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Cargo Receiving and Handling Practices are Focus of FMC Rule

Tuesday, December 18, 2018
Sandler, Travis & Rosenberg Trade Report

The Federal Maritime Commission has issued a final rule that, effective Dec. 17, revises the FMC’s interpretation of the scope of section 10(d)(1) of the Shipping Act of 1984, which prohibits regulated entities from failing to establish, observe, and enforce just and reasonable regulations and practices relating to or connected with receiving, handling, storing, or delivering property. Specifically, this rule provides that for a practice or regulation to violate section 10(d)(1) it must be unjust or unreasonable and practiced by a regulated entity on a normal, customary, and continuous basis.

As a result, contrary to the FMC’s reasoning in a line of recent cases, discrete or occasional unjust or unreasonable actions by regulated entities that do not constitute a practice or regulation will no longer constitute a violation of this section. The FMC believes this change will return its focus and priorities to the activities of maritime regulated entities that negatively affect the broader shipping public.

The FMC acknowledges that this rule may prevent some claims from being brought under this provision of the Shipping Act but states that such claims may be brought under other provisions or regulations of the Act or may be adjudicated as matters of contract law, agency law, or admiralty law.

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