Evergreen Shipping Agency (America) Corp. v. Federal Maritime Commission, No. 23-1052 (D.C. Cir. 2024)
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The case revolves around Evergreen Shipping Agency (America) Corp. and its affiliates, who were charged by the Federal Maritime Commission (FMC) for imposing "unjust and unreasonable" detention charges on TCW, Inc., a trucking company. The charges were for the late return of a shipping container. The FMC argued that the charges were unreasonable as they were levied for days when the port was closed and could not have accepted a returned container. Evergreen contested this decision, arguing that the FMC's application of the interpretive rule was arbitrary and capricious, in violation of the Administrative Procedure Act.
The FMC had previously ruled in favor of TCW, Inc. in a small claims program. The Commission then reviewed the decision, focusing on the application of the interpretive rule on demurrage and detention. The FMC upheld the initial decision, stating that no amount of detention can incentivize the return of a container when the terminal cannot accept the container. The Commission dismissed Evergreen's arguments that failing to impose detention charges during the port closure would have disincentivized the return of the container before the closure.
The United States Court of Appeals for the District of Columbia Circuit reviewed the case and found the FMC's decision to be arbitrary and capricious. The court noted that the FMC failed to consider relevant factors and did not provide a reasoned explanation for several aspects of its decision. The court also found that the FMC's application of the incentive principle was illogical. The court concluded that a detention charge does not necessarily lack any incentivizing effect because it is levied for a day on which a container cannot be returned to a marine terminal. The court granted the petition for review, vacated the Commission’s order, and remanded the matter to the agency for further proceedings.
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