[Federal Register Volume 63, Number 233 (Friday, December 4, 1998)]
[Proposed Rules]
[Pages 67030-67036]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-32224]
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FEDERAL MARITIME COMMISSION
46 CFR Parts 550, 551, 555, 560, 565, 585, 586, 587, and 588
[Docket No. 98-25]
Amendments to Regulations Governing Restrictive Foreign Shipping
Practices, and New Regulations Governing Controlled Carriers
AGENCY: Federal Maritime Commission.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Federal Maritime Commission proposes to revise and
redesignate its regulations relating to section 19 of the Merchant
Marine Act, 1920, section 13(b)(5) of the Shipping Act of 1984, and the
Foreign Shipping Practices Act of 1988, and add new regulations
relating to section 9 of the Shipping Act of 1984, in order to
incorporate certain amendments made by the Ocean Shipping Reform Act of
1998 as well as to clarify and reorganize existing regulations.
DATES: Submit comments on or before January 4, 1999.
ADDRESSES: Address all comments concerning this proposed rule to:
Joseph C. Polking, Secretary, Federal Maritime Commission, 800 North
Capitol Street N.W., Room 1046, Washington, D.C. 20573-0001.
FOR FURTHER INFORMATION CONTACT: Thomas Panebianco, General Counsel,
Federal Maritime Commission, 800 North Capitol Street N.W., Washington,
D.C. 20573-0001, (202) 523-5740.
SUPPLEMENTARY INFORMATION: The Ocean Shipping Reform Act of 1998,
Public Law 105-258, 112 Stat. 1902 (``OSRA''), amends the Shipping Act
of 1984 (``1984 Act''), the Merchant Marine Act, 1920 (``1920 Act''),
and the Foreign Shipping Practices Act of 1988 (``FSPA'') in several
areas. The Commission's rules at former 46 CFR parts 585, 586, 587, and
588 effectuate the statutory obligations mandated by the 1984 Act, the
1920 Act, and the FSPA. The Commission now proposes to update,
redesignate, and clarify these rules to reflect the changes made by
OSRA. In addition, the Commission proposes a new regulation, 46 CFR
part 565, which would implement changes made by OSRA to section 9 of
the 1984 Act and would gather previously scattered regulations
affecting
[[Page 67031]]
controlled carriers into a more readily accessible codification.
Clarification and Amendment of Former 46 CFR Part 585
The proposed rule would amend the Commission's regulations covering
the provisions of section 19 of the 1920 Act, to incorporate the
changes made by OSRA. The entire part is redesignated as part 550.
Changes to redesignated Sec. 550.102 and Sec. 550.301 reflect
OSRA's clarification that ``pricing practices'' are among the practices
that could give rise to a condition unfavorable to shipping. The
changes to the authority citation and to redesignated Sec. 550.103(a)
reflect the addition of OSRA as an amendment to the 1920 Act. The
changes to redesignated Secs. 550.103(b), 550.201, 550.202(b), and
550.301(d) reflect OSRA's use of the new term ``ocean transportation
intermediary'' in place of the old terms ``ocean freight forwarder''
and ``non-vessel-operating common carrier''.
The amendments instituted by OSRA include the addition of the
suspension of service contracts to the list of available remedies in
redesignated Secs. 550.505(a), 550.601(c), and 550.602. The
Commission's proposed rule reflects this change.
Redesignation of Former 46 CFR Part 586 and Removal of Sec. 586.3
The proposed rule would redesignate former 46 CFR part 586 as part
551, Actions To Adjust or Meet Conditions Unfavorable to Shipping in
the U.S. Foreign Trade. Former 46 CFR 586.3, Conditions unfavorable to
shipping in the United States/Ecuador trade, is no longer an ongoing
proceeding and is therefore removed.
Clarification and Amendment of Former 46 CFR Part 587
The proposed rule would amend the Commission's regulations covering
the 1984 Act's provisions providing relief for U.S.-flag vessels unduly
impaired from accessing the ocean trade between foreign ports. See
section 13(b)(5) of the 1984 Act, 46 U.S.C. app. Sec. 1712(b)(5)
(renumbered by OSRA as section 13(b)(6)). The entire part is
redesignated as part 560.
Changes to redesignated Secs. 560.1(a) (1) and (2) and 560.5(a) are
changes to reflect renumbering of the Act. Section 560.2(c) refers to
``fighting ships,'' a term which has been deleted from the definitions
section of the Act and elsewhere. The removal of this term effects that
deletion. The changes to redesignated Sec. 560.7(b)(3)(i) reflect
OSRA's addition of the suspension of service contracts as a section
11a(e)(1)(B) remedy.
Clarification and Amendment of Former 46 CFR Part 588
The proposed rule would amend the Commission's regulations covering
the FSPA's provisions authorizing Commission action to address adverse
conditions affecting U.S.-flag carriers that do not exist for foreign
carriers in the United States. The entire part is redesignated as part
555.
The change to redesignated Sec. 555.1 makes reference to OSRA as an
amendment to the FSPA. Changes to redesignated Sec. 555.2 (a) and (d),
and Sec. 555.4 reflect OSRA's use of the new term ``ocean
transportation intermediary'' in place of the old terms ``ocean freight
forwarder'' and ``non-vessel-operating common carrier''. The change to
redesignated Sec. 555.2(c) corrects an error of word choice and
corresponds to the language employed in the FSPA.
The change to redesignated Sec. 555.4(c) improves the clarity of
the provision. The changes to redesignated Sec. 555.8 reflect OSRA's
addition of the suspension of service contracts as a remedy.
New 46 CFR Part 565
The proposed new rule would implement OSRA's revision of section 9
of the 1984 Act, and would provide procedures for reviewing controlled
carrier rates, charges, classifications, rules and regulations. The
proposed rule improves the clarity of regulations governing controlled
carriers, and gathers into a single part regulations which were
previously scattered among the tariff and service contract regulations
in former 46 CFR Part 514.
In addition to the 1984 Act's prohibitions against ``maintaining''
rates or charges below a level that is just and reasonable, OSRA adds
the prohibition against ``charging or assessing'' such rates.
Similarly, OSRA adds the prohibition on ``enforcing'' unjust or
unreasonable rates, charges, classifications, rules or regulations in
addition to ``establishing and maintaining'' them.
The change of tariff filing to tariff publication under OSRA is
also reflected in section 9(a) of the 1984 Act as it applies to
controlled carriers. Hence, in place of ``filing,'' the Commission is
authorized to prohibit the ``publication or use'' of any rates,
charges, classifications, rules or regulations that a controlled
carrier has failed to show are just and reasonable.
In a further reflection of the new tariff system, OSRA changes the
authority of the Commission from ``disapproving'' the ``filing'' to
``prohibiting and suspending'' the ``publication and use'' of unjust
and unreasonable rates, charges, classifications, rules or regulations.
Likewise, the Commission is directed by OSRA to take into account
whether the rates or charges which have been ``published or assessed''
are below a compensatory level.
OSRA imposes a new time limit on the Commission's decision on
whether or not a rate, charge, classification, rule or regulation is
unjust or unreasonable. The Commission must decide such matters within
120 days of the receipt of information. This is reflected in proposed
46 CFR 565.8.
Finally, a significant change was made by OSRA to the regulation of
controlled carriers in the exceptions found in section 9(f) of the 1984
Act. Three of the five exceptions were removed by OSRA; the provisions
of section 9 now apply to all controlled carriers except those that
are: (1) of a state whose vessels are entitled by a treaty of the
United States to receive national treatment or Most Favored Nation
treatment; or (2) in a trade served exclusively by controlled carriers.
Proposed regulation Sec. 565.5 reflects those changes. In addition to
requiring ocean common carriers to inform the Commission of any changes
to their control which might affect their controlled carrier
classification, Sec. 565.4 also requires newly commencing controlled
common carrier operations to notify the Commission of the details of
their ownership or control.
This document also outlines the proposed restructuring of
subchapter C of chapter IV, 46 CFR, by revising the subchapter heading
and adding redesignated parts 550, 555, and 560 and new part 565 to
subchapter C. Current provisions of part 514 which are proposed here to
be incorporated into new part 565 will be removed from part 514 in a
subsequent document.
In accordance with 44 U.S.C. 3518(c)(1)(B), and except for
investigations undertaken with reference to a category of individuals
or entities (e.g., an entire industry), any information requests or
requirements in 46 CFR parts 585, 586, 587 and 588 are not subject to
the requirements of section 3507 of the Paperwork Reduction Act because
such collections of information are pursuant to a civil, administrative
action or investigation by an agency of the United States against
specific individuals or entities.
The reporting requirements contained in 46 CFR Part 565 have been
submitted to the Office of Management and Budget (OMB). The Commission
estimates that
[[Page 67032]]
the public burden for this collection of information is estimated to be
70 annual personhours for all of the estimated 10 annual respondents.
This estimate includes, as applicable, the time needed to review
instructions, develop, acquire, install, and utilize technology and
systems for the purposes of collecting, validating, and verifying
information, processing and maintaining information, and disclosing and
providing information; adjust the existing ways to comply with any
previously applicable instructions and requirements; train personnel to
respond to a collection of information, search existing data sources,
gathering and maintain the data needed, and complete and review the
collection of information; and transmit or otherwise disclose the
information.
Send comments regarding the burden estimate to the Office of
Information and Regulatory Affairs, Office of Management and Budget,
Attention Desk Officer for the Federal Maritime Commission, New
Executive Office Building, 725 17th Street, N.W., Washington, D.C.
20503 within 30 days of publication in the Federal Register.
The FMC would also like to solicit comments to: (a) evaluate the
accuracy of the Commission's burden estimates for the proposed
collection of information; (b) enhance the quality, utility, and
clarity of the information to be collected; and (c) minimize the burden
of the collection of information on respondents, including through the
use of automated collection techniques or other forms of information
technology. Comments submitted in response to this proposed rulemaking
will be summarized and/or included in the final rule and will become a
matter of public record. The OMB control number will be displayed in
the final rule.
The Chairman certifies, pursuant to section 605 of the Regulatory
Flexibility Act, 5 U.S.C. 605, that the proposed amendments will not,
if promulgated, have a significant impact on a substantial number of
small entities. The proposed changes affect vessel-operating common
carriers, entities that are not considered to be small.
List of Subjects
46 CFR Parts 585 and 550
Administrative practice and procedure, Maritime carriers.
46 CFR Parts 586 and 551
Japan, Maritime carriers.
46 CFR Parts 587 and 560
Administrative practice and procedure, Maritime carriers.
46 CFR Parts 588 and 555
Administrative practice and procedure, Investigations, Maritime
carriers.
46 CFR Part 565
Administrative practice and procedure, Maritime carriers, Reporting
and recordkeeping requirements.
For the reasons set out in the preamble, the Commission proposes to
amend 46 CFR parts 585, 586, 587, and 588, and to add new part 565, as
set forth below:
1. Revise the title of subchapter C to read:
SUBCHAPTER C--REGULATIONS AND ACTIONS TO ADDRESS RESTRICTIVE
FOREIGN MARITIME PRACTICES
PART 585--REGULATIONS TO ADJUST OR MEET CONDITIONS UNFAVORABLE TO
SHIPPING IN THE FOREIGN TRADE OF THE UNITED STATES
PART 585--[REDESIGNATED AS PART 550]
1. Redesignate part 585 as part 550, and transfer newly designated
part 550 to subchapter C.
2. The authority citation for redesignated part 550 is revised to
read as set forth below:
Authority: 5 U.S.C. 553; sec. 19 (a)(2), (e), (f), (g), (h),
(i), (j), (k) and (l) of the Merchant Marine Act, 1920, 46 U.S.C.
app. 876 (a)(2), (e), (f), (g), (h), (i), (j), (k) and (l), as
amended by Pub. L. No. 105-258; Reorganization Plan No. 7 of 1961,
75 Stat. 840; and sec. 10002 of the Foreign Shipping Practices Act
of 1988, 46 U.S.C. app. 1710a.
2a. Add a note to newly designated part 550 to read as follows:
Note to part 550: In accordance with 44 U.S.C. 3518(c)(1)(B),
and except for investigations undertaken with reference to a
category of individuals or entities (e.g., an entire industry), any
information requests or requirements in 46 CFR part 550 are not
subject to the requirements of section 3507 of the Paperwork
Reduction Act because such collections of information are pursuant
to a civil, administrative action or investigation by an agency of
the United States against specific individuals or entities.
3. Revise redesignated Sec. 550.102 to read as set forth below:
Sec. 550.102 Scope.
Regulatory actions may be taken when the Commission finds, on its
own motion or upon petition, that a foreign government has promulgated
and enforced or intends to enforce laws, decrees, regulations or the
like, or has engaged in or intends to engage in practices which
presently have or prospectively could create conditions unfavorable to
shipping in the foreign trade of the United States, or when owners,
operators, agents or masters of foreign vessels engage in or intend to
engage in competitive methods, pricing practices or other practices
which have created or could create such conditions.
4. Revise redesignated Sec. 550.103 (a) and (b) to read as set
forth below:
Sec. 550.103 Definitions.
* * * * *
(a) Act means the Merchant Marine Act, 1920, as amended by Pub. L.
No. 101-595 and as amended by Pub. L. No. 105-258.
(b) Person means individuals, corporations, partnerships and
associations existing under or authorized by the laws of the United
States or of a foreign country, and includes any common carrier, tramp
operator, bulk operator, shipper, shippers' association, importer,
exporter, consignee, ocean transportation intermediary, marine terminal
operator, or any component of the Government of the United States.
* * * * *
5. Revise redesignated Sec. 550.201(a) to read as set forth below:
Sec. 550.201 Information orders.
* * * * *
(a) The Commission may, by order, require any person (including any
common carrier, tramp operator, bulk operator, shipper, shippers'
association, ocean transportation intermediary, or marine terminal
operator, or any officer, receiver, trustee, lessee, agent, or employee
thereof), to file with the Commission a report, answers to questions,
documentary material, or other information which the Commission
considers necessary or appropriate;
* * * * *
6. Revise redesignated Sec. 550.202(b) introductory text and (b)(3)
to read as set forth below:
Sec. 550.202 Type of information.
* * * * *
(b) Shipper, shippers' association, or ocean transportation
intermediary in the affected trade to furnish any or all of the
following information:
* * * * *
(3) Amount of brokerage, ocean transportation intermediary
compensation or other charges collected or paid in connection with
shipments in the affected trade; and
* * * * *
7. Revise the introductory text and paragraph (d) of redesignated
Sec. 550.301 to read as set forth below:
[[Page 67033]]
Sec. 550.301 Findings.
For the purposes of this part, conditions created by foreign
governmental action or competitive methods, pricing practices or other
practices of owners, operators, agents or masters of foreign vessels
are found unfavorable to shipping in the foreign trade of the United
States, if such conditions:
* * * * *
(d) Restrict or burden a carrier's intermodal movements or shore-
based maritime activities, including terminal operations and cargo
solicitation; agency services; ocean transportation intermediary
services and operations; or other activities and services integral to
transportation systems; or
* * * * *
8. Revise redesignated Sec. 550.601(c) to read as set forth below:
Sec. 550.601 Actions to correct unfavorable conditions.
* * * * *
(c) Suspend, in whole or in part, tariffs and service contracts for
carriage to or from United States ports, including a common carrier's
right to use tariffs of conferences and service contracts of agreements
in United States trades of which it is a member for any period the
Commission specifies;
* * * * *
9. Revise redesignated Sec. 550.602 to read as set forth below:
Sec. 550.602 Penalty.
A common carrier that accepts or handles cargo for carriage under a
tariff or service contract that has been suspended under Sec. 550.505
or Sec. 550.601 of this part, or after its right to use another tariff
or service contract has been suspended under those sections, is subject
to a civil penalty of not more than $50,000 for each day that it is
found to be operating under a suspended tariff or service contract.
PART 586--ACTIONS TO ADJUST OR MEET CONDITIONS UNFAVORABLE TO
SHIPPING IN THE U.S. FOREIGN TRADE
1. Redesignate part 586 as part 551, and transfer newly designated
part 551 to subchapter C.
PART 586--[REDESIGNATED AS PART 551]
2. The authority citation for redesignated part 551 is revised to
read as set forth below:
Authority: 46 U.S.C. app. 876(1)(b); 46 U.S.C. app. 876 (5)
through (12); 46 CFR part 550; Reorganization Plan No. 7 of 1961, 26
FR 7315 (August 12, 1961).
2a. Add a note to newly designated part 551 to read as follows:
Note to part 551: In accordance with 44 U.S.C. 3518(c)(1)(B),
and except for investigations undertaken with reference to a
category of individuals or entities (e.g., an entire industry), any
information requests or requirements in 46 CFR part 551 are not
subject to the requirements of section 3507 of the Paperwork
Reduction Act because such collections of information are pursuant
to a civil, administrative action or investigation by an agency of
the United States against specific individuals or entities.
3. Redesignated Sec. 551.3 is removed.
PART 587--ACTIONS TO ADDRESS CONDITIONS UNDULY IMPAIRING ACCESS OF
U.S.-FLAG VESSELS TO OCEAN TRADE BETWEEN FOREIGN PORTS
PART 587--[REDESIGNATED AS PART 560]
1. Redesignate part 587 as part 560, and transfer newly designated
part 560 to subchapter C.
2. The authority citation for redesignated part 560 is revised to
read as set forth below:
Authority: 5 U.S.C. 553; secs. 13(b)(6), 15 and 17 of the
Shipping Act of 1984, 46 U.S.C. app. 1712(b)(6), 1714, and 1716, as
amended by Pub. L. No. 105-258; sec. 10002 of the Foreign Shipping
Practices Act of 1988 (46 U.S.C. app. 1710a), as amended by Pub. L.
No. 105-258.
3. Revise redesignated Sec. 560.1(a) to read as set forth below:
Sec. 560.1 Purpose; general provisions.
(a)(1) It is the purpose of this part to enumerate certain
conditions resulting from the action of a common carrier, acting alone
or in concert with any person, or a foreign government, which unduly
impair the access of a vessel documented under the laws of the United
States whether liner, bulk, tramp or other vessel, (hereinafter ``U.S.
flag vessel'') to ocean trade between foreign ports, which includes
intermodal movements, and to establish procedures by which the owner or
operator of a U.S. flag vessel (hereinafter ``U.S. flag carrier'') may
petition the Federal Maritime Commission for relief under the authority
of section 13(b)(6)of the Shipping Act of 1984 (``the Act'') (46 U.S.C.
app. 1712(b)(6)).
(2) It is the further purpose of this part to indicate the general
circumstances under which the authority granted to the Commission under
section 13(b)(6)may be invoked, and the nature of the subsequent
actions contemplated by the Commission.
(3) This part also furthers the goals of the Act with respect to
encouraging the development of an economically sound and efficient U.S.
flag liner fleet as stated in section 2 of the Act (46 U.S.C. app.
1701).
* * * * *
4. Revise redesignated Sec. 560.2(c) to read as set forth below:
Sec. 560.2 Factors indicating conditions unduly impairing access.
* * * * *
(c) Use of predatory practices, possibly including but not limited
to below market pricing designed to exclude competition, and use of
closed conferences employing deferred rebates, which unduly impair
access of a U.S. flag vessel to the trade.
* * * * *
5. Revise the first sentence of the introductory text of
redesignated Sec. 560.5(a) to read as set forth below:
Sec. 560.5 Receipt of relevant information.
(a) In making its decision on matters arising under section
13(b)(6)of the Act, the Commission may receive and consider relevant
information from any owner, operator, or conference in an affected
trade, or from any foreign government, either directly or through the
Department of State or from any other reliable source. * * *
* * * * *
6. Revise redesignated Sec. 560.7(b)(3)(i) to read as set forth
below:
Sec. 560.7 Decision; sanctions; effective date.
* * * * *
(b) * * *
(3)(i) Suspension, in whole or in part, of any or all tariffs or
service contracts for carriage to or from United States ports for any
period the Commission specifies, or until such time as unimpaired
access is secured for U.S. flag carriers in the affected trade.
* * * * *
PART 588--ACTIONS TO ADDRESS ADVERSE CONDITIONS AFFECTING U.S. FLAG
CARRIERS THAT DO NOT EXIST FOR FOREIGN CARRIERS IN THE UNITED
STATES
PART 588--[REDESIGNATED AS PART 555]
1. Redesignate part 588 as part 555, and transfer newly designated
part 555 to subchapter C.
2. The authority citation for redesignated part 555 is revised to
read as set forth below:
Authority: 5 U.S.C. 553; sec. 10002 of the Foreign Shipping
Practices Act of 1988 (46 U.S.C. app. 1710a), as amended by Pub. L.
No. 105-258.
[[Page 67034]]
2a. Add a note to newly designated part 555 to read as follows:
Note to part 555: In accordance with 44 U.S.C. 3518(c)(1)(B),
and except for investigations undertaken with reference to a
category of individuals or entities (e.g., an entire industry), any
information requests or requirements in 46 CFR part 555 are not
subject to the requirements of section 3507 of the Paperwork
Reduction Act because such collections of information are pursuant
to a civil, administrative action or investigation by an agency of
the United States against specific individuals or entities.
3. Revise redesignated Sec. 555.1 to read as set forth below:
555.1 Purpose.
It is the purpose of the regulations of this part to establish
procedures to implement the Foreign Shipping Practices Act of 1988, as
amended by the Ocean Shipping Reform Act of 1998, which authorizes the
Commission to take action against foreign carriers, whose practices or
whose government's practices result in adverse conditions affecting the
operations of United States carriers, which adverse conditions do not
exist for those foreign carriers in the United States. The regulations
of this part provide procedures for investigating such practices and
for obtaining information relevant to the investigations, and also
afford notice of the types of actions included among those that the
Commission is authorized to take.
4. Revise redesignated Sec. 555.2(a), (c), and (d) to read as set
forth below:
Sec. 555.2 Definitions.
* * * * *
(a) Common carrier, marine terminal operator, ocean transportation
intermediary, ocean common carrier, person, shipper, shippers
association, and United States have the meanings given each such term,
respectively, in section 3 of the Shipping Act of 1984 (46 U.S.C. app.
1702);
* * * * *
(c) Maritime services means port-to-port carriage of cargo by the
vessels operated by ocean common carriers;
(d) Maritime-related services means intermodal operations, terminal
operations, cargo solicitation, agency services, ocean transportation
intermediary services and operations, and all other activities and
services integral to total transportation systems of ocean common
carriers and their foreign domiciled affiliates on their own and
others' behalf;
* * * * *
5. Revise redesignated Sec. 555.4 (a) and (c) to read as set forth
below:
Sec. 555.4 Petitions.
(a) A petition for investigation to determine the existence of
adverse conditions as described in Sec. 555.3 may be submitted by any
person, including any common carrier, shipper, shippers' association,
ocean transportation intermediary, or marine terminal operator, or any
branch, department, agency, or other component of the Government of the
United States. Petitions for relief under this part shall be in
writing, and filed in the form of an original and fifteen copies with
the Secretary, Federal Maritime Commission, Washington, DC 20573.
* * * * *
(c) A petition which the Commission determines fails to comply
substantially with the requirements of paragraph (b) of this section
shall be rejected promptly and the person filing the petition shall be
notified of the reasons for such rejection. Rejection is without
prejudice to the filing of an amended petition.
6. Revise redesignated Sec. 555.8(a)(2) to read as set forth below:
Sec. 555.8 Action against foreign carriers.
(a) * * *
(2) Suspension, in whole or in part, of any or all tariffs or
service contracts, including the right of an ocean common carrier to
use any or all tariffs or service contracts of conferences in United
States trades of which it is a member for such period as the Commission
specifies;
* * * * *
PART 565--[ADDED]
1. Add part 565 to subchapter C to read as set forth below:
PART 565--CONTROLLED CARRIERS
Sec.
565.1 Purpose and scope.
565.2 Definitions.
565.3 Classification as controlled carrier.
565.4 Notification to Commission of change in control.
565.5 Exceptions.
565.6 Level of rates and charges generally.
565.7 Effective dates.
565.8 Special permission.
565.9 Commission review, suspension and prohibition of rates,
charges, classifications, rules or regulations.
565.10 Suspension procedures, period and replacement rates.
565.11 Presidential review.
565.12 Stay, postponement, discontinuance or suspension of action.
Authority: 46 U.S.C. App. 1708, as amended by Pub. L. No. 105-
258.
Sec. 565.1 Purpose and scope.
(a) Purpose. The regulations of this part are intended to carry out
the Commission's mandate under section 9 of the Shipping Act of 1984,
as amended by the Ocean Shipping Reform Act of 1998, to monitor the
practices of controlled carriers and ensure that they do not:
(1) Maintain rates or charges in their tariffs and service
contracts that are below a level that is just and reasonable; nor
(2) Establish, maintain or enforce unjust or unreasonable
classifications, rules or regulations in those tariffs or service
contracts which result or are likely to result in the carriage or
handling of cargo at rates or charges that are below a just and
reasonable level.
(b) Scope. The regulations contained in this part set forth the
special procedures whereby controlled carriers' tariffs and service
contracts become effective and are reviewed by the Commission. These
regulations in no way exempt controlled carriers from other Commission
regulations or statutory authority to which they may otherwise be
subject as ocean common carriers. These regulations apply to all
controlled carriers operating in the foreign commerce of the United
States unless excepted under section 9(f) of the Shipping Act of 1984,
as reflected by Sec. 565.5.
Sec. 565.2 Definitions.
(a) Controlled carrier means an ocean common carrier that is, or
whose operating assets are, directly or indirectly owned or controlled
by a government. Ownership or control by a government shall be deemed
to exist with respect to any ocean common carrier if:
(1) A majority portion of the interest in the carrier is owned or
controlled in any manner by that government, by any agency thereof, or
by any public or private person controlled by that government; or
(2) That government has the right to appoint or disapprove the
appointment of a majority of the directors, the chief operating officer
or the chief executive officer of the carrier.
(b) Effective date has the same meaning it has in 46 CFR part 520.
Sec. 565.3 Classification as controlled carrier.
(a) Notification. The Commission will periodically review the ocean
common carriers operating in the foreign commerce of the United States
and will notify any ocean common carrier of any change in its
classification as a controlled carrier.
(b) Rebuttal of classification. (1) Any ocean common carrier
contesting such a classification may, within 30 days after
[[Page 67035]]
the date of the Commission's notice, submit a rebuttal statement.
(2) The Commission shall review the rebuttal and notify the ocean
common carrier of its final decision.
Sec. 565.4 Notification to Commission of change in control.
Whenever the operation, control or ownership of an ocean common
carrier is transferred resulting in a majority portion of the interest
of that ocean common carrier being owned or controlled in any manner by
a government, the ocean common carrier shall immediately send written
notification of the details of the change to the Secretary of the
Commission. If a carrier is newly commencing ocean common carrier
operations in a United States trade, and if a majority portion of the
carrier is owned or controlled by a government, or if a government may
approve or disapprove the majority of directors or the chief executive
or operating officer of the carrier, the carrier shall immediately send
written notification to the Secretary of the details of such ownership
or control.
Sec. 565.5 Exceptions.
All controlled carriers shall be subject to provisions of this part
and section 9 of the Shipping Act of 1984 except those which meet the
following exceptions:
(a) When the vessels of the controlling state are entitled by a
treaty of the United States to receive national or most-favored-nation
treatment; or
(b) When the controlled carrier operates in a trade served
exclusively by controlled carriers.
Sec. 565.6 Level of rates and charges generally.
No controlled carrier may maintain or enforce rates or charges in
its tariffs or service contracts that are below a level that is just
and reasonable. No controlled carrier may establish or maintain unjust
or unreasonable classifications, rules, or regulations in its tariffs
or service contracts. An unjust or unreasonable classification, rule or
regulation means one that results or is likely to result in the
carriage or handling of cargo at rates or charges that are below a just
and reasonable level. See Sec. 565.9(a)(2) (Rate standards).
Sec. 565.7 Effective dates.
(a) Generally. Except for service contracts, the rates, charges,
classifications, rules or regulations of controlled carriers may not,
unless the Commission has granted special permission, become effective
sooner than the 30th day after the date of publication.
(b) Open rates. (1) Generally. Controlled carriers that are members
of conference agreements publishing rates for commodities designated as
open by the conference are subject to the 30-day controlled carrier
notice requirement, except when special permission is granted by the
Commission under Sec. 565.8.
(2) Conference publication of reduced open rates. Notwithstanding
paragraph (b)(1) of this section, a conference may, on less than 30
days' notice, publish reduced rates on behalf of controlled carrier
members for open-rated commodities:
(i) At or above the minimum level set by the conference; or
(ii) At or above the level set by a member of the conference that
has not been determined by the Commission to be a controlled carrier
subject to section 9 of the Shipping Act of 1984.
(c) Independent action rates of controlled carriers. Conferences
may publish on behalf of their controlled carrier members lower
independent action rates on less than 30 days' notice, subject to the
requirements of their basic agreements and subject to such rates being
published at or above the level set by a member of the conference that
has not been determined by the Commission to be a controlled carrier
subject to section 9 of the Shipping Act of 1984.
Sec. 565.8 Special permission.
Section 8(d) of the Shipping Act of 1984 authorizes the Commission,
in its discretion and for good cause shown, to permit increases or
decreases in rates, or the issuance of new or initial rates, on less
than statutory notice under Sec. 565.7. Section 9(c) of the Shipping
Act of 1984 authorizes the Commission to permit a controlled carrier's
rates, charges, classifications, rules or regulations to become
effective on less than 30 days' notice. The Commission may also in its
discretion and for good cause shown, permit departures from the
requirements of this part. The Commission will consider such requests
for special permission by controlled carriers pursuant to its
procedures set forth at 46 CFR part 520.
Sec. 565.9 Commission review, suspension and prohibition of rates,
charges, classifications, rules or regulations.
(a)(1) Request for justification. Within 20 days of a request (with
respect to its existing or proposed rates, charges, classifications,
rules or regulations) from the Commission, each controlled carrier
shall file a statement of justification that sufficiently details the
controlled carrier's need and purpose for such rates, charges,
classifications, rules or regulations upon which the Commission may
reasonably base its determination of the lawfulness thereof.
(2) Rate standards. (i) In determining whether rates, charges,
classifications, rules or regulations by a controlled carrier are just
and reasonable, the Commission shall take into account whether the
rates or charges which have been published or assessed or which would
result from the pertinent rates, charges, classifications, rules or
regulations are below a level which is fully compensatory to the
controlled carrier based upon that carrier's actual or constructive
costs.
(ii) For the purposes of Sec. 565.9(a)(2)(i), ``constructive
costs'' means the costs of another carrier, other than a controlled
carrier, operating similar vessels and equipment in the same or a
similar trade.
(iii) The Commission may also take into account other appropriate
factors, including, but not limited to, whether:
(A) The rates, charges, classifications, rules or regulations are
the same as or similar to those published or assessed by other carriers
in the same trade;
(B) The rates, charges, classifications, rules or regulations are
required to assure movement of particular cargo in the trade; or
(C) The rates, charges, classifications, rules or regulations are
required to maintain acceptable continuity, level or quality of common
carrier service to or from affected ports.
(3) Time for determination. The Commission shall determine within
120 days of the receipt of information requested by the Commission
under this section, whether the rates, charges, classifications, rules
or regulations of a controlled carrier may be unjust and unreasonable.
Whenever the Commission is of the opinion that the rates, charges,
classifications, rules or regulations published or assessed by a
controlled carrier may be unjust and unreasonable, the Commission shall
issue an order to the controlled carrier to show cause why those rates,
charges, classifications, rules or regulations should not be
prohibited.
(b) Suspension. Pending a decision on whether to prohibit the
rates, charges, classifications, rules or regulations of a controlled
carrier, the Commission may suspend the rates, charges,
classifications, rules or regulations. See Sec. 565.10.
(c) Prohibition. The Commission shall prohibit the use of any
rates, charges, classifications, rules or regulations that the
controlled carrier has failed to demonstrate to be just and reasonable.
In a proceeding under this paragraph, the burden of proof is on the
controlled
[[Page 67036]]
carrier to demonstrate that its rates, charges, classifications, rules
or regulations are just and reasonable. The use of rates, charges,
classifications, rules or regulations published or assessed by a
controlled carrier that have been suspended or prohibited by the
Commission is unlawful.
(d) Publication. All final orders of prohibition shall be published
in the Federal Register.
Sec. 565.10 Suspension procedures, period and replacement rates.
(a) (1) Suspension prior to effective date. Pending a determination
as to their lawfulness in a prohibition proceeding as described in
Sec. 565.9, the Commission may suspend the rates, charges,
classifications, rules or regulations at any time before their
effective date.
(2) Suspension after effective date. In the case of rates, charges,
classifications, rules or regulations that have already become
effective, the Commission may, upon the issuance of an order to show
cause, suspend those rates, charges, classifications, rules or
regulations on not less than 30 days' notice to the controlled carrier.
(b) Period of suspension. In any case, no period of suspension may
be greater than 180 days.
(c) Implementation. (1) Upon issuance of an order suspending a
rate, charge, classification, rule or regulation in whole or in part,
the Commission shall direct the controlled carrier to remove the
suspended material from its tariff publication; or
(2) If the matter subject to the suspension order is not covered by
paragraph (c)(1) of this section, the Commission shall set forth
procedures in the order for implementing the suspension.
(3) Publication. All orders of suspension shall be published in the
Federal Register.
(d) Replacement rates. Controlled carriers may publish in tariffs
or file in service contracts rates, charges, classifications, rules or
regulations in lieu of the suspended matter (``replacement rates'').
(1) Effective date. In the case of replacement rates which are
published in tariffs and which are scheduled to become effective during
a suspension period, may become effective immediately upon either their
publication in tariffs or upon the effective date of the suspension,
whichever is later.
(2) Rejection of replacement rates. The Commission may reject the
replacement rates, charges, classifications, rules or regulations
published in tariffs or filed in service contracts to take effect
during the suspension period if they are unjust and unreasonable. In
determining whether to reject replacement rates, charges,
classifications, rules or regulations, the Commission will consider
whether they would result in total charges (i.e, rate plus applicable
surcharges) that are lower than the lowest comparable charges effective
for a common carrier, other than a controlled carrier, serving the same
trade.
(3) At the same time it announces replacement rates, the controlled
carrier shall submit to the Secretary of the Commission, a letter
identifying the specific competing common carrier's rates, charges,
classification or rules resulting in total charges which are equal to
or lower than its own.
Sec. 565.11 Presidential review.
The Commission shall transmit all orders of suspension or final
orders of prohibition to the President of the United States
concurrently with the submission of such orders to the Federal Register
pursuant to Sec. 565.9(d) or Sec. 565.10(c)(3). The President may,
within 10 days of either the receipt or effective date of the order,
request in writing that the Commission stay the effect of the order for
reasons of national defense or foreign policy.
Sec. 565.12 Stay, postponement, discontinuance or suspension of
action.
The Commission may, on its own motion or upon petition, postpone,
discontinue, or suspend any and all actions taken by it under the
provisions of this part. The Commission shall immediately stay the
effect of any order issued under this part as requested by the
President pursuant to Sec. 565.11.
By the Commission.
Joseph C. Polking,
Secretary.
[FR Doc. 98-32224 Filed 12-3-98; 8:45 am]
BILLING CODE 6730-01-P
