[Federal Register Volume 64, Number 122 (Friday, June 25, 1999)]
[Proposed Rules]
[Pages 34183-34184]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-16036]


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FEDERAL MARITIME COMMISSION

46 CFR Parts 515, 520, 530 and 535

[Docket No. 99-10]


Ocean Common Carriers Subject to the Shipping Act of 1984

AGENCY: Federal Maritime Commission.

ACTION: Proposed rule.

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SUMMARY: The Federal Maritime Commission proposes to amend its 
regulations implementing the Shipping Act of 1984 to clarify the 
definition of ``ocean common carrier'' to reflect the Commission's 
current interpretation of the term. As a result, only ocean common 
carriers that operate vessels in at least one United States trade will 
be subject to these rules.

DATES: Comments due August 24, 1999.

ADDRESSES: Send comments (original and fifteen copies) to: Bryant L. 
VanBrakle, Secretary, Federal Maritime Commission, 800 North Capitol 
Street, NW., Room 1046, Washington, DC 20573, (202) 523-5725.

FOR FURTHER INFORMATION CONTACT: Thomas Panebianco, General Counsel, 
Federal Maritime Commission, 800 North Capitol Street, NW., Room 1018, 
Washington, DC 20573, (202) 523-5740.

SUPPLEMENTARY INFORMATION: In one of its several rulemaking proceedings 
to implement the Ocean Shipping Reform Act of 1998, Pub. L. 105-258, 
112 Stat. 1902 (``OSRA''), the Federal Maritime Commission (``FMC'' or 
``Commission'') proposed to amend its regulations governing agreements 
among ocean common carriers and marine terminal operators. Docket No. 
98-26, Ocean Common Carrier and Marine Terminal Operator Agreements 
Subject to the Shipping Act of 1984, 64 FR 11236, March 8, 1999. One of 
the proposed changes was a new definition of ``ocean common carrier'' 
to address perceived deficiencies in the definition of that term 
contained in section 3(16) of the Shipping Act of 1984 (``1984 Act''), 
46 U.S.C. app. Sec. 1702(16), (``a vessel-operating common carrier''), 
and to clarify the dividing line between ocean common carriers and non-
vessel-operating common carriers (``NVOCCs''). The proposed rule sated 
that:

    Ocean common carrier means a common carrier that operates, for 
all or part of its common carrier service, a vessel 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.

    The Commission received comments on this particular aspect of the 
proposed rule from Croatia Line and the Council of European & Japanese 
National Shipowners Association (``CENSA''). While generally supporting 
the Commission's proposed definition, CENSA suggested that it be 
further clarified to include a carrier that provides part of a vessel 
service in a U.S. trade. In addition, Croatia Line claimed that the 
Commission failed to disclose the facts necessitating such a change, 
and failed to discuss the effects of the changes on regulated parties. 
Croatia Line also argued that the proposed definition would adversely 
affect it, since it is party to two space charter agreements and does 
not operate vessels making direct calls at U.S. ports. It further 
argued that the proposal was contrary to the clear language of the 1984 
Act and well-established precedent. Croatia Line suggested that changes 
not required by OSRA should not be subject to such a short comment 
period.
    In light of these comments, and the absence of additional comments 
from other potentially affected parties, the Commission decided to 
provide an additional opportunity to comment, 64 FR 11236, March 8, 
1999. Accordingly, the Commission is initiating this rulemaking 
proceeding to further consider the definition of ``ocean common 
carrier.'' In addition, because the definition of ocean common carrier 
appears not only in the agreement rules but also in the rules governing 
ocean transportation intermediaries (part 515), tariffs (part 520), and 
service contracts (part 530), the Commission is proposing to adopt a 
definition that is consistent for all rules.
    As explained in the preamble to the proposed rule in Docket No. 98-
26, the amended definition of ``ocean common carrier'' is proposed to 
resolve uncertainty generated by the 1984 Act's definition, which is 
simply ``a vessel-operating common carrier.'' At issue is how to 
distinguish between ocean common carriers and NVOCCs. The distinction, 
which was first codified in 1984, has significant implications, 
inasmuch as the 1984 Act affords ocean carriers, but not NVOCCs, 
antitrust immunity and other rights and responsibilities, including the 
ability to offer service contracts. The need for clarity in this area 
is continued by OSRA, which continues to differentiate between vessel-
operating and non-vessel-operating lines with regard to service 
contracting and other areas.
    At first glance, it is difficult to see the ambiguity in the phrase 
``vessel-operating.'' However, the Commission's staff has encountered a 
number of complex situations regarding where and when vessels are 
operated, and what types of vessels are involved. In this regard, 
various bureaus have taken the position that an ``ocean common 
carrier'' is a common carrier that, in providing a common carrier 
service, operates a vessel calling at a U.S. port. Moreover, if a 
carrier is an ocean common carrier in one U.S. trade, it has been 
reasoned, it is an ocean common carrier for all U.S. trades. For 
example, if a carrier operates vessels from the U.S. East Coast to 
northern Europe, it has the legal ``status'' of ocean common carrier to 
enter into space charter agreements for any U.S.-foreign trade.
    The proposed definition codifies this approach. It would continue 
the practice of determining status on a multi-trade basis (i.e., an 
ocean common carrier in one U.S. trade has that status in all U.S. 
trades). Any interpretation of the statute requiring status 
determinations to be made on a trade-by-trade basis would be 
administratively impractical and might prompt less than efficient 
redeployment of vessels in the U.S. trades solely to meet regulatory 
requirements.
    The proposed definition would also clarify the issue of whether 
companies that operate vessels only outside the U.S.--i.e., they have 
no vessel operations to U.S. ports--can be deemed ``ocean common 
carriers.'' It appears from the legislative intent of the 1984 Act that 
Congress viewed vessel operators as those whose vessels call at U.S. 
ports and classified all other common carriers in U.S. commerce as non-
vessel-operating common carriers. For example, in its report on the 
1984 Act, the Senate Commerce, Science, and Transportation Committee 
observed:

    The Committee strongly believes that it is in our national 
interest to permit cooperation among carriers serving our foreign 
trades to permit efficient and reliable service. * * * Our carriers 
need; a stable, predictable, and profitable trade with a rate of 
return that warrants reinvestment and a commitment to serve the 
trade; greater security in investment * * *.

S. Rep. No. 3, 98th Cong., 1st Sess. 9 (1983). We do not believe that 
Congress intended to provide special privileges or protections to 
carriers that have not made the financial commitment to providing 
vessel service to the United States.

[[Page 34184]]

    A definition of ocean common carrier that encompassed companies 
that operate vessels only in foreign-to-foreign trades would 
substantially broaden the scope of antitrust immunity potentially to 
include a number of small operators whose wholly foreign vessel 
operations would be difficult for the Commission to monitor or verify. 
Such a finding would remove such companies from the scope of the Act's 
NVOCC bonding requirements, even though they have no vessels or assets 
in the United States that can be attached to satisfy a Commission or 
U.S. court judgment. Such an approach would also seem to contravene the 
longstanding judicial policy of narrowly construing antitrust 
exemptions. See, e.g., Federal Maritime Commission v. Seatrain Lines, 
Inc., 411 U.S. 726, 733 (1973). In addition, from the text of the Act, 
it appears likely that when Congress used the unadorned term ``vessel'' 
in the definition of ocean common carrier, it was referring to the 
vessels specified in the definition of common carrier, i.e., those that 
operate on the high seas or Great Lakes between the United States and a 
foreign country.
    The proposed definition would continue the policy that the vessels 
in question must be used in a common carrier service. If an NVOCC 
operates tankers or tramp vessels, wholly apart from its common carrier 
service, it does not secure ocean common carrier status from those 
vessel operations.
    The Chairman certifies, pursuant to section 605 of the Regulatory 
Flexibility Act, 5 U.S.C. 605, that the proposed rules will not, if 
promulgated, have a significant impact on a substantial number of small 
entities. The affected universe of parties is limited to ocean common 
carriers or passenger vessel operators. The Commission has determined 
that these entities do not come under the programs and policies 
mandated by the Small Business Regulatory Enforcement Fairness Act as 
they typically exceed the threshold figures for number of employees 
and/or annual receipts to qualify as a small entity under Small 
Business Administration Guidelines.

List of Subjects

46 CFR Part 515

    Exports; Freight forwarders; Non-vessel-operating common carriers; 
Ocean transportation intermediaries; Licensing requirements; Financial 
responsibility requirements; Reporting and recordkeeping requirements.

46 CFR Part 520

    Common carrier; Freight; Intermodal transportation; Maritime 
carriers; Reporting and recordkeeping requirements.

46 CFR Part 530

    Freight; Maritime carriers; Reporting and recordkeeping 
requirements.

46 CFR Part 535

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

    Therefore, for the reasons set forth above, Parts 515, 520, 530, 
and 535 of Subchapter C of Title 46 Code of Federal Regulations, are 
proposed to be amended as follows:

PART 515--LICENSING, FINANCIAL RESPONSIBILITY REQUIREMENTS, AND 
GENERAL DUTIES FOR OCEAN TRANSPORTATION INTERMEDIARIES

    1. The authority citation for part 515 continues to read as 
follows:

    Authority: 5 U.S.C. 553; 31 U.S.C. 9701; 46 U.S.C. app. 1702, 
1707, 1710, 1712, 1714, 1716, and 1718, 21 U.S.C. 862; Pub. L. 105-
383, 112 Stat. 3411.

    2. In Sec. 515.2 revise paragraph (m) to read as follows:


Sec. 515.2   Definitions

* * * * *
    (m) Ocean common carrier means a common carrier that operates, for 
all or part of its common carrier service, a vessel 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.
* * * * *

PART 520--CARRIER AUTOMATED TARIFF SYSTEMS

    1. The authority citation for part 520, is revised to read as 
follows:

    Authority: 5 U.S.C. 553; 46 U.S.C. app. 1701-1702, 1707-1709, 
1712, 1716; sec. 424 of Pub. L. 105-383, 112 Stat. 3411.

    2. In Sec. 520.2 revise the definitions of ocean common carrier to 
read as follows:


Sec. 520.2   Definitions

* * * * *
    Ocean common carrier means a common carrier that operates, for all 
or part of its common carrier service, a vessel on the high seas or the 
Great Lake 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.
* * * * *

PART 530--SERVICE CONTRACTS

    1. The authority citation for part 530 continues to read as 
follows:

    Authority: 5 U.S.C. 553; 46 U.S.C. app. 1704, 1705, 1716.

    2. In Sec. 530.3 revise paragraph (n) to read as follows:


Sec. 530.3   Definitions.

    (n) Ocean common carrier means a common carrier that operates, for 
all or part of its common carrier service, a vessel 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.
* * * * *

PART 535--AGREEMENTS BY OCEAN COMMON CARRIERS AND OTHERS SUBJECT TO 
THE SHIPPING ACT OF 1984.

    1. The authority citation for part 535 is revised to read as 
follows:

    Authority: 5 U.S.C. 553; 46 U.S.C. app. 1702-1704, 1706-1707; 
1709-1710, 1712 and 1714-1717.

    2 Revise Sec. 535.101 to read as follows:


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, and 17 of the Shipping Act of 
1984 (``the Act''), and the Ocean Shipping Reform Act of 1998, Pub. L. 
105-258, 112 Stat. 1902.
    3. In Sec. 535.104 revise paragraph (u) to read as follows:


Sec. 535.104   Definitions.

* * * * *
    (u) Ocean common carrier means a common carrier that operates, for 
all or part of its common carrier service, a vessel 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.
* * * * *
    By the Commission.
Byrant L. VanBrakle,
Secretary.
[FR Doc. 99-16036 Filed 6-24-99; 8:45 am]
BILLING CODE 6730-01-M