[00:00:01] Speaker 00: for the petitioner, Mr. Summers for the respondents. [00:00:14] Speaker 05: Morning, Council. [00:00:15] Speaker 05: Mr Hughes, please proceed when you're ready. [00:00:18] Speaker 01: Good morning. [00:00:19] Speaker 01: May it please the court all Hughes for the petitioner World Shipping Council. [00:00:24] Speaker 01: This case addresses whether an ocean carrier may bill a motor carrier for demurrage or detention charges when two conditions are present. [00:00:34] Speaker 01: The first is an ocean carrier has a contract with the motor carrier. [00:00:38] Speaker 01: And the second is that the motor carrier through its own fault delays the timely movement of containers. [00:00:45] Speaker 01: In our comment letter, we squarely presented this issue to the commission. [00:00:49] Speaker 01: And in issuing the rule, the FMC agreed with our position. [00:00:53] Speaker 01: It said, quote, nothing in the rule prohibits an ocean carrier from issuing a demerger detention invoice to a motor carrier when a contractual relationship exists. [00:01:03] Speaker 01: That's a joint appendix 254. [00:01:06] Speaker 01: But the regulation itself, section 541.4, bars billing in these circumstances. [00:01:13] Speaker 01: When we pointed this out after the rule issued, at first the general counsel told us that they agreed with our position, but then later they corrected the rule by striking this preamble text. [00:01:26] Speaker 01: But they didn't strike it completely because this issue still exists with respect to Marine terminal operators, where they say that Marine terminal operators can build motor carriers and they give justification for that in the preamble, but that's also in conflict with the regulatory text is drafted. [00:01:43] Speaker 01: We think Section 541.4 is unlawful for four principal reasons. [00:01:48] Speaker 01: I'm gonna take these in slight different order from the brief. [00:01:50] Speaker 01: I think the first and most straightforward basis is that there's simply a failure to respond to a material comment. [00:01:58] Speaker 01: There was a response, but that response agreed with us, it got removed, and there's no response to this particular issue. [00:02:04] Speaker 01: The second point is simply a failure to explain. [00:02:07] Speaker 01: I should say these issues are interrelated, but there's no explanation as to why billing is disallowed in these circumstances. [00:02:14] Speaker 01: The third is a violation of the incentive principle, which exists both as a statutory and a regulatory matter. [00:02:21] Speaker 01: And our fourth point is that for FMC to say that all billing in these circumstances is disallowed, there needs to be a determination that such billing is unjust and unreasonable, and there is no determination as to this billing being unjust and unreasonable. [00:02:37] Speaker 01: Now, my friend is going to say that there are abuses and problems that emerge in detention and that regulation is important. [00:02:43] Speaker 01: And I wanna be clear, we don't disagree with the broad principle, either the FMC can generally regulate a demurrage and detention charges, nor that there are certain abuses that are appropriately regulated by the FMC. [00:02:55] Speaker 01: We agree with all of that. [00:02:56] Speaker 01: And my friend is going to point to parts of the regulation where he identifies those abuses and says there's an appropriate regulatory response. [00:03:04] Speaker 01: Again, we agree with all of that. [00:03:06] Speaker 01: We are focused on when there's a contractual relationship between the ocean carrier and the motor carrier, and it's the motor carrier's fault for the delay. [00:03:14] Speaker 01: And the only place in the regulation that addresses that issue agrees with us, saying that there can be billing, even though that's contrary to the regulatory text that was provided. [00:03:25] Speaker 05: On that part of it, so is it the JA 257 and 258 that you're relying on, where [00:03:34] Speaker 05: It's pages 14, 339 to 14, 340, I think, because I think the point you're making now is even if you give effect to the correction, which removes the paragraph in which [00:03:50] Speaker 05: the preamble most clearly took the position that you support. [00:03:55] Speaker 05: There's still something left in the preamble that still supports the position that you support. [00:04:00] Speaker 05: And I just want to make sure that I'm understanding that that part you're pointing to. [00:04:04] Speaker 01: Yes, Your Honor. [00:04:05] Speaker 01: It is the 257 to 258. [00:04:08] Speaker 01: It's that paragraph that carries over about the Marine terminal operators. [00:04:12] Speaker 01: because it's talking there in that marine terminal operator context it's discussing a schedule that may be at the terminal and says if there is billing pursuant to that schedule it's clear and consistent it provides notice to the trucker and it can be enforced as an implied contract right so it specifically talks about treating the schedules and applied contract and so i just want to make sure that your position [00:04:34] Speaker 05: is focused on situations in which there's a contract, whether implied or expressed, but it's focused on situations in which there's a contract, not other situations in which a motor carrier might be the subject of the fee. [00:04:48] Speaker 01: That's correct, Your Honor. [00:04:49] Speaker 01: We're principally focused on what's called carrier haulage. [00:04:52] Speaker 01: These are circumstances whereby their nature, the ocean carrier, has a contract with the motor carrier. [00:04:58] Speaker 01: And so my friend is going to point to other parts of- Before you move on, [00:05:02] Speaker 02: My reading of this language at J257 to 258 in the terminal schedule is that if the terminal schedule has some provisions in it about wharf demurrage, if I'm saying this word correctly, then those can be invoiced or billed. [00:05:26] Speaker 02: That's when I read the rules about what terminal schedules can include. [00:05:33] Speaker 02: It says wharf demurrage is one of the fees that can be specified in a terminal schedule, but that doesn't solve the problem of detention if a motor carrier [00:05:45] Speaker 02: doesn't return the storage container in a timely fashion, that's not addressed in a terminal schedule. [00:05:56] Speaker 02: So even as far as this goes, it doesn't address the other part of the problem, right? [00:06:05] Speaker 01: I think it could potentially be addressed in the tariff. [00:06:07] Speaker 01: But, Your Honor, my principal point is what this says in the page of the preamble that you can do with marine terminal operators is contradicted by the regulation that's actually adopted by 551.4. [00:06:19] Speaker 01: So even though this preamble says you can bill motor carriers if there is a tariff that provides this clarity for, to say, demerge, as Your Honor was suggesting, the actual regulatory text that the FMC adopted prohibits billing in those circumstances. [00:06:34] Speaker 01: So we're in a situation where the explanation. [00:06:37] Speaker 02: So you're saying that we should not read an exception into the regulatory text because they didn't write it. [00:06:49] Speaker 02: that that that that we shouldn't construe the regulatory text to have the exception that the preamble says that it does. [00:06:59] Speaker 01: And this is why we had this. [00:07:00] Speaker 01: We included the email exchange between the then president of my client with the general counsel, the FMC, because after this rule came out, we said, well, [00:07:11] Speaker 01: This is peculiar because on the face of the preamble, it seems from a policy matter, the commission has taken our position and agrees with us, but then how it's reduced it to regulation bars billing in these circumstances. [00:07:25] Speaker 01: The first response from the FMC is, we agree with you, you can bill in these circumstances, and here's how we think it's consistent with the regulatory. [00:07:33] Speaker 02: It's not a response from the commission, it's a response from the general council, and the general council doesn't speak for the commission, right? [00:07:41] Speaker 01: Of course, your honor, I just think this provides some context because that was the first thing, though, that we were told when we explain why we think it's challenging, if not impossible, really impossible to read the regulatory text that way. [00:07:52] Speaker 01: The next thing we found was the correction that removed part of the language, not all of the language. [00:07:58] Speaker 01: And now my friends are taking the position. [00:08:01] Speaker 01: Contrary to the email exchange that we cannot build that it is they're not suggesting that that I'm wrong here in submitting how we read five forty one point four. [00:08:10] Speaker 01: They're saying it is a flat ban on building motor carriers in all circumstances, even when there is a contract. [00:08:17] Speaker 01: And again, that's why I think the most basic way to resolve this case is this was clearly at issue in the regulation. [00:08:23] Speaker 01: My client put it at issue through their comment letter. [00:08:26] Speaker 01: The FMC thought it was at issue because it addressed it meaningfully, responded to the comments, and said, your comment is, they said, it's based on misunderstanding because you can bill in these circumstances. [00:08:37] Speaker 01: Recognizing billing in these circumstances is reasonable. [00:08:40] Speaker 01: That was the position that the FMC took, and to your honest point, as the commission. [00:08:44] Speaker 01: That's what the commission said. [00:08:47] Speaker 01: The commission as commission, now that they're telling us we cannot bill, has never given a reasoned articulation of why we cannot bill. [00:08:55] Speaker 05: Can I ask you this question? [00:08:56] Speaker 05: So the correction comes about subsequently after the email exchange. [00:09:02] Speaker 05: Yeah. [00:09:04] Speaker 05: I take it that you're not challenging the correction. [00:09:07] Speaker 05: Because I don't know that is there a situation in which there's a correction to a rule in this way that doesn't itself go through [00:09:16] Speaker 05: some sort of procedural formalities that attend an amendment to a rule or a new rule? [00:09:23] Speaker 01: I don't know what legal weight the correction has because it didn't undertake notice and comment rulemaking, but it certainly, it doesn't actually add any explanation. [00:09:32] Speaker 01: So if FMC had tried to say, well, we're providing the explanation that was missing in the original rule through the correction, we could have a discussion as to whether or not that's legally permissible. [00:09:42] Speaker 01: But the correction doesn't even attempt to do that. [00:09:45] Speaker 01: It just strikes the language, leaving us with a void. [00:09:48] Speaker 01: So there is no discussion or explanation of billing in these circumstances. [00:09:52] Speaker 05: So for your purposes, I mean, you didn't challenge the correction. [00:09:54] Speaker 05: So you're fine with us taking the correction as legally valid. [00:09:58] Speaker 05: You just think that even with the correction, it doesn't get them all the way home because they're still a problem. [00:10:03] Speaker 05: But I'm right in understanding as a predicate matter that you don't actually challenge [00:10:06] Speaker 01: Well, we are petition for review prior to the issuance of the correction, so the correction occurred after a petition for review. [00:10:13] Speaker 05: But you also didn't raise anything in your brief about the validity of the correction. [00:10:17] Speaker 01: I think that's right, Your Honor. [00:10:19] Speaker 01: But again, I don't think the correction has any substantive weight. [00:10:22] Speaker 01: It doesn't address the issues that we have put forward because there's nothing in the correction taking it as fully valid that answers our fundamental challenges. [00:10:31] Speaker 01: Again, I think easiest is they needed to respond. [00:10:34] Speaker 01: Second, they needed to give explanation. [00:10:36] Speaker 01: Third, [00:10:38] Speaker 01: the substantive result reached is in conflict with the incentive principle. [00:10:42] Speaker 01: The incentive principle exists both as a statutory matter, and even if there are questions about that, it certainly exists as a regulatory matter that the commission itself has adopted. [00:10:51] Speaker 05: But it doesn't matter to you. [00:10:52] Speaker 05: I mean, that's getting to the statutory argument. [00:10:54] Speaker 05: In terms of the various grounds that you put forward, you started with the other one, and that one is just as good. [00:10:59] Speaker 01: I think the easiest route for the court is a very simple APA-based argument of the commission had an obligation to address this issue. [00:11:09] Speaker 01: It didn't. [00:11:09] Speaker 01: That's a basis to vacate and remand without having to engage in any statutory interpretation. [00:11:14] Speaker 01: As arbitrary and capricious. [00:11:15] Speaker 01: Yes, it's arbitrary and capricious. [00:11:16] Speaker 01: I think that would be a very sufficient way to resolve the case without some of the other. [00:11:22] Speaker 01: What I put as my third argument, the conflict with the incentive principle and the fourth argument, the conflict with 41-102, because that would require a determination that is unjust and unreasonable. [00:11:33] Speaker 01: That would require the court to engage in statutory construction or regulatory construction, which we would be happy to discuss. [00:11:41] Speaker 01: that's why I inverted the order because I think the arbitrary and capricious arguments are very straightforward in terms of failure to respond to comments and failure to provide, explain reasoning. [00:11:53] Speaker 01: To me, it's harder to see a more clear cut case where we knew this issue was before the commission. [00:11:58] Speaker 01: It was a material significant issue. [00:12:00] Speaker 01: The commission thought it had to respond to. [00:12:02] Speaker 01: It decided it favorably and at least in its preamble discussion, we thought we had prevailed on this issue. [00:12:09] Speaker 01: Now they tell us that we cannot bill, but there's no justification for that in the context of the rule. [00:12:15] Speaker 03: I was going to say, I'd like to visit your proposed remedies. [00:12:18] Speaker 03: Are you asking for the whole rule to be vacated or just the 541.4? [00:12:23] Speaker 01: We're focused on 541.4, Your Honor. [00:12:25] Speaker 01: That is where we think that is the challenge. [00:12:28] Speaker 01: As I said, [00:12:30] Speaker 01: We are not making a view that the FMC has disempowered from regulating more that there could be justifications for regulations to the extent that they say things like there needs to be more specificity in the billing, timely billing, things of that nature. [00:12:43] Speaker 01: We're not challenging that, we don't disagree. [00:12:45] Speaker 01: This is a very important range of billing where this is reasonable and that's what we're focused on, Your Honor. [00:12:51] Speaker 03: Okay, and then there are other options to remain without vacator and then also severability. [00:12:56] Speaker 03: Could you just speak to those issues as to [00:13:02] Speaker 01: Thank you, Your Honor. [00:13:03] Speaker 01: On severability, again, we're focused on 541.4. [00:13:06] Speaker 01: So I don't think we join issue on vacater. [00:13:09] Speaker 01: Sorry, on severability. [00:13:10] Speaker 01: On vacater, a few points about that. [00:13:13] Speaker 01: Of course, the standard remedy is vacater. [00:13:16] Speaker 01: My friends make an argument [00:13:17] Speaker 01: solely by footnote in their brief suggesting against Faketer, is this court has long precedent in the CTS case, et cetera, that a skeletal argument in footnote doesn't really advance it. [00:13:27] Speaker 01: And I think that's true here because they make two points. [00:13:31] Speaker 01: They say that there would be disruptive consequences, but they say that in one conclusory sentence without any explanation as to why [00:13:39] Speaker 01: returning to the status quo ante, which has governed this industry for decades, would lead to disruptive consequences. [00:13:45] Speaker 01: And I don't think it can be disruptive because our position is that we turn on the existence of contracts. [00:13:50] Speaker 01: All we want to do is be able to enforce existing contracts. [00:13:53] Speaker 01: That's not disruptive to be able to enforce those contracts that are disruptive. [00:13:57] Speaker 01: And the second point is they say that they can cure deficiencies. [00:14:00] Speaker 01: But again, that's a single conclusory sentence. [00:14:03] Speaker 01: with no justification or warrant by footnote as to why the court should have depart from the general approach of a vacator here. [00:14:11] Speaker 05: But from your perspective, as Judge Childs was highlighting, there's no reason to deal with vacator of any part of the rule other than the specific part that you're concerned with. [00:14:20] Speaker 05: The rest of the rule can be intact. [00:14:24] Speaker 01: We're focused on this issue in 541.4. [00:14:28] Speaker 02: Just make sure I understand your arbitrary and capricious argument. [00:14:32] Speaker 02: is your argument that to the extent that the commission says that it's only going to allow invoicing with parties that are in contractual privity with the ocean carriers or the marine terminal operators, you don't dispute [00:14:55] Speaker 02: that proposition. [00:14:57] Speaker 02: You're just saying that they didn't implement that proposition or they didn't implement that theory of efficiency or however you want to put it. [00:15:07] Speaker 02: Is that your argument? [00:15:09] Speaker 01: Yes, sir. [00:15:10] Speaker 01: That's why. [00:15:10] Speaker 01: And again, I know it's not in the rule, but that's why my client before bringing this petition for review [00:15:15] Speaker 01: to the commission because what my client wants is exactly what the preamble of the text said. [00:15:22] Speaker 01: They just want that reduced to the actual operative rule. [00:15:25] Speaker 01: So what we are asking for is for what the FMC said in his preamble text was the result to actually, in fact, be the result. [00:15:34] Speaker 01: So that is the net result that we are requesting. [00:15:38] Speaker 05: Thank you. [00:15:41] Speaker 05: ask you one question about statutory part, not because I necessarily think we need to get to, but I'm just actually just curious about this. [00:15:47] Speaker 05: And this is your second statutory argument. [00:15:50] Speaker 05: In 4102, the provision speaks in terms of a common carrier marine terminal operator or ocean transportation intermediary cannot fail to establish, observe, and enforce just and reasonable regulations and practices, et cetera. [00:16:02] Speaker 05: Are the regulations that's being referred to in that, is that regulations of the regulated parties, or is it regulations of the agency that regulates? [00:16:10] Speaker 01: I think because it says regulations and practices, Your Honor, I think it is confusing. [00:16:14] Speaker 01: But I believe that is talking about the practices of the parties, not the regulations of FMC. [00:16:20] Speaker 01: In this language, as we talk about in the briefs, it's common in statutes where commissions govern the- Tariffs and- [00:16:30] Speaker 01: The system so it's common in the for context and elsewhere and let me just add a point there that we made in our opening brief it's at joint appendix 41. [00:16:39] Speaker 01: This is the interpretive rule that's so critical in this just points out the commission sees the statutory construction the same way. [00:16:48] Speaker 01: The commission says the commission may, quote unquote, issue regulations prohibiting certain practices determined to be unjust and unreasonable, and the D.C. [00:16:58] Speaker 01: Circuit has affirmed this authority. [00:17:00] Speaker 01: That's what the commission says in the interpretive rule. [00:17:03] Speaker 01: We agree with that. [00:17:05] Speaker 01: That's how we think the statute works under 41-102. [00:17:08] Speaker 01: They just have to make the determination that the practices they're prescribing are unjust and unreasonable. [00:17:14] Speaker 01: with respect to situations where there is an actual contract between ocean carrier and motor carrier, there's been no finding that it's unjust and unreasonable. [00:17:22] Speaker 01: Rather, it's to the contrary. [00:17:24] Speaker 01: The struck part of the preamble suggests it is reasonable. [00:17:28] Speaker 01: And the part of the preamble that talks about marine terminal operators says, of course it's reasonable when you're operating pursuant to a tariff, which, again, isn't a one-on-one contract. [00:17:38] Speaker 01: It is an implied and law contract. [00:17:40] Speaker 01: We're talking about where our members have expressed contracts. [00:17:43] Speaker 01: express real contracts with motor carriers to finish the completion of the freight's journey. [00:17:50] Speaker 05: Thank you, Council. [00:17:50] Speaker 05: We'll give you a little time for rebuttal. [00:17:58] Speaker 05: Mr. Summers. [00:17:59] Speaker 04: Good morning. [00:18:03] Speaker 04: So contrary to what the court may have heard, the commission did not agree with the shipping council's interpretation of its rule. [00:18:13] Speaker 04: Our position is that the regulatory text itself has always been very clear. [00:18:18] Speaker 04: Not just the regulatory text itself has been very clear that trucker billing is not allowed in this context, but the NPRM was very clear about what the agency was proposing. [00:18:29] Speaker 04: The preamble itself in [00:18:32] Speaker 04: every other location except for the one paragraph that's been discussed was very clear that billing truckers was not permitted in this circumstance. [00:18:40] Speaker 04: And then the correction that's been discussed was again, very clear truckers can't be billed in this circumstance. [00:18:47] Speaker 05: So the one paragraph was very clear in the opposite direction. [00:18:53] Speaker 04: your honor, it was a garbled paragraph, as we pointed out, two of the same. [00:18:56] Speaker 05: I don't know what garbled. [00:18:57] Speaker 05: It seemed to me actually wasn't garbled. [00:18:58] Speaker 05: It seemed to me it was clear. [00:18:59] Speaker 05: It may have been garbled as to what the result of that is, but the paragraph itself spoke pretty clearly. [00:19:05] Speaker 05: If you did, put it this way. [00:19:07] Speaker 05: Suppose there were no regulatory text, and all you had was that paragraph. [00:19:11] Speaker 05: Wouldn't it be pretty clear what that paragraph said? [00:19:13] Speaker 04: I understand the reading. [00:19:15] Speaker 04: I understand that reading. [00:19:17] Speaker 04: It did not reflect the commission's position, that paragraph. [00:19:20] Speaker 04: I think it's fair to say that it was [00:19:23] Speaker 04: at best ambiguous and erroneous and it was something that's why we chose to correct the text and make it extra clear. [00:19:30] Speaker 04: It really did not, it was not consistent with all of the other factor, all of the other elements that I've mentioned, most importantly, the crystal clear regulation itself. [00:19:43] Speaker 04: the regulation was issued at the same time as that preamble. [00:19:47] Speaker 05: So that's the regulation is what- Actually, I mean, to me, it actually does seem pretty, the paragraph that was [00:19:57] Speaker 05: that was sought to be excised by the correction actually seems pretty consistent with a lot of what's in the rule because it's focused on whether there's a contract. [00:20:05] Speaker 05: And the idea, the underlying principle is that the contracting party is in the best position. [00:20:09] Speaker 05: And so we ought to make sure that the fee is directed against a contracting party. [00:20:14] Speaker 05: And then we do, I think your understanding would be totally understandable if there were never a situation in which the motor carrier could have a contract. [00:20:22] Speaker 05: then everything fits together. [00:20:24] Speaker 05: But I don't think you dispute that there are situations in which a motor con carrier can not just have the implied contract, which is discussed in the rule, but actually have an express contract. [00:20:33] Speaker 05: And if there is an express contract, then it seems to me to be fairly consistent with the rule, absent some explanation to the contrary that I'm not sure is in here as to why that what was in that paragraph wouldn't be what you would expect, which is in those situations in which there is a contract. [00:20:46] Speaker 05: Yeah, you can put the fee against that contracting party consistent with everything else we're saying here that the focus ought to be on the contracting. [00:20:53] Speaker 04: Your honor, I think the distinction that's important to get is the contract that matters, the one under section 541.4, is the contract for ocean carriage. [00:21:02] Speaker 04: That's the contract made between the shipper and the carrier, not a carrier haulage contract. [00:21:07] Speaker 04: That's a different contract, and I'll get to that in a minute. [00:21:10] Speaker 04: but the one that the rule focuses on is who is a party to the ocean carriage contract, and that's not truckers. [00:21:17] Speaker 04: So they're not part of that contract. [00:21:18] Speaker 04: It's not a general contract privity standard. [00:21:21] Speaker 04: It's based on who is party to. [00:21:23] Speaker 05: And was the ocean, was that added as part of the correction? [00:21:27] Speaker 04: No, that was always clear in the rule. [00:21:29] Speaker 04: It's right in the regulatory text of 541.4, which also contains a clear explanation of why MTOs can bill truckers. [00:21:39] Speaker 04: That's because they have a different type of contract, contract for storage of cargo under 541.4, under the clear language of the rule. [00:21:48] Speaker 04: There's no inconsistency with the preamble's explanation that truckers can be billed by MTOs because the rule specifically provides that different type of contract for storage of cargo different from the ocean carriage contract, the kind of contract that MTOs make with truckers to store cargo on site. [00:22:07] Speaker 02: There's no inconsistency. [00:22:09] Speaker 02: I'm not sure I understand you. [00:22:11] Speaker 02: The MTOs based on the terminal schedule, that's what you're talking about now? [00:22:16] Speaker 04: Yes, that's right. [00:22:17] Speaker 02: So what regulation allows the MTO to bill the truckers? [00:22:26] Speaker 04: It is the same regulation that we're talking about. [00:22:28] Speaker 04: 521.4 refers to two different types of contracts. [00:22:33] Speaker 04: one is the contract for ocean carriage the shippers make with the ocean carriers and the other is a contract for the storage of cargo and that's the kind of contract that an mto may make with a trucker and that's why it's permissible for them to build truckers it's under the express terms of the rule while we're on the express terms of the rule it may be skipping ahead a bit but in terms of the remedy perhaps my colleague can can explain further but [00:23:03] Speaker 04: Our understanding is what they're seeking here in this case is essentially to add truckers to the list of parties who can properly be built. [00:23:13] Speaker 04: Certainly not, as Your Honor was asking, not to strike down the entire rule. [00:23:18] Speaker 04: but under my understanding, not even to strike down 541.4, but simply to add truckers to the list. [00:23:25] Speaker 02: Let me ask you a question about language that appears at JA 257, which is page 14339. [00:23:35] Speaker 02: In the FMC response, it's in the bottom first column. [00:23:45] Speaker 02: where it says that after careful analysis, the commission has determined that prohibiting billing parties from issuing the marriage and detention invoices to persons with whom they do not have a contractual relationship will best benefit the supply chain. [00:24:06] Speaker 02: Has that language been modified or omitted or changed? [00:24:13] Speaker 04: I think in that circumstance, Your Honor, the contract that was being discussed was the contract for ocean carriage. [00:24:20] Speaker 04: It's true that at times in the preamble, there is not a full, perhaps a full statement of exactly which contract is being referred to, but that language that you've read was referring to the contract for ocean carriage. [00:24:33] Speaker 04: At times, as the discussion goes on within the preamble, it may be that it does not always [00:24:40] Speaker 04: include all clarifying language, it may start to abbreviate. [00:24:45] Speaker 02: Okay, well let's go to the next page, JA258. [00:24:49] Speaker 02: in the far right column, so this is paragraph, I'm sorry, page 14340 of the Federal Register, volume 89, and there was a question about whether it's proper to allow consignees to be invoiced, and the commission responds [00:25:13] Speaker 02: that yes, it's proper and that's where we're going to change the final rule to allow consignees to be billed when the consignee is the party contracting for the shipping and is therefore in contractual privity with the carrier. [00:25:33] Speaker 02: That language was never amended in the preamble, right? [00:25:37] Speaker 04: That was never changed and it reflects my message that the contract that matters is the one for ocean carriage when we're talking about ocean carrier billing. [00:25:47] Speaker 02: So where in the regulation does it say that the only consignees that can be invoiced are ones that have a contract with an ocean carrier? [00:25:58] Speaker 02: I believe that is made clear in 541.4, Your Honor. [00:26:03] Speaker 02: Show me the language in 541.4 that says that, because all it says is that a properly issued invoice may be given to the consignee, and it doesn't say the consignee that's in privity. [00:26:20] Speaker 02: It just says consignee. [00:26:22] Speaker 04: I believe my reading of the regulation is that it's a party that has a contract for ocean transport or storage, and the consignee is listed after that. [00:26:34] Speaker 02: Or the consignee. [00:26:38] Speaker 02: So what part of subparagraph one is grafted into subparagraph two? [00:26:45] Speaker 02: I mean, they're two separate things. [00:26:48] Speaker 04: I think the idea, the overall reading that we would put forward for that is that the intention there is that the consignee is in a similar position to the shipper, or usually the shipper, and therefore that reflects the same basic analysis and the same underlying. [00:27:09] Speaker 02: Here's my basic concern, and you tell me why I shouldn't have this concern. [00:27:15] Speaker 02: My concern is that the Commission's reasoning seems to be that it's fair to invoice where there's contractual privity, but they omit some parties that have contractual privity from being invoiced, i.e. [00:27:33] Speaker 02: truckers. [00:27:35] Speaker 02: And then they include some parties consignees even without contractual privity if I disagree with your reading of this regulation. [00:27:48] Speaker 02: So I come away with that feeling that the regulation is arbitrary and capricious because it doesn't implement what the commission said that it was trying to implement. [00:27:59] Speaker 02: So tell me why I shouldn't have that conclusion. [00:28:01] Speaker 04: Your honor, I think the standard is whether the parties involved are involved with the ocean carriage contract and are likely to be aware and are aware of the terms, especially the terms that relate to the charging of these late fees. [00:28:15] Speaker 04: So the commission's determination was that obviously it's the shippers who are making the contracts that set the terms, but also consignees typically are involved and aware of those terms as well, regardless of the exact [00:28:31] Speaker 04: way that their relationship to the agreement may be defined. [00:28:34] Speaker 02: It doesn't make if they're aware of the terms if they aren't in privity. [00:28:38] Speaker 02: I mean, how is a consignee, let's suppose that there's a contract between the ocean carrier and a motor carrier that says that the motor carrier under these circumstances would be responsible for the demurrage charges. [00:28:59] Speaker 02: even if the consignee is aware of that contract, if the consignee gets invoiced for those demurrage charges, how are they gonna recover that from the motor carrier? [00:29:12] Speaker 02: That contract, they're not a third-party beneficiary. [00:29:18] Speaker 02: What's their theory of liability to sue and recover the motor carrier [00:29:26] Speaker 02: recover from the motor carrier those submerged charges? [00:29:30] Speaker 04: Your honor, if I understand the question, I think that kind of carrier haulage contract is a separate type of contract. [00:29:38] Speaker 04: I think that our rule only reaches submerged detention charges charged by, in this context, by the ocean carrier. [00:29:47] Speaker 04: If they were to [00:29:50] Speaker 04: that the rule would prohibit such charges being sent to the motor carriers, regardless of the contract. [00:29:57] Speaker 02: Congress said, determine who may be- No, my point is, you say in your brief, and the commission said in the preamble, that look, if there's an instance where the consignee is invoiced for demerit charges, but really the motor carrier is really the cause of those charges, and there's a contract, [00:30:20] Speaker 02: between the ocean carrier and the motor carrier that specifies that under these circumstances, the motor carrier is responsible for those charges. [00:30:30] Speaker 02: That it's fine for the ocean carrier to invoice the consignee because ultimately they can recover from the motor carrier. [00:30:40] Speaker 02: And I'm asking you how? [00:30:43] Speaker 04: Your honor, I'm not sure if that's necessarily. [00:30:45] Speaker 04: You don't think you said that in your brief? [00:30:50] Speaker 04: If you say so, I think it may be that the parties to the ocean carriage contract have assumed the risk of certain causes to the delays that we're talking about that are outside the range of the rule. [00:31:06] Speaker 04: But we looking at the commission was trying to create a rule for the entire system that would help the whole system work in a more reasonable and efficient way. [00:31:14] Speaker 04: We're here focusing on a very specific event. [00:31:18] Speaker 04: It's the case that the ocean carriers have a lot of market power and they may make these carrier haulage contracts with the truckers. [00:31:25] Speaker 04: We're not saying that they have no remedies against the truckers. [00:31:31] Speaker 04: Because they do have those other contracts and they have a lot of market power, they have a lot of power to shape conduct of the truckers. [00:31:38] Speaker 04: But what we're saying is, [00:31:42] Speaker 04: in this system that we're trying to look at more broadly than the claim of the World Shipping Council, it serves the system best, including the incentive principle and the other principles in the interpretive rule, which include transparency and more efficient dispute resolution to have this rule. [00:32:00] Speaker 04: This is where the commission drew the line based on [00:32:03] Speaker 04: the parties involved, it may be that in a particular circumstance, the rule doesn't align perfectly for everyone in the system. [00:32:12] Speaker 04: But our effort was to create an overall system that was more effective than the system that we saw before and that Congress identified as having significant abuses during the pandemic. [00:32:24] Speaker 02: I'd like for you to answer, explain to me what you said on page 36 of your brief. [00:32:30] Speaker 02: which is that in the event that a third party such as a trucker is at fault for a delay, the billed parties have recourse against that third party for reimbursement as they generally do have commercial relationships and strong incentives to continue those relationships. [00:32:51] Speaker 02: So how would that recourse work for a consignee that is billed for a demurrage charge that was the fault of a motor carrier? [00:33:01] Speaker 04: Well, I think the consignee could dispute that charge. [00:33:05] Speaker 04: Dispute it with who? [00:33:07] Speaker 04: Dispute it with the ocean carrier and say, [00:33:11] Speaker 02: What under the regulation would give them a leg to stand on? [00:33:15] Speaker 04: Well, the regulations require that there be, if you look at the statute, section 410, 41, 104. [00:33:23] Speaker 04: D, which is the new provisions that govern the content of invoicing for demergent detention, it specifies, I believe, 13 different elements that the invoices must have. [00:33:36] Speaker 04: And so they can object that the invoice is not. [00:33:38] Speaker 02: OK, so that's just about what the invoice has to include. [00:33:43] Speaker 02: But let's say they included all of the things that they have to include. [00:33:48] Speaker 02: It's not about the substance of what the invoice, it's about [00:33:53] Speaker 02: just generally, should they be responsible for paying it? [00:33:56] Speaker 04: Well, some of the elements do get into the substance of whether the invoice is properly created and properly directed, including, for example, I believe the last element requires that the carrier confirm that it did not cause or contribute to the delay itself. [00:34:17] Speaker 04: So some of those elements do. [00:34:19] Speaker 02: That the carrier did not [00:34:21] Speaker 04: Yeah, that's right. [00:34:22] Speaker 02: So if the ocean carrier is clear, I didn't contribute to the delay. [00:34:27] Speaker 02: The motor carrier did, but I'm going to go ahead and charge the consignee for the demurrage or the detention. [00:34:37] Speaker 04: but I think it would be for the consignee to decline that. [00:34:40] Speaker 04: And, you know, this is based on a hypothetical. [00:34:43] Speaker 02: Consignee could decline to pay the invoice. [00:34:46] Speaker 04: I think they could say, yes, if they said, we're not responsible for this invoice. [00:34:50] Speaker 04: This isn't giving the carrier the right to collect from either of the two entities identified in the rule. [00:34:57] Speaker 02: But doesn't the regulation say that they are properly invoiced for that? [00:35:01] Speaker 04: They are properly invoiced as, [00:35:04] Speaker 04: a category, a type of party, but that doesn't mean that every bill sent to that party is necessarily payable. [00:35:11] Speaker 04: It has to meet other requirements. [00:35:13] Speaker 02: What happens if they refuse to pay it and the ocean carrier says, you owe us this money and you either pay it or we'll sue you or we won't deliver any more product to you? [00:35:35] Speaker 04: Well, I think you've identified mechanisms by which the carrier could seek recourse in the event that some bill that they've sent is not paid. [00:35:45] Speaker 04: And that's true also in terms of their billing of motor carriers, which they seek to want to do. [00:35:51] Speaker 04: I mean, what's really at issue here is that when they have a contract with a motor carrier, they want to be able to bill that party. [00:35:59] Speaker 02: But you said in your brief that the consignee would have recourse against the trucker. [00:36:05] Speaker 02: That's what you say at page 34. [00:36:07] Speaker 02: How do they have recourse against the trucker? [00:36:11] Speaker 04: I believe what that language is trying to say was that the ocean carrier would have recourse, not that consigning would have recourse. [00:36:18] Speaker 02: You said the billed parties will have recourse against the third party, the third party being the trucker. [00:36:25] Speaker 02: So how is the ocean carrier the billed party? [00:36:28] Speaker 02: They are the billing party. [00:36:30] Speaker 04: Yes, that's true. [00:36:31] Speaker 04: If we said that, that may have been erroneous. [00:36:33] Speaker 04: But I think the consignee could contact the motor carrier and seek to negotiate reimbursement. [00:36:40] Speaker 04: I mean, if they felt that they were responsible for the charge. [00:36:43] Speaker 04: So these are general rules and there may be circumstances when they don't [00:36:49] Speaker 04: work perfectly, but in an effort to look at the entire system holistically and create rules that would improve the prior system as Congress directed the commission to do, Congress did direct the commission to determine who may be appropriately billed. [00:37:03] Speaker 05: Can I go back on that score? [00:37:05] Speaker 05: Can I go back to this question about how we apply the scenario, how we apply under the regulation the scenario in which [00:37:16] Speaker 05: The moto carrier has a contractual relationship with the MTO under a schedule, which is disgusted J 257 to 58 so I take it that what you're saying now I just want to make sure I understand your argument that you started with. [00:37:29] Speaker 05: You're saying that in that situation actually [00:37:32] Speaker 05: the regulation does allow for invoicing the motor carrier. [00:37:37] Speaker 05: And that's because that's a storage of cargo contract. [00:37:42] Speaker 05: That's right. [00:37:43] Speaker 05: And so therefore, under 541.4A1, the motor carrier is a party that can be invoiced. [00:37:53] Speaker 05: And so if that's the case, [00:37:57] Speaker 05: then I thought I'm gonna be interested to hear what the other side says on this because I assume that's gonna be news to them. [00:38:03] Speaker 05: But if that's, and also I'm misunderstanding the context entirely, but if that's the case, then why was it under at regulation at 257 and 258 of the joint appendix in the preamble, there's no reference to the regulation. [00:38:20] Speaker 05: I mean, it says that such schedules are enforceable as implied contracts and it references [00:38:27] Speaker 05: 46 USC 4050501F and 46 CFR 25.2A2. [00:38:33] Speaker 05: Wouldn't it just have been easy just to say, well, under the regulation, this is totally participable. [00:38:40] Speaker 05: That's why it speaks in terms of storage contracts. [00:38:43] Speaker 04: I understand that concern, Your Honor. [00:38:46] Speaker 04: If number one, it's not directly an issue in this case, but it may well be that it would have been better. [00:38:51] Speaker 05: It's kind of an issue because I think we're just trying to understand the extent to which there's some rationale in the rule for why circumstances in which motor carriers who are in express contractual privity with the billing party can't be invoiced. [00:39:07] Speaker 05: And this is speaking about that. [00:39:08] Speaker 05: And you've made the representation that the regulation actually did mean to cover that in this particular context of the schedules. [00:39:14] Speaker 05: And it meant to cover that [00:39:15] Speaker 05: by use of the term storage of cargo. [00:39:18] Speaker 05: And I'm just wondering if that's the answer. [00:39:21] Speaker 05: That seems like that would have been a very straightforward answer to put in the preamble, but it's not in there, which makes me wonder whether that is in fact the right way to read the regulation. [00:39:31] Speaker 04: Your honor, it may be that there was an assumption at that point in the preamble that that had been gone over earlier. [00:39:38] Speaker 04: I believe the ANPRM may have discussed the differences in those contracts as well between the contract for storage of cargo versus ocean carriage. [00:39:48] Speaker 05: Is that discussed beforehand in detail? [00:39:51] Speaker 05: I believe it is discussed in the... But there's not even a reference to the terms of the regulations. [00:39:59] Speaker 05: I had not appreciated this argument before, and maybe I missed it somewhere, but I had not appreciated this argument that there's a storage of cargo contract that allows for the levying of the invoice under the terms of the regulation. [00:40:15] Speaker 05: And I guess it's just surprising to me that that wouldn't have been explained in the exact part of the preamble in which this issue is discussed. [00:40:21] Speaker 04: Right. [00:40:21] Speaker 04: I think it was in the ANPRM that [00:40:26] Speaker 04: there was a discussion of the different types of contracts covered, and that the distinction between this contract for storage of cargo versus the ocean carriage contract may have been spelled out. [00:40:42] Speaker 04: That might have been at 87 Federal Register 8507. [00:40:44] Speaker 04: That's the site I have. [00:40:46] Speaker 04: But in any event, I think that point of the preamble [00:40:50] Speaker 04: There may have been an assumption that the regulatory language was was clear, but it may well have benefited from the kind of explanation you're pointing to. [00:40:59] Speaker 04: I don't. [00:41:00] Speaker 05: And the next sentence says this is a very different situation than where a motor carrier. [00:41:08] Speaker 05: Let me see. [00:41:09] Speaker 05: I just lost my place. [00:41:10] Speaker 05: It's a very different situation than where a motor carrier is billed for demerger detention and the motor carrier has no contractual relationship with the billing party and is not privy to the specifics of the contractual agreement. [00:41:21] Speaker 05: I mean, if I read that sentence, then I would have thought the negative pregnant of that is a situation in which the motor carrier is in a contractual relationship with the billing party. [00:41:31] Speaker 05: and therefore is privy to the specifics of the contractual agreement. [00:41:35] Speaker 05: But there's at least some circumstances in which that's the case where you'd say, well, even though that's the case, the regulation still bars in voicing the motor care. [00:41:43] Speaker 04: Yes, where they are in privity in that context is when there's a contract for storage of cargo. [00:41:50] Speaker 04: So perhaps it could have been more clearly stated there. [00:41:54] Speaker 05: But I'm right in saying that the upshot of your view is that [00:41:58] Speaker 05: even in situations, which the preamble denominates as very different, but even in situations in which a motor carrier has a contractual relationship with the billing party and is privy to the specificities of the contractual agreement, the motor carrier still cannot be invoiced. [00:42:15] Speaker 05: That regulation encompasses at least some of those situations. [00:42:18] Speaker 05: I get in your argument now that when you're talking about storage contracts, [00:42:22] Speaker 05: doesn't encompass those. [00:42:23] Speaker 05: But there are other situations in which there is an express contract and there's privity and therefore awareness of the specifics. [00:42:29] Speaker 05: But nonetheless, the regulation bars the invoicing of the motor carrier. [00:42:33] Speaker 04: Yes. [00:42:34] Speaker 04: I think that's right, Your Honor. [00:42:35] Speaker 04: And I think when Congress told the commission to define which parties maybe appropriately build, [00:42:43] Speaker 04: They expected the agency, they weren't saying define it unless the ocean carrier wants to make a different contractual arrangement with another party like a motor carrier. [00:42:56] Speaker 04: The Congress meant for us to define who can be properly billed as a general category. [00:43:00] Speaker 04: So yes, that would exclude motor carriers where they were not [00:43:05] Speaker 04: parties to the operative contract, the one that we're concerned with, the one that sets the terms of demerit and detention. [00:43:13] Speaker 04: So I realize I'm over time. [00:43:15] Speaker 04: If I could just make a couple, you may have more questions. [00:43:18] Speaker 03: Yeah, I just wanted to go into just a little bit about the contradiction [00:43:23] Speaker 03: or the correction that once you became aware of that contradiction between the preamble and the final text, final rule rather, it just seemed like it was treated pretty much ministerial. [00:43:34] Speaker 03: And so I wanted to know, do you consider there to be a more formal process generally rather than these emails? [00:43:42] Speaker 03: And does a correction generally become part of the final rule? [00:43:46] Speaker 04: I think the correction modifies the preamble to the final rule. [00:43:50] Speaker 04: I mean, the terms used here can be confusing. [00:43:53] Speaker 04: The final rule [00:43:55] Speaker 04: often refers to the entire publication that includes the regulatory tax plus the preamble. [00:44:00] Speaker 04: There's been no change to the regulation. [00:44:04] Speaker 04: There has been a change to the lengthy explanation of the regulation that is the preamble to make sure it's consistent with every other part of the preamble where building of truckers in this setting was clearly rejected and the council clearly understood that. [00:44:20] Speaker 04: And to make sure the [00:44:24] Speaker 03: because council is also asking that all of that information be amended or included in the record. [00:44:32] Speaker 03: That's correct, your honor. [00:44:33] Speaker 04: We don't think that's appropriate. [00:44:34] Speaker 04: I think those who are informal guidance oriented emails involving FMC staff, as was noted earlier, that's not the same as the statement of the commission. [00:44:44] Speaker 04: But there's also no ability to comment on any of that information. [00:44:48] Speaker 04: Our position is that it wouldn't be required to have notice and comment for something that was merely correcting one paragraph of a preamble. [00:44:55] Speaker 04: You didn't consider that substantive? [00:44:58] Speaker 04: It's no change at all to the regulation. [00:45:01] Speaker 04: It is clarifying and correcting arguably erroneous information in one paragraph of a preamble. [00:45:08] Speaker 04: So I believe that meets the standard for something that the agency can just correct. [00:45:14] Speaker 04: And it was done before the effective date of the rule. [00:45:17] Speaker 04: So there's no real potential for confusion. [00:45:20] Speaker 04: As far as the emails go, I think in the early, [00:45:26] Speaker 04: There was an effort to understand what was being requested and to reconcile the preamble text at issue with the remainder when greater understanding occurred and it was clear what the question was. [00:45:42] Speaker 04: The main focus of those emails was to ask the council to direct a formal request to the commission. [00:45:48] Speaker 04: to clarify or change the rule. [00:45:52] Speaker 04: And that's something that the council can do anytime. [00:45:54] Speaker 04: We've noted there's been no real evidence presented that this is a substantial problem for the council, other than hypotheticals and general descriptions. [00:46:02] Speaker 04: But if the council wishes to request that the commission reconsider the substance of the rule, identifying evidence as to the problems it's causing them, it's always free to do that. [00:46:12] Speaker 04: But if it hasn't done that, it's filed suit. [00:46:14] Speaker 03: Certainly, then one last point. [00:46:16] Speaker 03: The opposing council has asked that 541.4 be vacated with respect to the rule. [00:46:23] Speaker 03: What's your position on that or is severability an option? [00:46:27] Speaker 04: I think that it need not be vacated because their objection appears to be so limited. [00:46:32] Speaker 04: Our understanding is that they have not challenged the identity, the structure, the current structure of 541.4 in terms of saying here are the parties who can be billed. [00:46:42] Speaker 04: This type, that type, I think my reading and my friend can clarify is that they wish [00:46:50] Speaker 04: a third category to be added, and that is trucker motor carriers when they have a contract with the ocean carrier for carrier foliage. [00:47:02] Speaker 04: I think that's a very limited addition. [00:47:04] Speaker 04: I don't think that would require even vacating 541.4, but a remand with instructions to [00:47:15] Speaker 04: modify and explain would make more sense. [00:47:18] Speaker 04: Because at this point, when the rule has been in effect for almost a year, it would be disruptive to reverse to the prior system, I think at this point. [00:47:27] Speaker 04: And it is something that an explanation-based objection could be addressed in that way, at a minimum. [00:47:35] Speaker 02: I have a question. [00:47:39] Speaker 02: If there's an ocean carrier [00:47:42] Speaker 02: that entered into a contract with motor carriers, let's say in 2020, that said that the motor carriers would be responsible for demurrage and detention charges when those charges were incurred through the fault of the motor carrier. [00:48:06] Speaker 02: Let's say that those contracts existed beginning in 2020. [00:48:12] Speaker 02: With the promulgation of this rule, those ocean carriers can't invoice those motor carriers anymore, right? [00:48:22] Speaker 02: That's right. [00:48:23] Speaker 02: So the rule has the effect of essentially abrogating those contracts to the extent that such a contract exists. [00:48:35] Speaker 04: I do think federal law would generally, um, take precedence over a private contract once, once it's in effect, once it's in effect. [00:48:44] Speaker 02: Yes. [00:48:44] Speaker 02: So, so how is that consistent with your friends on the other side and their opening brief at page 10 talk about the shipping act of 1984 and what its purposes are? [00:48:57] Speaker 02: And it says that one of the purposes of the commission is to regulate common carriage of goods by water in the foreign commerce of the United States with a minimum of government intervention and regulatory costs. [00:49:13] Speaker 02: And then they go on to say that another thing that it directs the commission to do is to ensure an efficient, competitive, economical transportation system, et cetera, et cetera, [00:49:27] Speaker 02: by placing a greater reliance on the marketplace. [00:49:32] Speaker 02: So to the extent that this kind of underlying statute, Congress expressed an intent for the commission to regulate in such a way that there's a minimum of government intervention and there's a greater reliance on the marketplace. [00:49:48] Speaker 02: How is a regulation that abrogates a contract that was negotiated by parties [00:49:56] Speaker 02: to deal with this issue consistent with that statute? [00:50:03] Speaker 02: How is that efficient? [00:50:04] Speaker 02: How is that placing a greater reliance on the marketplace? [00:50:10] Speaker 04: Your honor, I think that was the impetus of the 1984 revision to the act, or rather the 1984 Shipping Act. [00:50:18] Speaker 04: But there have been revisions since then. [00:50:20] Speaker 04: And the most recent one in 2022, the Ocean Shipping Reform Act of 2022, where Congress directed us to create a rule like this, was clearly pushing in a more regulatory direction because of the abuses in the system that Congress and the commission observed during the pandemic. [00:50:38] Speaker 04: abuses that are clear from the legislative record, that are clear from the commission's fact-finding 29 investigation. [00:50:44] Speaker 02: So I would say... Are you saying that the 2022 act somehow overruled what Congress said in the 84 act? [00:50:52] Speaker 04: the 2022 act was a more specific direction to regulate in a very specific area, very limited area of the act that I would call it revising and refining the act. [00:51:05] Speaker 04: And that's what the commission tried to do with its rule, to follow Congress's direction based on what Congress saw and documented during the pandemic to create a more refined and yes, to some extent, more expanded [00:51:19] Speaker 04: regulation in this area. [00:51:20] Speaker 04: And that's clear from the statutory changes that the Ocean Shipping Reform Act of 2022 created in 41.104D and F, where Congress was clearly very concerned to limit the types of billing, the parties to whom you could send these bills and also regulate what the bills could say. [00:51:42] Speaker 04: So I think [00:51:43] Speaker 04: It's correct to say that the 1984 Act was deregulatory relative to what was seen before. [00:51:51] Speaker 04: But I think Congress's more recent direction is in the other direction and does authorize what we did here. [00:51:57] Speaker 05: Thank you, counsel. [00:51:59] Speaker 05: Let me make sure my colleagues don't have additional questions. [00:52:04] Speaker 02: Thank you, John. [00:52:04] Speaker 05: Thank you, counsel. [00:52:10] Speaker 01: I'll give you two minutes for rebuttal. [00:52:13] Speaker 01: Thank you, your honor. [00:52:14] Speaker 01: Just to start with the new argument about the Marine terminal, your honor is right. [00:52:17] Speaker 01: That's not one we had seen before. [00:52:19] Speaker 01: I don't think that argument works, though, for a few reasons. [00:52:22] Speaker 01: The first is 541 talks about billing the party on whose account the storage is for. [00:52:28] Speaker 01: There's no sense that the storage is for the account of the motor carrier. [00:52:32] Speaker 01: That's my first point. [00:52:33] Speaker 01: The second is when you look at the regulatory text, it also says that the Marine terminals can bill for detention. [00:52:40] Speaker 01: Well, the tension has nothing to do with storage. [00:52:42] Speaker 01: That is about keeping the containers out for too long and preventing them to come back into the flow of freight fluidity. [00:52:48] Speaker 01: So that also doesn't work for that second reason. [00:52:51] Speaker 01: And my third point is, even if we're wrong about all that, which I don't think we are, [00:52:56] Speaker 01: This was just an additional example of this rule being arbitrary and capricious. [00:53:00] Speaker 01: I don't think it takes away from our broader showing that the whole purpose of this rule is about contractual privity. [00:53:06] Speaker 01: And that's what our essential point here is, is the preamble as written, which focuses on enforcing contracts, and that's fair for all parties involved, [00:53:14] Speaker 01: We think the preamble yields a sensible result. [00:53:18] Speaker 01: The problem is 554.4 does not achieve what the preamble described. [00:53:24] Speaker 01: That's arbitrary and capricious failure to give reasons, failure to respond to comments. [00:53:29] Speaker 01: In terms of remedy, we do think that vacating 541.4 [00:53:33] Speaker 01: is the critical issue. [00:53:34] Speaker 01: It's the set aside relief under the APA. [00:53:37] Speaker 01: It's because 541.4 is what is harming us. [00:53:40] Speaker 01: It's precluding our members from billing motor carriers pursuant to existing contracts that these arm lanes parties have already negotiated. [00:53:48] Speaker 01: That's what is causing the harm. [00:53:51] Speaker 01: I don't think this court can pull out a pen and add motor carriers to a list. [00:53:55] Speaker 01: That's not a remedy that we have available. [00:53:56] Speaker 01: The remedy that we have is a set aside of the provision. [00:53:59] Speaker 01: We're not asking for a broad set aside of the whole regulatory package, rather the sole piece of the regulation that harms us. [00:54:04] Speaker 02: They say that there's no evidence in the record that such contracts exist. [00:54:10] Speaker 01: That is inaccurate, Your Honor, and I can describe this for a bunch of reasons. [00:54:14] Speaker 01: First, the fact that these contracts, these carrier haulage contracts, were described in such length in the original preamble at 254 demonstrates that they exist. [00:54:24] Speaker 01: There's substantial record evidence of this. [00:54:27] Speaker 01: So in the interpretive rule at J61, the Maritime Commission describes carrier haulage at length and describes how this is a common way of shipping. [00:54:37] Speaker 01: When I say carrier haulage, I mean that's distinct from merchant haulage. [00:54:40] Speaker 01: Carrier haulage is a scenario in which the ocean carrier has a contract not just to deliver the freight to a port, but to deliver it to the consignee wherever [00:54:50] Speaker 01: the purchase or the customer is preferred place. [00:54:54] Speaker 01: In those circumstances, the ocean carrier always has to contract with inland transportation, which is typically with motor carriers. [00:55:03] Speaker 01: The record evidence talks about, for example, the Port of New York and New Jersey. [00:55:07] Speaker 01: This is a J 195 footnote nine, 85% of that car. [00:55:12] Speaker 01: was moved via truck. [00:55:14] Speaker 01: The third reason that this is described is in the World Shipping Council comment at pages J214 to 215, we explain the scenario and the commonality of it. [00:55:23] Speaker 01: Our brief fourth provides a reply 16 to 17 cases that talk about this carrier haulage and disputes between motor carriers [00:55:32] Speaker 01: and ocean carriers demonstrating this occurs. [00:55:35] Speaker 01: This is a frequent pattern. [00:55:36] Speaker 01: You can look to the Supreme Court's decision in Norfolk Southern versus Kirby that talks about these, it's called a through bill of lading. [00:55:44] Speaker 01: The through bill of lading that brings the goods to the ultimate destination is quite common. [00:55:51] Speaker 01: In all those situations with a through bill of lading, you have carrier haulage. [00:55:55] Speaker 05: And then the- There's emails, as the email traffic said. [00:55:59] Speaker 05: I think the email traffic confirms this idea about a through bill of lading. [00:56:03] Speaker 01: Yes, Your Honor. [00:56:04] Speaker 01: It's exactly right. [00:56:04] Speaker 01: It's a through bill of lading. [00:56:05] Speaker 01: And then the last point, Your Honor, is when standing was challenged, if not talked about, I don't think there's a real challenge there. [00:56:11] Speaker 01: But we put up five member declarations. [00:56:14] Speaker 01: And when the court looks to those member declarations, each of them talk about existing contracts that those five members of ours presently have with motor carriers that are impaired by this rule. [00:56:26] Speaker 01: That is in the declarations that we attach to our reply brief to demonstrate standing. [00:56:31] Speaker 01: I think there's an abundance of evidence that this is very frequent. [00:56:35] Speaker 01: And again, we're here on behalf of the ocean water shipping industry because this matters, because this matters an enormous deal. [00:56:43] Speaker 01: of the day, the preamble is written makes sense. [00:56:46] Speaker 01: It's about contractual privity. [00:56:48] Speaker 01: It's about enforcing contracts. [00:56:50] Speaker 01: The notion that demurring detention has problems in the absence of contracts, we don't dispute. [00:56:55] Speaker 01: We think the preamble is written leads to a sensible place. [00:56:58] Speaker 01: The regulation simply did not adopt that. [00:57:01] Speaker 01: That's arbitrary and capricious, and there should be set aside of the portion, the sole portion of the regulation that bars billing in these circumstances. [00:57:09] Speaker 05: Thank you, counsel. [00:57:10] Speaker 05: Thank you to both counsel. [00:57:11] Speaker 05: We'll take this case under submission.