[Federal Register Volume 81, Number 39 (Monday, February 29, 2016)]
[Proposed Rules]
[Pages 10198-10204]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-04264]


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FEDERAL MARITIME COMMISSION

46 CFR Parts 530 and 531

[Docket No. 16-05]
RIN 3072-AC53


Service Contracts and NVOCC Service Arrangements

AGENCY: Federal Maritime Commission.

ACTION: Advance notice of proposed rulemaking.

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SUMMARY: The Federal Maritime Commission (FMC or Commission) is seeking 
comments on possible amendments to its rules governing Service 
Contracts and NVOCC Service Arrangements. These possible rule changes 
are intended to update, modernize, and reduce the regulatory burden.

DATES: Submit comments on or before: March 30, 2016.

ADDRESSES: You may submit comments by the following methods:
     Email: [email protected]. Include in the subject line: 
``Docket 16-05, [Commentor/Company name].'' Comments should be attached 
to the email as a Microsoft Word or text-searchable PDF document. Only 
non-

[[Page 10199]]

confidential and public versions of confidential comments should be 
submitted by email.
     Mail: Karen V. Gregory, Secretary, Federal Maritime 
Commission, 800 North Capitol Street NW., Washington, DC 20573-0001.
    Docket: For access to the docket to read background documents or 
comments received, go to the Commission's Electronic Reading Room at: 
http://www.fmc.gov/16-05.
    Confidential Information: The Commission will provide confidential 
treatment for identified confidential information to the extent allowed 
by law. If your comments contain confidential information, you must 
submit the following:
     A transmittal letter requesting confidential treatment 
that identifies the specific information in the comments for which 
protection is sought and demonstrates that the information is a trade 
secret or other confidential research, development, or commercial 
information.
     A confidential copy of your comments, consisting of the 
complete filing with a cover page marked ``Confidential-Restricted,'' 
and the confidential material clearly marked on each page. You should 
submit the confidential copy to the Commission by mail.
     A public version of your comments with the confidential 
information excluded. The public version must state ``Public Version--
confidential materials excluded'' on the cover page and on each 
affected page, and must clearly indicate any information withheld. You 
may submit the public version to the Commission by email or mail.

FOR FURTHER INFORMATION CONTACT: For questions regarding submitting 
comments or the treatment of confidential information, contact Karen V. 
Gregory, Secretary, Phone: (202) 523-5725. Email: [email protected]. 
For technical questions, contact Florence A. Carr, Director, Bureau of 
Trade Analysis. Phone: (202) 523-5796. Email: [email protected]. 
For legal questions, contact Tyler J. Wood, General Counsel. Phone: 
(202) 523-5740. Email: [email protected].

SUPPLEMENTARY INFORMATION:

Background

    In 1984, Congress passed the Shipping Act of 1984 (the Shipping Act 
or the Act) 46 U.S.C. 40101 et seq., which introduced the concept of 
contract carriage under service contracts filed in paper format with 
the Federal Maritime Commission (Commission or FMC). 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 Act also clarified the authority of conference members to 
offer intermodal pricing (the integration of ocean carriage with truck 
or rail service).
    FMC regulations require all ocean freight rates, surcharges, and 
accessorial charges in liner trades be published in ocean common 
carrier tariffs or agreed to in service contracts filed with the 
Commission. Contemporaneous with the filing of service contracts, 
carriers are also required to make available to the public a concise 
statement of essential terms in tariff format. Initially, service 
contracts filed with the Commission under the Act could not be amended. 
In 1992, FMC regulations were revised to allow for service contracts to 
be amended to adjust terms and/or rates.
    In 1998, Congress passed the Ocean Shipping Reform Act (OSRA), 
amending the Shipping Act of 1984 relating to service contracts. To 
facilitate compliance and minimize the filing burdens on the oceanborne 
commerce of the United States, service contracts and amendments 
effective after April 30, 1999 are required to be filed with the 
Commission in electronic format. The electronic filing of service 
contracts and amendments eliminated the regulatory burden of filing in 
paper format, saving ocean carriers both time and money. In addition, 
under OSRA, contracts between ocean common carriers and shippers can be 
agreed to on a confidential basis and the public no longer has access 
to view their contents.\1\ Service contracts and amendments continue 
today to be filed into the Commission's electronic filing system, 
SERVCON.
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    \1\ Prior to OSRA, contract rates were published in the 
essential terms tariff publication, thereby allowing similarly 
situated shippers to request and obtain similar terms. In enacting 
OSRA, Congress limited the essential terms publication to the 
following terms: The origin and destination port ranges, the 
commodities, the minimum volume or portion, and the duration.
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    In 2005, the Commission issued a rule exempting Non-Vessel-
Operating Common Carriers (NVOCCs) from certain tariff publication 
requirements of the Shipping Act, pursuant to section 16 of the 
Shipping Act, 46 U.S.C. 40103. 69 FR 75850 (December 20, 2004) (final 
rule). Under the exemption, NVOCCs are relieved from certain Shipping 
Act tariff requirements, provided that the carriage in question is 
performed pursuant to an NVOCC Service Arrangement (NSA) filed with the 
Commission and the essential terms are published in the NVOCC's tariff. 
46 CFR 531.1, 351.5, and 531.9
    On January 18, 2011, President Obama issued Executive Order 13563 
(E.O. 13563) to emphasize the importance of public participation in 
adopting regulations, promote integration and innovation in regulatory 
actions, utilize flexible approaches in achieving regulatory 
objectives, and ensure the objectivity of any scientific and 
technological information and process in regulatory actions. E.O. 13563 
requires executive agencies to develop a plan to periodically review 
their existing significant regulations to determine whether any such 
regulations should be modified, streamlined, expanded, or repealed so 
as to make such agencies' regulatory programs more effective and less 
burdensome in achieving the regulatory objectives. On July 11, 2011, 
Executive Order 13579 was issued to encourage independent regulatory 
agencies to also pursue the goals stated in E.O. 13563.
    On November 4, 2011, the Commission issued its Plan for 
Retrospective Review of Existing Rules (Retrospective Review Plan or 
Plan) and invited public comment on how it might improve existing 
regulations.\2\ The Plan included a review schedule for its existing 
regulations, which was updated on February 13, 2013. The updated Plan 
called for review of the existing rules for NVOCC Service Arrangements 
in 46 CFR part 531 from 2013 to 2014, and for review of Service 
Contracts regulations Part 530 in 2013.
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    \2\ A copy of the Retrospective Review Plan and comments filed 
in response to the plan that are within the scope of this rulemaking 
have been placed in the docket.
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    In response to the Commission's request for public comment, the 
National Customs Brokers and Forwarders Association of America, Inc. 
(NCBFAA) filed comments regarding Part 532, NVOCC Negotiated Rate 
Arrangements (NRAs), and Part 531, NVOCC Service Arrangements, on 
November 21, 2011. NCBFAA's comments supported the Commission's effort 
to review and streamline its regulations and indicated that several 
additional steps would significantly ease some of the obstacles that it 
claims have hindered utilization of Part 532, NVOCC NRAs, and Part 531, 
NVOCC Service Arrangements. The Commission also received the Comments 
of Ocean Common Carriers \3\ regarding Part 530,

[[Page 10200]]

Service Contracts on May 18, 2012. The carriers' comments largely 
focused on three areas that they believe changes in the service 
contract regulations would be beneficial, namely, introducing greater 
flexibility in the timing of service contract amendment filing, making 
adjustments to the service contract correction process, and expanding 
the list of commodities exempted from tariff and service contract 
filing. The comments are described in further detail in discussion of 
Parts 530 and 531 that follows.
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    \3\ The commenting carriers consisted of a total of 30 ocean 
carriers participating in the following agreements active at that 
time: The 14 members of the Transpacific Stabilization Agreement 
(TSA); 10 members of the Westbound Transpacific Stabilization 
Agreement (WTSA); 6 members of the Central America Discussion 
Agreement (CADA); 11 members of the West Coast South America 
Discussion Agreement (WCSADA); 5 members of the Venezuela Discussion 
Agreement (VDA); 3 members of the ABC Discussion Agreement (ABCDA); 
6 members of the United States Australasia Discussion Agreement 
(USADA); and, the 3 members of the Australia New Zealand United 
States Discussion Agreement (ANZUSDA). For comments, refer to 
Attachment B.
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    In September 2013, the Commission initiated the present regulatory 
review of Part 530, Service Contracts, and Part 531, NVOCC Service 
Arrangements. Executive Order 13563 served as guidance for the 
Commission in seeking ways in which the regulations should be modified, 
expanded, or streamlined in order to make the regulations more 
effective, reduce the regulatory burden, encourage public 
participation, make use of technology, and consider flexible 
approaches, keeping in mind the FMC's mission, strategic goals, and 
regulatory responsibilities.
    As part of its review, the Commission informally solicited views 
from various stakeholders in order to gather a broad range of 
perspectives. The discussions with stakeholders, including Vessel-
Operating Common Carriers (VOCCs), several major trade associations, 
licensed NVOCCs, beneficial cargo owners (BCOs), and shippers 
associations, were held on a confidential basis to promote a candid 
dialogue. The Commission asked stakeholders how existing regulations 
impact their businesses, what regulatory changes each stakeholder would 
recommend, and to quantify the cost of its regulatory burden.
    Below, on a section by section basis, is a discussion of issues on 
which the Commission is seeking public comment. Further, the public is 
invited to comment on any provisions contained in Parts 530 and 531.

Part 530--Service Contracts

Subpart A--General Provisions

Section 530.3 Definitions
Section 530.3 Affiliate
    Currently, there is no definition of affiliate in Sec.  530.3, 
Service Contracts. A definition of affiliate is provided for NVOCC 
Service Arrangements, in Sec.  531.3(b). In order to provide clarity 
and consistency, the Commission seeks comment on adding the definition 
of affiliate contained in Sec.  531.3(b) to Sec.  530.3.
Section 530.3(i) Effective Date
    Presently, the Commission's regulations require that a service 
contract or amendment be filed on or before the date it becomes 
effective. The Commission is seeking comment on whether it should amend 
the definition of effective date with respect to service contract 
amendments to allow the effective date of amendments to be before the 
filing date of the amendment.
Section 530.5 Duty To File
    In addition to converting to electronic filing in 1999, the 
Commission has made efforts to reduce the regulatory burden of filing 
service contracts and amendments into its SERVCON system. At the 
request of one ocean carrier, the Commission developed an automated web 
services process in 2006, which allows service contracts or NSAs and 
their amendments to be filed directly from a carrier's contract 
management system into SERVCON, thereby reducing the regulatory burden 
and error rate associated with manual processing. By ``pushing'' the 
unique data already entered in the filer's contract management systems 
directly to the SERVCON system, it eliminates the time and expense 
involved in manually logging into SERVCON to file contracts or NSAs. 
SERVCON then processes the filing and returns a confirmation number if 
the filing was successful, or an error message giving the reason it was 
not.
    Using web services to file service contracts and amendments reduces 
a carrier's cost and creates efficiencies for both the carrier and the 
Commission. The Commission has encouraged the use of web services to 
carriers throughout the years. Currently, 36% of all service contracts 
and amendments filed use web services. It is estimated, based on 
current carrier projections, that approximately 92% of contracts and 
amendments filed by April 1, 2016 should be filed using web services. 
Given the Commission's past experience, transitioning to web services 
can be accomplished in a relatively short period of time using 
carriers' in-house IT professionals.
    The Commission seeks comment on amending its regulations to ensure 
that carriers are aware of the availability of the automated web 
service process for filing service contracts and amendments.
Section 530.6 Certification of Shipper Status
    The provisions in this section set forth the requirement that 
shippers entering into service contracts certify their status and 
require vessel-operating common carriers (VOCCs) to obtain proof of an 
NVOCC's compliance with tariff and financial responsibility 
requirements. Carriers regularly use the FMC Web site, www.fmc.gov, to 
verify whether or not an NVOCC contract holder or affiliate is in good 
standing. Various carriers employ more rigid standards in certifying 
NVOCC status by requiring copies of the NVOCC's bond as well as the 
title page of its respective published tariffs. Further, many VOCCs 
include the NVOCC's 6-digit FMC Organization Number in the service 
contract, which indicates that the VOCC sought to ensure compliance 
with the requirements of Sec.  530.6.
    Carriers frequently ask about the FMC's electronic systems' 
capability to automatically verify whether an NVOCC party named in a 
service contract or amendment is in compliance with Sec.  530.6. While 
the FMC's SERVCON system does not currently have this capability, the 
technology exists to add this functionality in the future. One possible 
approach to accomplish this would be for the FMC to create a new data 
field in SERVCON which would require a VOCC to enter the NVOCC's 6-
digit FMC Organization Number when a NVOCC is a contract holder or 
affiliate. If multiple NVOCCs are party to a service contract, each 
NVOCC's respective Organization Number would be required to be listed 
in this field. SERVCON could be updated so that it would automatically 
determine at the time a contract or amendment is uploaded for filing, 
whether the NVOCC(s) is in good standing with the Commission. The 
development of such an automatic process could potentially save 
carriers a substantial amount of time currently spent verifying an 
NVOCC's status.
    Another option, which would require a substantial amount of SERVCON 
system programming and necessitate a standard service contract format 
to be adopted and agreed to by carriers, would be to require 
``metadata'' to be incorporated into service contracts that

[[Page 10201]]

would include the 6-digit FMC Organization Number of all NVOCC 
parties.\4\ For instance, with the required programming implemented 
this technology could be leveraged to identify during the filing 
process contracts or amendments which contain an NVOCC that is not in 
compliance with Sec.  530.6. If an NVOCC is not compliant, an alert 
would be sent to the carrier filing the contract or amendment and 
Commission staff.
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    \4\ ``Metadata is structured information that describes, 
explains, locates, or otherwise makes it easier to retrieve, use, or 
manage an information resource. Metadata is often called data about 
data or information about information.'' National Information 
Standards Organization (NIST), Understanding Metadata, NIST Press 
(2004), available at: http://www.niso.org/publications/press/UnderstandingMetadata.pdf (last visited Jan. 17, 2016).
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    Therefore, the Commission is seeking comment regarding whether the 
Commission should move forward in:
    (1) Requiring use of the 6-digit FMC Organization Number for NVOCCs 
who are a contract holder or affiliate in a service contract;
    (2) adding a data field in the Commission's electronic filing 
system (SERVCON) in order to enter the 6-digit FMC Organization Number 
when an NVOCC is party to a contract, or
    (3) requiring service contracts to be formatted to contain metadata 
that includes the 6-digit FMC Organization Number for each NVOCC that 
is a contract holder or affiliate in a service contract.

Subpart B--Filing Requirements

Section 530.8 Service Contracts
    In the filed Comments of Ocean Common Carriers, a number of 
carriers cite the filing of service contract amendments as the largest 
administrative burden for both carriers and their customers. Many ocean 
carriers believe that the service contract effective date requirement 
is overly burdensome and restrictive given current commercial 
practices, particularly with respect to amendments to contracts. The 
carriers claim that the vast majority of amendments are for minor 
revisions to commercial terms, such as a revised rate or the addition 
of a new origin/destination or commodity. The carriers advise that 
shippers will often tender cargo to them without first formally 
accepting their proposal. Therefore, according to ocean common 
carriers' comments, the carrier and shipper often agree on a rate 
without memorializing that agreement in a form that can be filed as an 
amendment. The carriers claim that filing amendments within 30 days 
would enable shippers and carriers to apply agreed-upon terms 
immediately and thus do business without disrupting or delaying that 
business.
    Based on the above practices, the carriers recommend that Sec.  
530.8(a) be amended to permit the contract parties to implement a 
service contract amendment immediately, provided that the amendment is 
entered into by the parties and filed within 30 days of whichever 
occurs first: (1) The date agreement on the amendment is reached; or 
(2) the date the carrier receives the cargo to which the amendment 
applies. Under this proposal, the carriers note that the Commission 
would still receive all service contract amendments, however, not prior 
to implementation.
    The revised regulation envisioned by the carriers would require 
that each filed amendment state the effective date of each change to 
the contract made by the amendment, so the Commission could determine 
the date from which any given rate or term was to apply. Carriers state 
that filing within 30 days would also reduce the filing burden by 
enabling carriers to aggregate several contract changes together in a 
single amendment. The carriers contend that the Commission would 
maintain the authority to request service contract records, including 
the evidence that the parties reached agreement on a particular term as 
of a particular date.
    When Commission staff met individually with large beneficial cargo 
owners (BCOs) and NVOCCs, those shippers relayed that they had not 
experienced delays as a result of carriers' inability to process 
service contract amendments in a timely manner prior to movement of 
their cargo. It was the shippers' understanding that the carriers' 
requirement to file amendments with the Commission prior to acceptance 
of the cargo protects rate and contract commitments. Shippers advised 
the Commission that carriers were responsive to their rate requests and 
the shippers were confident that VOCCs would honor the rates and 
contract commitments knowing their contracts were being filed with the 
Commission.
    In order to minimize the filing burden, the Commission is seeking 
comment on whether it should allow an amendment to be filed up to 30 
days after an amendment is reached by the parties. A change in the 
definition of effective date would only affect the filing date of the 
amendment, as the parties must still agree to the rates and/or contract 
terms prior to receipt of the cargo.
    In commenting on the carriers' suggestions, consideration should 
also be given to the manner in which service contracts and amendments 
would be filed into the FMC's SERVCON system. SERVCON is designed to 
process the filing of the initial service contract, designated as 
Amendment ``0,'' with subsequent amendments to the contract numbered 
sequentially, beginning with Amendment No. ``1''. If the definition of 
effective date is changed to allow amendments to be filed up to 30 days 
after the date on which they are agreed, and amendments are filed using 
the existing filing process, which requires sequential filing of 
amendments starting with Amendment No. 1, then no programming changes 
would be required in SERVCON.
    In connection with the 30-day period for filing service contract 
amendments, the carriers also proposed aggregating several contract 
changes in a single amendment in what, in effect, could be a monthly 
filing. In a monthly filing that consolidates a number of service 
contract amendments, it would be necessary for carriers to specify the 
effective date of each amendment. In some cases, for example, the same 
rate may change more than once in a monthly period. Since the SERVCON 
system is not designed to process multiple amendments in a single 
filing, this would require a substantial amount of reprogramming for 
the system to be able to capture both the effective date and amendment 
number should, for example, Amendments Nos. 7 through 12 be combined 
into a single document. Further, based on input from the Commission's 
Office of Information Technology, carriers would need to manually input 
the effective date of each amendment into SERVCON. Therefore, absent 
the requisite reprogramming, this process could possibly result in 
more, rather than less, of a filing burden. Additionally, consolidating 
several service contract amendments may also prevent carriers from 
using the Commission's web services technology in accordance with Sec.  
530.5, thereby offsetting the advantages of web services, which do not 
require manual input and are intended to reduce the burden of filing.
    The Commission seeks comments on whether it should revise its 
regulations to allow: (1) A service contract amendment to be filed 
individually and sequentially within 30 days of its effectiveness; or 
(2) any number of service contract amendments to be consolidated into a 
single document, but filed within 30 days of the effective date of the 
earliest of all amendments contained in the document. Any

[[Page 10202]]

clarifications or refinements to the suggestions made by the 
commenters, given the information technology constraints, are also 
requested.
Section 530.10 Amendment, Correction, Cancellation, and Electronic 
Transmission Errors
    In Comments of Ocean Common Carriers, the carriers noted that the 
current service contract correction procedures largely pre-date both 
service contract amendments (first permitted in 1992) and confidential 
individual carrier contracts introduced by OSRA, and maintain that 
these procedures are ``ill suited'' to the manner in which service 
contracts are employed today. The carriers identified a number of 
revisions to the requirements governing Service Contract Correction 
Requests at Sec.  530.10(c), some of which are discussed below.
    With respect to the forgoing carrier proposals, the Commission is 
considering stakeholder comments and staff experience regarding service 
contract correction requests, corrected transmissions, and the proposed 
``conforming amendment.'' An item by item discussion follows.

30 Day Grace Period

    The carriers propose that the Commission allow a 30 day grace 
period in which a carrier would not be required to file a service 
contract correction request (requesting retroactive effectiveness to 
correct a clerical or administrative error) or a formal amendment to 
the contract (effective upon filing or in the future), but rather, be 
permitted to submit a new type of filing, designated as a ``conforming 
amendment'' or some other special designation (in order to 
retroactively correct a ``typographical or clerical error'').
    The Commission questions whether this process would, in effect, be 
a substitute for the service contract correction process within the 
first 30 days after filing, without an affidavit and other 
documentation used for verification purposes that establishes the 
nature of the error and the parties' intent. The Commission also has 
concerns that the use of the term ``amendment'' in the proposed special 
designation ``conforming amendment'' could be confusing, as the 
submission would be a corrective filing, rather than an actual 
sequential amendment to the contract.
    There is an additional approach under which a service contract or 
amendment can currently be corrected that is somewhat similar to the 
proposed ``conforming amendment,'' though its application is limited to 
a narrow set of circumstances, that of a Corrected Transmission. 
Pursuant to Sec.  530.10(d), Electronic transmission errors, carriers 
may file a ``Corrected Transmission'' (CT) within forty-eight (48) 
hours of filing a service contract or amendment into SERVCON, however, 
only to correct a purely technical data transmission error or a data 
conversion error that occurred during uploading. A CT may not be used 
to make changes to rates, terms or conditions.
    While the vast majority of service contracts are uploaded into the 
Commission's electronic filing system, SERVCON, without encountering 
any problems, staff has noted that, when errors do occur, many times 
carriers do not discover the error until after the initial 48 hour 
period has passed. The vast majority of these mistakes are attributable 
to data entry errors on the SERVCON upload screen (e.g. the incorrect 
amendment or service contract number is entered, an incorrect effective 
date is typed, or the wrong contract or amendment is attached for 
uploading). Staff verifies that these are indeed purely clerical data 
errors that do not make changes to rates, terms, or conditions prior to 
accepting the CT filings.
    While incorporation of web services filing would reduce the 
occurrence of many of the technical and data transmission errors 
leading to a Corrected Transmission, the Commission is seeking comments 
on whether the current 48-hour period in which to file a CT after 
filing the original contract or amendment should be extended to thirty 
(30) days to afford carriers with a more realistic time frame to 
correct purely clerical data transmission errors. The Commission notes 
that extending the time period for filing CTs would also facilitate 
ensuring that the service contract terms and conditions agreed to by 
the carrier and shipper are those on file with the Commission in the 
SERVCON system while maintaining adequate shipper protections.

Extend Filing Period for Correction Requests to 180 Days

    The Commission is considering extending the time period for a 
service contract correction from forty-five (45) to one-hundred eighty 
(180) days. An error in a service contract may not be discovered until 
after cargo has moved, been invoiced on the bill of lading, the shipper 
reviews it and notes that the rate assessed is not the agreed upon 
rate. Given long transit times due to carriers' global pendulum 
services and slow steaming, in many cases this type of error is not 
discovered until well after 45 days has transpired. In other cases, 
shippers engage in audits of bills of lading and identify errors in the 
service contract that do not match the rates offered. Again, these 
audits may be well after the 45-day period. To provide needed 
flexibility in this process, the Commission is considering whether a 
longer time period in which to file is appropriate. The Commission 
seeks comment on extending the amount of time a service contract 
correction request can be filed from within 45 days of the contract's 
filing with the Commission up to 180 days.

Extend the Service Contract Correction Procedure To Include Unfiled 
Contracts and Amendments

    The ocean carriers provided a number of arguments in support of 
allowing the correction process to be utilized for unfiled service 
contracts and service contract amendments. Service contracts are 
required by law, under the Shipping Act, 46 U.S.C. 40502, to be filed 
with the Commission. Shippers advised that they believe that a filed 
contract provides them with the assurance that the rates and terms of 
the service contract will be adhered to by both the shipper and 
carrier.

Eliminate Carrier Affidavit and Significantly Reduce Filing Fee

    Carriers requested that the Commission eliminate the affidavit 
requirement for service contract correction requests and also 
significantly reduce the filing fee. The Commission's filing fee 
reflects time expended by Commission staff to research and verify 
information provided in the correction request and to conduct its 
analysis. The Commission could reduce the filing fee from $315 to 
around $100 or less by streamlining its internal processes, provided 
that the affidavit requirement is not eliminated. If the affidavit 
requirement were eliminated, staff time researching and verifying 
information would increase, and thus, the filing fee would need to be 
increased commensurate with the additional time required for processing 
and analysis. The Commission is seeking comment on these proposals.

Subpart C--Publication of Essential Terms

Section 530.12 Publication
    Several stakeholders advised the Commission that essential terms 
publications were no longer accessed by the public or useful to 
stakeholders. However, other stakeholders indicated that they do rely 
on them for various

[[Page 10203]]

purposes, such as during a grievance proceeding.

Subpart D--Exceptions and Implementation

Section 530.13 Exceptions and Exemptions
    Sec.  530.13(a) Statutory exceptions. In Comments of Ocean Common 
Carriers, the carriers recommend that the Commission, pursuant to its 
authority to grant exemptions from statutory requirements, expand the 
list of commodities which are exempt from the tariff publication and 
service contract filing requirements of 46 U.S.C. 40501(a)(1) and 
40502(b)(1). The carriers' rationale is that the existing list of 
exempt commodities: bulk cargo, forest products, recycled metal scrap, 
new assembled motor vehicles, waste paper or paper waste, was largely 
adopted to provide ocean common carriers serving the U.S. trades with 
greater flexibility to compete with bulk and tramp carriers serving 
both the U.S. and neighboring countries (Canada, Mexico), which do not 
require carriers to adhere to published tariffs. They assert that the 
exemption should apply to other, similar commodities.
    After the implementation of OSRA, carriers continued to offer 
service contracts to many shippers of exempt commodities. Many VOCCs 
today still offer service contracts for exempt commodities, while other 
carriers choose only to offer such contracts to a select group of 
customers. Various carriers opt to use exempt commodity tariffs instead 
of agreeing to offer service contracts. This may diminish a shipper's 
ability to conclude service terms such as free time, demurrage and 
detention, credit, and other terms that could be negotiated in service 
contracts. Further, a VOCC's standard governing rules tariff does not 
apply to exempt commodities and therefore, shipments of those 
commodities would not have the same protections under the Act and the 
Commission's regulations.
Section 530.14 Implementation.
    If the carriers' proposal to allow up to 30 days for filing service 
contract amendments is later adopted, corresponding changes would be 
made to Sec.  530.14.

Part 531--NVOCC Service Arrangements

Subpart A--General Provisions

Section 531.1 Purpose
    In their comments on the Commission's Retrospective Review Plan, 
NCBFAA states that NSAs are private, negotiated contracts between 
NVOCCs and their shipper customers.\5\ NCBFAA adds that the various 
NSAs that have been filed with the Commission provide little 
information that is of use to the agency.
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    \5\ NCBFAA recently filed a petition for rulemaking. Docket No. 
P2-15, Petition of the National Customs Brokers and Forwarders 
Association of America, Inc. for Initiation of Rulemaking (Apr. 18, 
2015). The Commission is currently reviewing the petition as well as 
the comments filed in response to the petition, and has not made a 
determination on whether to initiate a rulemaking. Therefore, the 
proposals presented by NCBFAA in its petition will not be addressed 
in this ANPRM.
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    NCBFAA indicated that, with the advent of NVOCC Negotiated Rate 
Arrangements (NRAs), it is less likely that NSAs will be used in the 
future. NCBFAA stated that it believes one of the main impediments to 
any significant industry use of the NSA procedure was caused by the 
Commission's perceived need to regulate them in the identical manner as 
ocean carrier service contracts. They further elaborate that, as a 
result, these privately- and individually-negotiated contracts between 
NVOCCs and their shipper customers are required to follow the same 
filing and essential term tariff procedures as are applicable to ocean 
carrier agreements with their customers.
    NCBFAA also states that NVOCCs do not enjoy antitrust immunity and 
therefore do not contain ``collectively established boilerplate terms 
and conditions or consider, let alone follow, `voluntary guidelines' 
relating to pricing or service conditions.'' NCBFAA further advocates 
that, inasmuch as there are situations where NVOCCs and their customers 
would like to enter into more formal, long-term arrangements, which 
cannot be accomplished through NRAs, the industry would benefit by 
having the Commission reexamine the need for continuing the filing of 
NSAs and the publication of essential terms.
Section 531.3 Definitions
Section 531.3(k) Effective Date
    Presently, the Commission's regulations require that an NSA or 
amendment be filed on or before the date it becomes effective. In 
response to filed VOCC comments, the Commission is considering whether 
to allow the filing of service contract amendments pursuant to Part 530 
to be delayed up to 30 days after an amendment is agreed to by the 
contract parties. In order to minimize the filing burden on NVOCCs as 
well, the Commission is seeking comment on whether it should, 
similarly, allow amendments to NSAs to be filed up to 30 days after an 
amendment is agreed to by the parties.
Section 531.5 Duty To File
    The Commission is considering and seeks comment on whether to amend 
the regulations so NVOCCs, like VOCCs, are aware of the availability of 
the automated Web service process in the filing of NSAs and amendments.

Subpart B--Filing Requirements

Section 531.6 NVOCC Service Arrangements
    Presently the Commission's regulations require that an NSA or 
amendment be filed on or before the date it becomes effective. If the 
Commission should later allow up to 30 days for filing NSA amendments, 
corresponding changes to Sec.  531.6 would be made.
Section 531.6(d) Other Requirements
    Pursuant to Sec.  531.6(d)(4), an NVOCC may not knowingly and 
willfully enter into an NSA with another NVOCC that is not in 
compliance with the Commission's tariff and proof of financial 
responsibility requirements. As discussed more fully under Sec.  530.6 
above pertaining to service contracts, the industry frequently refers 
to the Commission's Web site, www.fmc.gov, to verify whether or not an 
NVOCC contract holder or affiliate is compliant with these 
requirements.
    As noted previously, many VOCCs include all NVOCCs' 6-digit FMC 
Organization Number in their service contracts, and Commission staff 
notes this practice with respect to some NSAs as well. As VOCCs have 
frequently asked about the FMC's electronic systems' capability to 
automatically verify whether an NVOCC party named in a service contract 
or amendment is in compliance with FMC regulations at Sec.  530.6, the 
Commission is considering whether to facilitate this in the SERVCON 
system in which both service contracts and NSAs are filed. Therefore, 
the Commission seeks comment on whether NSAs should include the 6-digit 
FMC Organization Number for each NVOCC party to an NSA including 
affiliates. If so, comment is sought on the appropriate manner to 
update SERVCON to allow electronic verification of NVOCC status against 
the FMC's database of active NVOCCs. For further discussion of the 
technological changes being considered were this requirement to be 
implemented, see the more expansive explanation in Sec.  530.6 above.
Section 531.6(d)(5) Certification of Shipper Status
    Presently, the NSA regulations do not include a requirement that 
the NSA

[[Page 10204]]

shipper certify its status, which is a requirement for shippers under 
current service contract regulations in Part 530. The Commission seeks 
comment on whether to make these requirements consistent and uniform 
for NVOCCs and VOCCs, as both are common carriers, and such 
certification assists in compliance.
Section 531.8 Amendment, Correction, Cancellation, and Electronic 
Transmission Errors
    Under the Commission's regulations, VOCC service contracts and 
NVOCC service arrangements are both agreements between a common carrier 
and a shipper for the carriage of cargo. Given these congruencies, the 
Commission is considering whether changes being proposed by the VOCCs 
to the correction procedures for service contracts should be handled in 
a similar manner for NSAs. A complete discussion of the changes 
requested with respect to service contract amendment, correction, 
cancellation, and electronic transmission errors is included in Sec.  
530.10 above.

Subpart C--Publication of Essential Terms

Section 531.9 Publication
    In NCBFAA's comments regarding the Commission's Retrospective 
Review Plan, NCBFAA requested that the Commission consider whether the 
essential term tariff publication requirements are necessary.

Subpart D--Exceptions and Implementation

Section 531.10 Excepted and Exempted Commodities
    For consistency, the Commission is seeking comment on whether to 
treat VOCC service contracts and NVOCC service arrangements similarly 
with respect to exempted commodities. The Commission is requesting 
comment on whether it should add to this Part additional commodity 
exemptions approved by the Commission in Sec.  530.13.
Section 531.11 Implementation
    Proposed changes regarding the effective date of service contract 
amendments are under consideration by the Commission. If the Commission 
determines to make such changes to Part 530 (Service Contracts), it 
will consider whether to revise similar requirements for NSA amendments 
in Part 531 (NVOCC Service Arrangements), which would include Sec.  
531.11.

Regulatory Notices and Analysis

Regulatory Flexibility Act

    The Regulatory Flexibility Act, 5 U.S.C. 601 et seq., requires an 
agency to review regulations to assess their impact on small entities 
and prepare an initial regulatory flexibility analysis (IRFA), unless 
the agency head determines that the regulatory action will not have a 
significant impact on a substantial number of small entities. The 
Commission does not believe the proposed changes in this ANPRM would 
have a signification impact on a substantial number of small entities, 
but invites comments to facilitate the assessment of the potential 
impact of a rule implementing any of the proposals in this ANPRM.

Paperwork Reduction Act

    Under the Paperwork Reduction Act of 1995 (PRA), a person is not 
required to respond to a collection of information by a Federal agency 
unless the collection displays a valid OMB control number. There is no 
information collection requirement associated with this ANPRM.

Regulation Identifier Number

    The Commission assigns a regulation identifier number (RIN) to each 
regulatory action listed in the Unified Agenda of Federal Regulatory 
and Deregulatory Actions (Unified Agenda). The Regulatory Information 
Service Center publishes the Unified Agenda in April and October of 
each year. You may use the RIN contained in the heading at the 
beginning of this document to find this action in the Unified Agenda, 
available at: http://www.reginfo.gov/public/do/eAgendaMain.

    By the Commission.
Karen V. Gregory,
Secretary.
[FR Doc. 2016-04264 Filed 2-26-16; 8:45 am]
BILLING CODE P