[Federal Register Volume 64, Number 44 (Monday, March 8, 1999)]
[Rules and Regulations]
[Pages 11236-11244]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-5364]



[[Page 11235]]

_______________________________________________________________________

Part VI





Federal Maritime Commission





_______________________________________________________________________



46 CFR Parts 535 and 572



Ocean Common Carrier and Marine Terminal Operator Agreements Subject to 
the Shipping Act of 1984; Final Rule

  Federal Register / Vol. 64, No. 44 / Monday, March 8, 1999 / Rules 
and Regulations  

[[Page 11236]]



FEDERAL MARITIME COMMISSION

46 CFR Parts 535 and 572

[Docket No. 98-26]


Ocean Common Carrier and Marine Terminal Operator Agreements 
Subject to the Shipping Act of 1984

AGENCY: Federal Maritime Commission.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Federal Maritime Commission is amending its regulations 
governing agreements among ocean common carriers and marine terminal 
operators to reflect changes made to the Shipping Act of 1984 by the 
recently enacted Ocean Shipping Reform Act of 1998, Pub. L. 105-258. In 
accordance with that Act, the Commission is proposing to establish new 
rules for ocean carrier agreements regarding carriers' service 
contracts with shippers, amend the scope of marine terminal agreements 
subject to the Act, establish rules for agreements on freight forwarder 
compensation, reduce the mandatory notice period for carriers' 
independent action on tariff rates, and make other conforming changes. 
The Commission is also deleting much of its format requirements for 
filed agreements and making other technical amendments to the filing 
rules for clarity and administrative efficiency.

DATES: Effective May 1, 1999.

FOR FURTHER INFORMATION CONTACT:

Thomas Panebianco, General Counsel, Federal Maritime Commission, 800 
North Capitol Street, NW., Washington, DC 20573-0001, (202) 523-5740
Florence Carr, Director, Bureau of Economics and Agreement Analysis, 
Federal Maritime Commission, 800 North Capitol Street, NW., Washington, 
DC 20573-0001, (202) 523-5787

SUPPLEMENTARY INFORMATION:

Background

    On December 15, 1998, the Commission published in the Federal 
Register (63 FR 69034) a proposed rule in this proceeding to bring its 
rules for ocean common carrier and marine terminal operator agreements 
into conformity with the Ocean Shipping Reform Act, Pub. L. 105-258, 
112 Stat. 1902, (``OSRA''), and the Coast Guard Authorization Act of 
1998, 1999 and 2000, Pub. L. 105-383, 112 Stat. 3411. These recently 
enacted statutes make several changes to the Federal Maritime 
Commission's (``FMC'' or ``Commission'') authorities and 
responsibilities under the Shipping Act of 1984, 46 U.S.C. app. 1701 et 
seq. (``1984 Act''). At the same time, the Commission proposed to amend 
its rules to eliminate certain unnecessary formal requirements and make 
other clarifications and changes.
    Comments in this proceeding were filed by: Fruit Shippers Ltd.; 
Port of Philadelphia Marine Terminal Association, Inc.; China Ocean 
Shipping (Group) Company (``COSCO''); P&O Nedlloyd Ltd. (``P&ON''); 
American Institute for Shippers'' Associations, Inc. (``AISA''); Japan-
United States Eastbound Freight Conference and its Member Lines 
(``JUEFC''); Ocean Carrier Working Group Agreement (``Carrier Group''); 
National Industrial Transportation League (``NITL''); Croatia Line; 
Council of European & Japanese National Shipowners'' Associations 
(``CENSA''); Sea-Land Service, Inc.; and American President Lines, Ltd. 
and APL Co. Pte. Ltd. (collectively, ``APL'').

The Final Rule

    The final rule redesignates the Commission's agreement rules, 
formerly 46 CFR part 572, as part 535, and makes changes to its 
authority citations to reflect OSRA's passage.
    The following discussion first covers the four issues in the 
proposed rule that generated the most attention from commenters: (1) 
Proposed reporting requirements; (2) changes regarding service 
contracts; (3) changes in agreement form; and (4) a revised definition 
of ocean common carrier. Following those matters is a discussion of the 
remainder of the rule changes and other matters raised by the 
commenters.

Proposed Reporting Requirements

    The Commission proposed to adopt a new reporting requirement for 
ocean common carriers to aid in implementing OSRA's new prohibitions in 
sections 10(c)(7-8), barring discrimination against ocean 
transportation intermediaries and shippers' associations based on 
status. The proposal would have required each member of an agreement to 
provide summary statistics on numbers of service contract ``requests,'' 
``denials,'' and ``approvals,'' tallied by class of shipper.
    Several commenters, including APL, Sea-Land, COSCO, JUEFC, and the 
Carrier Group object strongly to the Commission's proposed reporting 
requirements for service contracting activity. These commenters 
characterized the proposal as excessively burdensome or intrusive; P&O 
Nedlloyd estimates the annual cost of such data collection at $2 
million. Sea-Land asserts that the proposed reporting categories, i.e., 
the terms ``requested,'' ``adopted,'' or ``denied,'' have no meaning in 
the context of the actual marketplace of contract negotiations. NITL 
echoes many of these sentiments, using examples of negotiating 
situations that cannot easily be characterized as ``requests'' or 
``denials'' under the rule. NITL is concerned that the reporting 
requirements might limit flexibility in carriers' contracting 
processes. Sea-Land and other carrier commenters suggest that the 
proposed reporting requirements are outside the scope of the 
Commission's authority, or they have no valid regulatory purpose, 
inasmuch as they reach wholly individual contracting activities not 
within the scope of the new sections 10(c)(7-8).
    AISA supports the proposed reporting requirement, suggesting that 
it will be minimally intrusive, and will aid the Commission in carrying 
out its responsibilities under section 10(b) (barring, among other 
things, unreasonable refusals to deal) as well as section 10(c)(7-8). 
AISA states that under the 1984 Act, it has been able to detect when 
shippers' associations have been discriminated against by conferences, 
and has sought ``marketplace alternatives to remedy such 
discrimination,'' using, among other things, its ``me-too'' rights to 
obtain competitive contracts. However, AISA notes that, with the 
absence of me-too contract rights for similarly situated shippers and 
the confidentiality of service contracts and agreement contract 
guidelines, its ability to protect itself from discrimination will be 
compromised. It calls the proposed reporting ``prudent,'' ``a good 
minimum,'' and a ``first step'' for administering the new statutory 
protections for intermediaries and shippers' associations.
    The carriers' sweeping legal arguments that the reporting 
requirement exceeds the Commission's authority are unconvincing. 
Inasmuch as the information sought is reasonably related to the 
Commission's oversight responsibilities under the Act, it can 
defensibly be compelled by the agency under section 15 of the Shipping 
Act.
    More persuasive, however, are many of the commenters' explanations 
that the proposed categories of reporting do not comport with the 
market realities of shipping sales practices and commercial inquiries 
and negotiations. After considering the examples set forth in NITL's 
and the carriers' comments, we believe that the proposed reporting 
would generate a large quantity of data of questionable utility. 
Shippers often

[[Page 11237]]

may make inquiries of, and explore negotiations with, a number of 
carriers (with regard to both contract and tariff rates) before making 
final transportation arrangements. In this environment, the proposed 
rule would seem likely to lead to ambiguous tallies reflecting 
inquiries, quotes, offers, or counteroffers.
    AISA is correct that the Commission must engage in active policing 
if the new nondiscrimination provisions of the Act are to be given 
effect, as the Commission will be the only body that can compare and 
analyze terms of otherwise confidential contracts. However, the 
Commission's monitoring and enforcement resources will be better spent 
investigating or analyzing specific allegations or complaints about 
particular instances of status-based discrimination, rather than 
laboring over questionable market-wide statistics. Thus, the reporting 
provision of the proposed rule has not been finalized.

Proposed Amendments Regarding Service Contracts

    The proposed rule contained provisions implementing new 
restrictions and requirements for carrier agreements and service 
contracting, as set forth in the new section 5(c) of the Shipping Act. 
That section states:

    Ocean common carrier agreements. An ocean common carrier 
agreement may not--
    (1) prohibit or restrict a member or members of the agreement 
from engaging in negotiations for service contracts with 1 or more 
shippers;
    (2) require a member or members of the agreement to disclose a 
negotiation on a service contract, or the terms and conditions of a 
service contract, other than those terms and conditions required to 
be published under section 8(c)(3) of this Act; or
    (3) adopt mandatory rules or requirements affecting the right of 
an agreement member or agreement members to negotiate and enter into 
service contracts.
    An agreement may provide authority to adopt voluntary guidelines 
relating to the terms and procedures of an agreement member's or 
agreement members' service contracts if the guidelines explicitly 
state the right of the members of the agreement to not follow these 
guidelines. These agreement guidelines shall be confidentially 
submitted to the Commission.

    The proposed rule included a proposed Sec. 535.802(a-b) indicating 
that the new sections 5(c)(1-2) (prohibiting restrictions on members' 
negotiations and requirements for members to disclose contract 
negotiations and terms) applied to enforceable and unenforceable 
agreements. It contained a definition of voluntary guidelines which 
limited them to ``contract terms a carrier or carriers may include in 
the texts of their individual contracts; or the procedures that a 
carrier or carriers may follow in negotiating, modifying, or 
terminating contracts with shipper customers.'' The proposed rule also 
would have barred guidelines that contained commitments, policies, or 
procedures for notification or pre-clearance of proposed service 
contract terms with other carriers or agreement officials, or 
imposition or acceptance of any liability or sanction whatsoever for 
non-compliance with contract terms.
    The proposed Sec. 535.802 is supported by AISA and NITL. NITL says 
it ``believes that the proposed rules generally comport with the 
provisions and policies of the statute, and in general correctly 
implement the important new restrictions imposed on collective carrier 
action by OSRA.'' NITL at 3. NITL suggests that the proposed section 
barring guidelines for auditing and pre-clearing contracts be amended 
to include the catch-all phrase: ``and any other commitment, policy, or 
procedure that would have a similar effect.''
    The proposal is strenuously objected to by the Carrier Group, APL, 
Sea-Land, JUEFC, P&ON, and CENSA. APL states that the proposed 
Sec. 535.802(a) and (b) are ``overbroad,'' because they ``forbid 
carriers from reaching a consensus concerning service contracts or 
their negotiations which restrict negotiations or require disclosure.'' 
APL at 1. APL asserts that carriers have a right to enter into 
``lawful, independent, parallel courses of conduct with respect to 
service contracts.'' Under OSRA, according to APL, ``carriers may not 
adopt rules affecting a carrier's rights to negotiate or enter into a 
service contract,'' but carriers can ``discuss[] and adopt[] 
consciously parallel action in service contract practices.'' Id. at 1-
2.
    APL suggests that carriers must be able to offer multi-carrier 
service undertakings; to do that, carriers must have extensive 
voluntary discussions and agreements regulating that activity. APL 
urges that the Commission adopt the draft rule set forth in the Carrier 
Group's comments.
    The Carrier Group states that the proposed regulations are 
inconsistent with OSRA, and that the proposed Sec. 535.802(d) (which 
would limit voluntary guidelines to procedures between shippers and 
carriers, not among carriers) is in direct conflict with section 5(c) 
of the Act. The Carrier Group suggests that the Commission cannot place 
any limitation on the scope of voluntary guidelines. The only 
limitation on voluntary guidelines' content, according to the Carrier 
Group, is that they must in some way relate to the terms and procedures 
of service contracting; referring to Black's definition of ``related 
to'' and Supreme Court cases, the carriers assert that guidelines must 
``stand in some relation; have bearing or concern; pertain; refer; (or) 
bring into association with or connection with'' service contracts.
    The Carrier Group states that ``the Commission's position that any 
type of voluntary guidelines or procedures is contrary to the 
disclosure requirements in section 5(c) is unsupported'' and contrary 
to the legislative history. The Carrier Group cites the following 
passage from the Report of the Senate Committee on Commerce, Science, 
and Transportation on the version of OSRA reported out of that 
committee:

    The provisions in new section 5(b)(9) do not extend to the 
discussion, agreement and adoption of voluntary guidelines by 
agreement members concerning their negotiation and use of service 
contracts. Thus, nothing in this Act is intended to preclude 
agreement members from promulgating voluntary guidelines relating to 
the terms and procedures of individual service contracts, as long as 
those guidelines make clear that there is no penalty associated with 
the failure of a member to follow any such guideline.

S. Rep. 105-61, 105th Cong. 1st Sess. 21.
    Sea-Land states that the authority to enter into voluntary 
guidelines is ``clear and unambiguous, and does not exclude any subject 
matter from its scope.'' Sea-Land at 1-2.
    JUEFC makes similar points, stating, ``the plain wording indicates 
that if what is adopted is ``mandatory'' it is banned, and that if what 
is adopted is ``voluntary,'' it is allowed.'' JUEFC at 2. JUEFC 
suggests that carriers could agree to a system of sanctions for failure 
to adhere to service contract guidelines, as long as the sanctions were 
denoted as voluntary. JUEFC suggests that any issues regarding what may 
or may not be permissible guidelines ``should be reserved for 
resolution in specific cases.'' Id. at 3.
    In light of the comments, the Commission has determined not to 
adopt the proposed rule regarding service contracts and voluntary 
guidelines. Instead, the Commission is adopting a final rule covering 
agreement restrictions on service contracting and voluntary guidelines 
that follows the language of OSRA, affording the carriers more 
flexibility than under the proposed rule.
    No objections were raised to the proposed Sec. 535.803, which is 
included in the final rule. It tracks the new statute's mandate that 
carriers may not

[[Page 11238]]

agree to limit freight forwarder compensation to less than 1.25 percent 
of charges, and must be allowed to take independent action on freight 
forwarder compensation on not more than five days' notice.

Proposed Changes Regarding Form of Agreements

    The Commission proposed to eliminate many of the form and manner 
requirements for agreements set forth in subpart D. While this change 
was not mandated by OSRA, the Commission suggested that requirements 
for filing highly structured, tariff-type agreements seemed 
inconsistent with OSRA's focus on the marketplace and emphasis on 
commercial flexibility.
    Reaction to the proposal to eliminate the form requirements for 
agreements was varied. APL is the sole carrier expressly in favor of 
the move, stating:

    We commend the Commission for removing its prior requirements 
for a uniform format for filed agreements. This will cure the 
anomalous situation in which carriers and others subject to the act 
entered into agreements which were commercially and legally 
appropriate, but then had to be rewritten in the prescribed format 
for the regulatory act of filing.
* * * * *
    However, we share the concern of TSA, JUEFC, ANERA and others 
that any new enforcement activity by the Commission based on novel 
and unpublished standards as to what does or does not constitute an 
agreement which is properly interstitial to a filed agreement should 
await another rulemaking.

APL at 2. APL recognizes that the Commission's regulations, recodified 
at 46 CFR 535.407, provide specific guidance as to the content of filed 
agreements. APL is ``encouraged by the fact that these standards remain 
unchanged by the proposed rule, and we do not think that the 
Commission's elimination of the formatting requirement itself changes 
any of the standards of completeness by which agreements filing is to 
be governed.'' Id.
    Other carrier commenters, however, objected strongly to the 
proposed move. Sea-Land explains:

    Sea-Land would not oppose changes in the agreement form and 
manner requirements if they resulted in increased flexibility or 
decreased burdens. What this Proposed Rule has done, however, is 
generate great concern that, whether intended or not, this 
rulemaking could create enormous uncertainty and potential 
regulatory infractions for what has been accepted agreement filing 
practice and conduct that has existed without a problem for well 
over a decade.

Sea-Land at 4.
    P&ON, JUEFC, the Carrier Group, and CENSA also suggest that the 
deletion of form requirements would change the standards for the 
content of agreements. The Carrier Group states that ``we believe the 
true purpose * * * is that elimination of the form and manner 
requirements is, in fact, intended to require the parties to slot 
charter agreements to file their actual operational/administrative 
agreements rather than an agreement in `FMC format.' '' Carrier Group 
at 13. This, according to the Carrier Group, would ``replace one set of 
uncertainties with another.'' Carrier Group at 14. Various carrier 
commenters suggest that when carriers are involved in ongoing 
cooperative working arrangements, they need to enter into various 
detailed agreements to establish the actual working particulars of the 
partnerships. According to the commenters, these so-called 
``operational'' agreements often contain sensitive or confidential 
business information, are revised frequently, and generally are not 
filed with the Commission.
    The Carrier Group asserts that the issue of operational agreements 
is related to the proposed deletion of form requirements:

    [O]perational/administrative agreements contain a myriad of 
provisions necessary for the parties to carry out the authority 
contained in a slot charter agreement filed with the Commission. 
Such provisions include, but are not limited to, slot charter hire, 
financial accounting, terminals to be used at each port, the name of 
the contact person for each party at each port, the type and size of 
containers to be accepted, * * * etc. Most, if not all, of these 
provisions are of no concern to the Commission. They have little or 
no anti-competitive impact. Yet, the Commission's proposed rule 
would require that all such provisions be publicly filed, and 
amended whenever changed.

Carrier Group at 16.
    The Carrier Group does not explain specifically why it believes the 
content standards have changed. JUEFC states, however, that ``(b)y 
removing the list of required elements from (part) 572, this could 
affect future and existing agreements, including those agreements under 
challenge today, by prohibiting carriers from defending their 
agreements based on the existing regulations.'' JUEFC at 9.
    APL's assessment--that elimination of the form requirements does 
not affect standards for content--is accurate. The deletion of the form 
provisions, such as ordering of provisions, page numbering, and use of 
appendices, does not have any impact on the issue of whether particular 
operational or administrative matters need to be filed with the 
Commission. The fact that particular provisions are required to be set 
forth in a fixed order does not provide carriers with a comprehensive 
list of particulars that must be filed in agreements, nor otherwise 
contribute to the certainty or clarity of agreement content 
requirements.\1\
---------------------------------------------------------------------------

    \1\ The form requirements do not purport to be an exhaustive 
list of required content; indeed they do just the opposite. The 
current 46 CFR 572.403(b)(5) (which states that every agreement must 
have an Article 5 providing a summary of the agreement authority) 
states, in part:
    To the extent that the summary provided does not represent the 
full arrangement between the parties, additional articles or 
appendices of the parties' own designation and subsequent to these 
enumerated articles will be required to provide the specification of 
the authority to be exercised and the mechanics of that exercise.
---------------------------------------------------------------------------

    Agreement content is controlled by sections of the Act and 
regulations that have remained unchanged. Ocean common carriers are 
required under section 5 of the 1984 Act to file a true copy of any 
agreement with respect to an activity described in section 4, unless 
such agreement falls within one of the narrow exceptions or exemptions 
set forth in the Act or the Commission's rules. The Commission's rules 
require that filed agreements be ``complete,'' ``in detail,'' 
``clear,'' ``definite,'' and ``specific.'' 46 CFR 572.103(g) and 
572.407(a). The issue of routine administrative or operational matters 
is addressed in an exception in 46 CFR Sec. 572.407(c) (which is left 
unchanged), which states:

    Further specific agreements or understandings which are 
established pursuant to express enabling authority in an agreement 
are considered interstitial implementation and are permitted without 
further filing under section 5 of the Act only if the further 
agreement concerns routine operational or administrative matters, 
including the establishment of tariff rates, rules, and regulations.

    The Commission has determined to adopt the approach urged by APL. 
First, it is proceeding at this time with the elimination of agreement 
form requirements. This step has no substantive effect on the content 
requirements for agreements. Indeed, even with form requirements 
eliminated, nothing bars carriers from continuing to structure their 
agreements as they have done under the old rules.
    Second, the Commission has determined, in the face of a request 
from the nearly-unanimous carrier community, to institute a subsequent 
rulemaking on the issue of content of filed agreements. The carrier 
commenters apparently seek far more specific requirements as to what 
matters do or do not have to be filed. The

[[Page 11239]]

Commission's rules, according to the commenters, should provide 
protections for confidential business information, provide maximum 
flexibility for carriers to modify cooperative arrangements without 
overly burdensome filing requirements or waiting periods, and possibly 
include guidance tailored for different types of agreements. These 
prospective issues would appear to warrant a further public airing and 
Commission review.
    Therefore, Sec. 535.402 is amended as follows. Sections 535.402(a-
b) (paper size, margins, title page) are modified. A revised 
Sec. 535.402(d) clarifies that agreements are to be signed by each 
individual contracting party or its designated agent, as opposed to a 
single official signing on behalf of the group as a whole. Inasmuch as 
agreements should represent the true understanding of each party, it 
does not appear unreasonable that the assent of each individual party 
should be indicated by signature. The Carrier Group and JUEFC object 
that this requirement may be burdensome. This does not appear correct, 
however, as each agreement party can, if it wishes, select the same 
agent for signature purposes. A revised Sec. 535.402(d), permitting 
faxed or photocopied signatures, will also minimize any administrative 
delay.
    The ordering and pagination requirements in Secs. 535.402(e) and 
403 are almost entirely removed. Agreements must either include or be 
accompanied by a table of contents, and by information such as contact 
names, addresses, and specific geographic scope involved. While the 
Commission sought to eliminate as many formalities as possible, these 
requirements are necessary to the expeditious processing and oversight 
of the agreement, and are retained in the final rule.
    Section 535.404 is revised to delete the requirement that 
conference-specific agreement language be ordered in a particular 
fashion. However, the content requirements, which track section 5 of 
the 1984 Act's provisions, are largely retained.
    The Carrier Group suggests that the use of the ``revised pages'' 
format for modifications, as proposed in Sec. 535.405, is ``not 
consistent with how carriers necessarily structure their commercial 
agreements.'' No alternative approach is suggested by the group, 
however. Therefore, the revised page format has been retained in the 
final rule, as it appears from experience to be the most efficient and 
expedient way of processing amendments. If carriers wish to take an 
alternative approach, they can seek a waiver of the requirement 
pursuant to Sec. 535.406. We would also again note, that the 
elimination of the form requirements implicitly provides carriers more 
flexibility to amend their understandings by filing additional 
agreement pages or sections, rather than revised language. Mandatory 
republication is eliminated, replaced with a new Sec. 535.405(e), 
providing that the Commission may mandate republication when it is 
deemed necessary to maintain the clarity of an agreement. In addition, 
the waiting period exemption for miscellaneous amendments, set forth in 
Sec. 535.309, is amended to remove specific form requirements.

Proposed Revised Definition of Ocean Common Carrier

    The Commission proposed an amended definition of ``ocean common 
carrier'' to resolve uncertainty generated by the 1984 Act's definition 
(which simply is ``a vessel-operating common carrier'') and clarify the 
regulatory dividing line between ocean common carriers and non-vessel-
operating common carriers (``NVOCCs'').
    Croatia Line objects to the proposed definition of ``ocean common 
carrier.'' Among other things, Croatia Line represents that the 
Commission provided inadequate notice by including this issue in a 
short-notice OSRA rulemaking. Both Croatia Line and CENSA suggest that 
the definition should be broadened to include a vessel operator that 
provides service to the U.S. pursuant to a transshipment arrangement, 
even if the carrier only operates the foreign-to-foreign leg of the 
service.
    The Commission believes that, given the brevity of the comment 
period in this proceeding and the paucity of comments received on this 
issue, it would be useful to provide an additional opportunity for 
interested parties to comment. The Commission would also benefit from 
more time to consider the merits of this issue. A separate notice 
seeking additional comments in a further rulemaking proceeding will be 
issued shortly. \2\
---------------------------------------------------------------------------

    \2\ Croatia Line incorrectly asserts that the Commission is 
proposing a change in policy. As explained in the proposed rule, the 
proposed definition is a codification of the Commission's 
longstanding, but uncodified, policy. That the Commission has taken 
no enforcement action against Croatia Line in connection with its 
recently filed agreements is not an indication of a proposed policy 
shift. Rather, the Commission is seeking to ensure that it had 
provided the maximum opportunity for notice and comment on its 
longstanding policy in a rulemaking context before considering 
specific enforcement action against any one carrier. In deferring 
the issue to a separate proceeding, the Commission is in no way 
adopting or endorsing Croatia Line's interpretation of the law or 
its characterization of its own status, but rather is seeking to be 
as procedurally fair and inclusive as possible.
---------------------------------------------------------------------------

Other Proposed Changes

    Redesignated Sec. 535.102 is amended to reflect that marine 
terminal agreements are no longer limited to solely international 
commerce.
    The definition of ``common carrier'' in Sec. 535.104(f) is amended 
to reflect changes made in the 1984 Act by section 424(d) of the Coast 
Guard Authorization Act. That act inserted a qualified exception in the 
definition for certain vessels carrying perishable agricultural 
commodities.
    The definition of ``conference agreement,'' in redesignated 
Sec. 535.104(g), is changed to clarify that the term (and the rule 
sections that apply it, such as the mandatory independent action 
requirements) extends only to ocean common carrier conferences, and not 
to marine terminal conferences, which are defined elsewhere in this 
part. The definition is also changed to eliminate two elements that do 
not appear to correspond with the statutory text: (1) The requirement 
that, to be a conference, carriers must agree to collective 
administrative affairs, and (2) the statement that carriers may have a 
common tariff and must participate in some tariff.
    The Carrier Group states that there is no statutory need to change 
the definition in the regulations of ``conference agreement,'' and 
opposes the proposed definition, saying that it could create 
``unintended results.'' Carrier Group at 24. The definition does need 
to be changed, however, to comport with OSRA. Under the new Act, 
agreements other than conferences can enter into service contracts. The 
members of these agreements must, as a matter of course, agree to fix 
and adhere to those service contract rates that they have in common. 
Under the old definition (which said ``conference agreement means an 
agreement * * * which provides for: (1) The fixing of and adherence to 
uniform rates, charges * * *'') an agreement such as a vessel sharing 
agreement that offered joint service contracts would seem to be 
classified as a conference, undermining Congress's intentions. 
Therefore, the definition was amended to make clear that conferences 
provided for the fixing of and adherence to tariff (not service 
contract) rates.
    The Carrier Group appears to object to removing the references to 
``utiliz(ing) a common tariff'' from the current definition. However, 
the deleted clause appeared to add nothing to the old definition, 
insofar as it said that conference carriers ``may'' (but do not

[[Page 11240]]

have to) use a common tariff, but must participate in some tariff. 
While this seems to be an accurate synopsis of the Act's tariff 
publication rule, it does not appear to be an integral component of the 
definition of ``conference.'' The revised definition will not, as the 
Carrier Group suggests without elaboration, subject other carrier 
agreements to various statutory requirements set forth in section 5(b) 
of the Act. Id.
    The definition of ``effective agreement'' in redesignated 
Sec. 535.104(j) is changed to remove references to the Shipping Act, 
1916, and the definition of ``information form'' in paragraph (m) is 
amended to clarify that it extends to some types of agreement 
modifications. ``Marine terminal operator'' is redefined in paragraph 
(q) to accord with the new definition in OSRA, and the definition of 
NVOCC is removed.
    OSRA's changes regarding jurisdiction over marine terminal 
operators are also reflected in redesignated Sec. 535.201, the list of 
agreements subject to the Act. Also in that section, the reference to 
cooperative working agreements with non-vessel-operating common 
carriers, is deleted in accordance with OSRA. Also, references to NVOCC 
and freight forwarder agreements are removed from the non-subject 
agreements section, redesignated Sec. 535.202(f) and (g).
    The exemption provisions in redesignated Sec. 535.301 are changed 
to comport with the new law's more liberal standard. The exemption 
procedures are being moved to a general exemption section in the 
Commission's Rules of Practice and Procedure, 46 CFR part 502.
    In the marine terminal agreements exemption, redesignated 
Sec. 535.307, the definition of ``marine terminal conference'' in 
paragraph (b) is amended to reflect that such agreements do not have to 
involve solely international commerce. Also, the extraneous references 
to collective administrative affairs and tariff filing are removed (as 
with the definition of ``conference agreement'' in redesignated 
Sec. 535.104(g)). In the marine terminal services exemption in 
redesignated Sec. 535.310, a definition of marine terminal services is 
incorporated in paragraph (a), and paragraph (a)(2), which excepts 
previously filed agreements from the exemption, is removed.
    Redesignated Sec. 535.501(a) is amended, and a new Sec. 535.503(b) 
is added to make clear that agreement modifications that expand the 
geographic scope or change the class designation of the underlying 
agreement must be accompanied by an appropriate information form. At 
NITL's suggestion, the reference in Sec. 535.502(a)(5) to ``regulation 
or discussion of service contracts'' is changed to ``discussion or 
agreement on service contracts,'' to more closely track the text of 
OSRA. Also, redesignated Sec. 535.706(c)(1) is amended to accord with 
OSRA's changed tariff requirements.
    The mandatory provisions for independent action for conferences in 
redesignated Sec. 535.801 are changed to reflect that shortened notice 
period, from ten to five days. The rules are amended to reflect the 
statutory change that conferences must allow independent action on all 
rates and service items, not just those required to be included in 
tariffs. That is, if a conference fixes a rate on a commodity exempt 
from tariff publication, for example, waste paper, it must allow 
members to take independent action on the waste paper rates. If the 
conference publishes a waste paper rate in its tariff (it does not have 
to, but it can do so voluntarily), then it must publish the member's IA 
waste paper rates as well. Section 535.801(i), a transitional provision 
that applied to the 90-day period immediately after the IA rules were 
adopted, is deleted.
    In its comments, the Port of Philadelphia seeks confirmation of its 
view of the relationship between the Commission's agreement rules and 
its regulations for marine terminal operator schedules. The port's 
observations are correct, as discussed in more detail in the final rule 
in Docket No. 98-27.
    P&ON suggests that the Commission broaden the exception to the 45-
day waiting period when new parties are added to pre-existing 
agreements. It also suggests that a new process be implemented to 
effect name changes in multiple agreements. Both of these suggestions 
could have some merit, and will be noticed for comment in a subsequent 
rulemaking proceeding.
    The Carrier Group recommends that the Commission take this 
opportunity to eliminate its current Class A reporting requirements for 
high market share rate agreements. However, that reporting requirement 
(adopted less than three years ago) provides information that is 
indispensable for the Commission's ongoing oversight of potentially 
substantially anticompetitive agreements, pursuant to the 6(g) 
standard. Any modifications in the current agreement monitoring program 
based on changed market conditions will be considered only after an 
opportunity to evaluate the competitive effects of OSRA's regulatory 
changes.
    In accordance with the Regulatory Flexibility Act, 5 U.S.C. 601 et 
seq., the Chairman of the Federal Maritime Commission has certified to 
the Chief Counsel for Advocacy, Small Business Administration, that the 
rule will not have a significant impact on a substantial number of 
small entities. In its Notice of Proposed Rulemaking, the Commission 
stated its intention to certify this rulemaking because the proposed 
changes affect only ocean common carriers, marine terminal operators, 
and passenger vessel operators, entities the Commission has determined 
do not come under the programs and policies mandated by the Small 
Business Regulatory Enforcement Fairness Act. As no commenter refuted 
this determination, the certification remains unchanged.
    The Commission has received Office of Management and Budget (OMB) 
approval for the collection of this information required in this part. 
Section 530.991 displays the control numbers assigned by OMB to 
information collection requirements of the Commission in this part by 
the pursuant to the Paperwork Reduction Act of 1995, as amended. In 
accordance with that Act, agencies are required to display a currently 
valid control number. In this regard, the valid control number for this 
collection of information is 3072-0045.
    This regulatory action is not a ``major rule'' under 5 U.S.C. 
804(2).

List of Subjects in 46 CFR Parts 535 and 572

    Administrative practice and procedure; Maritime carriers; Reporting 
and recordkeeping requirements.

    Therefore, for the reasons set forth above, part 572, subchapter C 
of Title 46, Code of Federal Regulations, is redesignated and amended 
as follows:

PART 572--AGREEMENTS BY OCEAN COMMON CARRIERS AND OTHER PERSONS 
SUBJECT TO THE SHIPPING ACT OF 1984 [REDESIGNATED AS PART 535 AND 
AMENDED]

    1. The authority citation for part 572 [redesignated as part 535] 
is amended to read as follows:

    Authority: 5 U.S.C. 553, 46 U.S.C. app. 1701-1707, 1709-1710, 
1712 and 1714-1717, Pub. L. 104-88, 109 Stat. 803.

    2. Redesignate part 572 as part 535 of subchapter B, chapter IV of 
46 CFR.
    3. Revise redesignated Sec. 535.101 to read as follows:

[[Page 11241]]

Sec. 535.101  Authority.

    The rules in this part are issued pursuant to the authority of 
section 4 of the Administrative Procedure Act (5 U.S.C. 553), sections 
2, 3, 4, 5, 6, 7, 8, 10, 11, 13, 15, 16, 17 and 19 of the Shipping Act 
of 1984 (``the Act''), and the Ocean Shipping Reform Act of 1998, Pub. 
L. 104-88, 109 Stat. 803.


Sec. 535.102  [Amended]

    4. Amend redesignated Sec. 535.102 to remove the parenthetical 
phrase ``(to the extent the agreements involve ocean transportation in 
the foreign commerce of the United States).''
    5. Amend redesignated Sec. 535.103 to add paragraph (h) to read as 
follows:


Sec. 535.103  Policies.

* * * * *
    (h) In order to promote competitive and efficient transportation 
and a greater reliance on the marketplace, the Act places limits on 
carriers' agreements regarding service contracts. Carriers may not 
enter into an agreement to prohibit or restrict members from engaging 
in contract negotiations, may not require members to disclose service 
contract negotiations or terms and conditions (other than those 
required to be published), and may not adopt mandatory rules or 
requirements affecting the right of an agreement member or agreement 
members to negotiate and enter into contracts. However, agreement 
members may adopt voluntary guidelines covering the terms and 
procedures of members' contracts.
    6. Amend redesignated Sec. 535.104 as follows: paragraphs (f), (g), 
(j), (m) and (q) are revised, paragraph (u) is removed, paragraphs (v), 
(w), (x), (y), (z), (aa), (bb) and (cc) are redesignated (u), (v), (w), 
(x), (y), (z), (aa) and (bb), paragraph (dd) is redesignated (cc) and 
revised, paragraph (ee) is redesignated (dd), redesignated paragraph 
(dd) is revised, paragraphs (ff), (gg), (hh), (ii), (jj), and (kk) are 
redesignated (ee), (ff), (gg), (hh), (ii) and (jj), as follows:


Sec. 535.104  Definitions.

* * * * *
    (f) Common carrier means a person holding itself out to the general 
public to provide transportation by water of passengers or cargo 
between the United States and a foreign country for compensation that:
    (1) Assumes responsibility for the transportation from the port or 
point of receipt to the port or point of destination; and
    (2) Utilizes, for all or part of that transportation, a vessel 
operating on the high seas or the Great Lakes between a port in the 
United States and a port in a foreign country, except that the term 
does not include a common carrier engaged in ocean transportation by 
ferry boat, ocean tramp, or chemical parcel tanker, or by a vessel when 
primarily engaged in the carriage of perishable agricultural 
commodities:
    (i) If the common carrier and the owner of those commodities are 
wholly owned, directly or indirectly, by a person primarily engaged in 
the marketing and distribution of those commodities; and
    (ii) Only with respect to those commodities.
    (g) Conference agreement means an agreement between or among two or 
more ocean common carriers which provides for the fixing of and 
adherence to uniform tariff rates, charges, practices and conditions of 
service relating to the receipt, carriage, handling and/or delivery of 
passengers or cargo for all members. The term does not include joint 
service, pooling, sailing, space charter, or transshipment agreements.
* * * * *
    (j) Effective agreement means an agreement effective under the Act.
* * * * *
    (m) Information form means the form containing economic information 
which must accompany the filing of certain kinds of agreements and 
agreement modifications.
* * * * *
    (q) Marine terminal operator means a person engaged in the United 
States in the business of furnishing wharfage, dock, warehouse, or 
other terminal facilities in connection with a common carrier, or in 
connection with a common carrier and a water carrier subject to 
subchapter II of chapter 135 of Title 49 U.S.C. This term does not 
include shippers or consignees who exclusively furnish marine terminal 
facilities or services in connection with tendering or receiving 
proprietary cargo from a common carrier or water carrier.
* * * * *
    (cc) Service contract means a written contract, other than a bill 
of lading or a receipt, between one or more shippers and an individual 
ocean common carrier or an agreement between or among ocean common 
carriers in which the shipper or shippers make a commitment to provide 
a certain volume or portion of cargo over a fixed time period, and the 
ocean common carrier or the agreement commits to a certain rate or rate 
schedule and a defined service level--such as assured space, transit 
time, port rotation, or similar service features. The contract may also 
specify provisions in the event of nonperformance on the part of any 
party.
    (dd) Shipper means:
    (1) A cargo owner;
    (2) The person for whose account the ocean transportation is 
provided;
    (3) The person to whom delivery is to be made;
    (4) A shippers' association; or
    (5) A non-vessel-operating common carrier (i.e., a common carrier 
that does not operate the vessels by which the ocean transportation is 
provided and is a shipper in its relationship with an ocean common 
carrier) that accepts responsibility for payment of all charges 
applicable under the tariff or service contract.
* * * * *
    7. Amend redesignated Sec. 535.201 to revise paragraphs (a)(5), 
(a)(6), (a)(7) and (b) to read as follows:


Sec. 535.201  Subject agreements.

    (a) * * *
    (5) Engage in exclusive, preferential, or cooperative working 
arrangements among themselves or with one or more marine terminal 
operators;
    (6) Control, regulate, or prevent competition in international 
ocean transportation; or
    (7) Discuss and agree on any matter related to service contracts.
    (b) Marine terminal operator agreements. This part applies to 
agreements among marine terminal operators and among one or more marine 
terminal operators and one or more ocean carriers to:
    (1) Discuss, fix, or regulate rates or other conditions of service; 
or
    (2) Engage in exclusive, preferential, or cooperative working 
arrangements, to the extent that such agreements involve ocean 
transportation in the foreign commerce of the United States.
    8. Amend redesignated Sec. 535.202 to revise paragraphs (d) and (e) 
and to remove paragraphs (f) and (g) to read as follows:


Sec. 535.202  Non-subject agreements.

* * * * *
    (d) Any agreement among common carriers to establish, operate, or 
maintain a marine terminal in the United States; and
    (e) Any agreement among marine terminal operators which exclusively 
and solely involves transportation in the interstate commerce of the 
United States.
    9. Amend redesignated Sec. 535.301 to revise paragraphs (a) and 
(c), to remove paragraphs (d) and (e), and to redesignate paragraph (f) 
as paragraph (d) to read as follows:

[[Page 11242]]

Sec. 535.301  Subject agreements.

    (a) Authority. The Commission, upon application or its own motion, 
may by order or rule exempt for the future any class of agreements 
between persons subject to the Act from any requirement of the Act if 
it finds that the exemption will not result in substantial reduction in 
competition or be detrimental to commerce.
* * * * *
    (c) Application for exemption. Applications for exemptions shall 
conform to the general filing requirements for exemptions set forth at 
Sec. 502.67 of this title.
* * * * *
    10. Amend redesignated Sec. 535.307 to revise paragraph (b) to read 
as follows:


Sec. 535.307  Marine terminal agreements---exemption.

* * * * *
    (b) Marine terminal conference agreement means an agreement between 
or among two or more marine terminal operators and/or ocean common 
carriers for the conduct or facilitation of marine terminal operations 
which provides for the fixing of and adherence to uniform maritime 
terminal rates, charges, practices and conditions of service relating 
to the receipt, handling, and/or delivery of passengers or cargo for 
all members.
* * * * *
    11. Amend redesignated Sec. 535.309 to revise paragraphs (a)(2) to 
read as follows:


Sec. 535.309  Miscellaneous modifications to agreements--exemptions.

    (a) * * *
    (2) Any modification to the following:
    (i) Parties to the agreement (limited to conference agreements, 
voluntary ratemaking agreements having no other anticompetitive 
authority (e.g., pooling authority or capacity reduction authority), 
and discussion agreements among passenger vessel operating common 
carriers which are open to all ocean common carriers operating 
passenger vessels of a class defined in the agreements and which do not 
contain ratemaking, pooling, joint service, sailing or space chartering 
authority).
    (ii) Officials of the agreement and delegations of authority.
    (iii) Neutral body policing (limited to the description of neutral 
body authority and procedures related thereto).
* * * * *
    12. Amend redesignated Sec. 535.310 to revise paragraph (a) to read 
as follows:


Sec. 535.310  Marine terminal services agreements--exemptions.

    (a) Marine terminal services agreement means an agreement, 
contract, understanding, arrangement or association, written or oral 
(including any modification, cancellation or appendix) between a marine 
terminal operator and an ocean common carrier that applies to marine 
terminal services, including checking; dockage; free time; handling; 
heavy lift; loading and unloading; terminal storage; usage; wharfage; 
and wharf demurrage and including any marine terminal facilities which 
may be provided incidentally to such marine terminal services) that are 
provided to and paid for by an ocean common carrier. The term ``marine 
terminal services agreement'' does not include any agreement which 
conveys to the involved carrier any rights to operate any marine 
terminal facility by means of a lease, license, permit, assignment, 
land rental, or similar other arrangement for the use of marine 
terminal facilities or property.
* * * * *
    13. Amend redesignated Sec. 535.402 to revise paragraphs (a), (b) 
introductory text, (d) and (e) and remove paragraphs (f) and (g) to 
read as follows:


Sec. 535.402  Form of agreements.

* * * * *
    (a) Agreements shall be clearly and legibly written. Agreements in 
a language other than English shall be accompanied by an English 
translation.
    (b) Every agreement shall include or be accompanied by a title page 
indicating:
* * * * *
    (d) Each agreement and/or modification filed will be signed in the 
original by an official or authorized representative of each of the 
parties and shall indicate the typewritten full name of the signing 
party and his or her position, including organizational affiliation. 
Faxed or photocopied signatures will be accepted if replaced with an 
original signature as soon as practicable before the effective date.
    (e) Every agreement shall include or be accompanied by a Table of 
Contents providing for the location of all agreement provisions.
    14. Revise redesignated Sec. 535.403 to read as follows:


Sec. 535.403  Agreement provisions.

    If the following information (necessary for the expeditious 
processing of the agreement filing) does not appear fully in the text 
of the agreement, it shall be indicated in an attachment or appendix to 
the agreement, or on the title page:
    (a) Details regarding parties. Indicate the full legal name of each 
party, including any FMC-assigned agreement number associated with that 
name; and the address of its principal office (to the exclusion of the 
address of any agent or representative not an employee of the 
participating carrier or association).
    (b) Geographic scope of the agreement. State the ports or port 
ranges to which the agreement applies and any inland points or areas to 
which it also applies with respect to the exercise of the collective 
activities contemplated and authorized in the agreement.
    (c) Officials of the agreement and delegations of authority. 
Specify, by organizational title, the administrative and executive 
officials determined by the parties to the agreement to be responsible 
for designated affairs of the agreement and the respective duties and 
authorities delegated to those officials. At a minimum, specify:
    (1) The officials with authority to file agreements and agreement 
modifications and to submit associated supporting materials or with 
authority to delegate such authority; and
    (2) A statement as to any designated U.S. representative of the 
agreement required by this chapter.
    15. Revise redesignated Sec. 535.404 to read as follows:


Sec. 535.404  Organization of conference and interconference 
agreements.

    (a) Each conference agreement shall include the following:
    (1) Neutral body policing. State that, at the request of any 
member, the conference shall engage the services of an independent 
neutral body to fully police the obligations of the conference and its 
members. Include a description of any such neutral body authority and 
procedures related thereto.
    (2) Prohibited acts. State affirmatively that the conference shall 
not engage in conduct prohibited by section 10(c)(1) or 10(c)(3) of the 
Act.
    (3) Consultation: Shippers' requests and complaints. Specify the 
procedures for consultation with shippers and for handling shippers' 
requests and complaints.
    (4) Independent action. Include provisions for independent action 
in accordance with Sec. 535.801 of this part.
    (b)(1) Each agreement between carriers not members of the same 
conference must provide the right of independent action for each 
carrier.
    (2) Each interconference agreement must provide the right of 
independent action for each conference and specify the procedures 
therefor.
    16. Amend redesignated Sec. 535.405 to revise paragraphs (a), (b), 
(c), (d) and (e),

[[Page 11243]]

and to remove paragraphs (f) and (g) to read as follows:


Sec. 535.405  Modification of agreements.

* * * * *
    (a) Agreement modifications shall be: filed in accordance with the 
provisions of Sec. 535.401 and in the format specified in Sec. 535.402.
    (b) Agreement modifications shall be made by reprinting the entire 
page on which the matter being changed is published (``revised 
pages''). Revised pages shall indicate the consecutive denomination of 
the revision (e.g., ``1st Revised Page 7''). Additional material may be 
published on a new original page. New pages inserted between existing 
pages shall be numbered with an appropriate suffix (e.g., a page 
inserted between page 7 and page 8 shall be numbered 7a, 7.1, or 
similarly).
    (c) If the modification is made by the use of revised pages, the 
modification shall be accompanied by a page, submitted for illustrative 
purposes only, indicating the language being modified in the following 
manner (unless such marks are apparent on the face of the agreement):
    (1) Language being deleted or superseded shall be struck through; 
and,
    (2) New and initial or replacement language shall immediately 
follow the language being superseded and be underlined.
    (d) If a modification requires the relocation of the provisions of 
the agreement, such modification shall be accompanied by a revised 
Table of Contents page which shall report the new location of the 
agreement's provisions.
    (e) When deemed necessary to ensure the clarity of an agreement, 
the Commission may require parties to republish their entire agreement, 
incorporating such modifications as have been made. No Information Form 
requirements apply to the filing of a republished agreement.
    17. Revise redesignated Sec. 535.501 paragraph (a) to read as 
follows:


Sec. 535.501  General requirements.

    (a) Certain agreement filings must be accompanied with an 
Information Form setting forth information and data on the filing 
parties' prior cargo carryings, revenue results and port service 
patterns.
* * * * *
    18. Amend redesignated Sec. 535.502 to revise paragraphs (a)(1), 
(a)(3), (a)(4), (a)(5), (b)(1), and (b)(2) to read as follows:


Sec. 535.502  Subject agreements.

* * * * *
    (a) * * *
    (1) A rate agreement as defined in Sec. 535.104(aa);
(2) * * * * *
    (3) A pooling agreement as defined in Sec. 535.104(x);
    (4) An agreement authorizing discussion or exchange of data on 
vessel-operating costs as defined in Sec. 535.104(jj); or
    (5) An agreement authorizing regulation or discussion of service 
contracts as defined in Sec. 535.104(cc).
    (b) * * *
    (1) A sailing agreement as defined in Sec. 535.104(bb); or
    (2) A space charter agreement as defined in Sec. 535.104(gg).
    19. Amend redesignated Sec. 535.503 to redesignate the introductory 
text as paragraph (a) and to add new paragraph (b) to read as follows:


Sec. 535.503  Information form for Class A/B agreements.

    (a) * * *
    (b) Modifications to Class A/B agreements that expand the 
geographic scope of the agreement or modifications to Class C 
agreements that change the class of the agreement from C to A/B must be 
accompanied by an Information Form for Class A/B agreements.
    20. Amend redesignated Sec. 535.706 by revising paragraph (c)(1) to 
read as follows:


Sec. 535.706  Filing of minutes---including shippers' requests and 
complaints, and consultations.

* * * * *
    (c) * * *
    (1) Rates that, if adopted, would be required to be published in 
the pertinent tariff except that this exemption does not apply to 
discussions limited to general rate policy, general rate changes, the 
opening or closing of rates, or service or time/volume contracts; or
* * * * *
    21. Revise the heading of Subpart H to read as follows:

Subpart H--Mandatory and Prohibited Provisions

    22. Amend redesignated Sec. 535.801 by: Revising paragraphs (a), 
(b)(1), (d), (e), the final sentence of paragraph(f)(1), and (f)(2); 
removing paragraph (i); and redesignating paragraphs (j) as (i) and (k) 
as (j), to read as follows:


Sec. 535.801  Independent action.

    (a) Each conference agreement shall specify the independent action 
(``IA'') procedures of the conference, which shall provide that any 
conference member may take independent action on any rate or service 
item upon not more than 5 calendar days' notice to the conference and 
shall otherwise be in conformance with section 5(b)(8) of the Act.
    (b)(1) Each conference agreement that provides for a period of 
notice for independent action shall establish a fixed or maximum period 
of notice to the conference. A conference agreement shall not require 
or permit a conference member to give more than 5 calendar days' notice 
to the conference, except that in the case of a new or increased rate 
the notice period shall conform to the tariff publication requirements 
of this chapter.
* * * * *
    (d) A conference agreement shall not require a member who proposes 
independent action to attend a conference meeting, to submit any 
further information other than that necessary to accomplish the 
publication of the independent tariff item, or to comply with any other 
procedure for the purpose of explaining, justifying, or compromising 
the proposed independent action.
    (e) A conference agreement shall specify that any new rate or 
service item proposed by a member under independent action (except for 
exempt commodities not published in the conference tariff) shall be 
included by the conference in its tariff for use by that member 
effective no later than 5 calendar days after receipt of the notice and 
by any other member that notifies the conference that it elects to 
adopt the independent rate or service item on or after its effective 
date.
    (f)(1) * * * Additionally, if a party to an agreement chooses to 
take on an IA of another party, but alters it, such action is 
considered a new IA and must be published pursuant to the IA 
publication and notice provisions of the applicable agreement.
    (2) An IA TVR published by a member of a ratemaking agreement may 
be adopted by another member of the agreement, provided that the 
adopting member takes on the original IA TVR in its entirety without 
change to any aspect of the original rate offering (except beginning 
and ending dates in the time period) (i.e., a separate TVR with a 
separate volume of cargo but for the same duration). Any subsequent IA 
TVR offering which results in a change in any aspect of the original IA 
TVR, other than the name of the offering carrier or the beginning date 
of the adopting IA TVR, is a new independent action and shall be 
processed in accordance with the provisions of the applicable 
agreement. The adoption procedures

[[Page 11244]]

discussed above do not authorize the participation by an adopting 
carrier in the cargo volume of the originating carrier's IA TVR. Member 
lines may publish and participate in joint IA TVRs, if permitted to do 
so under the terms of their agreement; however, no carrier may 
participate in an IA TVR already published by another carrier.
* * * * *
    23. Revise redesignated Sec. 535.802 to read as follows:


Sec. 535.802  Service contracts.

    (a) Ocean common carrier agreements may not prohibit or restrict a 
member or members of the agreement from engaging in negotiations for 
service contracts with one or more shippers.
    (b) Ocean common carrier agreements may not require a member or 
members of the agreement to disclose a negotiation on a service 
contract, or the terms and conditions of a service contract, other than 
those terms or conditions required by section 8(c)(3) of the Shipping 
Act.
    (c) Ocean common carrier agreements may not adopt mandatory rules 
or requirements affecting the right of an agreement member or agreement 
members to negotiate or enter into service contracts.
    (d) An agreement may provide authority to adopt voluntary 
guidelines relating to the terms and procedures of an agreement 
member's or agreement members' service contracts if the guidelines 
explicitly state the right of the members of the agreement not to 
follow these guidelines.
    (e) Voluntary guidelines shall be submitted to the Director, Bureau 
of Economics and Agreement Analysis, Federal Maritime Commission, 
Washington, DC 20573. Voluntary guidelines shall be kept confidential 
in accordance with Sec. 535.608 of this part. Use of voluntary 
guidelines prior to their submission is prohibited.
    24. Amend Subpart H--Mandatory and Prohibited Provisions to add new 
Sec. 535.803 to read as follows:


Sec. 535.803  Ocean freight forwarder compensation.

    No conference or group of two or more ocean common carriers may:
    (a) Deny to any member of such conference or group the right, upon 
notice of not more than 5 calendar days, to take independent action on 
any level of compensation paid to an ocean freight forwarder; or
    (b) Agree to limit the payment of compensation to an ocean freight 
forwarder to less than 1.25 percent of the aggregate of all rates and 
charges applicable under the tariff assessed against the cargo on which 
the forwarding services are provided.

    By the Commission.3
---------------------------------------------------------------------------

    \3\ Although Commissioner Won voted to issue the Final Rule, he 
indicated a strong preference for the ``voluntary guidelines'' 
provisions set forth in the proposed rule.
---------------------------------------------------------------------------

Bryant L. VanBrakle,
Secretary.
[FR Doc. 99-5364 Filed 3-5-99; 8:45 am]
BILLING CODE 6730-01-P