ATA's Intermodal Carriers Conference reported that yesterday, the DC Circuit Court of Appeals issued a ruling in the World Shipping Council’s challenge of the FMC’s Detention and Demurrage Billing Rule. As we had expected based on oral arguments, the judges found the provision of the rule detailing which parties can be billed for these charges to be arbitrary and capricious. The Court found that “the Commission failed to explain the seeming inconsistency between its contractual-privity-based rationale and its categorical bar against billing motor carriers even when in privity with the billing party.” 

While the Court allowed most of the rule to stand, it struck down the rule’s provision defining a properly issued invoice which permits the invoice to be issued solely 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. “ While the challenge was based on the issue of whether charges assessed in carrier haulage could be billed to motor carriers, this provision of the rule makes no distinction. As a result it would seem that there are no limitations on who can be billed for both carrier and merchant haulage charges. 

The Ocean Shipping Reform Act requires that the FMC address the issue of who can be billed for these charges and the Commission should revisit this issue in the future. The Court’s decision, however, would seem to permit ocean carriers to once again bill motor carriers for all detention and demurrage charges regardless of whether they are carrier or merchant haulage. 

CLICK HERE for a copy of the ruling.