FMC Rejects Carriers' Request to Delay D&D Billing Rule

The Federal Maritime Commission denied a request from a group of ocean carriers to delay its recently issued final rule on demurrage and detention billing requirements, saying the delay would impede orders from Congress and would lead to more confusion within the shipping industry.

Although the FMC rule took effect May 28 (see 2402230049), the Ocean Carrier Equipment Management Association said its members needed more time to adjust their practices and asked the commission to extend the effective date by at least 90 days (see 2406070015). Shipping, trucking and freight forwarding associations strongly opposed the request, though at least two said the FMC could consider giving the industry more time to adapt to the rules before punishing violators with fines (see 2407080016).

In a notice released Sept. 23, the commission said it officially rejected the OCEMA’s petition on Sept. 17, telling the carrier group that an extension would “directly impede the explicit instructions of Congress.” The FMC had been facing pressure from lawmakers to finalize the new billing rules (see 2401260049).

Granting OCEMA’s request would “result in pushing the rule’s effective date even further beyond the explicit statutory deadline,” the FMC said, likely “two years past the specified Congressional deadline.”

OCEMA had also argued members needed more time to adjust to the new rule along with a “correction” to the rule’s preamble later issued by the FMC that clarified how the new requirements apply to cargo moved inland on a through bill of lading (see 2405080026).

The FMC called this argument “unpersuasive." It acknowledged that its correction was “potentially ‘ambiguous’” but said it didn’t change any of the actual regulatory text amended by the rule.

“A rule’s preamble cannot be used to create ambiguity and contradict regulatory text,” the FMC said.

The commission also noted that 16 of the 17 groups and shipping companies that submitted comments to the FMC opposed the extension, and said granting the delay “would lead to greater confusion in the regulated community than what the Petitioner claims was caused by the Correction.” An extension 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.”

Even if it wanted to delay the rule, the FMC said it would take time to draft and implement a rulemaking to extend the effective date. “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,” the commission said.