99-16036. Ocean Common Carriers Subject to the Shipping Act of 1984  

  • [Federal Register Volume 64, Number 122 (Friday, June 25, 1999)]
    [Proposed Rules]
    [Pages 34183-34184]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 99-16036]
    
    
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    FEDERAL MARITIME COMMISSION
    
    46 CFR Parts 515, 520, 530 and 535
    
    [Docket No. 99-10]
    
    
    Ocean Common Carriers Subject to the Shipping Act of 1984
    
    AGENCY: Federal Maritime Commission.
    
    ACTION: Proposed rule.
    
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    SUMMARY: The Federal Maritime Commission proposes to amend its 
    regulations implementing the Shipping Act of 1984 to clarify the 
    definition of ``ocean common carrier'' to reflect the Commission's 
    current interpretation of the term. As a result, only ocean common 
    carriers that operate vessels in at least one United States trade will 
    be subject to these rules.
    
    DATES: Comments due August 24, 1999.
    
    ADDRESSES: Send comments (original and fifteen copies) to: Bryant L. 
    VanBrakle, Secretary, Federal Maritime Commission, 800 North Capitol 
    Street, NW., Room 1046, Washington, DC 20573, (202) 523-5725.
    
    FOR FURTHER INFORMATION CONTACT: Thomas Panebianco, General Counsel, 
    Federal Maritime Commission, 800 North Capitol Street, NW., Room 1018, 
    Washington, DC 20573, (202) 523-5740.
    
    SUPPLEMENTARY INFORMATION: In one of its several rulemaking proceedings 
    to implement the Ocean Shipping Reform Act of 1998, Pub. L. 105-258, 
    112 Stat. 1902 (``OSRA''), the Federal Maritime Commission (``FMC'' or 
    ``Commission'') proposed to amend its regulations governing agreements 
    among ocean common carriers and marine terminal operators. Docket No. 
    98-26, Ocean Common Carrier and Marine Terminal Operator Agreements 
    Subject to the Shipping Act of 1984, 64 FR 11236, March 8, 1999. One of 
    the proposed changes was a new definition of ``ocean common carrier'' 
    to address perceived deficiencies in the definition of that term 
    contained in section 3(16) of the Shipping Act of 1984 (``1984 Act''), 
    46 U.S.C. app. Sec. 1702(16), (``a vessel-operating common carrier''), 
    and to clarify the dividing line between ocean common carriers and non-
    vessel-operating common carriers (``NVOCCs''). The proposed rule sated 
    that:
    
        Ocean common carrier means a common carrier that operates, for 
    all or part of its common carrier service, a vessel on the high seas 
    or the Great Lakes between a port in the United States and a port in 
    a foreign country, except that the term does not include a common 
    carrier engaged in ocean transportation by ferry boat, ocean tramp, 
    or chemical parcel-tanker.
    
        The Commission received comments on this particular aspect of the 
    proposed rule from Croatia Line and the Council of European & Japanese 
    National Shipowners Association (``CENSA''). While generally supporting 
    the Commission's proposed definition, CENSA suggested that it be 
    further clarified to include a carrier that provides part of a vessel 
    service in a U.S. trade. In addition, Croatia Line claimed that the 
    Commission failed to disclose the facts necessitating such a change, 
    and failed to discuss the effects of the changes on regulated parties. 
    Croatia Line also argued that the proposed definition would adversely 
    affect it, since it is party to two space charter agreements and does 
    not operate vessels making direct calls at U.S. ports. It further 
    argued that the proposal was contrary to the clear language of the 1984 
    Act and well-established precedent. Croatia Line suggested that changes 
    not required by OSRA should not be subject to such a short comment 
    period.
        In light of these comments, and the absence of additional comments 
    from other potentially affected parties, the Commission decided to 
    provide an additional opportunity to comment, 64 FR 11236, March 8, 
    1999. Accordingly, the Commission is initiating this rulemaking 
    proceeding to further consider the definition of ``ocean common 
    carrier.'' In addition, because the definition of ocean common carrier 
    appears not only in the agreement rules but also in the rules governing 
    ocean transportation intermediaries (part 515), tariffs (part 520), and 
    service contracts (part 530), the Commission is proposing to adopt a 
    definition that is consistent for all rules.
        As explained in the preamble to the proposed rule in Docket No. 98-
    26, the amended definition of ``ocean common carrier'' is proposed to 
    resolve uncertainty generated by the 1984 Act's definition, which is 
    simply ``a vessel-operating common carrier.'' At issue is how to 
    distinguish between ocean common carriers and NVOCCs. The distinction, 
    which was first codified in 1984, has significant implications, 
    inasmuch as the 1984 Act affords ocean carriers, but not NVOCCs, 
    antitrust immunity and other rights and responsibilities, including the 
    ability to offer service contracts. The need for clarity in this area 
    is continued by OSRA, which continues to differentiate between vessel-
    operating and non-vessel-operating lines with regard to service 
    contracting and other areas.
        At first glance, it is difficult to see the ambiguity in the phrase 
    ``vessel-operating.'' However, the Commission's staff has encountered a 
    number of complex situations regarding where and when vessels are 
    operated, and what types of vessels are involved. In this regard, 
    various bureaus have taken the position that an ``ocean common 
    carrier'' is a common carrier that, in providing a common carrier 
    service, operates a vessel calling at a U.S. port. Moreover, if a 
    carrier is an ocean common carrier in one U.S. trade, it has been 
    reasoned, it is an ocean common carrier for all U.S. trades. For 
    example, if a carrier operates vessels from the U.S. East Coast to 
    northern Europe, it has the legal ``status'' of ocean common carrier to 
    enter into space charter agreements for any U.S.-foreign trade.
        The proposed definition codifies this approach. It would continue 
    the practice of determining status on a multi-trade basis (i.e., an 
    ocean common carrier in one U.S. trade has that status in all U.S. 
    trades). Any interpretation of the statute requiring status 
    determinations to be made on a trade-by-trade basis would be 
    administratively impractical and might prompt less than efficient 
    redeployment of vessels in the U.S. trades solely to meet regulatory 
    requirements.
        The proposed definition would also clarify the issue of whether 
    companies that operate vessels only outside the U.S.--i.e., they have 
    no vessel operations to U.S. ports--can be deemed ``ocean common 
    carriers.'' It appears from the legislative intent of the 1984 Act that 
    Congress viewed vessel operators as those whose vessels call at U.S. 
    ports and classified all other common carriers in U.S. commerce as non-
    vessel-operating common carriers. For example, in its report on the 
    1984 Act, the Senate Commerce, Science, and Transportation Committee 
    observed:
    
        The Committee strongly believes that it is in our national 
    interest to permit cooperation among carriers serving our foreign 
    trades to permit efficient and reliable service. * * * Our carriers 
    need; a stable, predictable, and profitable trade with a rate of 
    return that warrants reinvestment and a commitment to serve the 
    trade; greater security in investment * * *.
    
    S. Rep. No. 3, 98th Cong., 1st Sess. 9 (1983). We do not believe that 
    Congress intended to provide special privileges or protections to 
    carriers that have not made the financial commitment to providing 
    vessel service to the United States.
    
    [[Page 34184]]
    
        A definition of ocean common carrier that encompassed companies 
    that operate vessels only in foreign-to-foreign trades would 
    substantially broaden the scope of antitrust immunity potentially to 
    include a number of small operators whose wholly foreign vessel 
    operations would be difficult for the Commission to monitor or verify. 
    Such a finding would remove such companies from the scope of the Act's 
    NVOCC bonding requirements, even though they have no vessels or assets 
    in the United States that can be attached to satisfy a Commission or 
    U.S. court judgment. Such an approach would also seem to contravene the 
    longstanding judicial policy of narrowly construing antitrust 
    exemptions. See, e.g., Federal Maritime Commission v. Seatrain Lines, 
    Inc., 411 U.S. 726, 733 (1973). In addition, from the text of the Act, 
    it appears likely that when Congress used the unadorned term ``vessel'' 
    in the definition of ocean common carrier, it was referring to the 
    vessels specified in the definition of common carrier, i.e., those that 
    operate on the high seas or Great Lakes between the United States and a 
    foreign country.
        The proposed definition would continue the policy that the vessels 
    in question must be used in a common carrier service. If an NVOCC 
    operates tankers or tramp vessels, wholly apart from its common carrier 
    service, it does not secure ocean common carrier status from those 
    vessel operations.
        The Chairman certifies, pursuant to section 605 of the Regulatory 
    Flexibility Act, 5 U.S.C. 605, that the proposed rules will not, if 
    promulgated, have a significant impact on a substantial number of small 
    entities. The affected universe of parties is limited to ocean common 
    carriers or passenger vessel operators. The Commission has determined 
    that these entities do not come under the programs and policies 
    mandated by the Small Business Regulatory Enforcement Fairness Act as 
    they typically exceed the threshold figures for number of employees 
    and/or annual receipts to qualify as a small entity under Small 
    Business Administration Guidelines.
    
    List of Subjects
    
    46 CFR Part 515
    
        Exports; Freight forwarders; Non-vessel-operating common carriers; 
    Ocean transportation intermediaries; Licensing requirements; Financial 
    responsibility requirements; Reporting and recordkeeping requirements.
    
    46 CFR Part 520
    
        Common carrier; Freight; Intermodal transportation; Maritime 
    carriers; Reporting and recordkeeping requirements.
    
    46 CFR Part 530
    
        Freight; Maritime carriers; Reporting and recordkeeping 
    requirements.
    
    46 CFR Part 535
    
        Administrative practice and procedure; Maritime carriers; Reporting 
    and recordkeeping requirements.
    
        Therefore, for the reasons set forth above, Parts 515, 520, 530, 
    and 535 of Subchapter C of Title 46 Code of Federal Regulations, are 
    proposed to be amended as follows:
    
    PART 515--LICENSING, FINANCIAL RESPONSIBILITY REQUIREMENTS, AND 
    GENERAL DUTIES FOR OCEAN TRANSPORTATION INTERMEDIARIES
    
        1. The authority citation for part 515 continues to read as 
    follows:
    
        Authority: 5 U.S.C. 553; 31 U.S.C. 9701; 46 U.S.C. app. 1702, 
    1707, 1710, 1712, 1714, 1716, and 1718, 21 U.S.C. 862; Pub. L. 105-
    383, 112 Stat. 3411.
    
        2. In Sec. 515.2 revise paragraph (m) to read as follows:
    
    
    Sec. 515.2   Definitions
    
    * * * * *
        (m) Ocean common carrier means a common carrier that operates, for 
    all or part of its common carrier service, a vessel on the high seas or 
    the Great Lakes between a port in the United States and a port in a 
    foreign country, except that the term does not include a common carrier 
    engaged in ocean transportation by ferry boat, ocean tramp, or chemical 
    parcel-tanker.
    * * * * *
    
    PART 520--CARRIER AUTOMATED TARIFF SYSTEMS
    
        1. The authority citation for part 520, is revised to read as 
    follows:
    
        Authority: 5 U.S.C. 553; 46 U.S.C. app. 1701-1702, 1707-1709, 
    1712, 1716; sec. 424 of Pub. L. 105-383, 112 Stat. 3411.
    
        2. In Sec. 520.2 revise the definitions of ocean common carrier to 
    read as follows:
    
    
    Sec. 520.2   Definitions
    
    * * * * *
        Ocean common carrier means a common carrier that operates, for all 
    or part of its common carrier service, a vessel on the high seas or the 
    Great Lake between a port in the United States and a port in a foreign 
    country, except that the term does not include a common carrier engaged 
    in ocean transportation by ferry boat, ocean tramp, or chemical parcel-
    tanker.
    * * * * *
    
    PART 530--SERVICE CONTRACTS
    
        1. The authority citation for part 530 continues to read as 
    follows:
    
        Authority: 5 U.S.C. 553; 46 U.S.C. app. 1704, 1705, 1716.
    
        2. In Sec. 530.3 revise paragraph (n) to read as follows:
    
    
    Sec. 530.3   Definitions.
    
        (n) Ocean common carrier means a common carrier that operates, for 
    all or part of its common carrier service, a vessel on the high seas or 
    the Great Lakes between a port in the United States and a port in a 
    foreign country, except that the term does not include a common carrier 
    engaged in ocean transportation by ferry boat, ocean tramp, or chemical 
    parcel-tanker.
    * * * * *
    
    PART 535--AGREEMENTS BY OCEAN COMMON CARRIERS AND OTHERS SUBJECT TO 
    THE SHIPPING ACT OF 1984.
    
        1. The authority citation for part 535 is revised to read as 
    follows:
    
        Authority: 5 U.S.C. 553; 46 U.S.C. app. 1702-1704, 1706-1707; 
    1709-1710, 1712 and 1714-1717.
    
        2 Revise Sec. 535.101 to read as follows:
    
    
    Sec. 535.101   Authority.
    
        The rules in this part are issued pursuant to the authority of 
    section 4 of the Administrative Procedure Act (5 U.S.C. 553), sections 
    2, 3, 4, 5, 6, 7, 8, 10, 11, 13, 15, 16, and 17 of the Shipping Act of 
    1984 (``the Act''), and the Ocean Shipping Reform Act of 1998, Pub. L. 
    105-258, 112 Stat. 1902.
        3. In Sec. 535.104 revise paragraph (u) to read as follows:
    
    
    Sec. 535.104   Definitions.
    
    * * * * *
        (u) Ocean common carrier means a common carrier that operates, for 
    all or part of its common carrier service, a vessel on the high seas or 
    the Great Lakes between a port in the United States and a port in a 
    foreign country, except that the term does not include a common carrier 
    engaged in ocean transportation by ferry boat, ocean tramp, or chemical 
    parcel-tanker.
    * * * * *
        By the Commission.
    Byrant L. VanBrakle,
    Secretary.
    [FR Doc. 99-16036 Filed 6-24-99; 8:45 am]
    BILLING CODE 6730-01-M
    
    
    

Document Information

Published:
06/25/1999
Department:
Federal Maritime Commission
Entry Type:
Proposed Rule
Action:
Proposed rule.
Document Number:
99-16036
Dates:
Comments due August 24, 1999.
Pages:
34183-34184 (2 pages)
Docket Numbers:
Docket No. 99-10
PDF File:
99-16036.pdf
CFR: (5)
46 CFR 515.2
46 CFR 520.2
46 CFR 530.3
46 CFR 535.101
46 CFR 535.104