[Federal Register Volume 81, Number 157 (Monday, August 15, 2016)]
[Proposed Rules]
[Pages 53986-54018]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-18805]


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FEDERAL MARITIME COMMISSION

46 CFR Parts 501 and 535

[Docket No. 16-04]
RIN 3072-AC54


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

AGENCY: Federal Maritime Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Federal Maritime Commission is seeking public comments on 
proposed modifications to its rules governing agreements by or among 
ocean common carriers and/or marine terminal operators subject to the 
Shipping Act of 1984 and its rules on the delegation of authority to 
and redelegation of authority by the Director, Bureau of Trade 
Analysis. These proposed modifications were developed in conformity 
with the objectives of the 2011 Executive Order to independent 
regulatory agencies that aims to promote a regulatory system that 
protects public health, welfare, safety and our environment while 
promoting economic growth, innovation, competitiveness and job 
creation.

DATES: Submit comments on or before: October 17, 2016. In compliance 
with the Paperwork Reduction Act, the Commission is also seeking 
comment on revisions to an information collection. See the Paperwork 
Reduction Act section under Regulatory Analyses and Notices below. 
Please submit all comments relating to the revised information 
collection to the Commission and to the Office of Management and Budget 
(OMB) at the address listed in the ADDRESSES section on or before 
October 17, 2016. Comments to OMB are most useful if submitted within 
30 days of publication.

ADDRESSES: You may submit comments by the following methods:
     Email: [email protected]. Include in the subject line: 
``Docket 16-04, [Commentor/Company name].''

[[Page 53987]]

Comments should be attached to the email as a Microsoft Word or text-
searchable PDF document. Only non-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/16-04.
    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: 

I. Introduction

    The Federal Maritime Commission (FMC or Commission) issued an 
Advance Notice of Proposed Rulemaking (ANPR) to obtain public comments 
on proposed modifications to its regulations in 46 CFR part 535, Ocean 
Common Carrier and Marine Terminal Operator Agreements Subject to the 
Shipping Act of 1984, and 46 CFR 501.27, Delegation to and redelegation 
by the Director, Bureau of Trade Analysis. 81 FR 10188 (Feb. 29, 2016). 
The ANPR was issued pursuant to Executive Order 13579 (E.O. 13579), 
Regulation and Independent Regulatory Agencies (July 11, 2011), and the 
Commission's corresponding Plan for the Retrospective Review of 
Existing Rules.\1\ Under this plan, the Commission requested and 
received comments on how to improve its existing regulations and 
programs. With respect to part 535, comments with specific 
recommendations on regulatory modifications were submitted by ocean 
carrier members of major discussion agreements effective under the 
Shipping Act.\2\
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    \1\ The Commission's Plan for the Retrospective Review of 
Existing Rules (Nov. 4, 2011) and Update to Plan for Retrospective 
Review of Existing Rules (Feb. 13, 2013) are published on the FMC 
home page under About the FMC/Report, Strategies, and Budget.
    \2\ Comments of Ocean Common Carriers to Retrospective Review of 
Existing Rules, dated May 18, 2012, are published on the FMC home 
page under www.fmc.gov/16-04.
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    The proposed modifications in the ANPR were based on the 
Commission's comprehensive review of its regulations in parts 501 and 
535, including review of the modifications recommended in the comments 
submitted by the carriers. In the ANPR, the Commission sought public 
comments on possible changes to the following regulations: (1) The 
definition of capacity rationalization in Sec.  535.104(e), a new 
waiting period exemption for space charter agreements in Sec.  535.308, 
and the waiting period exemption for low market share agreements in 
Sec.  535.311; (2) the agreement filing exemption of marine terminal 
services agreements in Sec.  535.309; (3) the standards governing 
complete and definite agreements in Sec.  535.402 and agreement 
activities that may be conducted without further filing in Sec.  
535.408; (4) the Information Form requirements in subpart E of part 
535; (5) the filing of comments on agreements in Sec.  535.603 and the 
request for additional information on agreements in Sec.  535.606; (6) 
the agreement reporting requirements in subpart G of part 535; and (7) 
non-substantive modifications to update and clarify the regulations in 
parts 501 and 535.
    In response to the ANPR, seven sets of comments were received from 
interested parties. These parties are the ocean common carriers and 
agreements (carriers); \3\ the National Association of Waterfront 
Employers (NAWE); the Pacific Merchant Shipping Association (PMSA); the 
Port of NY/NJ Sustainable Terminal Services Agreement, and the Port of 
NY/NJ-Port Authority/Marine Terminal Operator Agreement (Port of NY/
NJ); the West Coast MTO Agreement, the Oakland MTO Agreement, and their 
members (WCMTOA/OAKMTOA), the South Carolina Port Authority (SCPA); and 
the National Customs Brokers and Forwarders Association of America, 
Inc. (NCBFAA). Under this Notice of Proposed Rulemaking (NPR), the 
Commission addresses the comments to the ANPR and seeks further public 
comments on the proposed modifications to its regulations in parts 501 
and 535.
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    \3\ The carriers are the members to the ABC Discussion 
Agreement, Australia and New Zealand-United States Discussion 
Agreement, Caribbean Shipowners Association, Central American 
Discussion Agreement, Transpacific Stabilization Agreement, U.S./
Australasia Discussion Agreement, Venezuelan Discussion Agreement, 
and the West Coast of South America Discussion Agreement.
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II. The Definition of Capacity Rationalization in Sec.  535.104(e), a 
New Exemption for Space Charter Agreements in Sec.  535.308, and the 
Exemption for Low Market Share Agreements in Sec.  535.311

A. Background

    To receive immunity from the U.S. antitrust laws, the Shipping Act 
of 1984 (Shipping Act or Act) requires that parties file a true copy of 
their agreement with the Commission, 46 U.S.C. 40302, and that 
agreement filings be subject to an initial review period of 45 days 
before they may become effective, 46 U.S.C. 40304(c). The regulations 
in Sec.  535.311 provide an exemption from the 45-day waiting period 
for low market share agreements that do not contain certain types of 
authority, such as rate or capacity rationalization authority.\4\ To 
qualify for this exemption, the combined market shares of the parties 
in any of the affected sub-trades must be less than 30 percent (if all 
of the parties are members of another agreement in the same trade or 
sub-trade with one of the excluded authorities (e.g., rate or capacity 
rationalization)) or 35 percent (if at least one party is not a member 
of such an

[[Page 53988]]

agreement in the same trade or sub-trade). The regulations in Sec.  
535.104(e) define capacity rationalization to mean a concerted 
reduction, stabilization, withholding, or limitation in any manner 
whatsoever by ocean common carriers on the size or number of vessels or 
available space offered collectively or individually to shippers in any 
trade or service.
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    \4\ These authorities are listed under Sec.  535.502(b) as: (1) 
The discussion of, or agreement upon, whether on a binding basis 
under a common tariff or a non-binding basis, any kind of rate or 
charge; (2) the discussion of, or agreement on, capacity 
rationalization; (3) the establishment of a joint service; (4) the 
pooling or division of cargo traffic, earnings, or revenues and/or 
losses; or (5) the discussion of, or agreement on, any service 
contract matter.
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    Agreements that contain capacity rationalization authority do not 
qualify for an exemption from the waiting period under Sec.  535.311. 
Further, such agreements are assigned specific Information Form and 
Monitoring Report requirements. Although the definition could be 
interpreted quite broadly in the context of operational agreements, the 
Commission has, in practice, limited it to meaning agreements that fix 
the supply of capacity, such as vessel sharing and alliance agreements, 
and include exclusivity provisions \5\ on the ability of the parties to 
operate outside of the agreement.
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    \5\ Exclusivity provisions place conditions or restrictions on 
the parties' agreement participation, and/or use or offering of 
competing services within the geographic scope of the agreement. In 
effect, they are non-compete clauses.
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    In its ANPR, the Commission considered clarifying the definition of 
capacity rationalization to mean the authority in an agreement by or 
among ocean common carriers to discuss, or agree on, the amount of 
vessel capacity supplied by the parties in any service or trade within 
the geographic scope of the agreement. The Commission explained that 
the proposed definition would apply to voluntary discussion agreements 
between carriers where the parties discuss and/or agree on the amount 
of vessel capacity supplied in a trade. On an operational level, the 
proposed definition would apply to all forms of vessel sharing 
agreements (VSAs) between carriers where the parties discuss and/or 
agree on the number, capacity, and/or allocation of vessels or vessel 
space to be shared in the operation of a service between the parties to 
the agreement. Further, to avoid confusion, the proposed definition 
would apply to all such identified capacity agreements regardless of 
whether they contain any form of exclusivity clauses. As such, this 
definition would exclude all VSAs from qualifying for a low market 
share exemption.
    The Commission also introduced a new potential waiting period 
exemption in Sec.  535.308 that would apply to agreements among ocean 
common carriers that contain non-exclusive authority to charter or 
exchange vessel space between two individual carriers and do not 
contain any authority identified in Sec.  535.502(b) (i.e., forms of 
rate, pooling, service contract or capacity rationalization 
authorities). The Commission explained that non-exclusive authority 
means that the agreement contains no provisions that place conditions 
or restrictions on the parties' agreement participation, and/or use or 
offering of competing services. The Commission explained that a waiting 
period exemption was better suited for such space charter agreements 
because there is more of an operational urgency for them to become 
effective upon filing.
    The Commission further considered simplifying the application of 
the low market share exemption in Sec.  535.311 by eliminating the 
lower market share threshold of 30 percent in cases where the parties 
to the agreement are members of another agreement in the same trade or 
sub-trade containing any of the authorities identified in Sec.  
535.502(b) (i.e., forms of rate, pooling, service contract or capacity 
rationalization authorities). As such, the market share threshold would 
be set at 35 percent or less regardless of whether the parties to the 
agreement participate in any other agreements in the same trade or sub-
trade. The Commission explained that the application of the tiered 30 
and 35 percent threshold (based on the parties' participation in other 
agreements by sub-trade) is unnecessarily complicated and time 
consuming for the industry to analyze. Further, with the proposed 
modification to the definition of capacity rationalization, only simple 
operational agreements would be eligible for the exemption, such as 
space charter and sailing agreements, that would not otherwise be 
automatically exempted under the proposed space charter exemption in 
Sec.  535.308. Accordingly, the Commission stated that limiting the low 
market share exemption to such simple operational agreements would 
reduce the competitive concerns about the parties' participation in 
other agreements in the same trade or sub-trade and eliminate the need 
for the lower 30 percent market share threshold.

B. Summary of Comments

    The carriers were the only interested parties that submitted 
comments on these proposals. On the definition of capacity 
rationalization, the carriers favor retaining the present definition in 
Sec.  535.104(e), which they argue was intended to include: (i) An 
agreement that prohibits or restricts the introduction of vessels into 
the agreement trade in a service other than that operated under the 
agreement; (ii) an agreement that prohibits or restricts the use of 
space on non-agreement vessels in the agreement trade by an agreement 
party (e.g., chartering space from a non-agreement carrier); and (iii) 
an agreement that results in an artificial withholding of vessel 
capacity (i.e., a ``roping off'' of a portion of vessel capacity). 
Carriers at 4. The carriers recommend that if the Commission wants to 
clarify the definition, it should be revised to reflect this intended 
meaning and proposes the following definition:

    Capacity rationalization means any agreement between or among 
two or more ocean common carriers that: (i) Restricts or limits the 
ability of any or all those carriers to provide transportation in 
one or more trades covered by the agreement on vessels other than 
those utilized under that agreement; (ii) restricts or limits the 
ability of any or all of those carriers to provide services that are 
alternate to or in competition with the services provided under that 
agreement; or (iii) which results in the withholding of vessel 
capacity on vessels being operated in the trade covered by that 
agreement. The term does not include adjustments to capacity made by 
adding or removing vessels or strings of vessels pursuant to and 
within the existing authority of a filed and effective agreement.

Carriers at 12.
    The carriers further argue that the Commission's proposed 
definition and its application under the low market share exemption 
would potentially subject many more agreements to the 45-day waiting 
period and quarterly monitoring reports, regardless of their impact or 
market share. Further, time sensitive modifications of such agreements 
would also be subjected to the waiting period. While they acknowledge 
that the regulations in Sec.  535.605 allow for expedited review of 
agreements on request, the carriers claim that Commission staff is 
burdened by such requests and a fee is being proposed for each such 
request in another Commission rulemaking. They further explain that the 
filing fee for non-exempt agreements is much higher than the fee for 
exempt agreements, and the Commission is proposing to raise the fees. 
Carriers at 7.
    The carriers believe that the Commission's proposed definition of 
capacity rationalization assumes that any agreement where the parties 
agree on vessels results in a reduction in capacity, which they state 
is untrue and provide examples of such. They argue that even if an 
agreement reduces capacity, it is not a concern in trades suffering 
from excess capacity, and where agreements do not contain

[[Page 53989]]

exclusivity provisions, the parties are free to pursue their own 
commercial objectives. Carriers at 8-9.
    The carriers find the Commission's proposed definition to be 
unclear and overly broad and are concerned that it may be interpreted 
to include unintended forms of agreements. They explain that simple 
space charter agreements may allocate vessel space and/or set forth the 
number and size of vessels to be provided by the carrier selling the 
space. Further, they contend that subjecting more agreements to the 45-
day waiting period reduces the carriers' operational flexibility and 
responsiveness to demand and imposes a serious administrative burden on 
carriers and Commission staff by requiring more agreements to file 
Information Forms and Monitoring Reports. Carriers at 9-10.
    On the proposed exemption for space charter agreements in Sec.  
535.308, the carriers are supportive of the exemption but believe that 
the Commission's proposed definition for capacity rationalization 
creates uncertainty in distinguishing which agreements would qualify 
for the exemption. The carriers also see no reason why the exemption is 
limited to two party agreements and believe that space charter 
agreements involving more than two parties should be exempted as well. 
Carriers at 12.
    On the proposed single 35 percent threshold for the low market 
share exemption in Sec.  535.311, the carriers support the proposed 
modification but continue to argue that the market share should be 
based on the agreement-wide trade, rather than sub-trade. Carriers at 
13.

C. Discussion

    The Commission is unpersuaded by the carriers' arguments and does 
not believe that its proposed modifications to these sections, as set 
forth in the ANPR, should be altered. The requirements of the Shipping 
Act are clear. Agreements by or between ocean common carriers and/or 
marine terminal operators (MTOs) on matters set forth in 46 U.S.C. 
40301 must be filed with the Commission to receive immunity from the 
U.S. antitrust laws and are subject to an initial review period of 45 
days before they may become effective, except for assessment 
agreements.\6\ The Commission may at its discretion exempt by order or 
rule any class of agreements or activities of parties to agreements, if 
it finds that the exemption will not result in a substantial reduction 
in competition or be detrimental to commerce. Further, the Commission 
may attach conditions to an exemption and may, by order, revoke an 
exemption. 46 U.S.C. 40103.
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    \6\ An assessment agreement is an agreement, whether part of a 
collective bargaining agreement or negotiated separately, that 
provides for collectively bargained fringe benefit obligations on 
other than a uniform man-hour basis regardless of the cargo handled 
or type of vessel or equipment utilized. 46 U.S.C. 40102. Assessment 
agreements must be filed with the Commission and are effective upon 
filing. 46 U.S.C. 40305(a)
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    The ANPR explained in detail the basis for the present low market 
share exemption and the definition of capacity rationalization, as well 
as the need to modify these regulations. At present, almost any form of 
agreement involving capacity could fall within the current definition 
of capacity rationalization. Even agreements that simply coordinate 
sailing schedules among the parties can impose a concerted limitation 
on capacity as described under the present definition. The ambiguity of 
the definition has created uncertainty over which types of agreements 
would qualify for a low market share exemption under Sec.  535.311. As 
discussed above, the Commission has, in practice, limited the 
definition to mean agreements that fix the supply of capacity, such as 
vessel sharing and alliance agreements, and include exclusivity 
provisions on the ability of the parties to operate outside of the 
agreement. Operational agreements between carriers to fix capacity with 
exclusivity provisions are viewed as one of the most potentially 
anticompetitive forms of capacity rationalization.
    Technically, however, the Commission views an agreement on the 
amount of vessel capacity supplied in a service or trade as the 
rationalization of capacity between carriers, and is proposing to 
clarify the definition of capacity rationalization to reflect this 
view. Under the application of U.S. antitrust law, agreements between 
competitors to fix supply in a market are viewed as potentially harmful 
and anticompetitive, and, like agreements between competitors to fix 
prices, are per se illegal, regardless of and without any examination 
of their purported purposes, harms, benefits, or effects.\7\ Per se 
illegal agreements are not acceptable activities that are permitted 
within a ``safety zone'' for collaboration between competitors under 
the FTC/DOJ guidelines.\8\ In part, it was this principle of a ``safety 
zone'' of competitor collaboration that was used as a basis for the low 
market share exemption.\9\
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    \7\ Antitrust Guidelines for Collaborations Among Competitors, 
issued by the Federal Trade Commission and the U.S. Department of 
Justice (FTC/DOJ), April 2000, p. 3.
    \8\ Ibid, p. 26.
    \9\ 69 FR 64398, 64399-64400 (Nov. 4, 2004).
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    At the time of the previous rulemaking in 2004, many of the vessel 
sharing and alliance agreements contained exclusivity clauses and even 
rate authority. Since that time, agreements that manage capacity have 
changed and continue to evolve, which supports the need for the 
Commission's review and update of its present regulations. Carriers are 
expanding their cooperation of services through larger alliances and 
using service centers to manage capacity. Such agreements authorize the 
parties to exchange vessel space and agree on capacity to form and 
operate collective services and VSAs in the global liner trades. The 
Commission tentatively affirms that agreements with such authority 
clearly rationalize capacity, and therefore should not be exempted from 
the waiting period under Sec.  535.311, regardless of whether 
exclusivity provisions are imposed on the parties.
    The Commission emphasizes that the proposed definition of capacity 
rationalization does not mean that every agreement that contains such 
authority necessarily presents competitive concerns. The Commission 
acknowledges that VSAs and alliances can promote economic efficiencies 
and cost savings in the offering of services to shippers. Depending on 
market conditions, however, agreements with such a direct impact on 
capacity, especially in trades where their parties may discuss and 
agree on rates, can potentially be used to reduce competition and 
unreasonably affect transportation services and costs within the 
meaning of section 6(g) of the Act (46 U.S.C. 41307(b)), which 
justifies a thorough initial review of their competitive impact under 
the 45-day waiting period.
    In their comments, the carriers propose an alternative definition 
of capacity rationalization that would appear to limit it to agreements 
that impose exclusivity provisions, or artificially withhold, i.e., 
``rope off,'' vessel capacity, as contemplated in the old definition of 
``capacity management,'' which the Commission replaced with the 
definition of ``capacity rationalization'' in the 2004 Final Rule.\10\ 
The carriers' definition is identical in meaning to their alternative 
definition proposed in the Commission's previous rulemaking in

[[Page 53990]]

2004.\11\ In that rulemaking, the Commission rejected the carriers' 
proposed definition and reasoned that:
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    \10\ Previously, the definition in Sec.  535.104(e) was limited 
to capacity management, which was defined as an agreement between 
two or more ocean common carriers that authorized withholding some 
part of the capacity of the parties' vessels from a specified 
transportation market, without reducing the real capacity of those 
vessels.
    \11\ 69 FR at 64401.

    We decline to adopt the definition suggested by OCCA, as it 
would omit some conference and discussion agreements that contain 
authority for members to discuss and agree upon rationalization of 
capacity by members in specific trades. In addition, the Commission 
continues to be of the view expressed in the NPR that the potential 
effects of such arrangements are heavily dependent on conditions 
particular to an agreement trade and how the agreement is related to 
other agreements.\12\
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    \12\ Ibid.

    For these same reasons, tentatively, the Commission finds the 
carriers' proposed definition in this rulemaking to be deficient and 
again declines to adopt it. The carriers' proposed definition seems to 
reflect past trends in carrier agreements as opposed to current trends, 
and part of the purpose of this rulemaking is to update and correct 
part 535 to reflect current carrier agreements. As explained above, 
while limiting the application of capacity rationalization to 
operational agreements with exclusivity provisions may have been 
appropriate in the past, carrier agreements have evolved since 2004 and 
are continuing to evolve. The Commission's proposed definition seeks to 
clarify the meaning of capacity rationalization as the authority to 
discuss, or agree on, the amount of vessel capacity supplied in a 
service or trade, which includes VSAs and alliances as well as 
voluntary discussion agreements with such authority. The Commission 
believes its proposed definition accurately captures the practice of 
capacity rationalization and narrows the scope and application of the 
present definition in a way that is preferable to the current practice 
of informally applying additional limitations that are not explicitly 
included in the current definition, such as the presence or absence of 
exclusivity provisions.
    Likewise, the practice of implementing capacity management programs 
to ``rope off'' vessel space in a trade has become obsolete, and the 
inclusion of such practices in the definition would have no application 
in the present day. In place of such programs, carriers have increased 
their cooperation in VSAs and alliances, and utilize service centers to 
manage and maintain set capacity levels among the parties. Further, 
under the carriers' proposed definition, to state that the term does 
not include adjustments to capacity made by adding or removing vessels 
or strings of vessels pursuant to and within the existing authority of 
a filed and effective agreement would likely exclude almost every VSA 
and alliance agreement, regardless of whether it contains exclusivity 
provisions.
    The carriers assert that the Commission's proposed definition 
assumes that any agreement where the parties agree on vessels results 
in a reduction in capacity. The Commission does not make any such 
assumption; however, the Commission must analyze agreement filings 
during the initial review period to determine their competitive impact 
in the trades where the parties operate. The Commission's proposed 
definition would provide for this initial review of VSAs and alliances 
before they take effect under the Shipping Act.
    The carriers further assert that the Commission's proposed 
definition could include unintended forms of agreements, such as simple 
space charter agreements that allocate vessel space or specify the 
number and size of vessels. On the contrary, the Commission believes 
that its proposed definition would more clearly and narrowly define the 
meaning of capacity rationalization to correct the overly broad 
ambiguity of the present definition, which could be interpreted to 
include almost any form of agreement involving vessel capacity. It is 
the interpretation of the Commission that space charter agreements can 
be distinguished from VSAs in that the parties to space charter 
agreements traditionally are not authorized to discuss or agree on the 
amount of vessel capacity to be deployed in a service or trade, which 
would place a concerted limit or restriction on the supply of vessel 
capacity made available by the parties. Referencing the number or size 
of vessels in a space charter agreement is not the same as providing 
the authority for the parties to discuss and agree on the amount of 
vessel capacity in a service or trade. The Commission believes that 
this distinction is made clear in Sec.  535.104(gg) by the definition 
that:

    Space charter agreement means an agreement between ocean common 
carriers whereby a carrier (or carriers) agrees to provide vessel 
space for use by another carrier (or carriers) in exchange for 
compensation or services. The arrangement may include equipment 
interchange and receipt/delivery of cargo, but may not include 
capacity rationalization as defined in this subpart.

A VSA, on the other hand, generally authorizes space chartering but 
also involves two or more carriers contributing and sharing vessels and 
vessel space to form and collectively operate a liner service, and such 
authority to discuss and agree on the amount of vessel capacity the 
parties plan to make available in their service is explicitly stated in 
the agreement.
    The carriers complain that the Commission's proposal would subject 
more agreements and modifications to agreements to the 45-day waiting 
period, reporting, and higher filing fees. The carriers fail to 
consider the corresponding reduction in filings associated with the 
Commission's proposed exemption for space charter agreements in Sec.  
535.308. As noted in the ANPR, in terms of the overall impact of its 
proposed modifications to agreement filings, the Commission estimated 
that the filing burden could actually be reduced.\13\ In addition, the 
carriers requested and the Commission is proposing in this rulemaking 
that agreement modifications to reflect changes in the number or size 
of vessels within the range specified in an agreement (which would 
include VSAs and alliances) should be exempt from the waiting period as 
non-substantive modifications in Sec.  535.302. In terms of reporting, 
the proposed Information Form and Monitoring Report \14\ would simply 
require parties to VSAs and alliances to file certain service and 
vessel capacity data, which any party to such agreements readily tracks 
and has available. The most reliable sources of information on an 
agreement are the parties to the agreement.\15\ In cases where 
agreement parties believe reporting is unnecessary or too onerous, the 
parties may apply for a waiver in accordance with the regulations in 
Sec.  535.705.
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    \13\ Based on new and amended agreement filings for fiscal year 
2014, the Commission estimates that 15 filings that were effective 
on filing under the low market share exemption would be subject to 
the 45-day waiting period as a result of the proposed revisions to 
the definition of capacity rationalization. Conversely, 20 filings 
that were subject to the 45-day waiting period would be effective on 
filing as new two-party space charter agreements or amendments 
thereof under the new proposed exemption. In fiscal year 2014, there 
were a total of 186 agreement filings, including new and amended 
agreements. 81 FR at 10192.
    \14\ The Monitoring Report would only require reporting from 
agreements authorizing capacity rationalization that involve three 
or more carrier parties.
    \15\ 2003 NPR, 68 FR 67510, 67522 (Dec. 2, 2003).
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    On the proposed space charter exemption in Sec.  535.308, the 
carriers believe that agreements involving more than two parties should 
be exempted as well. The Commission points out that space charter 
agreements involving more than two parties may qualify for a low market 
share exemption in Sec.  535.311, where the market share of the

[[Page 53991]]

parties in any of the agreement's sub-trades is equal to or less than 
35 percent and the agreement does not contain forms of rate or capacity 
rationalization authority, as proposed. Cases where a space charter 
agreement would not qualify under either waiting period exemption are 
generally rare, and the Commission believes that such agreements would 
require a full review under the 45-day waiting period. For instance, 
such cases have occurred in the past when a carrier decides to remove 
all of its vessels from a trade and enter into a space charter 
agreement with an alliance or a large VSA, which exceeded the threshold 
for the low market share exemption. In these cases, the Commission 
would need to examine the probable competitive impact of the removal of 
vessel space from the trade and the resulting market supply and demand 
levels, under a full 45-day review.
    The carriers continue to argue that the market share threshold for 
the low market share exemption in Sec.  535.311 should be based on the 
agreement-wide trade, rather than sub-trade. The ANPR addressed this 
matter at length.\16\ The Commission does not believe that the 
exemption should be modified in this manner because it could result in 
agreements taking effect upon filing without an initial review where 
the parties hold a competitively significant share of the market in the 
smaller sub-trades. Further, using an agreement-wide threshold may 
encourage parties to structure their agreements as broadly as possible 
to evade the waiting period by setting their scopes at a regional, 
continental, or worldwide level rather than by the applicable trade 
lane.
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    \16\ 81 FR at 10191.
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    Based on the foregoing, the Commission is proposing the 
modifications to Sec.  535.104(e), Sec.  535.308, Sec.  535.311 as 
described in the ANPR without any changes. The Commission requests 
additional comments on these proposals.

III. Marine Terminal Services Agreements in Sec.  535.309

A. Background

    Section 535.309 provides an exemption from the filing and waiting 
period requirements of the Act for terminal services agreements \17\ 
between MTOs and ocean carriers to the extent that the rates, charges, 
rules, and regulations of such agreements were not collectively agreed 
upon under a MTO conference agreement.\18\ Parties may optionally file 
their terminal services agreements with the Commission. 46 CFR 
535.301(b). If the parties decide not to file the agreement, however, 
no antitrust immunity is conferred with regard to terminal services 
provided under the agreement. 46 CFR 535.309(b)(2). Parties to any 
agreement exempted from filing by the Commission under Section 16 of 
the Act, 46 U.S.C. 40103, are required to retain the agreement and make 
it available to Commission staff upon request during the term of the 
agreement and for a period of three years after its termination. 46 CFR 
535.301(d).
---------------------------------------------------------------------------

    \17\ Section 535.309(a) defines marine terminal services 
agreement to mean an agreement, contract, understanding, 
arrangement, or association, written or oral, (including any 
modification or appendix) between a marine terminal operator and an 
ocean common carrier that applies to marine terminal services that 
are provided to and paid for by an ocean common carrier. These 
services include: Checking, docking, free time, handling, heavy 
lift, loading and unloading, terminal storage, usage, wharfage, and 
wharf demurrage and including any marine terminal facilities that 
may be provided incidentally to such marine terminal services.
    \18\ Section 535.309(b)(1) defines a marine terminal conference 
agreement as 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 that 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.
---------------------------------------------------------------------------

    In the ANPR, the Commission indicated that it was reconsidering 
this exemption with the view toward requiring certain terminal services 
agreement information to be submitted to the FMC because of the 
increased cooperation of MTOs in conference and discussion agreements. 
Within the past decade, MTOs at major U.S. ports have become more 
active in cooperating through agreements to implement new programs 
addressing security and safety measures, environmental standards, and 
port operations and congestion. While such programs may potentially be 
beneficial, agreements between MTOs can also affect competition in the 
terminal services market and reduce transportation services and costs 
within the meaning of section 6(g), such as agreements on the levels of 
free-time, detention, and demurrage charged by MTOs to port users. 
Under the exemption, as MTOs have increased their cooperation under 
agreements, no empirical data on the terminal services market has been 
readily available to the Commission to analyze the competitive impact 
of such cooperative programs and activities. The filing of terminal 
services agreements would provide the Commission with timely market 
data to analyze and monitor the competitive impact of programs and 
activities of MTOs in agreements.
    In the ANPR, the Commission considered a standard Monitoring Report 
requirement to provide that all of the MTOs participating in any 
conference or discussion agreement on file and in effect with the FMC, 
submit to the FMC all of their effective terminal services agreements 
and amendments thereto. The Commission invited public comments on this 
proposed Monitoring Report requirement for MTOs, along with estimates 
of the probable reporting burden. In addition, recommendations from 
commenters were solicited on alternative Monitoring Report requirements 
for MTOs. Further, the Commission considered modifying Sec.  535.301 to 
establish a procedure by which staff would send a written request for 
exempted agreements and the parties would have 15 days to respond.

B. Summary of Comments

    Comments on these proposals were submitted by the carriers, NAWE, 
PMSA, Port of NY/NJ, WCMTOA/OAKMTOA, and SCPA. None of the interested 
parties that submitted comments favor a Monitoring Report requirement 
for MTO parties to conference and discussion agreements to submit their 
terminal services agreements to the FMC. All of the commenters 
presented similar arguments opposing the proposed requirement.
    Commenters argue that the submission of terminal services 
agreements would be unduly burdensome from an administrative and cost 
perspective to both the industry and Commission. They explain that 
terminal services agreements are frequently amended on such matters as 
operating conditions, equipment variations, labor issues, environmental 
laws, port requirements, inland transport issues and numerous other 
factors. They claim that the burden would be too onerous if amendments 
had to be filed with the FMC every time adjustments are made to their 
terminal services agreements. NAWE also notes that under the Fixing 
America's Surface Transportation (FAST) Act (Pub. L. 114-94, 129 Stat. 
1312 (Dec. 4, 2015), substantial reporting requirements on port 
performance statistics will likely be imposed on MTOs, and it cautions 
against imposing simultaneous overlapping regulatory burdens. NAWE at 
5.
    SCPA stresses that unlike most port authorities, as a marine 
terminal operating port, it must meet the same regulatory requirements 
as private MTOs. SCPA at 4. As such, SCPA finds the proposed 
requirement to be

[[Page 53992]]

unnecessarily broad, and believes that a more narrowly defined rule 
could address the Commission's concerns without unduly burdening 
operating ports. SCPA at 6.
    Commenters argue that the filing of their terminal services 
agreements would have little or no regulatory value in analyzing the 
impact of MTO conference and discussion agreements or understanding the 
terminal services market. They explain that for the most part, terminal 
services agreements are negotiated on an individual and confidential 
basis between the MTO and the carrier, and MTOs actively compete 
against each other for carrier business. They reason that terminal 
services agreements containing any matters collectively agreed upon 
under an MTO conference or discussion agreement are already required to 
be filed with the FMC pursuant to Sec.  535.309(b)(1),\19\ and as such, 
the FMC is being provided with the necessary information to monitor the 
impact of the MTO conference or discussion agreement. Both PMSA and 
NAWE noted that because there are only a few terminal services 
agreements on file with the FMC, this is evidence that MTO agreements 
have no real impact on the terms of individually negotiated terminal 
services agreements. PMSA at 1-2 and NAWE at 3.
---------------------------------------------------------------------------

    \19\ At present, there are 19 terminal services agreements on 
file at the FMC.
---------------------------------------------------------------------------

    Commenters further reason that MTO conferences and discussion 
agreements are required to file minutes of their meetings under the 
regulations and some agreements provide monitoring data. Thus, they 
contend that the Commission already receives a sufficient amount of 
information to monitor MTO agreements. Also, instead of a blanket 
Monitoring Report requirement, when the Commission may need specific 
information, the Commission has the authority to request terminal 
services agreements through a more focused inquiry on an ad hoc basis. 
The carriers support the proposed modifications to Sec.  535.301 for a 
deadline to a written request, noting that such procedures provide 
greater certainty of receiving the requested agreements in a timely 
manner. Carriers at 15.
    In terms of the terminal services market, commenters argue that 
conclusions cannot be drawn from comparing terminal services 
agreements. They explain that the characteristics of marine terminals 
are unique from each other in their physical configurations, efficiency 
levels, operating procedures, and customer needs. Terminals have 
different berthing capabilities, equipment, customers with different 
vessels and cargo volumes, and attempting to understand the market by 
comparing terminal services agreements is not valid without accounting 
for the unique features of each marine terminal. Commenters contend 
that even if comparisons of terminal services agreements provided some 
conclusion about the market, it would shed no light on the activities 
of MTO conference or discussion agreements.
    Commenters believe that the proposed requirement could also 
discourage MTOs from joining and participating in agreements that 
develop and implement beneficial programs addressing such critical 
matters as air emissions, security, and port operations and congestion, 
and as such, the Commission would be acting in a manner that hinders 
such beneficial programs. SCPA added that new groupings of carrier 
alliances are placing novel demands on ports and MTOs, and the proposed 
requirement would stifle, rather than encourage innovation. SCPA at 6.
    Further, Commenters stress that terminal services agreements 
contain extremely sensitive and competitively significant information 
on not only rates, but duration, throughput and other items. They 
caution that if such information were disclosed (whether through 
subpoena, FOIA request, Congressional inquiry or otherwise), the 
parties to the agreement could suffer serious commercial harm. In this 
regard, the carriers request that if the Commission proceeds with the 
proposed requirement, regulations be added specifically protecting 
terminal services agreements from disclosure under 46 U.S.C. 40306. 
Carriers at 16.
    The carriers conclude by recommending that the Commission 
discontinue its proposed Monitoring Report requirement for MTOs in 
favor of its proposed modifications to Sec.  535.301. However, if the 
Commission chooses to proceed with the proposed requirement, the 
carriers request that Sec.  535.309(b)(2) be revised to provide that 
the parties to the terminal services agreements be granted antitrust 
immunity, as the agreements would be in the possession of the 
Commission. Carriers at 16.

C. Discussion

    The Commission disagrees with the idea that terminal services 
agreements have no value in analyzing the impact of MTO conference and 
discussion agreements or understanding the terminal services market. A 
terminal services agreement between an MTO and a carrier is an 
agreement that by statute is required to be filed with the FMC and 
subject to the 45-day review period,\20\ but was exempted from the 
filing requirements by the Commission in a final rule in 1992.\21\ The 
Commission may amend its exemption, or revoke it entirely, if the 
Commission finds that the circumstances that merited the exemption have 
materially changed.
---------------------------------------------------------------------------

    \20\ 46 U.S.C. 40301-40304.
    \21\ 57 FR 4578 (Feb. 6, 1992).
---------------------------------------------------------------------------

    Terminal services agreements directly reveal the extent to which 
rates, terms, and programs agreed upon by MTOs in conference and 
discussion agreements have been implemented in the market. A review of 
terminal services agreements can provide a basis for the Commission to 
gauge the competitive impact and costs of actions by MTOs in conference 
and discussion agreements, and the extent to which any Commission 
action may be necessary. Further, terminal services agreements show the 
extent to which MTOs are competing on pricing and other terms, which 
provides the Commission with an understanding of the competitive 
structure of the terminal services market at a port and between ports. 
A uniformity of pricing and terms between MTOs at a port or ports would 
indicate a lack of competition in the terminal services market that may 
be attributable to the actions of MTOs in conference and discussion 
agreements.
    In its review of a sampling of terminal services agreements in 
connection with the Pacific Ports Operational Improvements Agreement 
(PPOIA), FMC No. 201227,\22\ the Commission gleaned useful information 
on the rates and competitive structure of the terminal services market 
at U.S. Pacific ports, which it would not otherwise have been able to 
discern without requesting and reviewing the terminal services 
agreements of the PPOIA parties. In its regulatory oversight of carrier 
and MTO agreements, the Commission strives to obtain and utilize the 
most accurate information to monitor the competitive impact of 
agreements, particularly where there are complaints against the 
agreement, as in the case of PPOIA.
---------------------------------------------------------------------------

    \22\ By Order on July 10, 2015, the Commission requested certain 
terminal service agreements from carrier parties to PPOIA.
---------------------------------------------------------------------------

    As such, the Commission finds the commenters' arguments dismissing 
the relevance of terminal services agreements to be unpersuasive. While 
affected by various cost factors, container terminal operations at a 
port, or between ports, are not so different that the rates and terms 
of the terminal services offered by MTOs cannot be directly compared. 
While the exemption

[[Page 53993]]

in Sec.  535.309 does not apply to rates, charges, rules, and 
regulations of an MTO conference, it does not exclude from the 
exemption rates, charges, rules and programs established under a MTO 
discussion agreement, which is voluntary on the parties. It is this 
increased activity of MTOs under discussion agreements, such as the 
PierPASS program under WCMTOA, that has caused the most concern among 
consumers and affected third parties and which the Commission has 
endeavored to monitor more closely. Minutes of agreement meetings 
reveal the decisions made under an MTO conference or discussion 
agreement; however, market data is needed to determine the competitive 
impact of the agreement decisions, and few MTO agreements are required 
to provide consistent market data.
    On concerns of filing burden and confidentiality, the Commission 
does not believe that a Monitoring Report requirement to submit 
terminal services agreements and their amendments would be too onerous 
a burden on MTOs. The filing would require little, if any, preparation. 
A copy of the agreement and its amendments could be electronically and 
securely filed with the FMC in the same manner that service contracts 
and their amendments are filed, which in fiscal year 2015 exceeded 
700,000 filings.
    As a Monitoring Report requirement, the submission of terminal 
services agreements could be protected from public disclosure under 46 
U.S.C. 40306 and the regulations in Sec.  535.701(i), which protects 
information provided by parties to a filed agreement from being 
disclosed in response to a Freedom of Information Act (FOIA) request.
    On the other hand, the Commission tentatively agrees with the 
commenters that, at the present time, imposing a standard Monitoring 
Report requirement on all of the MTO conference and discussion 
agreements may be unnecessarily broad. The Commission believes that the 
most imminent need for terminal services agreement information pertains 
to particular MTO discussion agreements whose actions are more likely 
to affect competition in the terminal services market. The Commission 
tentatively concludes that it can acquire such agreements under its 
present authority in Sec.  535.301. If the Commission is going to use 
such authority, however, the Commission believes that Sec.  535.301(d) 
should be strengthened by adding a provision requiring exempted 
agreements to be submitted to the FMC within 15 days of a written 
request from the Director, Bureau of Trade Analysis. If conditions 
change, the Commission could revisit the proposal to institute standard 
Monitoring Report requirements for all MTO conference and discussion 
agreements, or possibly amend, or revoke, the exemption in Sec.  
535.309. The Commission requests comment on this proposal.

IV. Complete and Definite Agreements in Sec.  535.402, and Activities 
That May Be Conducted Without Further Filings in Sec.  535.408.

    The Shipping Act requires that a ``true copy'' of every agreement 
be filed with the Commission.\23\ In administering these requirements, 
the Commission has endeavored to provide parties to agreements with 
guidance and clarity on what constitutes a ``true copy'' of an 
agreement through its regulations in Sec.  535.402, which require that 
an agreement filed under the Act must be clear and definite in its 
terms, must embody the complete, present understanding of the parties, 
and must set forth the specific authorities and conditions under which 
the parties to the agreement will conduct their operations and regulate 
the relationships among the agreement members.
---------------------------------------------------------------------------

    \23\ 46 U.S.C. 40302(a).
---------------------------------------------------------------------------

    Section 535.408 exempts from the filing requirements certain types 
of agreements arising from the authority of an existing, effective 
agreement.\24\ Specifically, agreements based on the authority of 
effective agreements are permitted without further filing to the extent 
that: (1) the effective agreement itself is exempted from filing, 
pursuant to subpart C of part 535, or (2) it relates to one of several 
technical or operational matters stemming from the effective 
agreement's express enabling authority. Such matters include 
stevedoring, terminal, and related services.\25\
---------------------------------------------------------------------------

    \24\ As discussed above, the Commission may, under 46 U.S.C. 
40103, exempt classes of agreements and activities of regulated 
entities from the requirements of the Shipping Act if it finds that 
the exemption will not result in a substantial reduction in 
competition or be detrimental to commerce.
    \25\ 46 CFR 535.408(b)(3).
---------------------------------------------------------------------------

A. Sec.  535.402

    In the ANPR, the Commission stated that it was concerned about 
confusion among regulated entities regarding the requirement that 
further agreements arising from the authority of a filed agreement must 
generally be filed with the Commission.\26\ In order to address this 
issue, the Commission indicated that it was considering proposing to 
amend Sec.  535.402 to expressly state that an agreement that arises 
from the authority of an effective agreement, but whose terms are not 
fully set forth in the effective agreement to the extent required by 
the current text of Sec.  535.402, must be filed with the Commission 
unless exempted under Sec.  535.408.
---------------------------------------------------------------------------

    \26\ 81 FR at 10194.
---------------------------------------------------------------------------

    Only the carriers commented on this potential proposal, stating 
that although they do not believe that revision to the regulation was 
necessary, they have no objection to the proposal under 
consideration.\27\ Accordingly, the Commission is proposing to add a 
second paragraph to Sec.  535.402 as contemplated in the ANPR.
---------------------------------------------------------------------------

    \27\ Carriers at 16.
---------------------------------------------------------------------------

B. Sec.  535.408(b)(3)

    The Commission also noted in the ANPR that it was concerned that 
the filing exemption in Sec.  535.408(b)(3) for further agreements 
addressing stevedoring, terminal, and related services is unclear and 
overly broad. The Commission indicated that it was considering 
proposing to remove the exemption and replace it with a list of more 
narrowly defined, specific services and requested comment on what 
specific services might be appropriately included within the revised 
exemption and how to define those services. The Commission also 
requested comments on whether the specific examples of stevedoring, 
terminal, and related services listed in Sec.  535.408(b)(3), i.e., the 
operation of tonnage centers or other joint container marshaling 
facilities, continue to be relevant and suitable exempted activities.
    The carriers and several of the groups consisting of MTOs or MTOs 
and carriers \28\ (MTO groups) question the need for any changes to the 
exemption and assert that, given the few situations in which the scope 
of the provision had been discussed by agreement parties and Commission 
staff, the Commission was overstating concerns about the clarity and 
potential abuse of the provision.\29\ Those groups also express concern 
that it would be extremely difficult to make a comprehensive list of 
all services to exempt from filing, and any list developed now could be 
obsolete in the future.\30\ The groups argue that because any agreement 
related to service omitted from the list would have to be filed with 
the Commission and subject to the 45-day waiting period (regardless of 
how

[[Page 53994]]

minimal the competitive impact or how great the benefit to the public), 
the proposal under consideration would increase the burdens on both 
agreement parties and Commission staff, and delay the operational or 
business requirements of the parties.\31\
---------------------------------------------------------------------------

    \28\ OAKMTOA, WCMTOA, NAWE, PMSA, Port of NY/NJ.
    \29\ Carriers at 19; WCMTOA/OAKMTOA at 5-6; NAWE at 6; PMSA at 
2-3; Port of NY/NJ at 8.
    \30\ Carriers at 18-19; WCMTOA/OAKMTOA at 6; NAWE at 6-7; PMSA 
at 3; Port of NY/NJ at 7-8
    \31\ Carriers at 22-23; WCMTOA/OAKMTOA at 6; NAWE at 7; PMSA at 
3; Port of NY/NJ at 7-8.
---------------------------------------------------------------------------

    In order to avoid these alleged problems, the groups recommend that 
the Commission retain the existing exemption.\32\ As an alternative, 
WCMTOA/OAKMTOA suggest that the Commission consider requiring that 
agreement parties provide the Commission with confidential notice of 
further agreements falling under the exemption, allowing the Commission 
to review those agreements without a ``full-blown agreement amendment'' 
process and enabling the Commission to better understand how the 
exemption is being used and whether further action on the issue is 
required in the future.\33\
---------------------------------------------------------------------------

    \32\ WCMTOA/OAKMTOA at 6; NAWE at 7; PMSA at 3; Port of NY/NJ at 
8.
    \33\ WCMTOA/OAKMTOA at 7.
---------------------------------------------------------------------------

    In addition to the points described above, the carriers offer 
several additional comments not raised by the MTO groups. Specifically, 
the carriers state that the exemptions in Sec.  535.408(b) represent a 
delicate and difficult exercise in balancing the Commission's need for 
information and oversight and one of the Shipping Act's stated 
purposes, to regulate with a minimum of government intervention and 
regulatory costs.\34\ The carriers argue that the concerns voiced by 
the Commission in the ANPR are inapplicable to operational carrier 
agreements such as vessel and space charter agreements, which almost 
always create the need for carriers to come to an understanding about 
how to deal with terminals and stevedores and, therefore, generally 
include authority to discuss and agree on these issues.\35\ The 
carriers argue that such arrangements are a routine part of such 
agreements and there is no need to change the existing exemption.\36\
---------------------------------------------------------------------------

    \34\ Carriers at 17.
    \35\ Ibid. at 18.
    \36\ Ibid. at 19.
---------------------------------------------------------------------------

    In the alternative, the carriers recommend clarifying the current 
exemption rather than replacing it with a list of specific 
services.\37\ With respect to tonnage centers, the carriers assert that 
the exemption should be retained because a tonnage center is merely an 
administrative mechanism through which agreement parties carry out 
existing authorities in the agreement; it neither adds nor detracts 
from such authority.\38\
---------------------------------------------------------------------------

    \37\ Ibid. at 20.
    \38\ Ibid.
---------------------------------------------------------------------------

    With regard to joint container marshaling facilities, the carriers 
assert that the exemption should be retained and made part of a new 
provision exempting from further filing the implementation of authority 
to jointly procure facilities and services, providing three reasons 
supporting such an exemption.\39\ First, the carriers argue that it is 
unlikely that joint procurement activities could result in an 
unreasonable increase in transportation cost or unreasonable reduction 
in transportation service. Rather, they assert that such activities 
will generally result in a reduction in costs to carriers and more 
efficient service, thereby lowering costs and improving service for 
shippers. Second, the carriers state that joint procurement activities 
do not represent further agreement among the carriers, but an agreement 
between the carriers and a third party entered into under the authority 
of a filed agreement. Finally, the carriers argue that joint 
procurement arrangements, by their nature, are ill-suited to further 
filing and appropriate for exemption. Specifically, the carriers assert 
that these are routine, everyday transactions that would be conducted 
by the individual carriers themselves if not done jointly. In addition, 
the carriers express concern and confusion over the mechanics of filing 
such arrangements and the danger that competitively sensitive 
information would be made public.
---------------------------------------------------------------------------

    \39\ Ibid. at 20-23.
---------------------------------------------------------------------------

    The Commission notes that the exemptions in Sec.  535.408(b) were 
promulgated under the authority in 46 U.S.C. 40103 and were predicated 
on a finding that the exempted activities would not result in a 
substantial reduction in competition or be detrimental to commerce.\40\ 
Against that backdrop, we first respond to the MTO groups' comments, 
which are based on the understanding that the exemption in Sec.  
535.408(b)(3) applies, and was intended to apply, to MTO agreements. 
Although, by its plain language, Sec.  535.408(b)(3) does not limit the 
applicability of the exemptions to any particular type of agreement, 
the rulemaking history of the provision and the Commission's subsequent 
statements indicate that the Commission's focus was on activities under 
ocean common carrier agreements, rather than MTO agreements, when it 
promulgated Sec.  535.408(b).
---------------------------------------------------------------------------

    \40\ 2003 Proposed Rule, 68 FR at 67518.
---------------------------------------------------------------------------

    First, all of the exemptions in Sec.  535.408(b) concern matters 
that can arise during the implementation of ocean common carrier 
agreements, and some of these are clearly limited to such agreements 
(e.g., establishing and jointly publishing tariff rates, rules, and 
regulations; matters relating to space allocation and slot sales). In 
addition, the Commission's discussion of the exemptions in the 2003 
Proposed Rule and 2004 Final Rule focused solely on ocean common 
carrier agreements.\41\ Finally, the scope of Sec.  535.408(b) was 
clarified by the Commission in the preamble to the 2009 final rule 
eliminating the general exemption from the 45-day waiting period for 
marine terminal agreements.\42\ Specifically, the Ports of Los Angeles 
and Long Beach expressed concern in their comments to that rulemaking 
that the exemptions in Sec.  535.408 are specific to VOCCs and do not 
address marine terminal operators.\43\ In response, the Commission 
stated the following:
---------------------------------------------------------------------------

    \41\ 68 FR at 67517-67519; 69 FR at 64400-64401.
    \42\ Final Rule, Repeal of Marine Terminal Agreement Exemption, 
74 FR 65034 (Dec. 9, 2009).
    \43\ Ibid. at 65034.

    [T]he Commission acknowledges that the exemption under section 
535.408 primarily addresses carrier agreements. Section 535.408 
states that ``technical or operational matters of an agreement's 
affairs established pursuant to express enabling authority in an 
agreement are considered part of the effective agreement'' and thus 
exempts certain amendments having technical or operational effects 
from the Shipping Act's filing requirement. While not part of Docket 
No. 09-02, the Commission is open to reviewing this latter section 
to determine if additional flexibility can be provided for 
amendments addressing technical or operational matters of marine 
terminal operator agreements.\44\
---------------------------------------------------------------------------

    \44\ Ibid. at 65035-67036.

The MTO groups thus misconstrue the proposal under consideration as the 
revocation or revision of an exemption that the Commission granted to 
activities under MTO agreements after determining that such an 
exemption would not result in a substantial reduction in competition or 
be detrimental to commerce. As demonstrated by the history described 
above, no such determination has ever been made by the Commission, and 
part of the purpose of this rulemaking is to clarify the scope of the 
exemption as originally intended while also providing interested 
persons with the opportunity to put forth routine technical and 
operational matters related to terminal, stevedoring, and related 
services under MTO agreements that would be appropriate for an 
exemption.

[[Page 53995]]

    The ``few situations'' in which this exemption has arisen in the 
context of MTO agreements are thus troubling. They demonstrate that: 
(1) Contrary to the Commission's original intent, the exemption in 
Sec.  535.408(b)(3) is worded broadly enough potentially to apply to 
activities under MTO agreements; and (2) in the context of MTO 
agreements, the exemption is potentially broad enough to encompass 
activities that raise competitive concerns (i.e., much more than 
routine operational or administrative activities).
    Unlike other exemptions in Sec.  535.408(b) that could be read as 
applying to MTO agreements, but have the same minimal impact on 
competition and commerce as they do in the ocean common carrier 
agreement context,\45\ ``stevedoring, terminal and related services'' 
cover a much broader set of activities in the MTO agreement context. In 
ocean common carrier agreements, these activities generally involve the 
joint negotiation of services from MTOs and other waterfront entities, 
some of which, like terminal services agreements, are currently exempt 
from the filing requirements when they involve a single carrier.\46\ In 
contrast, ``stevedoring, terminal, and related services'' \47\ 
generally represent the primary subject matter of MTO agreements, and 
Sec.  535.408(b)(3) could be interpreted broadly enough to exempt from 
further filing, most, if not all, further agreements authorized by a 
filed agreement, regardless of their competitive impact. The Commission 
is therefore unable at this time to find that applying such a broad 
exemption to MTO agreements would not result in a substantial reduction 
in competition or be detrimental to commerce. The Commission requests 
comment on this tentative determination and any information that would 
support the finding required by 46 U.S.C. 40103 with respect to 
applying the exemption, as written, to MTO agreements.
---------------------------------------------------------------------------

    \45\ For example, scheduling agreement meetings. 46 CFR 
535.408(b)(4)(i).
    \46\ 46 CFR 535.309.
    \47\ The Commission's regulations define terminal services 
checking, dockage, free time, handling, heavy lift, loading and 
unloading, terminal storage, usage, wharfage, and wharf demurrage. 
46 CFR 525.1(19); 535.309.
---------------------------------------------------------------------------

    For similar reasons, the Commission is tentatively rejecting 
WCMTOA/OAKMTOA's suggestion that the Commission require further 
agreements falling under the exemption to be filed confidentially with 
the Commission rather than subject them to the normal filing 
requirements. Granting such an exemption would require the same 
affirmative finding under 46 U.S.C. 40103, and given the potential 
breadth of further agreements falling under the exemption, and the fact 
that the Commission would not have the 45-day review period, the 
benefit of third-party comments, or the opportunity to issue an RFAI if 
it had concerns with such agreements, the Commission is unable to make 
such a finding at this time.
    Although the Commission has tentatively determined that the current 
exemption is not appropriate for MTO agreements, we acknowledge that 
there may be some further agreements dealing with stevedoring, 
terminal, or related services that have little to no competitive 
impact. Accordingly, the Commission requested comment in the ANPR on 
what specific services might be appropriately included within the 
revised exemption and how to define those services. Unfortunately, none 
of the MTO groups responded to this request. In the absence of any 
recommendations regarding specific MTO agreement activities to include 
within the revised exemption, the Commission is proposing to amend the 
language of Sec.  535.408(b)(3) to expressly limit the exemption to 
ocean common carrier agreements as originally contemplated by the 
Commission (with some additional revisions discussed below).
    The Commission is, however, renewing its request for comments on 
specific stevedoring, terminal, or related services that should be 
exempted from further filing if authorized by an MTO agreement.\48\ As 
contemplated in the rulemaking establishing Sec.  535.408(b), these 
should be routine operational and administrative matters that require 
day-to-day flexibility and have little to no competitive impact. In 
addition to describing these services, commenters should provide 
information sufficient to enable the Commission to determine that 
exempting them from the further filing requirements would not result in 
a substantial reduction in competition or be detrimental to commerce.
---------------------------------------------------------------------------

    \48\ The commenters' arguments regarding the difficulties of 
creating and maintaining a list of specific services are not 
compelling. Should the need arise to amend the list in the future, 
the Commission can initiate a new rulemaking on its own initiative 
or in response to a petition for rulemaking filed by an interested 
party. 46 CFR 502.51.
---------------------------------------------------------------------------

    With respect to the ocean common carrier agreements, the carriers 
are generally correct in their assertion that the Commission's concerns 
with Sec.  535.408(b)(3) relate primarily to MTO agreements rather than 
operational carrier agreements such as vessel and space charter 
agreements. As discussed above, stevedoring, terminal, and related 
services (including the operation of tonnage centers and other joint 
container marshalling facilities) are generally discrete, ancillary 
matters in these agreements and do not raise the same competitive 
concerns that they do in the MTO agreement context. Accordingly, the 
Commission is proposing to retain the exemption for joint contracting 
of stevedoring and terminal services by parties to an ocean common 
carrier agreement \49\ and the express exemption for the operation of 
tonnage centers and other joint container marshaling facilities under 
those agreements. In addition, the Commission is proposing to tie the 
definition of terminal services to Sec.  535.309 and to specify that 
the exemption only applies to those services that are provided to and 
paid for by the agreement parties.
---------------------------------------------------------------------------

    \49\ This proposal is based, in part, on the Commission's 
tentative determination to retain the exemption for marine terminal 
services agreements in Sec.  535.309. Should the Commission 
reconsider this determination, the proposal related to Sec.  
535.408(b)(3) may be affected.
---------------------------------------------------------------------------

    The Commission is also proposing to remove the phrase ``or related 
services'' from the exemption. It is unclear what might comprise the 
universe of such related services (other than the operation of tonnage 
centers and joint container marshaling services), and it is therefore 
difficult for the Commission to find that exempting such activities 
would not result in a substantial reduction in competition or be 
detrimental to commerce. The Commission invites comment on these 
revisions and any additional, specific related services for which 
exemption would be appropriate.
    For similar reasons, the Commission is tentatively rejecting the 
carriers' request to create a general joint procurement exemption for 
ocean common carrier agreements, to the extent that their proposal 
contemplates something beyond the joint procurement activities that 
would be exempted under the proposed language. Although agreements that 
involve joint purchasing can often reduce costs and create 
efficiencies, such agreements also have the potential for 
anticompetitive outcomes.\50\ Without knowledge of what upstream 
markets might be affected by such joint procurement activities, the 
Commission would have limited ability to determine their competitive 
impact. Similar to the request noted above with respect to ``related 
services,'' however,

[[Page 53996]]

the Commission requests comment on specific, additional joint 
procurement activities that may be appropriate for exemption.
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    \50\ By unduly increasing the bargaining power of the parties, 
in certain circumstances, such agreements potentially could extract 
prices so low (and/or an over-provision of service) that the 
sustainability of long-term investment in the affected upstream 
market(s) is jeopardized.
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V. The Information Form Requirements in Subpart E of Part 535

A. Proposed Changes

    In conjunction with its proposed changes to the agreement 
definitions and exemptions, the Commission proposes the following 
changes to the corresponding Information Form requirements. As 
discussed in its ANPR, the Commission proposes to modify Section I of 
the Information Form to specify that space charter agreements exempted 
under the new proposed exemption in Sec.  535.308 would not be subject 
to these requirements, and to revise or add the proposed modifications 
to the definitions of agreement authorities listed in Section I.
    In Section II, the Commission proposes to eliminate the Information 
Form requirements for simple operational agreements. The Commission 
believes that the present requirements to list port calls and provide a 
narrative statement of operational changes for such agreements are 
unnecessary.
    The Commission proposes that Section III be renumbered as Section 
II and modified to apply to agreements with authority to charter vessel 
space (unless exempted under Sec.  535.308 or Sec.  535.311), or with 
authority to discuss or agree on capacity rationalization. The 
Commission believes that parties to agreements with such authority 
should provide before and after data on their service strings, vessel 
deployments, port itinerary, annual capacity, and vessel space 
allocation for the services pertaining to the agreement. Further, it is 
proposed that parties to such agreements provide vessel capacity and 
utilization data for the services pertaining to the agreement for the 
preceding calendar quarter, as well as a narrative statement discussing 
any significant operational changes \51\ to be implemented under the 
agreement and the impact of those changes.
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    \51\ The Commission believes that the definition of significant 
operational changes should be standardized and applied consistently 
throughout the regulations to mean an increase or decrease in a 
party's liner service, ports of call, frequency of vessel calls at 
ports, and/or amount of vessel capacity deployment for a fixed, 
seasonally planned, or indefinite period of time. The amended 
definition would exclude incidental or temporary alterations or 
changes that have little or no operational impact.
---------------------------------------------------------------------------

    The Commission proposes that Section IV be renumbered as Section 
III and that the requirements for rate agreements be reduced to data on 
market share by agreement-wide trade instead of sub-trade, average 
revenue, vessel capacity and utilization, and a narrative statement on 
any anticipated or planned significant operational changes and their 
impact. The Commission believes that market share data derived on the 
total geographic scope of the agreement, rather than by sub-trade, 
should be sufficient for its analysis and less burdensome on the 
parties. Further, the Commission favors eliminating the present 
requirement for data regarding the revenue and cargo volume of the top 
ten major moving commodities for reasons explained in the ANPR. In 
addition, the Commission proposes to eliminate the requirement for data 
on the number of port calls.
    The Commission proposes that Section V be renumbered as Section IV 
with no changes to the present requirements for contact information and 
a signed certification of the Form. Further, it is proposed that the 
instructions to the Information Form be streamlined by removing many of 
the same definitions repeated throughout each section of the Form and 
stating them in paragraphs at the beginning of the Form, with the 
understanding that they apply to each section. The Commission believes 
that this proposed modification would improve the clarity and 
readability of the instructions.

B. Summary of Comments

    Comments to these proposals were submitted by the carriers and the 
NCBFAA. The carriers favor the proposed modifications that reduce the 
reporting requirements. However, consistent with their objections to 
the proposed change in the definition of capacity rationalization 
authority, the carriers object to the increase in the reporting 
requirements for VSA and alliance agreements and urge the Commission to 
reduce the requirements. Further, the carriers question why parties to 
rate agreements must continue to provide market share data on their 
Information Form when it has been eliminated elsewhere, and the 
Commission can use its own commercial sources of data to determine the 
market share of the agreement. They request that the requirement for 
market share be eliminated from the Information Form. Carriers at 23-
24.
    The NCBFAA supports the increased reporting for VSA and alliance 
agreements and encourages the Commission to seek a greater amount of 
detailed information on the potential costs and service impact of such 
agreements. They explain that VSA and alliance agreements encourage 
carriers to deploy increasingly larger vessels through the benefit of 
sharing the economic risk of such new purchases. They believe that the 
inadequate infrastructure at U.S. ports in combination with the 
deployment of these larger vessels has resulted in severe port 
congestion, extended delays in the delivery of cargo, and added costs 
to shippers. NCBFAA at 2-3.
    The NCBFAA identified the congestion problems at the Ports of Los 
Angeles, Long Beach, and New York/New Jersey as particularly severe in 
the recent past, noting that delays in cargo delivery resulted in 
significant demurrage and detention charges to shippers. The NCBFAA 
believes that the deployment of larger vessels through VSAs has 
exacerbated the problems of port congestion, the inability of the 
current infrastructure to handle the flow of containers, and the 
increased costs for participants in the supply chain. They complain 
that while the use of larger vessels causes more congestion and delays, 
carriers do not vary free time for vessel size, and merchant haulers 
grapple to find sufficient trucking to dray double and triple the 
container volume in the allotted free time. NCBFAA at 3.
    The NCBFAA further questions the purported cost savings associated 
with using larger vessels, stating that the costs associated with the 
congestion and infrastructure problems outweigh any savings of such 
vessels. They explain that the use of larger containerships results in 
increased equipment costs for MTOs; dredging costs for port 
authorities; infrastructure improvement costs for governments; and 
congestion costs for transportation companies, including trucking, 
barge and rail companies as well as ocean transportation 
intermediaries. In support of its argument, the NCBFAA cites a report 
on the impact of large containerships prepared by the Organization for 
Economic Cooperation and Development (OECD).\52\ In its report, the 
OECD determined that cost savings are decreasing as containerships 
become bigger, and this tendency of decreasing cost savings continues 
with the introduction of the newest generation of containerships, which 
it estimates at four to six times smaller than the savings associated 
with the preceding round of vessel deployments.\53\ NCBFAA at 4-5.
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    \52\ OECD/ITF, The Impact of Mega-Ships, International Transport 
Forum (2015), available at http://www.itf-oecd.org/sites/default/files/docs/15cspa_mega-ships.pdf.
    \53\ Ibid, p. 26.

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[[Page 53997]]

    The NCBFAA advises the Commission to examine whether the carriers' 
move toward increasingly larger vessels and alliance arrangements would 
result in an inappropriate transfer of risks and costs to the shipping 
public. As such, they recommend that the narrative statement of the 
Information Form requirements for parties to VSAs be expanded to 
include: (1) Carriers' plans for addressing delays in the loading and 
discharging of containers on and off vessels at ports; (2) sufficient 
chassis availability to handle the movement of containers at ports; (3) 
sufficient drayage availability to handle the movement of containers at 
ports; (4) carriers' plans for eliminating duplicative container 
handling operations at ports; (5) projected dwell times; (6) allotted 
free time for container movements based on vessel size and drayage 
availability; and (7) unfounded demurrage or detention costs due to 
delays that are beyond the control of shippers. NCBFAA at 6-7. Further, 
the NCBFAA recommends that parties to VSA and alliance agreements be 
required to provide the Commission with their contingency plans for 
handling cargo when their vessels cannot access ports as scheduled due 
to congestion. NCBFAA at 8.

C. Discussion

    The carriers request that the proposed Information Form 
requirements for VSAs be reduced but they do not provide any specifics 
or alternative recommendations. The proposed service and capacity 
reporting requirements for VSA and alliance agreements should provide 
the Commission with a clearer understanding of any service changes and 
the impact of those changes in its initial review of the agreement, 
without having to request additional information. The Commission 
believes that such service data is prepared and readily available 
because parties to VSAs would likely examine such data to conduct their 
own analysis when entering into such agreements. The parties are the 
source of the most accurate firsthand information. Therefore, such data 
should not be an unreasonable burden to report, and the Commission is 
disinclined to reduce these Information Form requirements.
    Regarding the market share requirement for rate agreements, while 
the Commission can and does conduct its own market analysis, it is 
important at the initial filing stage of the agreement that the parties 
present to the Commission their analysis and understanding of the 
market and the market share of the agreement. The interpretation of the 
market might vary depending on the authority and geographic scope of 
the agreement, and the parties' view of the market might differ from 
the Commission's view. In addition, the Commission is proposing to 
require only agreement-wide market share and eliminate the requirement 
of market share by sub-trade, which would significantly reduce the 
reporting burden on the industry.
    The Commission appreciates all of the concerns expressed in the 
comments of the NCBFAA regarding the competitive impact of VSA and 
alliance agreements. The Commission believes that the NCBFAA raises 
valid concerns on how the size of vessels deployed under these 
arrangements can impact port and terminal operations and the cost of 
handling containers within the meaning of unreasonable service 
decreases and unreasonable cost increases under section 6(g). The 
Commission will take these concerns into consideration in its review of 
such agreements. However, as a matter of standard reporting, the 
Commission does not believe that such an extensive line of inquiry is 
necessary for reviewing every VSA. The Commission believes that 
information on terminal and cargo handling matters would be more 
meaningful in the review of major alliance agreements, and the 
Commission has formally requested information on such matters in its 
past review of alliance agreements pursuant to its authority under 46 
U.S.C. 40304(d). Therefore, the Commission tentatively declines to 
adopt the recommendations of the NCBFAA as a standard Information Form 
reporting requirement, but reserves these recommendations as matters 
for consideration in the Commission's review of major VSA and alliance 
agreements that it may seek additional information on through its 
statutory authority.
    The Commission requests additional comment on the proposed changes 
to the Information Form requirements.

VI. Comments in Sec.  535.603, and Requests for Additional Information 
in Sec.  535.606

A. Requests for Additional Information

    The Shipping Act permits the Commission to request from the person 
filing the agreement any additional information and documents the 
Commission considers necessary to make the determinations required by 
the Act during the 45-day waiting period before an agreement may go 
into effect.\54\ In accordance with 46 U.S.C. 40304(d) and the 
Commission's general rulemaking authority under 46 U.S.C. 305, the 
Commission has promulgated regulations regarding the issuance of RFAIs 
at 46 CFR 535.606. The regulations state that the Commission will 
publish a notice in the Federal Register that it has requested 
additional information and serve that notice on any commenting parties, 
but the notice will indicate only that a request was made and will not 
specify what information is being sought.\55\ The purpose of this 
notice is to allow further public comment on the agreement.\56\
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    \54\ 46 U.S.C. 40304(d).
    \55\ 46 CFR 535.606(d).
    \56\ Final Rule, Rules Governing Agreements by Ocean Common 
Carriers and Other Persons Subject to the Shipping Act of 1984. 49 
FR 45320, 45338 (Nov. 15, 1984).
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    In the ANPR, the Commission noted that its general policy is not to 
disclose questions issued by the Commission in an RFAI and requested 
comment on the policy and whether it should be modified.\57\ All of the 
commenters that discussed the issue supported the current policy of not 
releasing RFAI questions and urged the Commission not to change it. 
Several commenters asserted that the policy promotes the frank exchange 
of questions and responses on issues of concern to the Commission, and 
that publication of the questions could lead to questions being asked 
for reasons other than regulatory concerns and could prejudice the 
parties to an agreement as a result of public reaction to the 
questions.\58\ The carriers stated that a RFAI is rooted in large part 
on confidential information in the possession of the Commission and is 
a part of the deliberative process, and, just as the Commission does 
not disclose staff recommendations, it should not disclose the 
questions that form part of the basis for those recommendations.\59\
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    \57\ 81 FR at 10196.
    \58\ WCMTOA/OAKMTOA at 7-8; Port of NY/NJ at 8-9.
    \59\ Carriers at 25-26.
---------------------------------------------------------------------------

    Given the comments received, the Commission is not proposing any 
changes to the treatment of RFAI questions.

B. Third-Party Comments

    The Commission's regulations regarding third-party comments on 
agreement filings are found at 46 CFR 535.603, which provides that 
persons may file with the Secretary written comments regarding a filed 
agreement. Section 535.603 provides that, if requested, comments and 
any accompanying material will be accorded confidential treatment to 
the fullest extent permitted by law and that such

[[Page 53998]]

requests must include a statement of legal basis for confidential 
treatment. The regulation further provides that when a determination is 
made to disclose all or a portion of a comment, notwithstanding a 
request for confidentiality, the party requesting confidentiality will 
be notified prior to disclosure.
    In the ANPR, the Commission requested comment on its policy with 
respect to the disclosure of third-party comments. The commenters who 
discussed the issue universally opined that third-party comments on 
agreements should be made public unless the submitter asserts that they 
fall within one of the exemptions from disclosure under FOIA, and the 
Commission determines that assertion to be valid.\60\ These commenters 
asserted that publishing the comments encourages accuracy, affords 
agreement parties with the opportunity to provide the Commission with 
their perspective on the issues raised, and promotes dialogue between 
the agreement parties and the commenters.
---------------------------------------------------------------------------

    \60\ WCMTOA/OAKMTOA Comments at 8; Carrier Comments at 26; 
PNYNJPA Comments at 9.
---------------------------------------------------------------------------

    During the past several years, there has been some confusion about 
how the Commission handles third-party comments to agreements and their 
accessibility by agreement parties and the public, leading the 
Commission to tentatively determine that Sec.  535.603 does not 
sufficiently advise commenters and the public about this process. The 
Commission tentatively concludes, however, that the current process, 
which permits requests for copies of third-party comments, has the same 
advantages as those cited by commenters with respect to publishing 
comments. Accordingly, the Commission is proposing to amend Sec.  
535.603 to describe in more detail the Commission's current process for 
handling third-party comments and requests comment on any modifications 
that should be considered.
    When the Commission receives a comment on a filed agreement, it is 
distributed internally to the Commissioners and relevant staff. If the 
commenter requests confidential treatment, the Secretary will make a 
prompt determination as to the Commission's ability to protect any 
comment or portion of a comment from disclosure and inform the 
submitter. If a member of the public, press, or agreement counsel 
request a copy of a comment, the Office of the Secretary will provide 
any comment or part of a comment unless the Secretary has determined 
that the comment or part of the comment should be afforded confidential 
treatment.
    Currently, late-filed comments are only accepted by leave of the 
Commission upon a showing of good cause. In order to more efficiently 
handle late-filed comments, the Commission is proposing to amend Sec.  
501.24 to delegate to the Secretary the authority to determine whether 
to accept such comments.
    The Commission requests comment on the proposed revisions to 
Sec. Sec.  501.24 and 535.603, which reflect the process described 
above, and any modifications that should be considered to the process.

VII. Agreement Reporting Requirements in Subpart G of Part 535

A. Background

    Under subpart G of part 535, parties to agreements that contain 
certain authority are required to file periodic Monitoring Report and/
or other prescribed reports. Further, parties to agreements with 
certain types of authority (e.g., rate authority) are required to 
provide minutes of their meetings. For reasons identified in its ANPR, 
the Commission is proposing the following modifications to these 
reporting requirements.
    There are currently three sections of the Monitoring Report. 
Sections I and II apply according to the authorities contained in the 
agreement. Section III applies to all agreements subject to Monitoring 
Reports and requires contact information and a signed certification of 
the Report. The Commission proposes that Section I be modified to apply 
to agreements between or among three or more ocean common carriers that 
contain the authority to discuss or agree on capacity rationalization, 
under the new proposed definition of this authority in Sec.  
535.104(e). Agreements subject to reporting under Section I would 
include vessel sharing and alliance agreements among three or more 
carriers regardless of whether such agreements contain exclusivity 
clauses.
    There, however, may be agreements below the threshold of three or 
more members agreeing on the supply of capacity in a trade or service 
that the Commission may need to monitor. In such cases, the Commission 
may decide to prescribe reporting requirements pursuant to Sec.  
535.702(d). In this regard, the Commission proposes to revise Sec.  
535.702(d) to clarify that it applies to any filed agreements, not just 
to those agreements subject to the Monitoring Report requirements. 
Further, the Commission proposes to move this authority from Sec.  
535.702(d) under the Monitoring Reports section to Sec.  535.701(c) 
under the general requirements section for reporting requirements in 
subpart G of part 535. Sections 535.701(c)-(j) of the current 
regulations would be redesignated sequentially.
    In terms of requirements, the Commission proposes to require that 
parties to capacity rationalization agreements subject to Section I 
submit quarterly Reports with data on their vessel capacity and 
utilization separately showing each month of the quarter for the liner 
services pertaining to the agreement. The provision for advance notice 
of significant reductions in capacity would be retained along with the 
narrative statement on any other significant operational changes 
implemented during the quarter.
    Section II of the Monitoring Report applies to carrier agreements 
containing rate authority with a market share of 35 percent or more. 
The Commission proposes that the requirements for these agreements be 
reduced by eliminating the market share, commodity components, and the 
narrative statement on significant operational changes.
    The market share requirement delays the Report because most of the 
carriers supply this information using commercial data sources, which 
causes a lag in the Report of 75 days after the end of the quarter. 46 
CFR 535.701(f). The Commission subscribes to commercial sources of data 
and can run periodic data reports as needed. Without the market share 
requirement, the Commission proposes that the filing deadline for the 
Report be shortened from 75 to 45 days after the end of each quarter, 
which would provide more timely data.
    Further, the Commission proposes that the reporting requirement for 
data by commodity be eliminated for the Monitoring Report. However, 
when essential to monitoring an agreement, the Commission could 
prescribe specific commodity data reporting pursuant to its authority.
    The Commission is also proposing that parties to rate agreements no 
longer be required to report on the significant operational changes in 
their services. The Commission believes that reporting this information 
under VSA and alliance agreements should provide a sufficient 
understanding of significant operational changes in the U.S. trade 
lanes. When needed, the Commission could request specific operational 
information from the parties.
    With the elimination of these requirements, it is proposed that 
parties to rate agreements with a market share

[[Page 53999]]

of 35 percent or more submit quarterly Monitoring Reports with data on 
their average revenue, vessel capacity, and utilization for each month 
of the quarter for the liner services operated by the parties within 
the geographic scope of the agreement.
    As with the Information Form, it is proposed that the Monitoring 
Report instructions be streamlined by removing definitions repeated 
within each section and stating them in paragraphs at the beginning of 
the Report with the understanding that they apply to each section.
    Section 535.704(b) defines a ``meeting'' between the parties to an 
agreement for the purpose of the filing of meeting minutes with the 
Commission. The Commission proposes that the definition be modified to 
clarify that the discussions of parties using different forms of 
technology (e.g., telephone, electronic device, electronic mail, file 
transfer protocol, electronic or video chat, video conference) still 
constitute discussions for the purpose of filing minutes.

B. Summary of Comments

    The carriers were the only interested parties to submit comments on 
the proposed changes to the Monitoring Report requirements. The 
carriers support the changes to reduce the reporting burden but again 
raise objections to the increase in reporting in connection with the 
proposed change in the definition of capacity rationalization as it 
applies to VSA and alliance agreements. They urge the Commission to 
reduce the reporting burden for these agreements. Further, the carriers 
generally support the reduction in the filing deadline from 75 to 45 
days with the understanding that occasional and reasonable requests for 
extensions of the deadline would be available as needed. Carriers at 
23-24.

C. Discussion

    The carriers urge that the Commission reduce the reporting burden 
for agreements subject to the proposed definition of capacity 
rationalization, but they provide no specifics or alternative 
recommendations. As explained above in the section discussing the 
Information Form, parties to VSA and alliance agreements closely track 
their service and capacity, and such data is readily available to the 
parties. The Commission does not believe that the reporting 
requirements pose an undue regulatory burden. The data is essential for 
the Commission to monitor the actions of the agreement parties and 
their impact on the supply of capacity in the U.S. liner trades, and 
the parties are the best source of information. Further, the Commission 
proposes to limit the application of the requirements to capacity 
rationalization agreements between three or more carriers, and 
eliminate the reporting of information on service changes for parties 
to rate agreements. Where agreement parties believe reporting is 
unnecessary or overly burdensome, they may apply and the Commission 
shall consider an application for waiver of some or all of the 
Monitoring Report requirements in accordance with Sec.  535.705. Such 
regulatory relief includes extensions of time to file the reports, 
which the Commission may grant on a case-by-case basis for good cause.

VIII. Non-Substantive Modifications To Update and Clarify the 
Regulations in Parts 501 and 535

A. Background

    As explained in its ANPR, to update and clarify the regulations, 
the Commission proposes that:
    1. The CFR citation for the delegated authority of the Director of 
the Bureau of Trade Analysis to prescribe reporting requirements in 
Sec.  501.27(o) be revised from Sec.  535.702(d) to Sec.  535.701(c) to 
reflect the proposed change to these regulations;
    2. The delegated authority of the Director of the Bureau of Trade 
Analysis in Sec.  501.27(p) to require the reporting of commodity data 
on a sub-trade basis from agreement parties be removed, in conjunction 
with the proposed changes to the reporting requirements;
    3. The definition of sailing agreement in Sec.  535.104(bb) \61\ be 
revised to mean an agreement by or among ocean common carriers to 
coordinate their respective sailing or service schedules of ports, and/
or the frequency of vessel calls at ports. The Commission believes that 
the present definition is more broadly descriptive of the authority of 
carriers in a VSA where the parties would conceivably rationalize 
capacity;
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    \61\ Section 535.104(bb) presently defines a sailing agreement 
as an agreement between ocean common carriers to provide service by 
establishing a schedule of ports that each carrier will serve, the 
frequency of each carrier's calls at those ports, and/or the size 
and capacity of the vessels to be deployed by the parties. The term 
does not include joint service agreements, or capacity 
rationalization agreements.
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    4. The regulations in Sec.  535.301(b) on the optional filing of 
exempt agreements be revised to add that such filings are also exempt 
from the 45-day waiting period requirement and may become effective 
upon filing with the FMC;
    5. The CFR reference on the application for exemption procedures 
cited in Sec.  535.301(c) be corrected and revised from Sec.  502.67 to 
Sec.  502.74;
    6. Per the carriers' request in comments submitted to the 
Commission's retrospective review plan of its regulations, the 
regulations in Sec.  535.302(a) on non-substantive modifications to 
effective agreements be amended to add agreement modifications in the 
number or size of vessels within the range of capacity specified in the 
agreement pursuant to the express enabling authority for operational 
matters identified in Sec.  535.408(b)(5)(ii). The Commission expects 
that this revision to Sec.  535.302(a) would encourage carriers to 
amend their agreements accordingly with more accurate information, 
which would improve the clarity of the agreement;
    7. The regulations in Sec.  535.302(d) be revised to specify that 
agreement parties may seek assistance from the Director of the Bureau 
of Trade Analysis on whether an agreement modification would qualify 
for an exemption based on the types of exemptions strictly listed and 
identified in Sec.  535.302, as intended, and not on a general basis as 
parties have mistakenly interpreted the regulations;
    8. The regulations in Sec.  535.404(b) be revised to require that 
where parties reference port ranges or areas in the geographic scope of 
their agreement, the parties identify the countries included in such 
ranges or areas so that the Commission can accurately evaluate the 
agreement;
    9. The formatting requirements for the filing of agreement 
modifications in Sec.  535.406 be revised to apply to all agreements 
identified in Sec.  535.201 and subject to the filing regulations of 
part 535, except assessment agreements; \62\
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    \62\ Section 535.104(d) defines assessment agreements to mean an 
agreement, whether part of a collective bargaining agreement or 
negotiated separately, that provides for collectively bargained 
fringe benefit obligations on other than a uniform man-hour basis 
regardless of the cargo handled or type of vessel or equipment 
utilized. Section 535.401(e) requires that assessment agreements be 
filed and effective upon filing with the FMC.
---------------------------------------------------------------------------

    10. In Sec.  535.501(b) on the electronic submission of the 
Information Form, the reference to diskette or CD-ROM be removed; \63\
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    \63\ Subsequent to the ANPR, the Commission implemented its 
automated agreement filing system by direct final rule. 81 FR 24703 
(Apr. 27, 2016).
---------------------------------------------------------------------------

    11. The phrase ``whether on a binding basis under a common tariff 
or a non-binding basis'' in Sec.  535.502(b)(1) be removed from the 
description of rate authority;
    12. In Sec.  535.502(c), the expansion of membership, in addition 
to the expansion of geographic scope as presently provided, be a 
modification

[[Page 54000]]

that requires an Information Form for agreements with any authority 
identified in Sec.  535.502(b), i.e., rate, pooling, capacity, or 
service contracting;
    13. Section 535.605(c) be added to indicate that a fee specified in 
Sec.  535.401(h) shall be assessed to process a request for expedited 
review of a filed agreement;
    14. In Sec.  535.701(e) (as redesignated from the current Sec.  
535.701(d)) on the electronic submission of Monitoring Reports, the 
reference to diskette or CD-ROM be removed and replaced with ``as 
provided in Sec.  535.701(f) of this part;''
    15. The regulations in Sec.  535.701(f) (as redesignated from the 
current Sec.  535.701(e)) be revised to state simply that the 
submission of reports and meeting minutes pertaining to agreements that 
are required by these regulations may be filed by direct secure 
electronic transmission in lieu of hard copy, and that detailed 
information on electronic transmission is available from the 
Commission's Bureau of Trade Analysis;
    16. The phrase ``whether on a binding basis under a common tariff 
or a non-binding basis'' in Sec.  535.702(a)(2)(i) be removed from the 
description of rate authority;
    17. The regulations in Sec.  535.702(b) be revised to indicate that 
rather than using market share data filed by the parties to agreements, 
the Bureau of Trade Analysis would notify the parties of any changes in 
their reporting requirements; \64\
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    \64\ As discussed, only parties to rate agreements with a 
combined market share of 35 percent or more are required to file 
Monitoring Reports. 46 CFR 535.702(a)(2). If the market share of a 
rate agreement drops below 35 percent, the Bureau would notify the 
parties that the agreement is no longer subject to the Monitoring 
Report regulations.
---------------------------------------------------------------------------

    18. In Sec.  535.703 on the Monitoring Report Form, the reference 
to part 2(C) of section I of the Monitoring Report be revised to part 
2(B) of section I in conjunction with the proposed modifications to the 
report; and
    19. The regulations in Sec.  535.703(d) on the commodity data 
requirements of the Monitoring Report be removed.

B. Summary of Comments and Discussion

    The carriers were the only interested parties to submit comments on 
the proposed changes in the regulations. The carriers support the 
proposal in Sec.  535.302(a) on non-substantive modifications to 
effective agreements to add agreement modifications in the number or 
size of vessels within the range specified in the agreement, with the 
understanding that such amendments to agreements are not required. 
Carriers at 27. This is the understanding of the Commission because 
such changes in the number or size of vessels [within the range stated 
in the agreement] are activities that may be conducted without further 
filing under the regulation in Sec.  535.408(b)(5)(ii).
    The carriers support the proposal in Sec.  535.404(b) to require 
that agreement parties identify the countries included in a port range 
or area of the geographic scope of the agreement, provided that the 
parties need not call directly at each specified country and may change 
direct calls without filing an amendment to the agreement. The carriers 
cite an example for the East Coast of South America that includes 
Brazil, Uruguay, and Argentina. Under this scope, the agreement parties 
may not directly call in Uruguay but serve the country via feeder from 
the other ports of call, or may change their services to begin directly 
calling in Uruguay and serve the other countries via feeder. Carriers 
at 27.
    The Commission believes that so long as the countries are within 
the range of service whether by direct calls or transshipment via 
feeder service, there would not be a need to file an amendment to the 
agreement. If the VSA or alliance agreement is subject to the proposed 
Monitoring Report requirements, the change in the ports of call would 
be reported in the parties' quarterly report. However, changes that 
would completely discontinue service to a country or add new countries 
would require the filing of an amendment to the geographic scope of the 
agreement.
    On the proposed change to Sec.  535.502(c) to add the expansion of 
membership as an agreement modification that would require an 
Information Form, the carriers find it acceptable if clarified that 
this requirement applies only to agreements that are subject to the 
Information Form in the first instance, and that only the new member(s) 
be required to submit the Information Form data. Carriers at 27-28. It 
is the Commission's understanding that this proposal would only apply 
to agreements subject to the Information Form requirements because 
Sec.  535.502(c) states that it pertains to agreements containing any 
authority identified in Sec.  535.502(b), which lists the types of rate 
and capacity authorities contained in agreements that would be required 
to file an Information Form in the first instance. The Commission 
believes that limiting the amount of Information Form data to only the 
new members may be sufficient to assess the impact of the agreement 
modification. The Commission will consider the carriers' proposal and 
invites public comments on it. In some cases, however, limiting the 
Information Form data to only new members may require the Commission to 
seek additional information to fully understand the impact of the 
agreement modification within the context of the entire membership and 
scope of the agreement.

IX. Regulatory Analyses and Notices

A. Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501-3521) 
requires an agency to seek and receive approval from the Office of 
Management and Budget (OMB) before collecting information from the 
public. 44 U.S.C. 3507. The agency must submit collections of 
information in proposed rules to OMB in conjunction with the 
publication of the notice of proposed rulemaking. 5 CFR 1320.11.
    The information collection requirements in Part 535-Ocean Common 
Carrier and Marine Terminal Operator Agreements Subject to the Shipping 
Act of 1984, are currently authorized under OMB Control Number 3072-
0045. In compliance with the PRA, the Commission has submitted the 
proposed revisions to the information collection contained in this 
proposed rule to the Office of Management and Budget (OMB).
    In terms of the estimated public burden of collection, the proposed 
rule would exempt certain space charter agreements from the 45-day 
waiting period and Information Form requirements, which amounted 39 
initial agreement filings in fiscal year 2015. It proposes to adjust 
the market share threshold for the waiting period exemption in Sec.  
535.311 to 35 percent or less. It would increase the number of capacity 
rationalization agreements required to submit Information Forms, which 
amounted to nine agreements in fiscal year 2015. However, it would 
eliminate the Information Form data requirements for basic operational 
agreements and significantly reduce the data requirements for carrier 
agreements with rate authority. There were no new carrier rate 
agreements filed in the past fiscal year. Further, the proposed rule 
would require that new members joining existing capacity 
rationalization or rate agreements provide their Information Form data 
with the agreement modification. There were two such agreement 
modifications for new members in fiscal year 2015.
    For Monitoring Reports, the proposed rule would require that 
parties to

[[Page 54001]]

capacity rationalization agreements with three or more members submit 
quarterly reports, which at present equates to 22 effective agreements. 
The rule would also significantly reduce the Monitoring Report data 
requirements for parties to carrier agreements with rate authority, and 
at present, there are 10 carrier rate agreements that submit Monitoring 
Reports. Further, for the filing of meeting minutes with the FMC, the 
rule proposes to clarify the definition of meeting to include 
discussions between parties conducted by electronic mail, file transfer 
protocol, electronic or video chat, and video conference, which is 
estimated to increase the number of annual minute filings by 20 percent 
to 942 from 785 in fiscal year 2015. With these proposed reporting 
changes, the total estimated annual public burden of collection would 
be 12,027 hours, which would be 1,602 hours, or 12 percent, less than 
the current annual burden of 13,629 hours, which was last reviewed and 
approved by OMB in September 2013. Specifically, the reduction in the 
collection burden primarily reflects the proposed changes associated 
with the Information Form and Monitoring Report requirements. As noted, 
the collection burden for carrier parties to rate agreements would be 
reduced. The collection burden for carrier parties to capacity 
agreements would increase because of the increase in the number of 
agreements subject to the reporting requirements.
    Comments are invited on:
     Whether the collection of information is necessary for the 
proper performance of the functions of the Commission, including 
whether the information will have practical utility;
     Whether the Commission's estimate for the burden of the 
information collection is accurate;
     Ways to enhance the quality, utility, and clarity of the 
information to be collected;
     Ways to minimize the burden of the collection of 
information on respondents, including the use of automated collection 
techniques or other forms of information technology.
    Please submit any comments, identified by the docket number in the 
heading of this document, by any of the methods described in the 
ADDRESSES section of this document.

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act, 5 U.S.C. 601-612, provides that 
whenever an agency is required to publish a notice of proposed 
rulemaking under the Administrative Procedure Act (APA) (5 U.S.C. 553), 
the agency must prepare and make available for public comment an 
initial regulatory flexibility analysis (IRFA) describing the impact of 
the proposed rule on small entities, unless the agency head determines 
that the rule, if promulgated, will not have a significant impact on a 
substantial number of small entities. 5 U.S.C. 603, 605. The Chairman 
of the Federal Maritime Commission certifies that the proposed rule, if 
promulgated, will not have a significant economic impact on a 
substantial number of small entities. The proposed rule would revise 
the filing requirements for agreements by or among vessel-operating 
common carriers (VOCCs) and/or marine terminal operators (MTOs). The 
Commission has previously determined that VOCCs and MTOs do not qualify 
as small entities because the number of employees and/or gross receipts 
of these regulated businesses typically exceed the thresholds set under 
the guidelines of the Small Business Administration.\65\
---------------------------------------------------------------------------

    \65\ See FMC Policy and Procedures Regarding Proper 
Considerations of Small Entities in Rulemakings 4 (Feb. 7, 2003), 
from the Web site of the FMC at http://www.fmc.gov/assets/1/Page/SBREFA_Guidelines_2003.pdf.
---------------------------------------------------------------------------

List of Subjects

46 CFR Part 501

    Authority delegations, Organization and functions, Seals and 
insignia.

46 CFR Part 535

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

    For the reasons stated in the supplementary information, the 
Federal Maritime Commission proposes to amend parts 501 and 535 of 
Title 46 of Code of Federal Regulations as follows:

PART 501--THE FEDERAL MARITIME COMMISSION--GENERAL

0
1. The authority citation for part 501 continues to read as:

    Authority: 5 U.S.C. 551-557, 701-706, 2903 and 6304; 31 U.S.C. 
3721; 41 U.S.C. 414 and 418; 44 U.S.C. 501-520 and 3501-3520; 46 
U.S.C. 301-307, 40101-41309, 42101-42109, 44101-44106; Pub. L. 89-
56, 70 Stat. 195; 5 CFR part 2638; Pub. L. 104-320, 110 Stat. 3870.

0
2. Amend Sec.  501.24 by adding paragraph (i) to read as follows:


Sec.  501.24  Delegation to the Secretary

* * * * *
    (i) Authority to accept late-filed comments to agreement filings 
submitted under Sec.  535.603 of this title.
0
3. Amend Sec.  501.27 by revising paragraph (o) and removing paragraph 
(p) to read as follows:


Sec.  501.27   Delegation to and redelegation by the Director, Bureau 
of Trade Analysis.

* * * * *
    (o) Authority to prescribe periodic reporting requirements for, or 
require Monitoring Reports from, parties to agreements under Sec.  
535.701(c) and Sec.  535.702(c) of this chapter.
    (p) [Removed]

PART 535--OCEAN COMMON CARRIER AND MARINE TERMINAL OPERATOR 
AGREEMENTS SUBJECT TO THE SHIPPING ACT OF 1984

0
4. The authority citation for part 535 continues to read as:

    Authority: 5 U.S.C. 553; 46 U.S.C. 305, 40101-40104, 40301-
40307, 40501-40503, 40901-40904, 41101-41109, 41301-41302, and 
41305-41307.

0
5. Amend Sec.  535.104 by revising paragraphs (e) and (bb) to read as 
follows:


Sec.  535.104  Definitions.

* * * * *
    (e) Capacity rationalization means the authority in an agreement by 
or among ocean common carriers to discuss, or agree on, the amount of 
vessel capacity supplied by the parties in any service or trade within 
the geographic scope of the agreement.
* * * * *
    (bb) Sailing agreement means an agreement by or among ocean common 
carriers to coordinate their respective sailing or service schedules of 
ports, and/or the frequency of vessel calls at ports. The term does not 
include joint service agreements, or capacity rationalization 
agreements.
* * * * *
0
6. Amend Sec.  535.301 by revising paragraphs (b) through (d) to read 
as follows:


Sec.  535.301  Exemption procedures.

* * * * *
    (b) Optional filing. Notwithstanding any exemption from filing, or 
other requirements of the Act and this part, any party to an exempt 
agreement may file such an agreement with the Commission. An agreement 
that is exempt from the filing requirements of the Act and this part 
and is optionally filed with the Commission is exempt from the waiting 
period requirements of the Act and this part. The filing fees for the 
optional filing of exempt agreements are provided in Sec.  535.401(g).
    (c) Application for exemption. Applications for exemptions must 
conform to the general filing requirements for exemptions set forth in 
Sec.  502.74 of this title.

[[Page 54002]]

    (d) Retention of agreements by parties and submission to the 
Commission. Parties to any agreement that has been exempted from the 
filing requirements of the Act and this part by the Commission pursuant 
to section 16 of the Act (46 U.S.C. 40103) must:
    (1) Retain the agreement for the term of the agreement and for a 
period of three years after its termination; and
    (2) Upon written request from the Director, Bureau of Trade 
Analysis, must submit a true and complete copy of the agreement to the 
Bureau of Trade Analysis within 15 days of the request.
0
7. Amend Sec.  535.302 by revising paragraph (a)(3), adding paragraph 
(a)(4), and revising paragraph (d) to read as follows:


Sec.  535.302  Exemptions for certain modifications of effective 
agreements.

    (a) * * *
    (3) Reflects changes in the titles of persons or committees 
designated therein or transfers the functions of such persons or 
committees to other designated persons or committees or which merely 
establishes a committee; or
    (4) Reflects changes in the number or size of vessels within the 
range of capacity specified in the agreement pursuant to the express 
enabling authority for operational matters identified in Sec.  
535.408(b)(5)(ii).
* * * * *
    (d) Parties to agreements may seek a determination from the 
Director of the Bureau of Trade Analysis on whether a particular 
modification is exempt as a change identified in paragraphs (a) or (b) 
of this section.
* * * * *
0
8. Add Sec.  535.308 to subpart C to read as follows:


Sec.  535.308  Space charter agreements--exemption.

    (a) An ocean common carrier agreement is exempted from the waiting 
period in Sec.  535.604 and becomes effective upon filing if the 
agreement contains non-exclusive authority to charter or exchange 
vessel space between two individual carriers and does not contain any 
authorities identified in Sec.  535.502(b). The term non-exclusive 
authority means authority that contains no provisions that place 
conditions or restrictions on the parties' agreement participation or 
use or offering of competing services.
    (b) The filing fee for exempted space charter agreements is 
provided in Sec.  535.401(g).
0
9. Amend Sec.  535.311 by revising paragraph (a) to read as follows:


Sec.  535.311  Low market share agreements--exemption.

    (a) Low market share agreement means any ocean common carrier 
agreement which contains none of the authorities identified in Sec.  
535.502(b) and for which the combined market share, based on cargo 
volume, of the parties in any of the agreement's sub-trades is equal to 
or less than 35 percent.
* * * * *
0
10. Revise Sec.  535.402 to read as follows:


Sec.  535.402  Complete and definite agreements

    (a) An agreement filed under the Act must be clear and definite in 
its terms, must embody the complete, present understanding of the 
parties, and must set forth the specific authorities and conditions 
under which the parties to the agreement will conduct their operations 
and regulate the relationships among the agreement members, unless 
those details are matters specifically enumerated as exempt from the 
filing requirements of this part.
    (b) An agreement that arises from the authority of an effective 
agreement, but whose terms are not fully set forth in the effective 
agreement to the extent required by paragraph (a) of this section, must 
be filed with the Commission in accordance with the requirements of 
this subpart unless exempted under Sec.  535.408.
0
11. Amend Sec.  535.404 by revising paragraph (b) to read as follows:


Sec.  535.404  Agreement provisions.

* * * * *
    (b) State the ports or port ranges to which the agreement applies 
as well as any inland points or areas to which it also applies. In 
referencing geographic port ranges or areas in an agreement, state the 
name of each country included in such ranges or areas; and
* * * * *
0
12. Amend Sec.  535.406 by revising the introductory text to read as 
follows:


Sec.  535.406  Modifications of agreements.

    The requirements of this section apply to all agreements identified 
in Sec.  535.201 and subject to the filing regulations of this part, 
except assessment agreements.
* * * * *
0
13. Amend Sec.  535.408 by revising paragraph (b)(3) to read as 
follows:


Sec.  535.408  Activities that may be conducted without further 
filings.

* * * * *
    (b) * * *
    (3) The following matters related to stevedoring, terminal, and 
related services: (i) Joint contracting for marine terminal services 
(as that term is defined in Sec.  535.309) or stevedoring services by 
parties to an ocean common carrier agreement if such services are 
provided to and paid for by the agreement parties;
    (ii) Operation of tonnage centers or other joint container 
marshalling facilities by parties to an ocean common carrier agreement.
* * * * *
0
14. Amend Sec.  535.501 by revising paragraph (b) to read as:


Sec.  535.501  General requirements.

* * * * *
    (b) Parties to an agreement subject to this subpart shall complete 
and submit an original and five copies of the Information Form at the 
time when the agreement is filed. A copy of the Form in Microsoft Word 
and Excel format may be downloaded from the Commission's home page at 
http://www.fmc.gov, or a paper copy of the Form may be obtained from 
the Bureau of Trade Analysis. In lieu of submitting paper copies, 
parties may complete and submit their Information Form in the 
Commission's prescribed format electronically using the automated 
agreement filing system in accordance with the instructions provided on 
the Commission's home page.
* * * * *
0
15. Amend Sec.  535.502 by revising paragraphs (a) through (c) to read 
as follows:


Sec.  535.502  Agreements subject to the Information Form requirements.

* * * * *
    (a) All agreements identified in Sec.  535.201(a), except for 
exempt agreements identified in Sec.  535.308 and Sec.  535.311;
    (b) Modifications to an agreement that add any of the following 
authorities:
    (1) The discussion of, or agreement on, any kind of rate or charge;
    (2) The discussion of, or agreement on, any service contract 
matter;
    (3) The establishment of a joint service;
    (4) The pooling or division of cargo traffic, earnings, or revenues 
and/or losses; or
    (5) The discussion of, or agreement on, capacity rationalization.
    (c) Modifications that expand the geographic scope or membership of 
an agreement containing any authority identified in paragraph (b) of 
this section. Modifications to expand the membership of an agreement 
may limit the Information Form requirements to

[[Page 54003]]

include only the new members that are the subject of the modification.
0
16. Revise Sec.  535.503 to read as follows:


Sec.  535.503  Information Form.

    (a) The Information Form, with instructions, for agreements and 
modifications to agreements subject to this subpart, are set forth in 
sections I through IV of appendix A of this part. The instructions 
should be read in conjunction with the Act and this part.
    (b) The Information Form must be completed as follows:
    (1) Sections I and IV must be completed by parties to all 
agreements identified in Sec.  535.502;
    (2) Section II must be completed by parties to agreements 
identified in Sec.  535.502 that contain any of the following 
authorities:
    (i) The charter or use of vessel space in exchange for compensation 
or services; or
    (ii) The discussion of, or agreement on, capacity rationalization.
    (3) Section III must be completed by parties to agreements 
identified in Sec.  535.502 that contain any of the following 
authorities:
    (i) The discussion of, or agreement on, any kind of rate or charge;
    (ii) The discussion of, or agreement on, any service contract 
matter;
    (iii) The establishment of a joint service; or
    (iv) The pooling or division of cargo traffic, earnings, or 
revenues and/or losses.
0
17. Revise Sec.  535.603 to read as follows:


Sec.  535.603  Comment.

    (a) General. Persons may file with the Secretary written comments 
regarding a filed agreement. Commenters may submit the comment by email 
to [email protected] or deliver to Secretary, Federal Maritime 
Commission, 800 N. Capitol St. NW., Washington, DC 20573-0001 within 
the time limit provided in the Federal Register notice. Late-filed 
comments will be received only by leave of the Secretary and only upon 
a showing of good cause.
    (b) Confidential Information. Comments and any accompanying 
material will be accorded confidential treatment to the fullest extent 
permitted by law. Commenters seeking confidential treatment must mark 
the comments (or relevant portions thereof) as confidential and must 
submit, along with their comments, a statement of legal basis for 
confidential treatment including the citation of appropriate statutory 
authority (e.g., Freedom of Information Act exemption). The Secretary 
will evaluate the basis of the request for confidential treatment and 
inform the commenter as to the Commission's ability to protect the 
comment from disclosure.
    (c) Requests for Comments. (1) Any member of the public may request 
a copy of a comment to a filed agreement from the Secretary.
    (2) The Secretary will provide to the requester any comment or 
portion of a comment that is not determined to be confidential.
    (d) The filing of a comment does not entitle a person to:
    (1) A reply to the comment by the Commission;
    (2) The institution of any Commission or court proceeding;
    (3) Discussion of the comment in any Commission or court proceeding 
concerning the filed agreement; or
    (4) Participation in any proceeding that may be instituted.
0
18. Amend Sec.  535.605 by adding paragraph (c) to read as follows:


Sec.  535.605  Requests for expedited review.

* * * * *
    (c) A fee to process the request for expedited review of a filed 
agreement will be assessed as specified in Sec.  535.401(h).
* * * * *
0
19. Amend Sec.  535.701 by:
0
A. Redesignating paragraphs (c) through (j) as paragraphs (d) through 
(k), respectively;
0
B. Adding a new paragraph (c);
0
C. Revising newly redesignated paragraphs (e), (f), and (g) to read as 
follows:


Sec.  535.701  General requirements.

* * * * *
    (c) The Commission may prescribe, on an agreement-by-agreement 
basis, periodic reporting requirements for parties to any agreement 
identified in Sec.  535.201 and subject to the filing requirements of 
this part but not identified in Sec.  535.702(a) as subject to the 
Monitoring Report requirements. The Commission may also prescribe, on 
an agreement-by-agreement basis, periodic reporting requirements in 
addition to or in lieu of the Monitoring Report requirements for 
parties to any agreement identified in Sec.  535.702(a) of this part.
* * * * *
    (e) Monitoring Reports and minutes required to be filed by this 
subpart should be submitted to: Director, Bureau of Trade Analysis, 
Federal Maritime Commission, Washington, DC 20573-0001. A copy of the 
Monitoring Report form in Microsoft Word and Excel format may be 
downloaded from the Commission's home page at http://www.fmc.gov, or a 
paper copy may be obtained from the Bureau of Trade Analysis. In lieu 
of submitting paper copies, parties may complete and submit their 
Monitoring Report in the Commission's prescribed format electronically 
as provided in paragraph (f) of this section.
    (f) Reports and minutes required to be filed by this subpart may be 
filed by direct secure electronic transmission in lieu of hard copy. 
Detailed information on electronic transmission is available from the 
Commission's Bureau of Trade Analysis.
    (g) Time for filing. Except as otherwise instructed, Monitoring 
Reports shall be filed within 45 days of the end of each calendar 
quarter. Minutes of meetings shall be filed within 21 days after the 
meeting. Other documents shall be filed within 15 days of the receipt 
of a request for documents.
* * * * *
0
20. Amend Sec.  535.702 by revising paragraphs (a) and (b) and removing 
paragraph (d), to read as follows:


Sec.  535.702   Agreements subject to Monitoring Report and other 
reporting requirements.

    (a) Agreements subject to the Monitoring Report requirements of 
this subpart are:
    (1) An agreement between or among three or more ocean common 
carriers that contains the authority to discuss or agree on capacity 
rationalization as defined in Sec.  535.104(e); or
    (2) Where the parties to an agreement hold a combined market share, 
based on cargo volume, of 35 percent or more in the entire geographic 
scope of the agreement and the agreement contains any of the following 
authorities:
    (i) The discussion of, or agreement on, any kind of rate or charge;
    (ii) The discussion of, or agreement on, any service contract 
matter;
    (iii) The establishment of a joint service; or
    (iv) The pooling or division of cargo traffic, earnings, or 
revenues and/or losses.
    (b) The determination of an agreement's reporting obligation under 
Sec.  535.702(a)(2) in the first instance shall be based on the market 
share data reported on the agreement's Information Form pursuant to 
Sec.  535.503. Thereafter, the Bureau of Trade Analysis will notify the 
agreement parties of any change in their reporting requirements.
* * * * *
    (d) [Removed]

[[Page 54004]]

0
21. Amend Sec.  535.703 by revising paragraph (c) and removing 
paragraph (d) to read as:


Sec.  535.703  Monitoring Report form.

* * * * *
    (c) In accordance with the requirements and instructions in 
appendix B of this part, parties to an agreement subject to part 2(B) 
of Section I of the Monitoring Report shall submit a narrative 
statement on any significant reductions in vessel capacity that the 
parties will implement under the agreement. The term ``significant 
reduction'' is defined in appendix B. The narrative statement shall be 
submitted to the Director, Bureau of Trade Analysis, no later than 15 
days after a significant reduction in vessel capacity has been agreed 
upon by the parties but prior to the implementation of the actual 
reduction under the agreement.
    (d) [Removed]
0
22. Amend Sec.  535.704 by revising the last sentence of paragraph (b) 
to read as follows:


Sec.  535.704  Filing of minutes.

* * * * *
    (b) * * * Discussions conducted by telephone, electronic device, 
electronic mail, file transfer protocol, electronic or video chat, 
video conference, or other means are included.
* * * * *
0
23. Revise Appendix A to part 535 to read as follows:

Appendix A to Part 535--Information Form and Information Form 
Instructions

    1. All agreements and modifications to agreements between or 
among ocean common carriers identified in 46 CFR 535.502 must be 
accompanied by a completed Information Form to the full extent 
required in sections I through IV of this Form. Sections I and IV 
must be completed by all such agreements. Sections II and III must 
be completed in accordance with the authority contained in each 
agreement. As applicable, complete each section of this Form in 
accordance with the specified format provided in FMC Form-150.
    2. Where an agreement containing multiple authorities is subject 
to duplicate reporting requirements in the various sections of this 
Form, the parties may provide only one response so long as the 
reporting requirements within each section are fully addressed. The 
Information Form specifies the data and information which must be 
reported for each section and the format in which it must be 
provided. If a party to an agreement is unable to supply a complete 
response to any item of this Form, that party shall provide either 
estimated data (with an explanation of why precise data are not 
available) or a detailed statement of reasons for noncompliance and 
the efforts made to obtain the required information. For purposes of 
this Form, if one of the agreement signatories is a joint service 
operating under an effective agreement that signatory shall respond 
to the Form as a single agreement party.
    3. For clarification of the agreement terminology used in this 
Form, the parties may refer to the definitions provided in 46 CFR 
535.104. In addition, the following definitions shall apply for 
purposes of this Form: Liner movement means the carriage of liner 
cargo; liner cargo means cargo carried on liner vessels in a liner 
service; liner operator means a vessel-operating common carrier 
engaged in liner service; liner vessel means a vessel used in a 
liner service; liner service means a definite, advertised schedule 
of sailings at regular intervals; and TEU means a unit of 
measurement equivalent to one 20-foot shipping container.
    4. When 50 percent or more of the total liner cargo carried by 
all of the parties in the geographic scope of the agreement was 
containerized, the required data for each party shall be reported in 
TEUs. When 50 percent or more of the total liner cargo carried by 
all of the parties in the geographic scope of the agreement was non-
containerized, the required data for each party shall be reported in 
non-containerized units of measurement. The unit of measurement for 
the non-containerized data must be specified clearly and applied 
consistently.
    5. Where the geographic scope of the agreement covers both U.S. 
inbound and outbound liner movements, inbound and outbound data 
shall always be stated separately.
    6. For purposes of this Form, the term vessel capacity means a 
party's total commercial liner space on line-haul vessels, whether 
operated by it or other parties from whom space is obtained, sailing 
to and/or from the continent of North America for each of the liner 
services pertaining to the agreement or operated by the parties to 
the agreement.
    7. For purposes of this Form, the term a significant operational 
change means an increase or decrease in a party's liner service, 
ports of call, frequency of vessel calls at ports, and/or amount of 
vessel capacity deployment for a fixed, seasonally planned, or 
indefinite period of time. It excludes incidental or temporary 
alterations or changes that have little or no operational impact. If 
no significant operational change is anticipated or planned to be 
implemented or occur after the agreement is scheduled to become 
effective, it shall be noted with the term ``none'' in response.
    8. When used in this Form, the terms ``entire geographic scope 
of the agreement'' or ``agreement-wide'' refer to the combined U.S. 
inbound trade and/or the combined U.S. outbound trade as such trades 
apply to the geographic scope of the agreement, as opposed to the 
term ``sub-trade,'' which is defined for reporting purposes as the 
scope of all liner movements between each U.S. port range and each 
foreign country within the scope of the agreement. U.S. port ranges 
are defined as: (a) The Atlantic and Gulf, which includes ports 
along the eastern seaboard and the Gulf of Mexico from the northern 
boundary of Maine to Brownsville, Texas, all ports bordering upon 
the Great Lakes and their connecting waterways, all ports in the 
State of New York on the St. Lawrence River, and all ports in Puerto 
Rico and the U.S. Virgin Islands; and (b) the Pacific, which 
includes all ports in the States of Alaska, Hawaii, California, 
Oregon, and Washington; and all ports in Guam, American Samoa, 
Northern Marianas, Johnston Island, Midway Island, and Wake Island.

Section I

    Section I applies to all agreements identified in 46 CFR 
535.502. Parties to such agreements must complete parts 1 through 4 
of this section. The authorities listed in part 4 of this section do 
not necessarily include all of the authorities that must be set 
forth in an agreement filed under the Act. The specific authorities 
between the parties to an agreement, however, must be set forth, 
clearly and completely, in a filed agreement in accordance with 46 
CFR 535.402.

Part 1

    State the full name of the agreement.

Part 2

    Provide a narrative statement describing the specific purpose(s) 
of the agreement pertaining to the parties' business activities as 
ocean common carriers in the foreign commerce of the United States, 
and the commercial or other relevant circumstances within the 
geographic scope of the agreement that led the parties to enter into 
the agreement.

Part 3

    List all effective agreements that cover all or part of the 
geographic scope of this agreement, and whose parties include one or 
more of the parties to this agreement.

Part 4(A)

    Identify whether the agreement authorizes the parties to 
discuss, or agree on, any kind of rate or charge

Part 4(B)

    Identify whether the agreement authorizes the parties to 
establish a joint service.

Part 4(C)

    Identify whether the agreement authorizes the parties to pool 
cargo traffic or revenues.

Part 4(D)

    Identify whether the agreement authorizes the parties to 
discuss, or agree on, any service contract matter.

Part 4(E)

    Identify whether the agreement authorizes the parties to 
discuss, or agree on, their respective sailing or service schedules 
of ports, and/or the frequency of vessel calls at ports.

Part 4(F)

    Identify whether the agreement authorizes the parties to charter 
or use vessel space in exchange for compensation or services.

Part 4(G)

    Identify whether the agreement authorizes the parties to discuss 
or agree on capacity

[[Page 54005]]

rationalization as defined in 46 CFR 535.104(e).

Part 4(H)

    Identify whether the agreement contains provisions that place 
conditions or restrictions on the parties' agreement participation, 
and/or use or offering of competing services.

Section II

    Section II applies to agreements identified in 46 CFR 535.502 
that contain any of the following authorities: (a) The charter or 
use of vessel space in exchange for compensation or services; (b) 
the discussion of, or agreement on, capacity rationalization as 
defined in 46 CFR 535.104(e). Parties to agreements identified in 
this section must complete the following parts:

Part 1(A)

    For the period prior to when the proposed agreement would become 
effective, for the liner services pertaining to the agreement and 
for each party, provide: (a) The name of each service; (b) the name 
of the carrier(s) directly deploying vessels in each service; (c) 
the number, names, and IMO numbers of the vessels in each service; 
(d) the name of the operator of each vessel; (e) the operating 
capacity of each vessel; (f) the frequency of each service; (g) the 
port itinerary of each service; (h) the total amount of annual 
vessel capacity supplied by each service; (i) the names of all of 
the carriers that charter space on each service but do not directly 
deploy vessels in the service; and (j) the allocation of vessel 
space in each service to any carrier. Liner services pertaining to 
the agreement include any services of the parties that would be 
terminated or altered as a result of the agreement becoming 
effective.

Part 1(B)

    For the period after the proposed agreement would become 
effective, for the liner services pertaining to the agreement and 
for each party, provide: (a) The name of each service, (b) the name 
of the carrier(s) that would directly deploy vessels in each 
service; (c) the number, names, and IMO numbers of the vessels in 
each service; (d) the name of the operator of each vessel; (e) the 
operating capacity of each vessel; (f) the frequency of each 
service; (g) the port itinerary of each service; (h) the total 
amount of annual vessel capacity that would be supplied by each 
service; (i) the names of all of the carriers that would charter 
space on each service but would not directly deploy vessels in the 
service; and (j) the proposed allocation of vessel space in each 
service to any carrier.

Part 2

    For the most recent calendar quarter for which complete data are 
available, for the liner services pertaining to the agreement and 
for each party, provide: (a) The name of each service; (b) the total 
number of sailings of each service; (c) the total amount of vessel 
capacity made available for each service; (d) the total amount of 
cargo carried on any vessel space counted above in part (c); and (e) 
the percentage of utilization on any vessel space counted above in 
part (c). For purposes of this Form, the percentage of utilization 
shall be calculated by dividing the amount of cargo carried in part 
(d) above by the corresponding amount of vessel capacity in part (c) 
above, which quotient is multiplied by 100. Liner services 
pertaining to the agreement include any services of the parties that 
would be terminated or altered as a result of the agreement becoming 
effective.

Part 3

    Provide a narrative statement on any significant operational 
changes proposed to be implemented under the agreement and their 
impact on each party's liner services, ports of call, frequency of 
vessels calls at ports, and/or amount of vessel capacity deployment 
for each service pertaining to the agreement. Liner services 
pertaining to the agreement include any services of the parties that 
would be terminated or altered as a result of the agreement becoming 
effective.

Section III

    Section III applies to agreements identified in 46 CFR 535.502 
that contain any of the following authorities: (a) The discussion 
of, or agreement on, any kind of rate or charge; (b) the 
establishment of a joint service; (c) the pooling or division of 
cargo traffic, earnings, or revenues and/or losses; or (d) the 
discussion of, or agreement on, any service contract matter. Parties 
to such agreements must complete the following parts:

Part 1

    1. For the most recent calendar quarter for which complete data 
are available, provide the market shares of all liner operators for 
the entire geographic scope of the agreement. A joint service shall 
be treated as a single liner operator, whether it is an agreement 
line or a non-agreement line.
    2. Market share shall be calculated as: The total amount of 
liner cargo carried on each liner operator's liner vessels in the 
entire agreement scope during the most recent calendar quarter for 
which complete data are available, divided by the total liner cargo 
movement in the entire agreement scope during that same calendar 
quarter, which quotient is multiplied by 100. The calendar quarter 
used must be clearly identified. The market shares held by non-
agreement lines as well as by agreement lines must be provided, 
stated separately.

Part 2

    For each party that served all or any part of the geographic 
scope of the agreement during all or any part of the most recent 12-
month period for which complete data are available, provide its 
total liner revenue, total liner cargo movement, and average revenue 
for its liner services within the geographic scope of the agreement. 
For purposes of this Form, total liner revenue means the total 
revenue in U.S. dollars of each party corresponding to the total 
cargo movement of its liner services within the geographic scope of 
the agreement, inclusive of all ocean freight charges, whether 
assessed on a port-to-port basis or a through intermodal basis, 
accessorial charges, surcharges, and charges for inland cargo 
carriage. Average revenue shall be calculated as the per-cargo unit 
quotient of each party's total revenue divided by its total cargo 
movement.

Part 3

    For each month of the same calendar quarter used in part 1 of 
this section, for each liner service operated by the parties to the 
agreement within the entire geographic scope of the agreement, 
provide: (a) The name of each service; (b) the total number of 
sailings for each service; (c) the amount of vessel capacity made 
available for each service, as measured in terms of: (i) The total 
amount per service, (ii) the amount allocated to each party of the 
agreement, and (iii) the amount chartered to non-agreement parties; 
(d) the total amount of liner cargo carried on any vessel space 
counted in part (c) above; and (e) the percentage of utilization on 
any vessel space counted above in part (c) above. For purposes of 
this Form, the percentage of utilization shall be calculated by 
dividing the amount of cargo carried in part (d) above by the 
corresponding amount of vessel capacity in part (c) above, which 
quotient is multiplied by 100.

Part 4

    Provide a narrative statement on any significant operational 
changes that are anticipated or planned to occur after the agreement 
is scheduled to become effective that would impact any of the 
parties' liner services, ports of call, frequency of vessel calls at 
ports, and/or amount of vessel capacity deployment in any of the 
liner services operated by the parties to the agreement within the 
entire geographic scope of the agreement.

Section IV

    Section IV applies to all agreements identified in 46 CFR 
535.502. Parties to such agreements must complete all items in part 
1 of this section.

Part 1(A)

    State the name, title, address, telephone and fax numbers, and 
electronic mail address of a person the Commission may contact 
regarding the Information Form and any information provided therein.

Part 1(B)

    State the name, title, address, telephone and fax numbers, and 
electronic mail address of a person the Commission may contact 
regarding a request for additional information or documents.

Part 1(C)

    A representative of the parties shall sign the Information Form 
and certify that the information in the Form and all attachments and 
appendices are, to the best of his or her knowledge, true, correct 
and complete. The representative also shall indicate his or her 
relationship with the parties to the agreement.
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0
24. Revise Appendix B to part 535 to read as follows:

Appendix B to Part 535--Monitoring Report Form and Instructions

Monitoring Report Instructions

    1. All agreements between or among ocean common carriers 
identified in 46 CFR 535.702(a) must submit completed Monitoring 
Reports to the full extent required in sections I through III of 
this Report. Sections I and II must be completed in accordance with 
the authority contained in each agreement. Section III must be 
completed by all agreements subject to the Monitoring Report 
requirements. As applicable, complete each section of this Report in 
accordance with the specified format provided in FMC Form-151
    2. Where an agreement containing multiple authorities is subject 
to duplicate reporting requirements in the various sections of this 
Report, the parties may provide only one response so long as the 
reporting requirements within each section are fully addressed. The 
Monitoring Report specifies the data and information which must be 
reported for each section and the format in which it must be 
provided. If a party to an agreement is unable to supply a complete 
response to any item of this Report, that party shall provide either 
estimated data (with an explanation of why precise data are not 
available) or a detailed statement of reasons for noncompliance and 
the efforts made to obtain the required information. For purposes of 
this Report, if one of the agreement signatories is a joint service 
operating under an effective agreement, that signatory shall respond 
to the Report as a single agreement party.
    3. For clarification of the agreement terminology used in this 
Report, the parties may refer to the definitions provided in 46 CFR 
535.104. In addition, the following definitions shall apply for 
purposes of this Report: Liner movement means the carriage of liner 
cargo; liner cargo means cargo carried on liner vessels in a liner 
service; liner operator means a vessel-operating common carrier 
engaged in liner service; liner vessel means a vessel used in a 
liner service; liner service means a definite, advertised schedule 
of sailings at regular intervals; and TEU means a unit of 
measurement equivalent to one 20-foot shipping container.
    4. When 50 percent or more of the total liner cargo carried by 
all of the parties in the geographic scope of the agreement was 
containerized, the required data for each party shall be reported in 
TEUs. When 50 percent or more of the total liner cargo carried by 
all of the parties in the geographic scope of the agreement was non-
containerized, the required data for each party shall be reported in 
non-containerized units of measurement. The unit of measurement for 
the non-containerized data must be specified clearly and applied 
consistently.
    5. Where the geographic scope of the agreement covers both U.S. 
inbound and outbound liner movements, inbound and outbound data 
shall always be stated separately.
    6. For purposes of this Report, the term vessel capacity means a 
party's total commercial liner space on line-haul vessels, whether 
operated by it or other parties from whom space is obtained, sailing 
to and/or from the continent of North America for each of the liner 
services pertaining to the agreement or operated by parties to the 
agreement.
    7. For purposes of this Report, the term a significant 
operational change means an increase or decrease in a party's liner 
service, ports of call, frequency of vessel calls at ports, and/or 
amount of vessel capacity deployment for a fixed, seasonally 
planned, or indefinite period of time. It excludes incidental or 
temporary alterations or changes that have little or no operational 
impact. If no significant operational change was implemented or 
occurred for the quarter, it shall be noted with the term ``none'' 
in response.
    8. When used in this Report, the terms ``entire geographic scope 
of the agreement'' or ``agreement-wide'' refer to the combined U.S. 
inbound trade and/or the combined U.S. outbound trade as such trades 
apply to the geographic scope of the agreement, as opposed to the 
term ``sub-trade,'' which is defined for reporting purposes as the 
scope of all liner movements between each U.S. port range and each 
foreign country within the scope of the agreement. U.S. port ranges 
are defined as: (a) The Atlantic and Gulf, which includes ports 
along the eastern seaboard and the Gulf of Mexico from the northern 
boundary of Maine to Brownsville, Texas, all ports bordering upon 
the Great Lakes and their connecting waterways, all ports in the 
State of New York on the St. Lawrence River, and all ports in Puerto 
Rico and the U.S. Virgin Islands; and (b) the Pacific, which 
includes all ports in the States of Alaska, Hawaii, California, 
Oregon, and Washington, all ports in Guam, American Samoa, Northern 
Marianas, Johnston Island, Midway Island, and Wake Island.

Section I

    Section I applies to agreements identified in 46 CFR 
535.702(a)(1) between or among three or more ocean common carriers 
that contain the authority to discuss or agree on

[[Page 54013]]

capacity rationalization as defined in 46 CFR 535.104(e). Parties to 
such agreements must complete the following parts:

Part 1

    State the full name of the agreement and the agreement number 
assigned by the FMC.

Part 2(A)

    For each month of the preceding calendar quarter, for the liner 
services pertaining to the agreement and for each party, provide: 
(a) The name of each service; (b) the total number of sailings for 
each service; (c) the amount of vessel capacity made available for 
each service, as measured in terms of: (i) The total amount per 
service, (ii) the amount allocated to each party of the agreement, 
and (iii) the amount chartered to non-agreement parties; (d) the 
total amount of liner cargo carried on any vessel space counted in 
part (c) above; and (e) the percentage of utilization on any vessel 
space counted in part (c) above. For purposes of this Report, the 
percentage of utilization shall be calculated by dividing the amount 
of cargo carried in part (d) above by the corresponding amount of 
vessel capacity in part (c) above, which quotient is multiplied by 
100.

Part 2(B)

    Provide a narrative statement on any significant reductions, to 
be implemented under the agreement, in the amounts of vessel 
capacity for the parties' liner services that pertain to the 
agreement within the entire geographic scope of the agreement. 
Specifically, explain the nature of and the reasons for the 
significant reduction and its effects on the liner service and the 
total amount of vessel capacity for such service that would be 
subject to the reduction. The narrative statement shall be submitted 
to the Director, Bureau of Trade Analysis, no later than 15 days 
after a significant reduction in the amount of vessel capacity has 
been agreed upon by the parties but prior to the implementation of 
the actual reduction under the agreement. For purposes of this part, 
a significant reduction refers to the removal from a liner service 
of vessels or vessel space for a fixed, seasonally planned, or 
indefinite period of time. A significant reduction excludes 
instances when vessels may be temporarily altered, or when vessels 
are removed from a liner service and vessels of similar or greater 
capacity are substituted. It also excludes operational changes in 
vessels or vessel space that would have little or no impact on the 
amount of vessel capacity offered in a liner service or a trade.

Part 3

    Excluding those changes already reported in part 2(B) of this 
section, provide a narrative statement of any other significant 
operational changes implemented under the agreement during the 
preceding calendar quarter and their impact on each party's liner 
services, ports of call, frequency of vessel calls at ports, and/or 
amount of vessel capacity deployment for each service pertaining to 
the agreement.

Section II

    Section II applies to agreements identified in 46 CFR 
535.702(a)(2) where the parties to the agreement hold a combined 
market share, based on cargo volume, of 35 percent or more in the 
entire U.S. inbound or outbound geographic scope of the agreement 
and the agreement authorizes any of the following authorities: (a) 
The discussion of, or agreement on, any kind of rate or charge; (b) 
the establishment of a joint service; (c) the pooling or division of 
cargo traffic, earnings, or revenues and/or losses; (d) the 
discussion of, or agreement on, any service contract matter. Parties 
to such agreements must complete the following parts.

Part 1

    State the full name of the agreement and the agreement number 
assigned by the FMC.

Part 2

    For each month of the preceding calendar quarter and for each 
party, provide its total liner revenue, total liner cargo movement, 
and average revenue for its liner services within the entire 
geographic scope of the agreement. For purposes of this Report, 
total liner revenue means the total revenue in U.S. dollars of each 
party corresponding to the total cargo movement of its liner 
services within the geographic scope of the agreement, inclusive of 
all ocean freight charges, whether assessed on a port-to-port basis 
or a through intermodal basis, accessorial charges, surcharges, and 
charges for inland cargo carriage. Average revenue shall be 
calculated as the per-cargo unit quotient of each party's total 
revenue divided by its total cargo movement

Part 3

    For each month of the preceding calendar quarter, for each liner 
service operated by the parties to the agreement within the entire 
geographic scope of the agreement, provide: (a) The name of each 
service; (b) the total number of sailings for each service; (c) the 
amount of vessel capacity made available for each service, as 
measured in terms of: (i) The total amount per service, (ii) the 
amount allocated to each party of the agreement, and (iii) the 
amount chartered to non-agreement parties; (d) the total amount of 
liner cargo carried on any vessel space counted in part (c) above; 
and (e) the percentage of utilization on any vessel space counted in 
part (c) above. For purposes of this Report, the percentage of 
utilization shall be calculated by dividing the amount of cargo 
carried in part (d) above by the corresponding amount of vessel 
capacity in part (c) above, which quotient is multiplied by 100.

Section III

    Section III applies to all agreements identified in 46 CFR 
535.702(a). Parties to such agreements must complete all items in 
part 1 of this section.

Part 1(A)

    State the name, title, address, telephone and fax numbers, and 
electronic mail address of a person the Commission may contact 
regarding the Monitoring Report and any information provided 
therein.

Part 1(B)

    A representative of the parties shall sign the Monitoring Report 
and certify that the information in the Report and all attachments 
and appendices are, to the best of his or her knowledge, true, 
correct and complete. The representative also shall indicate his or 
her relationship with the parties to the agreement.
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    By the Commission.
Karen V. Gregory,
Secretary.
[FR Doc. 2016-18805 Filed 8-12-16; 8:45 am]
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