Service Contracts
| Citation | 86 FR 5106 |
| Record Number | 2020-29173 |
| Published date | 19 January 2021 |
| Section | Proposed rules |
| Court | Federal Maritime Commission |
Federal Register, Volume 86 Issue 11 (Tuesday, January 19, 2021)
[Federal Register Volume 86, Number 11 (Tuesday, January 19, 2021)]
[Proposed Rules]
[Pages 5106-5112]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-29173]
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FEDERAL MARITIME COMMISSION
46 CFR Part 530
[Docket No. 20-22]
RIN 3072-AC84
Service Contracts
AGENCY: Federal Maritime Commission.
ACTION: Notice of Proposed Rulemaking.
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SUMMARY: The Federal Maritime Commission proposes to amend its service
contract filing requirements to permit ocean common carriers to file
original service contracts up to 30 days after the contract goes into
effect.
DATES: Submit comments on or before March 5, 2021.
In compliance with the Paperwork Reduction Act (PRA), the
Commission is also seeking comment on revisions to an information
collection. See the Paperwork Reduction Act section under Rulemaking
Analyses and Notices below. Please submit all comments relating to the
revised information collection requirements to the FMC and to the
Office of Management and Budget (OMB) at the address listed below under
ADDRESSES on or before March 22, 2021. Comments to OMB are most useful
if submitted within 30 days after publication.
ADDRESSES: You may submit comments, identified by Docket No. 20-22, by
the following methods:
Email: [email protected]. For comments, include in the
subject line: ``Docket No. 20-22, Comments on Service Contract
Rulemaking.'' Comments should be attached to the email as a Microsoft
Word or text-searchable PDF document.
Comments regarding the proposed revisions to the relevant
information collection should be submitted to the FMC through one of
the preceding methods and a copy should also be sent to the Office of
Information and Regulatory Affairs, Office of Management and Budget,
Attention: Desk Officer for Federal Maritime Commission, 725 17th
Street NW, Washington, DC 20503; by Fax: (202) 395-5167; or by email:
[email protected].
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.
Docket: For access to the docket to read background documents or
comments received, go to the Commission's Electronic Reading Room at:
https://www2.fmc.gov/readingroom/proceeding/20-22/.
FOR FURTHER INFORMATION CONTACT: Rachel E. Dickon, Secretary; Phone:
(202) 523-5725; Email: [email protected].
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Executive Summary
II. Background
A. Service Contract Requirements
B. 2016-2018 Rulemakings
C. 2018 World Shipping Council Petition for Exemption
D. 2020 Exemptions
III. Proposed Changes
A. Delayed Filing for Original Service Contracts
1. Definition of ``Effective Date'' (Sec. 530.3)
2. Service Contract Filing Requirements (Sec. 530.8)
3. Service Contract Implementation Requirements (Sec. 530.14)
B. Technical Amendments
1. Definition of ``Authorized Person'' (Sec. 530.3)
2. Exceptions and Exemptions (Sec. 530.13)
IV. Public Participation
V. Rulemaking Analyses and Notices
I. Executive Summary
The Shipping Act of 1984, as amended (46 U.S.C. 40101-41309)
(Shipping Act or Act) permits ocean common carriers and shippers to
enter into individual, confidential service contracts for the
international transportation of cargo, and requires that these
contracts be filed with the Federal Maritime Commission. Under the
current regulations in 46 CFR part 530, original service contracts must
be filed on or before their effective date, while service contract
amendments must be filed within 30 days after they go into effect. The
disparate treatment of original service contracts versus amendments was
the result of a 2016-2017 rulemaking in which the Commission determined
to allow delayed filing for amendments while retaining the requirement
that original service contracts be filed on or before their effective
date.
In response to the COVID-19 pandemic and its impact on service
contract negotiation and filing, the Commission recently granted a
temporary exemption permitting original service contracts, like
amendments, to be filed up to 30 days after their effective date. Based
on the Commission's experience during the exemption period and the
perceived benefits of allowing delayed filing for original service
contracts, the Commission has tentatively determined to make the status
quo permanent. Accordingly, the Commission is proposing to revise its
service contract regulations in part 530 to allow original service
contracts, like amendments, to be filed up to 30 days after they go
into effect. The Commission is also proposing several technical
amendments to the service contract regulations.
The Commission requests comments on these proposed amendments and
any other amendments necessary to implement delayed filing for original
service contracts.
II. Background
A. Service Contract Requirements
The Shipping Act permits ocean common carriers and shippers to
enter into individual, confidential service contracts for the
international transportation of cargo, and requires that these
contracts be filed with the Federal Maritime Commission.\1\ For many
years, the Commission's implementing regulations required that ocean
common carriers file all service contracts and amendments with the
Commission before the contract or amendment could go into effect.\2\
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\1\ See 46 U.S.C. 40502.
\2\ See, e.g., 46 CFR 530.8(a) (2016).
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B. 2016-2018 Rulemakings
In 2016, the Commission published an advanced notice of proposed
rulemaking (ANPRM) to revise its regulations governing service
contracts and non-vessel-operating common carrier (NVOCC) negotiated
service arrangements (NSAs).\3\ The rulemaking was based on the
Commission's retrospective review of its regulations and feedback from
the industry and shippers. One suggestion from ocean common carriers
was to allow service contract amendments to go into effect
[[Page 5107]]
before filing with the Commission, provided that the amendment was
filed within 30 days after the earlier of: (1) The date the parties
agreed to the amendment; or (2) the date the carrier received cargo to
which the amendment applied.\4\ Beneficial cargo owners and NVOCCs that
provided feedback to the Commission, however, indicated that filing
amendments prior to the acceptance of cargo protected rate and contract
commitments, and these shippers were confident ocean common carriers
would honor the rates and contract commitments knowing that the
contracts were filed with the Commission.\5\ Notwithstanding these
concerns, the Commission requested comment on the carriers'
proposal.\6\
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\3\ ANPRM: Service Contracts and NVOCC Service Arrangements, 81
FR 10198 (Feb. 29, 2016).
\4\ Id. at 10201.
\5\ Id.
\6\ Id.
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The Commission subsequently published an NPRM in 2016 that
proposed, among other things, to allow service contract amendments to
be filed up to 30 days after the effective date.\7\ The Commission
noted that the majority of commenters to the ANPRM supported the change
and some advocated extending the same relief to the filing of original
service contracts.\8\ Responding to the these comments, the Commission
initially discussed how the existing requirements protected shipper
interests by demonstrating agreement among the parties prior to the
movement of cargo, and that shippers had expressed confidence in this
process knowing that both the shipper and carrier would honor the
commitment of their service contract filed with the Commission.\9\ The
Commission moved on to distinguish original service contracts from
service contract amendments, describing an original service contract as
``a comprehensive agreement between the parties that encompasses the
commodities that are to be shipped, the origins and destinations
between which cargo is to move, the rates for the transportation of
that cargo, as well as terms and conditions governing the
transportation of goods for the shipper.'' \10\ The Commission
described service contract amendments, on the other hand, as ``more
limited in scope, generally adding new commodities and/or rates.'' \11\
The Commission therefore proposed to allow filing of service contract
amendments up to 30 days after going into effect, but declined to
propose extending the same treatment to original service contracts
``given their nature and the Commission's belief that doing so would
diminish its oversight abilities.'' \12\
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\7\ NPRM: Amendments to Regulations Governing Service Contracts
NVOCC Service Arrangements, 81 FR 56559 (Aug. 22, 2016).
\8\ Id. at 56562.
\9\ Id.
\10\ Id.
\11\ Id.
\12\ Id.
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The Commission published a final rule in 2017 adopting, among other
changes, the proposed change to permit filing of service contract
amendments up to 30 days after the effective date.\13\ Carriers and
shippers had asserted in their comments that the service contract
effective date requirement was overly restrictive, particularly with
respect to service contract amendments, and stated that the majority of
amendments were for minor revisions to commercial terms, such as a
revised rate or the addition of a new origin/destination or
commodity.\14\ The Commission also cited carrier claims that, in
certain instances, parties had agreed to amend a service contract, but
the cargo was received before the carrier filed the amendment with the
Commission, meaning that the rates and terms in the amendment could not
be applied to the cargo under the Commission's regulations.\15\ The
Commission concluded that permitting delayed filing was warranted
because: (1) It would reduce the filing burdens on the industry by
allowing carriers to file multiple amendments made within a 30-day
period at the same time rather than on a piecemeal basis; (2) it would
avoid the commercial harm associated with failing to timely file an
amendment and allow the parties to apply the agreed rates and terms to
the intended shipments; and (3) the Commission would maintain the
ability to protect the shipping public.\16\
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\13\ Final Rule: Amendments to Regulations Governing Service
Contracts NVOCC Service Arrangements, 82 FR 16288 (Apr. 4, 2017).
\14\ Id. at 16290.
\15\ Id.
\16\ Id.
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In discussing a related proposal that the service contract
correction process be amended to permit carriers to submit
inadvertently unfiled original service contracts and amendments to the
Commission within 180 days, the Commission determined that ``[i]n the
case of original service contracts, shipper protections at the time of
contracting and for the ensuing contract term are best assured by
requiring that the agreement be contemporaneously filed as the best
evidence of the actual agreement between the parties when first
reached.'' \17\ The Commission expressed concern that delayed filing of
service contracts could negatively affect its ability to investigate
and enforce the Shipping Act because ``[u]nlike those limited and
modest revisions to accommodate industry needs for correction of
contract amendments, failure to file the original contract may conceal
the very existence of a contractual arrangement in a given trade lane
or lanes, avoiding early detection of market-distorting practices by
individual carriers.'' \18\
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\17\ Id. at 16293.
\18\ Id.
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Following publication of the 2017 service contract/NSA final rule,
the Commission initiated a separate rulemaking in 2017 to address
regulatory revisions proposed by the National Customs Brokers and
Forwarders Association of America in a 2015 petition.\19\ Although this
rulemaking focused on NSAs and NVOCC Negotiated Rate Arrangements
(NRAs), the Commission discussed the World Shipping Council's (WSC)
comments on the 2015 petition regarding the implementation of similar
changes to the service contract requirements.\20\ The Commission noted
that these comments predated the 2016-2017 service contract/NSA
rulemaking, and with the publication of the final rule in that
proceeding, the Commission had substantially met the WSC's request for
regulatory relief for ocean common carriers.\21\ The Commission stated
that any further relief related to service contracts could be
undertaken after the Commission had an opportunity to analyze the
impact of the recent changes on carrier operations and shippers.\22\
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\19\ NPRM: Amendments to Regulations Governing NVOCC Negotiated
Rate Arrangements and NVOCC Service Arrangements, 82 FR 56781 (Nov.
30, 2017).
\20\ Id. at 56785.
\21\ Id.
\22\ Id.
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C. 2018 World Shipping Council Petition for Exemption
In 2018, the WSC petitioned the Commission for an exemption from
the service contract filing and essential terms publication
requirements.\23\ The Commission denied the request for exemption from
the service contract filing requirements but granted the request for
exemption from the essential terms publication requirements.\24\
Although the petition and subsequent Commission decision were focused
on eliminating the service contract filing requirement entirely,
delayed filing was discussed. For example, as part of the Commission's
analysis of the potential economic harm that could result from
[[Page 5108]]
eliminating the filing requirement, the Commission pointed to the
shipper comments discussed in the 2016-2017 service contract/NSA
rulemaking indicating that the filing requirement encouraged ocean
common carriers to adhere to contract terms and deterred them from
introducing unreasonable terms into service contract boilerplate
language.\25\ The Commission also stated that delayed filing for
service contract amendments addressed a number of the issues raised by
commenters.\26\ Finally, in response to WSC's argument that maintaining
the filing requirement would negatively impact the ability of NVOCCs to
use the expedited contract acceptance and effective date provisions
implemented by the Commission in the recent 2017-2018 NSA/NRA
rulemaking, the Commission pointed out that WSC's assertion was based
on the premise that service contract filing delays the effectiveness of
service contracts.\27\ The Commission noted that WSC had not alleged
that such a delay existed nor had Commission experience shown such a
delay, and in the absence of such a showing, the Commission did not
believe that granting WSC's petition was necessary to give full effect
to the changes made in the 2018 NSA/NRA final rule.\28\
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\23\ See Pet. of World Shipping Council for an Exemption from
Certain Provisions of the Shipping Act of 1984, as amended, for a
Rulemaking Proceeding, 1 F.M.C.2d 504 (FMC 2019).
\24\ Id.
\25\ Id. at 510 (citing ANPRM: Service Contracts and NVOCC
Service Arrangements, 81 FR 10198, 10201 (Feb. 29, 2016).
\26\ Id. at 513.
\27\ Id. at 514-515 (referring to Final Rule: Amendments to
Regulations Governing NVOCC Negotiated Rate Arrangements and NVOCC
Service Arrangements, 83 FR 34780 (July 23, 2018)).
\28\ Id. at 515.
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D. 2020 Exemptions
The spread of coronavirus disease 2019 (COVID-19) in 2020 had a
significant effect on the global freight delivery system, including
service contract negotiation and implementation.\29\ Many businesses
began working remotely because of social distancing guidance and stay-
at-home orders.\30\ For some entities, this situation, combined with
other COVID-19-related disruptions to commercial operations, made
complying with service contract filing requirements difficult.
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\29\ Temporary Exemption from Certain Service Contract
Requirements, 2 F.M.C.2d 65 (FMC 2020).
\30\ Id. at 65.
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To allow parties time to adapt to the increased pressures from
COVID-19 and minimize disruptions to the contracting process, the
Commission issued a temporary blanket exemption on April 27, 2020,
extending the filing flexibilities for service contract amendments to
original service contracts.\31\ The exemption is conditioned on
carriers continuing to file original service contracts, subject to the
same delayed filing requirements as service contract amendments (i.e.,
original service contracts must be filed within 30 days after the
effective date). The exemption was originally set to expire December
31, 2020, but the Commission recently extended it until June 1,
2021.\32\
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\31\ Id. at 65-67.
\32\ Temporary Exemption from Certain Service Contract
Requirements, Docket No. 20-06, 2020 FMC LEXIS 206 (FMC Oct. 1,
2020).
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On October 7, 2020, CMA CGM, S.A. and its corporate affiliates
petitioned the Commission for an exemption from the service contract
filing and tariff publishing requirements to mitigate the effects of a
cyberattack on their information systems.\33\ While the carriers stated
that they appreciated the flexibility afforded by the temporary
exemption, they requested further exemption from the filing
requirements with respect to original service contracts and amendments
to permit them to be filed more than 30 days after they went into
effect. The Commission granted the exemption on October 20, 2020, and
the exemption expired on November 26, 2020.
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\33\ Pet. of CMA CGM, S.A., Pet. No. P2-20, slip op. (Oct. 20,
2020).
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III. Proposed Changes
As discussed above, the Commission expressed concern during the
2016-2017 rulemaking about permitting original service contracts to be
filed after their effective date, and decided to limit delayed filing
to amendments. But the Commission did not permanently foreclose future
changes to the service contract requirements, stating in the 2017 NSA/
NRA NPRM that further relief related to service contracts could be
undertaken after the Commission had an opportunity to analyze the
impact of the 2017 final rule on carriers and shippers.\34\ In line
with this statement, the Commission has reexamined the issue of
allowing delayed filing for original service contracts after
considering both the agency's experience over the last three years with
delayed filing of amendments and the recent experience with delayed
filing of original service contracts under the current temporary
exemption.
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\34\ 82 FR at 56785.
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The Commission has tentatively concluded that permanently allowing
delayed filing of original service contracts will provide the same type
of benefits as delayed filing of service contract amendments, namely
avoiding the commercial harm associated with situations in which cargo
is received after the parties have agreed to a service contract but
before the service contract is filed with the Commission. The need for
this flexibility has been amply demonstrated by recent events,
including the commercial disruption, social distancing, and stay-at-
home orders stemming from COVID-19, which has impacted carriers'
ability to file service contracts and prompted the Commission to grant
a temporary exemption. And in CMA CGM's recent exemption petition in
response to a cyberattack, the carrier cited with appreciation the
flexibility afforded by the ability to file service contracts and
amendments after their effective date. These recent events demonstrate
that, in certain circumstances, requiring that service contracts be
filed before they go into effect can potentially delay performance
under the contract to the detriment of shippers.
The Commission has also tentatively concluded that allowing
original service contracts to be filed up to 30 days after the
effective date will not materially impact the agency's ability to
provide oversight and protect the shipping public. Of particular
importance, the Commission has not received any shipper complaints
regarding delayed filing of amendments or the recent exemption allowing
delayed filing of original service contracts. The Commission believes
that the service contract filing requirement will continue to ensure
adherence to service contract terms and deter the introduction of
unreasonable terms, regardless of whether original service contracts
are filed before, on, or after the effective date.\35\ And the proposed
amendments make clear that original service contracts and amendments
will continue to be prospective in nature, ensuring that the parties
have reached agreement before cargo moves under the contract.
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\35\ As discussed above, the Commission recently reaffirmed its
commitment to retaining the service contract filing requirement in
its decision to deny WSC's exemption request. Pet. of World Shipping
Council, 1 F.M.C.2d 504.
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Although the Commission continues to recognize that original
service contracts are more comprehensive in scope than amendments, the
Commission has tentatively concluded that this difference does not
support different filing requirements. Under the proposed rule, the
Commission would continue to monitor filed service contracts, and
delayed filing would not negatively impact the Commission's ability to
investigate potential Shipping Act violations given the relatively
short
[[Page 5109]]
filing period being proposed (30 days after the effective date).\36\
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\36\ The Commission's stated concerns in the 2017 service
contract/NSA final rule regarding the impact of delayed filing on
enforcement were made in response to comments stating that the
correction process should allow carriers to submit inadvertently
unfiled service contracts with the Commission within a much longer
period (180 days).
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Based on the foregoing, the Commission is proposing to revise its
service contract regulations in part 530 to allow original service
contracts, like amendments, to be filed up to 30 days after the
effective date. The proposed revisions are also intended to clarify
that the trigger for the 30-day filing period is the effective date of
the service contract or amendment.
In addition, the Commission is proposing technical amendments to
the service contract regulations following the Commission order and
subsequent rulemaking to exempt ocean common carriers from the
requirement to publish service contract essential terms.\37\ These
amendments would: (1) Remove a reference to essential terms publication
that was inadvertently retained; and (2) add language describing the
exemption to ensure that ocean common carriers and other stakeholders
that may not know the history of the matter are aware of the exemption.
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\37\ Pet. of World Shipping Council, 1 F.M.C.2d at 515-516. See
Final Rule: Service Contracts, 85 FR 38086 (June 25, 2020).
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The Commission requests comments on these proposed amendments and
any other amendments necessary to implement delayed filing for original
service contracts.
A. Delayed Filing for Original Service Contracts
1. Definition of ``Effective Date'' (Sec. 530.3)
The current definition of ``Effective date'' describes: (1) What an
effective date is; (2) the relationship between the effective date and
the filing date for both original service contracts and amendments
(i.e., the effective date may not be before the filing date for
original service contracts or more than 30 days prior to the filing
date for amendments); and (3) the specific time on the effective date
when an original service contract or amendment is effective (12:01 a.m.
Eastern Standard Time).
The Commission is proposing to amend the definition of ``Effective
date'' by removing the language tying the effective date to the filing
date. As described above, the Commission is proposing to extend delayed
filing to original service contracts and is therefore deleting the
sentence stating that the effective date for original service contracts
cannot be prior to the filing date. The Commission is also proposing to
delete the sentence stating that the effective date of an amendment can
be no more than 30 days prior to the filing date. This sentence, in
essence, simply repeats the filing requirement in Sec. 530.8(a)(2). As
described below, Sec. 530.8(a), as amended by the proposed revisions,
would adequately describe the filing requirement and the deadline for
filing, and repeating the requirement in Sec. 530.3(i) is therefore
unnecessary.
The Commission is also proposing to clarify the time on the
effective date when a service contract or amendment goes into effect.
Currently, Sec. 530.3(i) provides that a service contract or amendment
is effective at 12:01 a.m. Eastern Standard Time. The proposed revision
would add the equivalent time zone relative to Coordinated Universal
Time (UTC) for added clarity (i.e., UTC-05:00).
Finally, the Commission is proposing to add language to the
definition to clarify that although service contracts and amendments
may be filed after the effective date, the Commission is retaining the
requirement that service contracts and amendments must be prospective
in nature and cannot have retroactive effect. Under the current
regulations, service contract amendments may only have prospective
effect.\38\ And, prior to the recent temporary exemption, original
service contracts could not become effective prior to being filed with
the Commission and were therefore also limited to having prospective
effect. Because the Commission is proposing to allow original service
contracts to be filed after they go into effect, the Commission is also
adding language to the definition of ``Effective date'' to reflect the
continuing requirement that service contracts and amendments may only
have prospective effect. The added language specifies that the
effective date cannot be earlier than the date on which all the parties
have signed the service contract or amendment.
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\38\ Sec. 530.10(a)(1).
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2. Service Contract Filing Requirements (Sec. 530.8)
Section 530.8 sets forth the filing requirements for service
contracts and amendments. Under the current regulations, amendments
must be filed no later than 30 days after cargo moves pursuant to the
amendment, and, prior to the temporary exemption, original service
contracts had to be filed before any cargo moved pursuant to the
service contract.\39\ The Commission is proposing to allow a 30-day
filing period for both original service contracts and amendments and is
therefore combining Sec. 530.8(a)(1) and (2) into a single provision
at Sec. 530.8(a). The revised Sec. 530.8(a) would require that ocean
common carriers file service contracts and amendments no later than 30
days after the effective date.
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\39\ Sec. 530.8(a)(1), (2).
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The trigger for the filing period under the proposed revisions thus
differs from the current requirement for service contract amendments in
Sec. 530.8(a)(2). The current regulations include two trigger events.
Current Sec. 530.3(i) requires that the effective date for the
amendment be no more than 30 days prior to the filing date, while
current Sec. 530.8(a)(2) requires that an amendment be filed no later
than 30 days after cargo moves pursuant to the amendment. In accordance
with Sec. 530.14(a), performance under an original service contract or
amendment may not begin until the effective date, and therefore the
effective date will always be earlier than the date cargo moves under
the contract or amendment. Accordingly, in order to comply with both
Sec. Sec. 530.3(i) and 530.8(a)(2), ocean common carriers must file
service contract amendments no later than 30 days after the effective
date. Based on this interpretation, the Commission published guidance
on its website shortly after the 2017 final rule was issued to make
clear that service contract amendments must be filed no later than 30
days after their effective date.\40\ The Commission is thus proposing a
single trigger (effective date) for the 30-day filing period for both
original service contract and amendments. This will make clear when
service contracts must be filed and allow the Commission to readily
assess compliance.
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\40\ https://web.archive.org/web/20190321030253/https://www.fmc.gov/resources/amended_service_contract_nsas_rule.aspx (last
visited Nov. 24, 2020).
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The Commission is also proposing amendments to Sec. 530.8(e) to
reflect the 30-day filing period for original service contracts.
Section 530.8(e) currently provides that if the Commission's service
contract filing system is unable to receive filings for 24 hours or
more, affected parties are not subject to the requirements in
Sec. Sec. 530.8(a) and 530.14(a) that a service contract must be filed
before cargo is shipped under the contract. This exception is
conditioned on the affected service contracts being filed within 24
hours after the Commission filing system returns to service.
[[Page 5110]]
The proposed amendments to Sec. Sec. 530.8(a) and 530.14(a)
require corresponding changes to Sec. 530.8(e). The proposed changes
to Sec. 530.8(e) would provide that if the Commission's service
contract filing system is down for 24 hours or more, any service
contract or amendment that must be filed during that period (i.e.,
because the 30-day filing period concludes while the system is down)
will be considered timely filed so long as the contract or amendment is
filed no later than 24 hours after the Commission filing system returns
to service. As explained below, the Commission is proposing to remove
references to the filing date in Sec. 530.14(a), and therefore the
proposed revisions to Sec. 530.8(e) also delete the reference to Sec.
530.14(a).
3. Service Contract Implementation Requirements (Sec. 530.14)
Section 530.14 provides that performance under a service contract
or amendment may not begin until the effective date and conditions
performance on compliance with the relevant filing requirements, i.e.,
performance under an original service contract may not begin until the
contract is filed while performance under an amendment may begin on the
effective date provided that the amendment is filed no later than 30
days after the effective date.
Given the proposed changes to Sec. 530.8(a) would prescribe the
same filing period for original service contracts and amendments (30
days after the effective date), the Commission is proposing to replace
the separate requirements for original service contracts and amendments
in Sec. 530.14(a) with a single requirement that performance under
either may not begin until the effective date. The Commission is also
proposing to remove the language tying performance to the filing date
as it simply repeats the filing requirement in Sec. 530.8(a). As
described above, Sec. 530.8(a), as amended by the proposed revisions,
would adequately describe the filing requirement and the deadline for
filing, and repeating the requirement in Sec. 530.14(a) is therefore
unnecessary.
The Commission is also proposing to add an additional sentence to
Sec. 530.14(a) to clarify that original service contracts and
amendments may apply only to cargo received by the carrier on or after
the effective date. This is implied by the current language of
Sec. Sec. 530.8(a) (describing when a service contract or amendment
must be filed in relation to when cargo moves under the contract) and
530.14(a) (prohibiting performance under a service contract or
amendment until the effective date) and has been stated in previous
rulemakings.\41\ Because the Commission is proposing to amend Sec.
530.8(a) so that the filing period is tied to the effective date rather
than the date cargo moves, the Commission is proposing to include
language in Sec. 530.14(a) clearly stating that service contracts and
amendments may only apply to cargo received on or after the effective
date.
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\41\ See, e.g., 82 FR at 16290 (noting that because of the
previous requirement that amendments had to filed before cargo could
move under the terms of the amendment, ``[c]arriers have cited
instances in which the parties have agreed to amend the contract,
however, due to unavoidable circumstances, the cargo was received
before the carrier filed the amendment with the Commission'' and
``[i]n such cases, the amendment's rates and terms may not be
applied to that cargo pursuant to the Commission's rules.'').
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B. Technical Amendments
In order to implement the Commission's December 2019 decision to
grant in part WSC's petition and exempt ocean common carriers from the
essential terms publication requirements,\42\ the Commission recently
issued a final rule removing those requirements from part 530.\43\
Since then, the Commission has tentatively determined that additional
minor technical amendments are warranted.
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\42\ Pet. of World Shipping Council, 1 F.M.C.2d at 515-516.
\43\ See Final Rule: Service Contracts, 85 FR 38086 (June 25,
2020).
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1. Definition of ``Authorized Person'' (Sec. 530.3)
The definition of ``Authorized person'' in Sec. 530.3(c) includes
a reference to publishing statements of essential terms. The definition
also cross-references a nonexistent paragraph (Sec. 530.5(d)) when
referring to the registration requirements for filing service
contracts. The Commission is proposing to amend the definition by
removing the reference to essential terms publication and including the
correct citation for the registration requirements (Sec. 530.5(c)).
2. Exceptions and Exemptions (Sec. 530.13)
The Commission is proposing to add a new paragraph (e) to Sec.
530.13 to reflect the exemption granted by the Commission from the
essential terms publication requirements. Although the Commission
recently eliminated the essential terms publication requirements in
part 530, ocean common carriers that are not aware of the exemption may
be confused as to whether the statutory requirement in 46 U.S.C.
40502(d) continues to apply. Accordingly, the Commission has
tentatively determined to include a new provision reflecting the
exemption from section 40502(d).
IV. 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 document and the subject matter in the subject line of the email.
Comments should be attached to the email as a Microsoft Word or text-
searchable PDF document.
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
email 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.
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.
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 at the
[[Page 5111]]
addresses listed above under ADDRESSES.
V. Rulemaking Analyses and Notices
Regulatory Flexibility Act
The Regulatory Flexibility Act (codified as amended at 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 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. Based on the analysis below, the Chairman of the
Federal Maritime Commission certifies that this proposed rule will not
have a significant economic impact on a substantial number of small
entities. The regulated business entities that would be impacted by the
rule are ocean common carriers (i.e., vessel-operating common
carriers). The Commission has determined that ocean common carriers
generally do not qualify as small entities under the guidelines of the
Small Business Administration (SBA). See FMC Policy and Procedures
Regarding Proper Consideration of Small Entities in Rulemakings (Feb.
7, 2003), available at https://www.fmc.gov/wp-content/uploads/2018/10/SBREFA_Guidelines_2003.pdf.
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 would allow
ocean common carriers to file original service contracts up to 30 days
after their effective date. This rulemaking thus falls within the
categorical exclusion for actions related to the receipt of service
contracts (Sec. 540.4(a)(5)). 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) (PRA)
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 associated with the service
contract filing requirements in part 530 are currently authorized under
OMB Control Number 3072-0065. In compliance with the PRA, the
Commission has submitted the proposed revised information collection to
the Office of Management and Budget and is requesting comment on the
proposed revision.
Title: 46 CFR part 530--Service Contracts and Related Form FMC-83.
OMB Control Number: 3072-0065.
Abstract: 46 U.S.C. 40502 and 46 CFR part 530 require ocean common
carriers to file certain service contracts confidentially with the
Commission.
Current Action: The proposed rule would amend the service contract
filing requirements and allow ocean common carriers to file original
service contracts up to 30 days after the effective date. Currently,
part 530 requires that ocean common carriers file original service
contracts on or before the effective date, while amendments must be
filed within 30 days after the effective date.
Type of Request: Revision of a previously approved collection.
Needs and Uses: The Commission monitors service contract filings to
ensure compliance with the Shipping Act of 1984.
Frequency: Frequency of filings is determined by the ocean common
carrier and its customers. When parties enter into a service contract
or amend the contract, the service contract or amendment must be filed
with the Commission.
Type of Respondents: Ocean common carriers or their duly appointed
agents are required to file service contracts and amendments with the
Commission.
Number of Annual Respondents: The Commission does not anticipate
that the proposed revisions would affect the number of respondents. As
a general matter, however, the number of respondents has decreased
since the last revision to the information collection. The Commission
estimates an annual respondent universe of 86 ocean common carriers.
Estimated Time per Response: The Commission does not anticipate
that the proposed revisions would affect the estimated time per
response, which would continue to range from 0.0166 to 1 person-hours
for reporting and recordkeeping requirements contained in the
regulations, and 0.1 person-hours for completing Form FMC-83.
Total Annual Burden: The Commission does not anticipate that the
proposed revisions would affect the number of service contracts filed
or the burden associated with each filing and, therefore, would not
affect the total annual burden. Due to the decrease in the number of
respondents since the last revision, however, the Commission expects
that the total annual burden will decrease. The Commission estimates
the total person-hour burden at 30,448 person-hours.
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 the methods described in the ADDRESSES
section of this document.
Executive Order 12988 (Civil Justice Reform)
This proposed rule meets the applicable standards in E.O. 12988
titled, ``Civil Justice Reform,'' to minimize litigation, eliminate
ambiguity, and reduce burden. Section 3(b) of E.O. 12988 requires
agencies to make every reasonable effort to ensure that each new
regulation: (1) Clearly specifies the preemptive effect; (2) clearly
specifies the effect on existing Federal law or regulation; (3)
provides a clear legal standard for affected conduct, while promoting
simplification and burden reduction; (4) clearly specifies the
retroactive effect, if any; (5) adequately defines key terms; and (6)
addresses other important issues affecting clarity and general
draftsmanship under any guidelines issued by the Attorney General. This
document is consistent with that requirement.
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).
[[Page 5112]]
The Regulatory Information Service Center publishes the Unified Agenda
in April and October of each year. You may use the RIN contained in the
heading at the beginning of this document to find this action in the
Unified Agenda, available at http://www.reginfo.gov/public/do/eAgendaMain.
List of Subjects in 46 CFR Part 530
Freight, Maritime carriers, Report and recordkeeping requirements.
For the reasons set forth above, the Federal Maritime Commission is
proposing to amend 46 CFR part 530 as follows:
PART 530-SERVICE CONTRACTS
0
1. The authority citation for part 530 continues to read as follows:
Authority: 5 U.S.C. 553; 46 U.S.C. 305, 40301-40306, 40501-
40503, 41307.
0
2. Amend Sec. 530.3 by revising paragraphs (c) and (i) to read as
follows:
Sec. 530.3 Definitions.
* * * * *
(c) Authorized person means a carrier or a duly appointed agent who
is authorized to file service contracts on behalf of the carrier party
to a service contract and is registered by the Commission to file under
Sec. 530.5(c) and appendix A to this part.
* * * * *
(i) Effective date means the date upon which a service contract or
amendment is scheduled to go into effect by the parties to the
contract. A service contract or amendment becomes effective at 12:01
a.m. Eastern Standard Time (Coordinated Universal Time (UTC)-05:00) on
the effective date. The effective date may not be earlier than the date
on which all parties have signed the service contract or amendment.
* * * * *
0
3. Amend Sec. 530.8 by:
0
a. Revising paragraph (a);
0
b. Adding a subject heading to paragraph (b); and
0
c. Revising paragraph (e).
The revisions and addition read as follows:
Sec. 530.8 Service Contracts.
(a) Filing. Authorized persons shall file with BTA, in the manner
set forth in appendix A of this part, a true and complete copy of every
service contract and every amendment to a service contract no later
than thirty (30) days after the effective date.
(b) Required terms. * * *
* * * * *
(e) Exception in case of malfunction of Commission filing system.
In the event that the Commission's filing systems are not functioning
and cannot receive service contract filings for twenty-four (24)
continuous hours or more, an original service contract or amendment
that must be filed during that period in accordance with paragraph (a)
of this section will be considered timely filed so long as the service
contract or amendment is filed no later than twenty-four (24) hours
after the Commission's filing systems return to service.
0
4. Amend Sec. 530.13 by adding paragraph (e) to read as follows:
Sec. 530.13 Exceptions and exemptions.
* * * * *
(e) Essential terms publication exemption. Ocean common carriers
are exempt from the requirement in 46 U.S.C. 40502(d) to publish and
make available to the general public in tariff format a concise
statement of certain essential terms when a service contract is filed
with the Commission.
0
5. Amend Sec. 530.14 by revising paragraph (a) to read as follows:
Sec. 530.14 Implementation.
(a) Generally. Performance under an original service contract or
amendment may not begin until the effective date. An original service
contract or amendment may apply only to cargo received on or after the
effective date by the ocean common carrier or its agent, including
originating carriers in the case of through transportation.
* * * * *
By the Commission.
Rachel E. Dickon,
Secretary.
[FR Doc. 2020-29173 Filed 1-15-21; 8:45 am]
BILLING CODE P
