Following the Advance Notice of Proposed Rulemaking on Demurrage and Detention Billing Requirements published in the Federal Register in February, the Federal Maritime Commission (FMC or “the Commission”) notified the public of its Notice of Proposed Rulemaking (NPRM) on October 7, 2022.
The NPRM reinforces the existing demurrage and detention invoicing requirements established pursuant to the Ocean Shipping Reform Act of 2022 and provides clarity on certain data elements, broadens the scope of the invoice requirements, establishes new definitions, and requires additional information on demurrage and detention invoices. The Commission invites interested members of the public to submit comments within sixty (60) days of the NPRM’s publication date in the Federal Register, which is scheduled for October 14.
Below, we provide a high-level summary of notable proposed changes.
- Scope. The NPRM pulls marine terminal operators (MTOs) into the scope of the demurrage and detention invoicing requirements. As such, invoices issued by vessel-operating common carriers (VOCCs), non-vessel-operating common carriers (NVOCCs), and MTOs must adhere to the new proposed regulations at 46 C.F.R. Part 541.
- New Definitions. The Commission proposes new definitions for “demurrage or detention,” “demurrage or detention invoice,” “billed party,” “billing party,” and “billing dispute” to clarify the types of charges subject to these requirements and that the appropriate parties responsible for paying charges are those parties with a genuine commercial relationship with the common carrier or MTO (i.e., a contracting party). As such, parties outside the definition of “billed party,” such as motor carriers and customs brokers, are not liable for the underlying charges and should not be subject to any penalties for nonpayment by the billed party.
- New Required Invoice Information. The NPRM requires new, additional information at a minimum for demurrage and detention invoices. The information falls within the following categories:
- Identifying information (e.g., bill of lading number, container number, and basis for why the invoiced party is the appropriate party to be responsible for the charges)
- Timing information (e.g., time period when charges apply, due date for invoiced charges, and specific dates when demurrage or detention was charged)
- Rate information (e.g., total due, applicable detention or demurrage rule with enough detail for the billed party to locate the specific rate applied, grounds for application)
- Dispute information (e.g., contact person for any disputes, questions, or requests; URL linking parties to the common carrier’s or MTO’s website containing detailed information and documents necessary for disputes, refunds, waivers, etc.; and time frames for disputes and dispute resolution)
- Time Frames for Billing
- Common carriers and MTOs must issue invoices within 30 days from the date charges stop accruing.
- Failure to adhere to the time frame will excuse the billed party from paying the underlying charges.
- Billed parties must dispute invoices within 30 days of receipt.
- Common carriers and MTOs must resolve such disputes or requites within 30 days of receipt.
- Failure to adhere to the time frame will excuse the billed party from paying the underlying charges.
- If a common carrier or MTO bills the incorrect party, the correct billed party must receive an invoice within:
- 30 days from the date the incorrect party disputes the charges with the billing party.
- 60 days after the charges were last incurred.
We continue to monitor these developments and anticipate additional regulatory changes pursuant to the Ocean Shipping Reform Act of 2022. If you have questions regarding how these proposed regulatory changes may impact your business or would like assistance in drafting comments in response to this NPRM, please reach out to our International Trade and Logistics Group for assistance.