World Shipping Council v. Federal Maritime Commission and United States of America

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 9, 2025 Decided March 31, 2026
No. 24-1298
WORLD SHIPPING COUNCIL,
PETITIONER
v.
FEDERAL MARITIME COMMISSION AND UNITED STATES OF
AMERICA,
RESPONDENTS
On Petition for Review of a Final Order
of the Federal Maritime Commission
Robert K. Magovern argued the cause for petitioner. With
him on the briefs were Matthew Howell and Rachel Schwartz.
Harry J. Summers, Attorney-Advisor, Federal Maritime
Commission, argued the cause for respondents. With him on
the brief were Robert B. Nicholson and Robert J. Wiggers,
Attorneys, U.S. Department of Justice, and Phillip “Chris”
Hughey, General Counsel, Federal Maritime Commission.
Tamar Anolic and Courtney E. Mallon, Attorneys, Federal
Maritime Commission, entered appearances.
Before: SRINIVASAN, Chief Judge, WALKER, Circuit
Judge, and GINSBURG, Senior Circuit Judge.

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Opinion for the Court filed by Senior Circuit Judge
GINSBURG.
GINSBURG, Senior Circuit Judge: The Shipping Act of
1984, 46 U.S.C. § 40101 et seq., prohibits common carriers
from unreasonably refusing to deal or to negotiate with a
would-be shipper. 46 U.S.C. § 41104(a)(10). In 2022, the
Congress directed the Federal Maritime Commission to define
an unreasonable refusal to deal or to negotiate with respect to
vessel space. Two years later, the Commission issued a rule
implementing that statutory directive with respect to ocean
common carriers. Definition of Unreasonable Refusal to Deal
or Negotiate with Respect to Vessel Space Accommodations
Provided by an Ocean Common Carrier (Final Rule), 89 Fed.
Reg. 59648 (2024) (codified at 46 C.F.R. § 542.1).
The World Shipping Council, a trade association
representing approximately 90% of the world’s liner or
regularly scheduled, fixed-route shipping vessel services, now
petitions for review of the Final Rule. It argues that the rule
exceeds the Commission’s statutory authority and that it is
arbitrary and capricious. We disagree on both counts and so
deny the Council’s petition.
I. Background
The 1984 Act provides a “regulatory process for the
common carriage of goods by water in the foreign commerce
of the United States.” 46 U.S.C. § 40101(1). Although the
Congress first comprehensively regulated the shipping industry
with the Shipping Act of 1916, Pub. L. No. 64-260, 39 Stat.
728, the 1984 Act largely created the modern regime, in which
the Congress sought to regulate “with a minimum of
government intervention and regulatory costs.” 1984 Act, Pub.
L. No. 98-237, § 2, 98 Stat. 67, 67 (codified as amended at 46

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U.S.C. § 40101). To that end, the 1984 Act implemented
various deregulatory reforms, such as the authorization of
service contracts, which provide a privately negotiated
alternative to the publication of a tariff approved by the FMC.
Id. § 8(c), 98 Stat. at 75 (codified as amended at 46 U.S.C.
§ 40502); see also FMC History, The Shipping Act of 1984,
Fed. Mar. Comm’n, https://perma.cc/VH5C-R9EB (last visited
Mar. 10, 2026) (“The pricing of liner services via negotiated
contracts, rather than exclusively by public tariffs, was a
change that had profound effects on the liner industry”). The
1984 Act, together with the ICC Termination Act of 1995, also
eliminated the Commission’s general ratemaking authority
over common carriers under §§ 17 and 18 of the 1916 Act. See
1984 Act § 20(b)(8), 98 Stat. at 89 (repealing the ratemaking
provision of § 17); ICC Termination Act of 1995, Pub. L. No.
104-88, § 335(b)(6), 109 Stat. 803, 953–54 (repealing § 18).
The Congress most recently amended the 1984 Act by
means of the Ocean Shipping Reform Act of 2022 (OSRA).
Pub. L. No. 117-146, 136 Stat. 1272. In the preamble of the
implementing rule here under review, the Commission
concluded that “[o]ne basis, but not the only one, for some of
the OSRA 2022 provisions were the challenges expressed by
U.S. exporters trying to obtain vessel space to ship their
products.” 89 Fed. Reg. at 59649/3.
A. Statutory Framework
The Shipping Act regulates, among other entities, common
carriers. A common carrier, with certain exceptions not
relevant here, “holds itself out to the general public to provide
transportation by water of . . . cargo between the United States
and a foreign country for compensation”; “assumes
responsibility for the transportation from the port or point of
receipt to the port or point of destination”; and “uses, for all or

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part of that transportation, a vessel operating on the high seas
or the Great Lakes.” 46 U.S.C. § 40102(7)(A). If a common
carrier operates “the vessels by which the ocean transportation
is provided,” then it is an ocean common carrier. See id.
§ 40102(17)–(18).
Section 41104(a)(10), as amended by OSRA § 7(a)(1)(D),
prohibits common carriers from, among other things,
“unreasonably refus[ing] to deal or negotiate . . . with respect
to vessel space accommodations provided by an ocean
common carrier.” 46 U.S.C. § 41104(a)(10); see also OSRA
§ 7(a)(1)(D), 136 Stat. at 1274. OSRA § 7(d) further instructed
the Commission to issue a rule defining such unreasonable
refusals. OSRA § 7(d), 136 Stat. at 1276 (codified at 46 U.S.C.
§ 41104 note).
B. The Final Rule
Pursuant to the OSRA § 7(d) directive, the Commission
issued a Notice of Proposed Rulemaking defining when an
ocean common carrier unreasonably refuses to deal or to
negotiate with respect to vessel space accommodations. 87 Fed.
Reg. 57674 (2022). The Commission there took the
uncontroversial position that the prohibited conduct “does not
lend itself to a general definition and instead must be evaluated
on a case-by-case basis.” Id. at 57676/2. The proposed rule
therefore listed several mandatory but non-exhaustive factors
the Commission would consider in evaluating the
reasonableness of a particular refusal. Id. at 57678/3–79/1. One
consideration was whether an ocean carrier “made business
decisions that were subsequently applied in a fair and
consistent manner.” Id. at 57679/1. The Commission explained
it had “previously found reasonable those decisions that are
connected to a legitimate business decision or motivated by
legitimate transportation factors.” Id. at 57676/3.

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In response to comments, the Commission issued a
Supplemental Notice of Proposed Rulemaking (SNPRM) that
made four principal changes relevant here. First, instead of a
non-exhaustive list of mandatory factors that the Commission
would consider in evaluating reasonableness, the Commission
provided a list of non-binding “factors that the Commission
may choose to consider in evaluating whether a particular
ocean common carrier’s conduct was unreasonable.” 88 Fed.
Reg. 38789, 38804/2 (2023); see also id. at 38807/2–3. Second,
the Commission removed any mention of “business decisions”
from that list. See id. at 38807/2–3. Third, the Commission
included a few “[n]on-binding examples of unreasonable
conduct.” Id. at 38807/3. Fourth, the Commission added a
definition of an unreasonable refusal to provide cargo space
accommodations when available, which is a distinct
prohibition in 46 U.S.C. § 41104(a)(3). 88 Fed. Reg. at
38807/1–2; see also id. at 38791/2–92/3; OSRA § 7(a)(1)(B),
136 Stat. at 1274 (codified at 46 U.S.C. § 41104(a)(3)).
After another comment period, the Commission published
the Final Rule on July 23, 2024. Although the prohibition in 46
U.S.C. § 41104(a)(10) covers all unreasonable refusals to deal
or to negotiate by a common carrier, the definition in the Final
Rule applies only to containerized cargo on ocean (or “vessel-
operating”) common carriers. 89 Fed. Reg. at 59649/2. As had
the SNPRM, the Final Rule also defined an unreasonable
refusal of cargo space accommodations when available. 46
C.F.R. § 542.1(c)–(e).
The Final Rule identifies the following non-binding
factors the Commission may consider “[i]n evaluating the
reasonableness of an ocean common carrier’s refusal to deal or
negotiate with respect to vessel space accommodations”:

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(1) Whether the ocean common carrier followed a
documented export policy that enables the
timely and efficient movement of export
cargo;
(2) Whether the ocean common carrier engaged in
good faith negotiations;
(3) Whether the refusal was based on legitimate
transportation factors; and
(4) Any other relevant factors or conduct.
Id. § 542.1(g); see also id. § 542.1(d) (listing nearly identical
factors for “evaluating the reasonableness of an ocean common
carrier’s refusal to provide cargo space accommodations”). The
Commission defines a documented export policy as a “written
report produced by an ocean common carrier that details the
ocean common carrier’s practices and procedures for U.S.
outbound services.” Id. § 542.1(b). An “ocean common carrier
must submit a documented export policy to the Commission
once per calendar year and include . . . pricing strategies,
services offered, strategies for equipment provision, and
descriptions of markets served.” Id. § 542.1(j)(1).
The Final Rule also retained non-binding examples of
activity the Commission deemed proscribed by 46 U.S.C.
§ 41104(a)(10). The example to which the Council objects is
“[q]uoting rates that are so far above current market rates they
cannot be considered a good faith offer or an attempt at
engaging in good faith negotiations.” 46 C.F.R. § 542.1(h)(1).
II. Jurisdiction
This court has jurisdiction of the Council’s petition to
review the Final Rule pursuant to 28 U.S.C. § 2342(3)(B).

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Although the Commission previously moved to dismiss this
case for lack of standing, it no longer contests the Council’s
standing. Indeed, because the Council’s members are “the
object of the action,” its associational standing is “self-
evident.” Me. Lobstermen’s Ass’n v. Nat’l Marine Fisheries
Serv., 70 F.4th 582, 592 (D.C. Cir. 2023) (cleaned up). Further,
the Council provided sworn declarations from two members
indicating that the Final Rule has imposed concrete costs and
burdens on them. We need not inquire further. See World
Shipping Council v. FMC, 152 F.4th 215, 221 (D.C. Cir. 2025).
III. Analysis
The Council argues that the definition of an unreasonable
refusal to deal or to negotiate with respect to vessel space
accommodations in the Final Rule violates the Administrative
Procedure Act, 5 U.S.C. § 706, in three respects. First, the
Council claims the Commission does not have statutory
authority to consider the price in evaluating the reasonableness
of a carrier’s offer and that the Commission did not set forth a
sound basis for doing so. Second, the Council claims that
requiring a carrier to submit a documented export policy
exceeds the Commission’s statutory authority, is arbitrary and
capricious, and conflicts with another provision in the 1984
Act. Finally, the Council argues the Commission’s removal of
business decisions from the list of factors that may be
considered in evaluating reasonableness is arbitrary and
capricious. Because the definition of an unreasonable refusal to
provide cargo space accommodations when available in the
Final Rule also includes consideration of a documented export
policy and omits any mention of business decisions, see 46
C.F.R. § 542.1(d), the Council’s second and third challenges
apply to both definitions.

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“Courts must exercise their independent judgment in
deciding whether an agency has acted within its statutory
authority.” Loper Bright Enters. v. Raimondo, 603 U.S. 369,
412 (2024). In some situations, “the statute’s meaning may
well be that the agency is authorized to exercise a degree of
discretion. . . . For example, some statutes expressly delegate
to an agency the authority to give meaning to a particular
statutory term.” Id. at 394 (cleaned up). In that case, the “role
of the reviewing court” is “to independently interpret the
statute and effectuate the will of Congress subject to
constitutional limits.” Id. at 395. We must “police the outer
statutory boundaries of those delegations” and “ensure that
agencies exercise their discretion consistent with the APA.” Id.
at 404.
Arbitrary and capricious review is narrow in scope. Motor
Vehicle Mfrs. Ass’n of U.S. v. State Farm Mut. Auto. Ins. Co.,
463 U.S. 29, 43 (1983). The standard “requires that agency
action simply be reasonable and reasonably explained.” Cmtys.
for a Better Env’t v. EPA, 748 F.3d 333, 335 (D.C. Cir. 2014)
(cleaned up). State Farm further provides:
[A]n agency rule would be arbitrary and capricious if
the agency has relied on factors which Congress has
not intended it to consider, entirely failed to consider
an important aspect of the problem, offered an
explanation for its decision that runs counter to the
evidence before the agency, or is so implausible that
it could not be ascribed to a difference in view or the
product of agency expertise.
463 U.S. at 43.

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A. Quoting Rates That Are “So Far Above Current
Market Rates”
The Council contends the Commission has no statutory
authority to consider price in evaluating whether an ocean
common carrier has acted unreasonably, and the Commission
inadequately explained the role of price in the Final Rule. The
rule implicates price as a non-binding example of unreasonable
conduct, to wit: “Quoting rates that are so far above current
market rates they cannot be considered a good faith offer or an
attempt at engaging in good faith negotiations.” 46 C.F.R.
§ 542.1(h)(1). The Council argues the “act of claiming that a
rate is unreasonably high or low is tantamount to setting an
upper or lower rate limit, thus regulating the rate,” which the
Commission has no statutory authority to do. Moreover, per the
Council, there is no precedent for an agency lacking
ratemaking authority to consider rates in a reasonableness
determination.
The Commission counters that there is a “difference
between (1) setting shipping rates and (2) occasionally
evaluating whether one particular rate quoted by a carrier in a
specific context was unreasonably high, as just one potentially
relevant factor, and solely as part of an adjudication.” We
agree.
Like the Commission, we do not view the example in 46
C.F.R. § 542.1(h)(1) as tantamount to rate regulation because,
in any adjudication of an alleged violation of the Final Rule,
the Commission must also consider other relevant factors.
Failure to do so would be arbitrary and capricious. See Marsh
v. Or. Nat. Res. Council, 490 U.S. 360, 378 (1989). Contrary
to the Council’s assertion that “nothing in the Final Rule would
prevent the Commission from only considering price factors in
any given case,” this court recently held that it violates the APA

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for “the FMC to commit to making a circumstantial, fact-bound
inquiry . . . and then, when it [comes] time to apply the rule, to
jettison all but its favorite factor.” Evergreen Shipping Agency
(Am.) Corp. v. FMC, 106 F.4th 1113, 1118 (2024). Put
otherwise, if a common carrier can explain why its quoted
prices, though dramatically higher than the market rate, are
nonetheless reasonable, then the Commission must duly
consider that explanation.
Moreover, we are skeptical of the Council’s broad
assertion that “[t]here is no scenario under which an agency
that does not have ratemaking authority can permissibly use
rate levels as a measure to evaluate reasonableness.” The
National Labor Relations Act, which contains no grant of
power to set wages, imposes a duty to bargain in good faith. 29
U.S.C. § 158(d). In practice, the affirmative duty to bargain in
good faith resembles the prohibition on unreasonable refusals
to deal or to negotiate. And we have held, with respect to the
NLRA, that “[i]n determining whether [a party] fulfilled this
obligation [of good-faith bargaining], the terms of its
bargaining proposals may be examined.” NLRB v. Blevins
Popcorn Co., 659 F.2d 1173, 1188 (D.C. Cir. 1981); see also
K-Mart Corp. v. NLRB, 626 F.2d 704, 707 (9th Cir. 1980) (“We
agree with the ALJ’s characterization of the wage proposals as
‘meager.’ In an age of double digit inflation, an offer of little
or no wage increase is an effort to decrease wages. The ALJ
could infer that the company was not bargaining seriously”).
That the National Labor Relations Board may consider an
employer’s wage proposal in assessing good-faith bargaining
suggests the Commission need not have ratemaking authority
to consider a carrier’s rate proposal in assessing whether the
carrier unreasonably refused to deal or to negotiate with respect
to vessel space accommodations.

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To be sure, an unreasonably low wage offer alone is rarely,
if ever, the only evidence supporting a violation of the duty to
bargain in good faith under the NLRA. That is because the
NLRB considers the “totality of the employer’s conduct,” see,
e.g., District Hosp. Partners, L.P. v. NLRB, 141 F.4th 1279,
1290 (D.C. Cir. 2025), and therefore must consider all relevant
circumstances. The preamble of the rule here under review
similarly commits the Commission to “look at the totality of
circumstances relevant to each case to determine whether or
not an ocean common carrier has acted unreasonably.” 89 Fed.
Reg. at 59657/3. That other factors are usually relevant,
however, does not foreclose the possibility of a proposal so
extreme that it “cannot be considered a good faith offer or an
attempt at engaging in good faith negotiations.” 46 C.F.R.
§ 542.1(h)(1).
In the presumably rare event that a carrier quotes an
extreme rate that it cannot justify, we conclude the FMC has
the authority to decide the carrier has “unreasonably refuse[d]
to deal or negotiate” with its counterparty. 46 U.S.C.
§ 41104(a)(10). As the Council conceded at oral argument,
there is no practical difference between quoting a rate of one
billion dollars and outright refusing to deal. See Oral Arg. Tr.
19:12–17. To hold otherwise would permit any ocean carrier to
refuse to deal or to negotiate with impunity, simply by quoting
an unrealistically high rate. In the Commission’s words: The
“Congress did not pass such a self-defeating law.” Indeed, we
recognize an interpretive presumption against ineffective
readings of a statute that would “render the law in a great
measure nugatory, and enable offenders to elude its provisions
in the most easy manner.” Garland v. Cargill, 602 U.S. 406,
427 (2024) (cleaned up) (quoting The Emily, 22 U.S. (9
Wheat.) 381, 389 (1824)). Although a presumption cannot
justify a deviation from the plain meaning of a statute, see id.
at 427–28, invoking the presumption is particularly appropriate

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here because the Congress has instructed the Commission
specifically to issue a rule “defining [an] unreasonable refusal
to deal or negotiate with respect to vessel space,” OSRA § 7(d),
136 Stat. at 1276 (codified at 46 U.S.C. § 41104 note), and the
“Congress presumably does not enact useless laws.” United
States v. Castleman, 572 U.S. 157, 178 (2014) (Scalia, J.,
concurring in part and concurring in the judgment).
Having determined the Commission has authority to
consider price in the manner contemplated by 46 C.F.R.
§ 542.1(h)(1), we next address the Council’s contention that
the Commission acted arbitrarily and capriciously by failing to
explain the contours of that provision. Specifically, the Council
argues the term “so far above current market rates” is
impermissibly vague. It was not arbitrary, however, for the
Commission to “decline[] to set a bright line to determine how
far above the market rate is unreasonable.” 89 Fed. Reg. at
59662/2. This court has repeatedly upheld agency action that
did not provide a “clear line of demarcation to define an open-
ended term, instead choosing to establish the term’s contours
through a series of adjudications.” PDK Lab’ys Inc. v. DEA,
438 F.3d 1184, 1195 (2006) (cleaned up).
Nor did the agency, in promulgating a general rule, need
to specify exactly what data or methodology it would rely upon
to estimate market rates or, more likely, the high end of a range
of market rates. Cf. Tex. Mun. Power Agency v. EPA, 89 F.3d
858, 870 (D.C. Cir. 1996) (“[F]ailure of an agency to identify
every detail of a process before it is used does not automatically
require judicial interference in matters that must be thought to
lie within the agency’s expertise”). If the Commission
ultimately uses an unreliable or inconsistent methodology to
estimate market rates, then a common carrier may seek review
of that specific application of the Final Rule. That the Council
can “point to a hypothetical case in which the rule might lead

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to an arbitrary result does not render the rule arbitrary or
capricious.” Am. Hosp. Ass’n v. NLRB, 499 U.S. 606, 619
(1991) (cleaned up).
In any event, as counsel for the Commission pointed out at
oral argument, the statutory remedy for a violation of 46 U.S.C.
§ 41104(a)(10) is reparations. 46 U.S.C. §§ 41301(a),
41305(b). Because awarding reparations requires a benchmark,
such as a market rate, we presume the Commission has the
institutional ability reliably to assess a complainant’s evidence
of market rates. See, e.g., OJ Com., LLC v. Hamburg
Südamerikanische Dampfschifffahrts-Gesellschaft A/S & Co.
KG, Docket No. 21-11, 2024 WL 4034610, at *29 (F.M.C.
Aug. 27, 2024) (assessing data in the record to identify the most
supportable measure of the market price of a proposed service
contract after holding a party unreasonably refused to
negotiate).
B. Documented Export Policy
The Council next argues that requiring an ocean carrier to
have a “documented export policy,” 46 C.F.R. § 542.1(j), a
departure from which may be considered in evaluating a refusal
to provide cargo or vessel space accommodations, 46 C.F.R.
§ 542.1(d)(1), (g)(1), exceeds the Commission’s authority and
is arbitrary and capricious. The Commission claims authority
in 46 U.S.C. § 40104(a)(1), which authorizes it to “require a
common carrier . . . to file with [it] a periodical or special
report, an account, record, rate, or charge, or a memorandum
of facts and transactions related to the business of the common
carrier.” The Final Rule defines a documented export policy
broadly as a “written report . . . that details the ocean common
carrier’s practices and procedures for U.S. outbound services.”
46 C.F.R. § 542.1(b); see also 89 Fed. Reg. at 59663/3 (“An
ocean common carrier’s general policies concerning their

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export operations are facts related to the business of the
common carrier”). Even so, the Council argues that 46 U.S.C.
§ 40104(a)(1) authorizes the Commission to collect only
“information or an accounting of events that have already taken
place,” and not what it characterizes as “inherently
prospective” information, such as the “pricing strategies,
services offered, strategies for equipment provision, and
descriptions of markets served” required by the Final Rule. 46
C.F.R. § 542.1(j)(1).
Section 40104(a)(1) is not so narrow. The “pricing
strategies,” etc. of a common carrier at any given time are facts
“related to the business of [a] common carrier” at that time, not
just prospectively. 46 C.F.R. § 542.1(j); 46 U.S.C.
§ 40104(a)(1). The ordinary meaning of “report” is capacious
enough to encompass the requested information. The Council’s
preferred dictionary definition is “a formal oral or written
presentation of the results of an investigation, research
assignment, etc., often with a recommendation for action.”
Black’s Law Dictionary (12th ed. 2024). It is difficult to see
why a definition that includes “often with a recommendation
for action” categorically excludes even truly prospective
information. Another definition that is closer to
contemporaneous with the 1984 Act is even broader. Report,
Black’s Law Dictionary (5th ed. 1979) (“An official or formal
statement of facts or proceedings. To give an account of, to
relate, to tell, to convey or disseminate information”). We
conclude that the Commission is authorized by 46 U.S.C.
§ 40104(a)(1) to require an ocean common carrier to submit a
documented export policy.
The Council’s contention that the requirement of a
documented export policy is arbitrary and capricious fares no
better. The Commission explained that the “information
provided [in a documented export policy] will help the

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Commission determine whether an ocean common carrier’s
conduct in a specific matter aligns with [its] general policies
and whether the ocean common carrier thus acted reasonably.”
89 Fed. Reg. at 59663/3; see also 46 C.F.R. § 542.1(d)(1),
(g)(1). Because we agree that departing from common
practices and procedures can be evidence of unreasonableness,
we think the Commission’s justification for requiring a carrier
to submit a documented export policy is reasonable and
reasonably explained.
For the same reason, contrary to the Council, we think the
scope of the documented export policy is properly limited “to
fulfill the objective of the order.” 46 U.S.C. § 40104(a)(3)(A).
Furthermore, we find the specific requirements of the
documented export policy, such as descriptions of pricing
strategies or markets served, are “sufficiently comprehensible
to the regulated class” to deny a “pre-enforcement APA
challenge on vagueness grounds.” All. for Nat. Health U.S. v.
Sebelius, 775 F. Supp. 2d 114, 134 (D.D.C. 2011).
Finally, the Council argues that, because the Commission
lacks the power to regulate rates, the Commission has no
authority to consider any deviation from the pricing strategies
detailed in a carrier’s documented export policy. This argument
fails because we have already concluded that the Commission
is not categorically barred from considering prices in order to
determine whether a refusal to deal or to negotiate with respect
to vessel space accommodations is unreasonable.
C. Business Decisions
Lastly, the Council argues that the Commission arbitrarily
and capriciously removed any mention of business decisions
from the Final Rule, see 46 C.F.R. § 542.1(d), (g), improperly
departing from both the proposed rule and agency precedent.
The preamble of the Final Rule makes clear, however, that

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“information on business decisions relevant to establishing a
reasonable refusal to deal would still be relevant to the
Commission’s analysis.” 89 Fed. Reg. at 59657/3; see also id.
at 59662/1. At oral argument, counsel for the Commission
acknowledged that the Commission may not decline to
consider a relevant business decision because failure to
consider a relevant factor would itself be arbitrary. See Oral
Arg. Tr. 38:16–24. In short, the Commission did not
meaningfully change course by dropping its main reference to
business decisions. Nor did the Commission free itself to
ignore its precedents regarding business decisions insofar as
those precedents are relevant to issues arising under the Final
Rule.
IV. Conclusion
For the foregoing reasons, the Council’s petition for
review is
Denied.

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