussion preamble, and I'm only going to be quoting the new, actually corrected text here because the FMC was a little confusing on their preamble previously. Now when you read it with the explanation here, you can kind of read what they were trying to do. But here's the actual text. That will be the new text of the preamble discussion. It's just about a paragraph.

Speaker 1: 26:36

So it said the rule makes clear that demurrage and detention invoices can only be issued to either the person for whose account the billing party provided ocean transportation or storage of cargo, for whose account the billing party provided ocean transportation or storage of cargo, so that's that directly contracted relationship. And who contracted with the billing party for the ocean transportation or storage of cargo or the consignee right, and so that's always been the direct contractual relationship or the consignee, not both, and nobody else so issued to either 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 the consenting, as discussed in the NPRM. So that's the Notice of Proposed Rulemaking. A primary purpose of this rule is to stop demergent detention invoices from being sent to parties who did not negotiate contract terms for ocean transportation or storage of cargo with the billing party. When a VOCC issues a detention or demurrage invoice, the VOCC must comply with the requirements of Part 541.

Speaker 1: 27:36

However, in our response to this specific comment, we presume that the FMC's jurisdiction would apply only to cargo moved inland under a through bill of lading and that 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. So that's what the correction is, that's all it is. They kind of eliminated maybe six or so sentences that were after that In the original discussion. They seem to kind of almost say look, maybe so ends with this not based on through, but would likely be outside the scope of the rule. They almost seem to say in the original language look, maybe there's a possibility that when a VOCC and trucker contracted in furtherance of a through-bill lading and then they went into a little bit of discussion on how build party as a, as a term is intentionally vague and that's what the FMC they said. But now they're cleaning it up and eliminating that additional discussion. Right, they were kind of saying previously maybe there's a world and so we don't want to do, we don't want to say too absolute here, but in doing that, in doing kind of that, that exercise, it got confusing. Even me talking about it now feels like it's getting a little confusing. So what they said, like I said in the last sentence here of the corrected language in our response to the specific comment, we presume that the FMC's jurisdiction would apply only to cargo moved inland under a through bill of lading and that 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. So, simply put, vocc and motor carrier contracts are likely outside the scope of this rule, like they said. So why is this interesting? Well, it's good that they clarify, it's good that they clean that up and made it a little bit more right.

Speaker 1: 29:24

It's law, so they're always going to say would likely be outside the scope of this rule. What that signals to me is that they're going to let case law figure this out. Right, if there's anything that's in there, they're going to let the case law figure this out. They didn't want to make rules or make absolute statements in the preamble, in the discussion, they're saying this is our interpretation. But really the the discussion, they're saying this is our interpretation, but really the law that goes in is the law and the application of that law. If there's any question, that's where the case law, that's where filing lawsuits and complaints happen, and then they start to drill down and then that's where you use. Remember, in this case, you said this that's I mean, that's the job of a lawyer, right, bringing all these. You said this once before. So I think this is the same with that, all right. So they've cleaned this up. They've kind of eliminated that, but maybe sometimes conversation. So let's get back to that.

Speaker 1: 30:15

World Shipping Council filed petition, right, so they filed this petition against FMC's final rule in the US Court of Appeals for the DC Circuit. The petition itself really kind of says exceeding authority, but then through the published announcement at the same time they said look, they were looking at VOCCs and directly contracted port truckers and the billing. So this correction seems to line up with what the World Shipping Council released when they filed their petition. Right, it's certainly talking about the same thing VOCC and directly contracting with truckers and motor carriers and how that billing works, although the filing at the US Court of Appeals only mentions the exceeding authority argument, or certainly what I found. However, this is likely in the same, because if the FMC was trying to go for contracts between truckers and BOs that didn't have to do through bill of lading, that might actually put them into exceeding authority territory. And so let me say that a different way. They're saying look, inland stuff.

Speaker 1: 31:19

And this is kind of the larger question that is actually still being asked of Congress. About a year ago, 77 shippers got together and said look, there's a gray area on the inland movement of goods and certainly the rail stuff, and so that kind of remains. I say kind of remains a little bit gray area. But that's, I think, the crux of what's happening here is, look, if the FMC was trying to get at contracts that didn't have much to do with the trucker and VOCC relationship through this kind of delineating and regulatory requirements over those relationships, if they were trying to get into something other than that through bill lading, potentially they might be in this exceeding authority territory, right? I mean, that's kind of the argument, but that's a discussion for another day. Right, that's not today. We're not going to be getting into the gray area of all of that FMC jurisdiction on the moves. Where does their jurisdiction? And that gray area remains for now? And, like I said, other than the 77 shippers that asked Congress for that, we don't have a lot of clarity there. And so the FMC kind of really refining and saying, look, when these, when these contracts are on these through-billed lading, that's where we touch that part. So that's the clarification.

Speaker 1: 32:37

But why is the petition important, right? So I feel like this is all getting a little confusing so I want to bring it back around. So why is this petition in general important and why am I bringing it back here? Because if this correction solves that exceeding authority argument, I mean it potentially does right. If that's what the exceeding authority argument was, was this you're getting into inland transport? It's confusing, it's too confusing.

Speaker 1: 33:03

We asked for corrections. They weren't made in the final rule and it might have been an interpretation of what they thought the preamble said versus what the final text said. Right, I mean that's partly what they're saying here. This correction potentially could make that World Shipping Council petition move, right. If this correction clarifies it, syncs it up so that the final text and the preamble now are kind of saying the same thing and it says look, we're staying in our lane, we're staying on through bills of lading, potentially right.

Speaker 1: 33:34

That makes it so that maybe this petition the potential for it to scoot the May 28th date or to potentially pause that May 28th date, maybe it lessens the chance that that'll happen, right, maybe that will be part of what the US Court of Appeals for the DC Circuit looks at and says well, they made this correction seems to line up. They're both. They're all talking about motor carriers and VOCCs and the subject matter experts still remain the industry, right? I mean, this court likely doesn't know as much as the industry surrounding it on these specific issues, but that's what the arguments and that's what all the filings are for. But all this to say, look, this may lessen the chance that that May 28th date changes. And so, look, there's no change to the May 28th date. Right now we're all talking kind of in a speculative what might happen unless we hear otherwise.

Speaker 1: 34:31

I can't say this enough Right now that date is May 28th. That's the effective date and again, the effective date of the rule. But the contents of invoice section is TBD. It's still being reviewed by OMB. So watch for announcements. All this to say, watch for announcements.

Speaker 1: 34:49

That's today's discussion. It's a nice mix of right. Today was a nice mix of getting lost in the weeds and my attempt to kind of bring us out of the weeds with a little translation. But all of this is still very fluid. We have 18 days until the FMC final rule on the D&D goes into effect. That's all we know. That's the only kind of official thing that we know, only kind of official thing that we know, except for that, contents of invoice part so clear as mud.

Speaker 1: 35:16

I think it's all right. I think we'll get through it together. Keep it here. I'm going to keep track of everything. Keep breaking it down. There's a lot of moving parts and a lot of things are going to happen in the next 18 days. The FMC will certainly let us know, right, that's going to be part of their job is making sure that the industry knows if the rule gets, uh, delayed or stayed or paused or any of that stuff. Um, I guess it's.

Speaker 1: 35:39

It's kind of similar if you want to talk about procedural matters. It's a little similar to what's going on with the FTC, the federal trade commission and their non-competes, and the uh chamber of commerce filing a petition against the final rule. Right, that will likely pause that. That's why a lot of people are talking about the non-competes, but also saying don't count your chickens yet. It's likely to go into a whole legal battle. We're kind of in a similar moment here where the rule has been questioned, and so now it's a little bit out of the FMC's control. So we'll just see how the court interprets. Did that correction that happened yesterday solve those issues? Does the petition get repealed, right? I mean, I don't know, there's a million different things that could happen here, but, as always, I got to say this.

Speaker 1: 36:24

As always, the guidance here is general and for educational purposes. It should not be construed to be legal advice directly related to your matter. You need an attorney, contact an attorney. None of this was specific and direct to your situation. I can't stress that enough. This is all just general speculation and educational discussion. You need an attorney, contact an attorney. But if you have specific legal questions, feel free to reach out to me at my legal company, skoll Strategies. Otherwise, for the non-legal questions, for the e-learning general industry, information and insights, come find me at the Maritime Professor. If you like these videos, let me know, comment, like and share. If you want to listen to these episodes on demand, or if you missed any previous episodes, check out the podcast by Landon by Sea. If you prefer to see the video, they live on my YouTube page by Landon by Sea, presented by the Maritime Professor, and while you're at it, check out the website themaritimeprofessorcom. So until next week, this is Lauren Began, the Maritime Professor, and you've just listened to by Land and by Sea. See you next time.