[Federal Register Volume 87, Number 182 (Wednesday, September 21, 2022)]
[Proposed Rules]
[Pages 57674-57679]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-20105]


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FEDERAL MARITIME COMMISSION

46 CFR Part 542

[Docket No. 22-24]
RIN: 3072-AC92


Definition of Unreasonable Refusal To Deal or Negotiate With 
Respect to Vessel Space Accommodations Provided by an Ocean Common 
Carrier

AGENCY: Federal Maritime Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Federal Maritime Commission (Commission) is seeking public 
comment on its proposed rule arising from the Ocean Shipping Reform Act 
of 2022 requirement that prohibits ocean common carriers from 
unreasonably refusing to deal or negotiate with respect to vessel space 
accommodations. Specifically, the Commission is proposing to define the 
elements necessary to establish a violation and the criteria it will 
consider in assessing reasonableness.

DATES: Submit comments on or before October 21, 2022.

ADDRESSES: You may submit comments, identified by Docket No. 22-24, by 
sending an email to [email protected]. For comments, include in the 
subject line: ``Docket No. 22-24, Definition of Unreasonable Refusal to 
Deal or Negotiate.'' 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. Comments received by the Commission may be viewed at the 
Commission's Electronic Reading Room at https://www2.fmc.gov/readingroom/.
    Instructions: For detailed instructions on submitting comments, 
including requesting confidential treatment of comments, and additional 
information on the rulemaking process, see the Public Participation 
heading of the SUPPLEMENTARY INFORMATION section of this document. Note 
that all comments received will be posted without change to the 
Commission's website unless the commenter has requested confidential 
treatment.

FOR FURTHER INFORMATION CONTACT: William Cody, Secretary; Phone: (202) 
523-5725; Email: [email protected].

SUPPLEMENTARY INFORMATION:

I. Introduction and Background

    On June 16, 2022, the President signed the Ocean Shipping Reform 
Act of 2022 (``OSRA 2022'') into law.\1\ OSRA 2022 amended various 
statutory provisions contained in Part A of Subtitle IV of Title 46, 
U.S. Code. In Section 7(d) of OSRA 2022, Congress directed the Federal 
Maritime Commission (Commission), in consultation with the United 
States Coast Guard (Coast Guard), to initiate a rulemaking to define 
unreasonable refusal to deal or negotiate with respect to vessel space 
accommodations provided by an ocean common carrier.\2\ This definition 
would work in conjunction with 46 U.S.C. 41104(a)(10), which was 
amended by OSRA 2022 to prohibit a common carrier, either alone or in 
conjunction with any other person, directly or indirectly, from 
unreasonably refusing to deal or negotiate, including with respect to 
vessel space accommodations provided by an ocean common carrier.
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    \1\ Public Law 117-146.
    \2\ Codified at 46 U.S.C. 41104(a)(10), as amended.
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    OSRA 2022 amended Section 41104(a) by replacing ``may not'' with 
``shall not'' to highlight the mandatory nature of the entire list of 
common carrier prohibitions. OSRA 2022 further clarified the specific 
prohibition in Section 41104(a)(10) on refusal to deal or negotiate, by 
noting that this prohibition includes dealings and negotiations ``with 
respect to vessel space accommodations provided by an ocean common 
carrier.'' The phrase ``ocean common carrier'' is currently defined as 
a vessel-operating common carrier (VOCC) in the Shipping Act.\3\ 
However, other key terms and phrases in the Shipping Act as amended--
``unreasonably,'' ``refuse to deal or negotiate,'' and ``vessel space 
accommodations''--are not defined.
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    \3\ See 46 U.S.C. 40102(18).
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    The common carrier prohibitions in 46 U.S.C. 41104 do not 
distinguish between U.S. exports or imports. If adopted, this proposed 
rule would apply to both.\4\ One basis, but not the only one, for some 
of the OSRA 2022 provisions were the challenges expressed by U.S. 
exporters trying to obtain vessel space to ship their products.\5\ This 
export-focus arguably is also supported by the amendments to the 
``Purposes'' section of the

[[Page 57675]]

Commission's overall authority contained in 46 U.S.C. 40101. 
Specifically, Section 40101(4) ratified the purpose to ``promote the 
growth and development of United States exports through a competitive 
and efficient system for the carriage of goods by water.'' Congress 
further highlighted issues related to U.S. exports and imports in 
Section 9 of OSRA 2022. This section created 46 U.S.C. 41110 and the 
requirement for ocean common carriers to provide information to the 
Commission to enable the Commission to publish quarterly statistics on 
total import and export tonnage and the total loaded and empty 20-foot 
equivalent units (TEUs) \6\ per vessel.
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    \4\ Section 41104 applies generally to both VOCCs and non-
vessel-operating common carriers (NVOCCs). However, the specific 
prohibition that is the subject of this proposed rule applies only 
to VOCCs.
    \5\ OSRA 2022 originated as S. 3580 and the bill is partially 
summarized as: ``This bill revises requirements governing ocean 
shipping to increase the authority of the Federal Maritime 
Commission (FMC) to promote the growth and development of U.S. 
exports through an ocean transportation system that is competitive, 
efficient, and economical.'' See Congress.gov summary for S. 3580 
accessed July 10, 2022.
    \6\ ``TEU'' stands for ``twenty-foot equivalent unit'' A 
standard marine shipping container measures 20' long, 8' wide, and 
8.6' tall. It is the standard unit of measurement of the capacity of 
a container ship. Twenty-Foot Equivalent Unit (TEU) Definition 
[verbar] UPS Supply Chain Solutions--United States.
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    The Commission is also aware of the long-running U.S. trade deficit 
in goods (approximately $1.1 trillion in 2021) and the imbalance of 
imports and exports moving through U.S. ports in international trade. 
VOCCs, particularly those on the major east-west trade lanes between 
the U.S. and Asia and the U.S. and Europe, make operational decisions 
regarding the import and export goods they carry based on both economic 
and engineering considerations.
    Export loads are, on average, heavier than import loads. This means 
that ships that come into U.S. ports largely laden with goods cannot 
safely load the same number of laden twenty-foot equivalent units 
(TEUs) when leaving the U.S. for foreign ports. A higher volume of 
laden exports will result in a lower vessel utilization rate on the 
outbound voyage from the U.S., resulting in fewer containers returning 
to where the equipment is in highest demand.
    The economics of this trade imbalance results in very different 
revenue returns for import and export trades. U.S. imports feature 
higher value items on average and the rates that shippers pay to move 
these goods are historically higher than the rates paid to move U.S. 
exports. For example, the average rate of a 20-foot dry container 
moving from Shanghai to the U.S. West Coast was $1,740 in January 2019, 
$4,270 in January 2021, and $8,130 in January 2022. The corresponding 
rate for a 20-foot dry container moving from the U.S. West Coast to 
Shanghai was $730 in January 2019, $800 in January 2021, and $1,220 in 
January 2022.\7\ Further, the inland destination of import containers 
is often not located near export customers, which requires equipment 
repositioning costs as well as the opportunity cost of unused 
equipment.
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    \7\ Data source: Drewry Container Freight Rate Insight, accessed 
June 21, 2022.
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    Prior to the pandemic, the ratio of import TEUs to export TEUs 
moving through U.S. ports across all trade lanes was over 50 percent; 
in April 2019 this ratio was 59 percent.\8\ While containerized imports 
(measured in TEUs) increased steadily from May 2020 through April 2022, 
containerized exports declined over the same period, leading to an 
import-export TEU ratio of 39 percent in April 2022. Approximately 2.6 
million TEUs of all U.S. imports moved through U.S. ports in April 
2022, versus 1.98 million in April 2019. Total U.S. exports fell from 
1.2 million TEUs in April 2019 to 950,178 in April 2022.\9\
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    \8\ Data source: PIERS, S&P Global Market Intelligence, accessed 
June 21, 2022.
    \9\ Data source: PIERS, S&P Global Market Intelligence, accessed 
June 21, 2022.
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    Trade on some specific lanes is even more imbalanced. Trade from 
Asia to U.S. ports was characterized by an import/export TEU ratio of 
39 percent in 2019, 36 percent in 2020, and 29 percent in 2021. The 
number dropped further to 26 percent in the first quarter of 2022. 
There is no homogeneity among carriers, even within trade lanes. On the 
Asia to U.S. trade lane, among the largest carriers, the ratio of 
exports to imports ranged from 27 percent to 52 percent in 2019 and 
ranged from 23 to 44 percent in 2021. Some carriers had very stable 
export to import ratios throughout the pandemic, though most saw a 
substantial drop in both the ratio of exports to imports and the 
absolute number of export containers moved, particularly between 2020 
and 2021. This pattern has continued into the first quarter of 2022.
    While some export markets have been affected by trade shocks, such 
as China's ban on solid waste imports and other items, these trade 
shocks do not fully explain the drop in total exports carried, neither 
do safety concerns over ship loading. Largely these changes can be 
explained by carrier operational decisions based on equipment 
availability and differential revenues from import and export 
transportation.\10\ VOCCs should offer service in both directions 
within the trade lanes in which they operate in common carriage, 
regardless of trade lane, length of time active in the trade, or vessel 
size.
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    \10\ https://www.nytimes.com/2021/11/14/business/economy/farm-exports-supply-chain-ports.html.
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    VOCCs typically maintain documented procedures and policies related 
to their operations. Through its recently revised VOCC audit program, 
Commission staff reviewed a number of well-documented operating 
procedures and policies specifically related to export cargo. Ocean 
common carriers operating in the U.S. trade should have a documented 
export strategy that enables the efficient movement of export 
cargo.\11\ By way of illustration only, effective export strategies 
should be tailored to specific categories, such as programs, customers, 
markets, or commodities, and include documented policies on export 
business practices, including equipment provisioning, free time, 
outreach plans for contingencies and instances of imbalance in 
equipment availability, clearly defined and tracked performance 
metrics, identification of key export staff, and regular internal 
review of such policies. The Commission presumes that every ocean 
carrier operating in the U.S. market will have the ability to transport 
exports in addition to imports until further information is provided. 
In other words, an ocean carrier may not categorically exclude U.S. 
exports from a backhaul trip without showing how this action is 
reasonable.
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    \11\ This comports with OSRA 2022 generally, and specifically 
with the purpose in Section 41104(4) to ``promote the growth and 
development of United States exports.''
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    Common carriers stated they have seen delays in the movement of 
export cargo due to a lack of mutual commitment between shippers and 
common carriers leading to cancellations of vessel space accommodation 
by either party, sometimes up to the day of sailing. This contributes 
to uncertainty for both the shippers and common carriers.
    In addition to the challenges faced by exporters, there have also 
been reports of restricted access to equipment and vessel capacity for 
U.S. importers, particularly in the Trans-Pacific market. Access to 
import vessel space was impacted by congestion, equipment availability, 
and VOCC commercial decisions.\12\
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    \12\ https://www.nytimes.com/2022/05/04/business/shipping-container-shortage.html.
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    Finally, it is the Commission's experience, and as detailed in the 
Commission's Fact Finding 29 Final Report,\13\ that ocean common 
carriers and those with whom they contract to operate and load/unload 
their vessels,

[[Page 57676]]

have the best information on the ability of any particular vessel to 
accept cargo for import or export. Shippers generally do not have 
access to this information. Therefore, while the ultimate burden of 
proving a violation of Section 41104(a)(10) will remain with the 
complainant or the Commission's Bureau of Enforcement, Investigations, 
and Compliance (BEIC), this proposed rule includes a mechanism by 
which, upon a prima facie case of a violation of Section 41104(a)(10) 
being made, the burden shifts from the shipper (or the BEIC) to the 
ocean common carrier. The ocean common carrier must establish that its 
refusal to deal or negotiate with regard to vessel space, which in some 
cases results in a decision not to accept cargo, was reasonable. It is 
important to clarify that this proposed rule concerns the negotiations 
or discussions that lead up to a decision about whether an import or 
export load is accepted for transportation. There will undoubtedly be 
situations where an ocean common carrier and a shipper engage in good 
faith negotiations or discussions that do not result in the provision 
of transportation. However, as mentioned earlier in the preamble, a 
situation where an ocean common carrier categorically excludes U.S. 
exports from its backhaul trip will create a presumption of an 
unreasonable refusal to deal.
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    \13\ See generally, Fact Finding Investigation 29 Final Report 
(F.M.C.), 2022 WL 2063347 at 11, 21-23, 26, 34-35 (noting 
difficulties experienced by non-carrier entities to obtain 
information such as earliest return dates and vessel scheduling 
information held by ocean common carriers).
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    The Commission also notes that, consistent with Section 7(d) of 
OSRA 2022, it has consulted with the Coast Guard regarding the approach 
taken by the proposal. The Coast Guard offered no objections to the 
Commission's approach.

II. Summary of the Proposed Rule

    This proposed rule describes how the Commission will consider 
private party and enforcement cases where a violation of 46 U.S.C. 
41104(a)(10) is alleged, and relates to vessel space accommodation.\14\ 
This proposed rule considers the common carriage roots of Section 
41104(a)(10), as well as the overall competition basis of the 
Commission's authority.\15\ The proposed rule first lists the elements 
necessary to establish a violation of Section 41104(a)(10), and then 
lays out the criteria the Commission will consider in evaluating the 
reasonableness of the refusal, including a burden shifting regime. In 
proposing this rule, the Commission acknowledges that it is impossible 
to regulate for every possible scenario and thus, cases that allege a 
violation of Section 41104(a)(10) will be factually driven and 
determined on a case-by-case basis.\16\
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    \14\ The framework for this proposed rule is taken from 
Commission precedent on refusal to deal cases generally and could be 
applicable outside the ``vessel space accommodation'' context. This 
proposed rule, however, is solely focused on the OSRA 2022 
requirements related to vessel space accommodations provided by an 
ocean common carrier.
    \15\ See Orolugbagbe v. A.T.I., U.S.A., Inc., Informal Docket 
No. 1943(I) at *31-38.
    \16\ See Canaveral Port Authority--Possible Violations of 
Section 10(b)(10), 29 S.R.R. 1436, 1449 (FMC 2003). Note that 
Section 10(b)(10) is the former Shipping Act section for 
unreasonable refusals to deal or negotiate.
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A. Elements

    Pursuant to OSRA 2022 and Commission precedent, complainants must 
meet three elements to establish a violation for unreasonable refusal 
to deal or negotiate. The Commission proposes to continue to adhere to 
those elements, including in cases where the allegation relates to 
vessel space accommodations by an ocean common carrier. The elements 
are derived directly from the statutory text established in OSRA 1998 
and are: (1) the respondent is a [ocean] common carrier under FMC 
jurisdiction; (2) the respondent refuses to deal or negotiate [with 
respect to vessel space accommodations]; and (3) that the refusal is 
unreasonable.\17\
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    \17\ Id. at 1448.
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B. Definitions

    Neither the Shipping Act, as amended, nor OSRA 2022 define the 
phrase ``vessel space accommodations,'' and this phrase has not been 
interpreted in prior Commission matters. Therefore, the Commission 
proposes to define ``vessel space accommodations'' generally as space 
provided aboard a vessel of an ocean common carrier for laden 
containers being imported to, or exported from, the United States. This 
proposed definition is based on the common meaning of the words in the 
phrase as applied in ocean shipping.
    The phrase ``refusal to deal or negotiate'' does not lend itself to 
a general definition and instead must be evaluated on a case-by-case 
basis. In general, a ``refusal to deal or negotiate'' presumes that in 
order for there to be a refusal, there first must be something to 
refuse. In other words, a party has attempted in good faith to engage 
in discussions with an ocean common carrier for the purposes of 
obtaining vessel space accommodations.\18\ This good faith attempt is 
something more than one communication with no response or reply. The 
party must prove an actual refusal to even entertain the proposal or to 
engage in good faith discussions. Likewise, an ocean common carrier's 
refusal to deal or negotiate is only a violation if it is unreasonable, 
and as described below, this analysis will consider whether the ocean 
common carrier, in turn, gave good faith consideration to a party's 
efforts at negotiation.\19\
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    \18\ See Canaveral, supra at 1450; cf. Chilean Nitrate Sales 
Corp. v. San Diego Unified Port District, 24 S.R.R. 1314 (1988).
    \19\ See Canaveral, id. See also Maher Terminals, LLC v. PANYNJ, 
33 S.R.R. 821, 853 (F.M.C. 2014).
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    As noted above, reasonableness is necessarily a case-by-case 
determination, and the Commission will continue to adhere to that 
principle. However, the Commission believes it is necessary to provide, 
and OSRA 2022 requires, criteria that it will use to assess whether a 
refusal to deal or negotiate with respect to vessel space accommodation 
is reasonable. These criteria will be considered for the reasonableness 
evaluation for any given case.
    Case law indicates that ``reasonableness'' of the refusal to deal 
or negotiate has historically been interpreted broadly in this context, 
with courts deferring to the Commission's reading of that term in 
administering its statutes and regulations.\20\ The Commission has 
previously found reasonable those decisions that are connected to a 
legitimate business decision or motivated by legitimate transportation 
factors.\21\ ``Reasonableness'' can be given its dictionary definition 
but is judged on a case-by-case basis, with particular attention paid 
to the relevant circumstances; the Commission has said that a just and 
reasonable practice is one otherwise lawful but not excessive and 
suited to the end in view.\22\
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    \20\ In fact, the Commission has observed that ``[s]hipping law 
terms such as `unjust,' or `unreasonable,' are indeed broad and may 
plausibly admit consideration of a number of competing policies. It 
is well-established, however, that `[t]he primary objective of the 
shipping laws administered by the FMC is to protect the shipping 
industry's customers, not members of the industry.''' New York 
Shipping Ass'n, Inc. v. Fed. Mar. Comm'n, 854 F.2d 1338, 1374 (D.C. 
Cir. 1988) (quoting Boston Shipping Ass'n v. FMC, 706 F.2d 1231, 
1238 (1st Cir.1983)).
    \21\ See, e.g., Docking & Lease Agreement By & Between City of 
Portland, ME & Scotia Princess Cruises, Ltd., Order of Investigation 
& Hearing, 30 S.R.R. 377, 379 (F.M.C. 2004).
    \22\ In Investigation of Free Time Practices--Port of San Diego, 
9 F.M.C. 525, 547 (1966), discussing Section 17 of the 1916 Act, the 
Commission noted:
    ``Reasonable'' may mean or imply ``just, proper,'' ``ordinary or 
usual,'' ``not immoderate or excessive,'' ``equitable,'' or ``fit 
and appropriate to the end in view.'' Black's Law Dictionary, Fourth 
Edition. It is by application to the particular situation or subject 
matter that words such as ``reasonable'' take on concrete and 
specific meaning. As used in Sec. 17 and as applied to terminal 
practices, we think that ``just and reasonable practice'' most 
appropriately means a practice, otherwise lawful but not excessive 
and which is fit and appropriate to the end in view.
    The justness or reasonableness of a practice is not necessarily 
dependent upon the existence of actual preference, prejudice or 
discrimination. It may cause none of these but still be 
unreasonable.

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[[Page 57677]]

    Transportation-related factors can include, without limitation, the 
character of the cargo, vessel safety and stability, operational 
schedules, and the adequacy of facilities.\23\ Generally, however, 
transportation-related factors relate to the characteristics of the 
cargo or vessel, not the status of the shipper.\24\
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    \23\ For example, in Dart Containerline Co. v. FMC, 639 F.2d 
808, 813 (D.C. App. 1981), in considering whether a diversion of 
cargo from its naturally tributary port was unreasonable, the 
Commission considered ``any operational difficulties or other 
transportation factors that bear upon the carrier's ability to 
provide direct service (e.g., lack of cargo volume, inadequate 
facilities)[.]'' See also Harborlite Corp. v. I.C.C., 613 F.2d 1088, 
1100 (D.C. Cir. 1988), citing to United States v. Illinois Central 
Railroad, 263 U.S. 515, 524, 44 S.Ct. 189, 193, 68 L.Ed. 417 (1924), 
a case involving common-carriage principles, for the proposition 
that rate disparity is not unlawful if it is ``justified by the cost 
of the respective services, by their values, or by other 
transportation conditions''; Credit Practices of Sea-land Service, 
Inc., and Nedlloyd Lijnen, B.v., 1990 WL 427463, at *8 
(``Transportation or wharfage charges are dependent upon the 
particular commodity involved; the cost for shipping or storing 
bananas, for example, bears no relation to the fees levied for heavy 
industrial equipment''); Grace Line, Inc. v. Federal Maritime Board, 
280 F.2d 790 (1960); Investigation of Free Time Practices--Port of 
San Diego, 9 F.M.C. 525, 541 (1966).
    \24\ See, e.g., Credit Practices of Sea-land Service, Inc., and 
Nedlloyd Lijnen, B.v., 1990 WL 427463 (F.M.C. 1990); Department of 
Defense and Military Sealift Command v. Matson Navigation Co., 19 
F.M.C. 503 (1977).
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    The Commission has found various situations that inform what 
refusal to deal entails. It has found that a common carrier must avoid 
shutting out any person or party for reasons not connected to 
legitimate transportation-related factors.\25\ A common carrier must 
therefore give actual consideration to the other party's efforts or 
attempts at negotiation.\26\ For example, a common carrier's repeated 
refusal to respond to email or telephone requests for negotiations over 
an extended period of time may be viewed as an unreasonable method of 
shutting another party out. Similarly, there must be an affirmative act 
by a party to deal or engage in negotiations with the common carrier. 
Commercial convenience alone is not a reasonable basis for a common 
carrier's refusal to deal or negotiate.\27\ A common carrier granting 
special treatment to one party over another because that party is a 
regular customer is likewise likely to be viewed as unreasonable.\28\
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    \25\ New Orleans Stevedoring Co. v. Bd. of Commissioners of the 
Port of New Orleans, 29 S.R.R. 1066, 1070 (F.M.C. 2002), aff'd mem., 
30 S.R.R. 261 (D.C. Cir. 2003).
    \26\ Canaveral Port Authority--Possible Violations of Section 
10(b)(10), Unreasonable Refusal to Deal or Negotiate, 29 S.R.R. 1436 
(F.M.C. 2003).
    \27\ Investigation of Free Time Practices--Port of San Diego, 9 
F.M.C. 525, 541 (1966).
    \28\ Chr. Salvesen & Co., Ltd. v. West Michigan Dock & Market 
Corp., 12 F.M.C. 135, 146 (1968).
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    The Commission also has a history of recognizing that it is 
appropriate to defer to a party's reasonable business decisions and not 
to substitute its business judgement for that of an entity conducting 
negotiations.\29\ However, this precedent does not eliminate the 
Commission's responsibility to evaluate whether a party's decision-
making practices resulted in a violation of the Shipping Act.\30\ The 
Commission continues to acknowledge that its ``role is not to ensure 
that all interested parties get the same deal or make a certain profit. 
Rather, the Commission's role is to ensure that parties are not 
precluded from obtaining preferential treatment due to unreasonable or 
unjustly discriminatory reasons.'' \31\ The Commission further 
recognizes that an ocean common carrier does not have a duty to grant a 
contract to every potential party. However, upon establishing its 
criteria for granting preferential terms to parties who are able to 
meet those specified terms, the ocean common carrier then has a duty 
under the Shipping Act to apply such criteria in a consistent and fair 
manner without differentiating based on illegitimate transportation 
factors.\32\ An ocean common carrier may be viewed as having acted 
reasonably in exercising its business discretion to proceed with a 
certain arrangement over another by taking into account such factors as 
profitability and compatibility with its business development 
strategy.\33\
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    \29\ See Seacon Terminals, Inc. v. The Port of Seattle, 26 
S.R.R. 886 (F.M.C. 1993); New Orleans Stevedoring Co. v. Bd. of 
Commissioners of the Port of New Orleans, 29 S.R.R. 1066 (F.M.C. 
2002), aff'd mem., 30 S.R.R. 261 (D.C. Cir. 2003); Canaveral Port 
Authority--Possible Violations of Section 10(b)(10), Unreasonable 
Refusal to Deal or Negotiate, 29 S.R.R. 1436 (F.M.C. 2003); Maher 
Terminals, LLC v. The Port Authority of New York and New Jersey, 33 
S.R.R. 821 (F.M.C. 2014).
    \30\ Seacon Terminals at 898-899; New Orleans Stevedoring Co., 
at 1071.
    \31\ Ceres Marine Terminals v. Maryland Port Administration, 29 
S.R.R. 356, 369 (F.M.C. 2001).
    \32\ Id. at 370.
    \33\ Seacon Terminals at 899.
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C. Shifting Burden From Complainant to Ocean Common Carrier

    This proposed rule also sets forth a framework for an ocean common 
carrier to establish that its efforts to consider an entity's proposal 
or efforts at negotiation were done in good faith based on the criteria 
above. Once a complainant (or the BEIC) has established a prima facie 
case for each of the three elements above, the ocean common carrier 
will have the burden of production to show or justify why its refusal 
was reasonable. However, the ultimate burden of persuasion remains with 
the complainant to show that the refusal to deal or negotiate was 
unreasonable.\34\ Further, the proposed rule includes a rebuttable 
presumption of unreasonableness for those situations where an ocean 
common carrier categorically excludes U.S. exports from its backhaul 
trips from the U.S.
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    \34\ Canaveral Port Authority--Possible Violations of Section 
10(b)(10), Unreasonable Refusal to Deal or Negotiate, 29 S.R.R. 1436 
(F.M.C. 2003).
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    The proposed rule includes a mechanism for an ocean common carrier 
to justify its actions through means of a certification. Although this 
proposal does not require a certification for this purpose, the 
Commission is considering whether to make certification by a U.S.-based 
compliance officer mandatory. The Commission also notes that, as a 
preliminary matter, any justification must be directly relevant and 
specific to the case at hand. Information or data that supports 
generalized propositions is not helpful in determinations of 
reasonableness for a specific case. A certification should document the 
ocean common carrier's decision in a specific matter, the good faith 
consideration of an entity's proposal or request to negotiate, and the 
specific criteria considered by the ocean common carrier to reach its 
decision. Certification in this context means that an appropriate U.S.-
based representative of the ocean common carrier attests that the 
decision and supporting evidence is correct and complete. An 
appropriate representative can include the ocean common carrier's U.S.-
based compliance officer.
    As to all of the issues discussed in this document, the Commission 
seeks comment and supporting information regarding its proposal.

III. Public Participation

How do I prepare and submit comments?
    Your comments must be written and in English. To ensure that your 
comments are correctly filed in the docket, please include the docket 
number of this document in your comments.
    You may submit your comments via email to the email address listed 
above under ADDRESSES. Please include the docket number associated with 
this notice of proposed rulemaking (NPRM) and the subject matter in the 
subject line of the email. Comments should be attached to the email as 
a Microsoft

[[Page 57678]]

Word or text-searchable PDF document. Only non-confidential and public 
versions of confidential comments should be submitted by email.
    You may also submit comments by mail to the address listed above 
under ADDRESSES.
How do I submit confidential business 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 by mail 
to the address listed above under ADDRESSES:
     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.
Will the Commission consider late comments?
    The Commission will consider all comments received before the close 
of business on the comment closing date indicated above under DATES. To 
the extent possible, we will also consider comments received after that 
date.
How can I read comments submitted by other people?
    You may read the comments received by the Commission at the 
Commission's Electronic Reading Room or the Docket Activity Library at 
the addresses listed above under ADDRESSES.

IV. Rulemaking Analyses

Regulatory Flexibility Act

    The Regulatory Flexibility Act, 5 U.S.C. 601-612, provides that 
whenever an agency publishes 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 a regulatory flexibility 
analysis describing the impact of the rule on small entities, unless 
the head of the agency certifies that the rulemaking will not have a 
significant economic impact on a substantial number of small entities. 
5 U.S.C. 603-605. As the head of the agency, the Chairman, by voting to 
approve this NPRM, is certifying that this proposed rule, if adopted, 
will not have a significant economic impact on a substantial number of 
small entities.

National Environmental Policy Act

    The Commission's regulations categorically exclude certain 
rulemakings from any requirement to prepare an environmental assessment 
or an environmental impact statement because they do not increase or 
decrease air, water or noise pollution or the use of fossil fuels, 
recyclables, or energy. 46 CFR 504.4. The proposed rule describes the 
Commission's proposed criteria to determine whether an ocean common 
carrier has engaged in an unreasonable refusal to deal with respect to 
vessel space accommodations under 46 U.S.C. 41104(a)(10), and the 
elements necessary for a successful claim under that section. This 
rulemaking thus falls within the categorical exclusion for matters 
related solely to the issue of Commission jurisdiction and the 
exclusion for investigatory and adjudicatory proceedings to ascertain 
past violations of the Shipping Act. See 46 CFR 504.4(a)(20), (22). 
Therefore, no environmental assessment or environmental impact 
statement is required.

Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (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. This proposed rule does not 
contain any collections of information as defined by 44 U.S.C. 3502(3) 
and 5 CFR 1320.3(c).

Regulation Identifier Number

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

List of Subjects in 46 CFR Part 542

    Administrative practice and procedure, Non-vessel-operating common 
carriers, Ocean common carrier, Refusal to deal or negotiate, Vessel-
operating common carriers, Vessel space accommodations.
    For the reasons set forth in the preamble, the Federal Maritime 
Commission proposes to add 46 CFR part 542 to read as follows:

PART 542--COMMON CARRIER PROHIBITIONS

Sec.
542.1 Definition of Unreasonable Refusal to Deal or Negotiate with 
Respect to Vessel Space Accommodations Provided by an Ocean Common 
Carrier.
542.2 [Reserved]

    Authority: 5 U.S.C. 553; 46 U.S.C. 305, 40307, 40501-40503, 
41101-41106, and 40901-40904; 46 CFR 515.23.


Sec.  542.1  Definition of Unreasonable Refusal to Deal or Negotiate 
with Respect to Vessel Space Accommodations Provided by an Ocean Common 
Carrier.

    (a) Purpose. This part establishes the elements and definitions 
necessary for the Federal Maritime Commission (Commission) to apply 46 
U.S.C. 41104(a)(10) with respect to vessel space accommodations 
provided by an ocean common carrier. This includes complaints brought 
before the Commission by a private party or enforcement cases brought 
by the Commission.
    (b) Definitions. For the purposes of this section:
    (1) Transportation factors means factors that encompass the genuine 
operational considerations underlying an ocean common carrier's 
practical ability to accommodate laden cargo for import or export, 
which can include, without limitation, vessel safety and stability, 
scheduling considerations, and the effect of blank sailings.
    (2) Unreasonable means an ocean common carrier's refusal to deal or 
negotiate as prohibited under 46 U.S.C. 41104(a)(10). In evaluating an 
ocean common carrier's actions, the Commission will consider the 
following factors, without limitation, when deciding whether a refusal 
to deal or negotiate under paragraph (c)(3) of this section is 
unreasonable:
    (i) Whether the ocean common carrier follows a documented export 
strategy that enables the efficient movement of export cargo;

[[Page 57679]]

    (ii) Whether the ocean common carrier engaged in good-faith 
negotiations, and made business decisions that were subsequently 
applied in a fair and consistent manner;
    (iii) The existence of legitimate transportation factors; and
    (iv) Any other factors the Commission deems relevant.
    (3) Vessel space accommodations means space provided aboard a 
vessel of an ocean common carrier for laden containers being imported 
to or exported from the United States.
    (c) Elements. In order to establish a successful private party or 
enforcement claim under 46 U.S.C. 41104(a)(10) for refusal to deal or 
negotiate with respect to vessel space accommodations:
    (1) The respondent must be an ocean common carrier as defined in 46 
U.S.C. 40102;
    (2) The respondent refuses to deal or negotiate, including with 
respect to vessel space accommodations; and
    (3) The refusal is unreasonable.
    (d) Shifting of burden of production. The burden to establish a 
violation of this part is with the complainant (or Bureau of 
Enforcement, Investigations, and Compliance). Once a complainant sets 
forth a prima facie case of a violation, the burden shifts to the ocean 
common carrier to justify that its actions were reasonable. This 
justification may take the form of a certification by an appropriate 
representative of the ocean common carrier to attest that the decision 
and supporting evidence is correct and complete. An appropriate 
representative can include the ocean common carrier's compliance 
officer.


Sec.  542.2  [Reserved]

    By the Commission.
William Cody,
Secretary.
[FR Doc. 2022-20105 Filed 9-20-22; 8:45 am]
BILLING CODE 6730-02-P