Amid Criticism, FMC Planning to Amend Unreasonable Carrier Conduct Rule

The Federal Maritime Commission will amend its proposed rule on unreasonable carrier conduct (see 2209130040), after industry, lawmakers and at least one federal agency said the rule was too broad, missed congressional intent and didn’t go far enough to address carriers that refuse to carry exports in favor of imports. The commission plans to issue a “supplemental notice of proposed rulemaking” to incorporate changes to the rule, FMC Chair Daniel Maffei said during a Jan. 25 commission meeting, adding that he hopes to publish the updates “as quickly as possible.”

Congress had set a December statutory deadline to finalize the rule (see 2301100034), but Maffei said the FMC needs more time to “thoroughly consider the comments on the proposed rule and address many of the valid concerns raised.” The commission is reviewing the comments and hopes to incorporate the changes within “the next several months,” Maffei said, adding that the new rule likely will include a 30-day public comment period.

“We are cognizant of the deadlines that Congress established, and we know that they were not intended to be optional,” Maffei said. “However, we also know that the Congress does not want to sacrifice responsiveness and effectiveness for speed. Many in Congress, including many of the coauthors of the legislation, have made it clear to me that when push comes to shove, getting it right is more important than getting it fast.”

Maffei’s comments came several months after the commission heard from Reps. Dusty Johnson, R-S.D., and John Garamendi, D-Calif. -- who led the House’s passage of the Ocean Shipping Reform Act of 2022 -- and other lawmakers that the proposed rule needed to be revised (see 2211090026). The Agriculture Transportation Coalition called on the FMC to scrap the rulemaking and start fresh, saying it gave carriers a “loophole” to continue declining U.S. exports (see 2210280051). USDA Secretary Tom Vilsack also weighed in, saying the commission should “significantly narrow” its guidance on reasonable refusals and better “encourage specific actions by carriers to guard against unreasonable refusals” (see 2301110027).

Maffei said the FMC will “get some criticism” for failing to meet the December OSRA deadline and “I take responsibility for that.” But he also pointed to the various other initiatives FMC has been tasked with, including reviewing charge complaints and publishing other rulemakings.

“You can either see the glass as half-full or half-empty. In my view, the glass is 90% full,” Maffei said. “There will be some people that just insist on focusing on the 10% empty,” but the FMC and its staff is “fulfilling this very ambitious act that was passed and signed into law last June almost completely.”

Since OSRA was enacted last year, the FMC has received 200 complaints under its new charge complaint process (see 2209210063), Tara Nielsen, counsel for the FMC’s office of managing director, said during the meeting. She said the commission opened 72 charge complaint investigations from June to January and completed 53, meaning the carrier voluntarily issued a refund or waiver, or the case was closed after an investigation. “The charge complaint process is already having success in driving informal settlements and waivers of demurrage and detention billings,” Nielsen said.