[Federal Register Volume 64, Number 85 (Tuesday, May 4, 1999)]
[Rules and Regulations]
[Pages 23782-23794]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-11058]
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FEDERAL MARITIME COMMISSION
46 CFR Parts 514 and 530
[Docket No. 98-30]
Service Contracts Subject to the Shipping Act of 1984
AGENCY: Federal Maritime Commission.
ACTION: Confirmation of interim final rule with changes.
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SUMMARY: This rule confirms as final the Federal Maritime Commission's
interim rule governing service contracts between shippers and ocean
common carriers to implement changes made to the Shipping Act of 1984
(``Act'') by the Ocean Shipping Reform Act of 1998 (``OSRA''). The
interim final rule implemented section 8(c) of the Act. The interim
final rule is adopted as a final rule with certain changes. The final
rule: revises the Commission's definition of ``motor vehicle'' in
accordance with its regulation governing Carrier Automated Tariff
Systems (Docket No.98-29); adds a limited exception to the filing
requirements in cases of the Commission's electronic filing systems'
malfunction; revises the requirements for registration for filing and
cross-referencing for clarity; revises the regulation on ET publication
to clarify where those for multiple carrier parties must appear; and
carries forward certain exemptions from the requirements of the
regulation which the Commission had granted in former part 514 of this
chapter, but which had been inadvertently omitted from the interim
final rule. The final rule also corrects a paragraph numbering error
made in the section dealing with publication.
DATES: Effective May 1, 1999.
FOR FURTHER INFORMATION CONTACT:
Austin L. Schmitt, Director, Bureau of Tariffs, Certification and
Licensing, Federal Maritime Commission, 800 North Capitol Street, NW,
Washington, DC 20573-0001, (202) 523-5796
Thomas Panebianco, General Counsel, Federal Maritime Commission, 800
North Capitol Street, NW, Washington, DC 20573-0001, (202) 523-5740
SUPPLEMENTARY INFORMATION: On December 17, 1998, the Federal Maritime
Commission (``Commission'' or ``FMC'') issued a notice of proposed
rulemaking (``NPR'') to implement changes to the Shipping Act of 1984
(``Act'') mandated by the Ocean Shipping Reform Act of 1998 (``OSRA''),
Pub. L. 105-258, 112 Stat. 1902, enacted on October 14, 1998. 63 FR
71062-71076 (December 23, 1998). On March 1, 1999, the Commission
issued an interim final rule (``IFR''), removing 46 CFR part 514 and
adding 46 CFR part 530, which made significant changes to the proposed
rule. 64 FR 11186-11215 (March 8, 1999). The Commission held the
interim final rule open for comment until April 1, 1999.
The Commission received comments on the IFR from: Wallenius Lines
(``Wallenius''); Effective Tariff Management (``ETM''); Department of
the Army, Military Traffic Management Command (``MTMC''); the United
States Postal Service (``USPS''); the Council of European and Japanese
National Shipowners' Associations (``CENSA''); the American Association
of Exporters and Importers (``AAEI''); P&O Nedlloyd (``P&O''); the
International Longshore and Warehouse Union, AFL-CIO (``ILWU''); the
Ocean Carrier Working Group Agreement (``OCWG''); the National
Industrial Transportation League (``NITL''); Sea-Land Service, Inc.
(individually, concurring in the U.S. Industry Interests comments)
(``Sea-Land''); E.I. du Pont de Nemours and Company (``DuPont''); and
joint comments from American President Lines, Ltd., Sea-Land Service,
Inc., Crowley Maritime Corporation, Farrell Lines Inc., Lykes Lines,
Ltd., LLC, the Transportation Institute, the American Maritime
Congress, and the Maritime Institute for Research and Industrial
Development (``U.S. Industry Interests'').
A. General Comments
The comments generally agree with the Commission's re-assessment of
the filing systems and the more innovative approach of the IFR.
B. Section 530.3(m)--Definitions--Motor Vehicle
The Commission received comments from Wallenius on the IFR's
definition of ``motor vehicle.'' We adopt the same analysis as set
forth in Docket No. 98-29, Carrier Automated Tariff Systems (46 CFR
part 520) and, accordingly, revise the definition of ``motor vehicle.''
C. Section 530.4--Confidentiality
Section 530.4 of the IFR maintains that all service contracts filed
with the Commission will be confidential; however, such confidentiality
from the public does not preclude the Commission from providing service
contract information to another agency of the Federal government. In
order to address certain commenters' concerns about public disclosure
of service contract information that could result from sharing such
information with other Federal agencies, the Commission will require an
agency requesting the information to enter a Memorandum of
Understanding (``MOU'') with the Commission, stating that such
information is necessary to its statutory functions and agreeing to
protect the confidentiality of the information it receives.
MTMC and the U.S. Industry Interests are the only parties that
filed comments on this section. MTMC states that it is the Army
component of the United States Transportation Command. It is
responsible for providing ocean and intermodal transportation services
and
[[Page 23783]]
related support services to Department of Defense (``DOD'') components
during peace, war and national emergencies. MTMC explains that it
solicits ocean and intermodal transportation in the U.S. and abroad. It
procures transportation services by soliciting rates for fixed periods
from operators of U.S.-flag vessels for DOD cargo movements between the
continental U.S. and worldwide points, as well as between foreign
points. Such DOD cargo is transported, MTMC states, in commercial
carriers' regularly scheduled commercial routes, in the same vessels
and on the same schedule as any other commercial cargo. MTMC further
points out that its worldwide solicitations may result in the
acceptance of more than one carrier's offer in order to fulfill DOD
transportation requirements.
MTMC agrees with the Commission's assessment that the legislative
history of OSRA indicates that confidentiality accorded to service
contract filings may not be used to prevent other Federal agencies
(particularly DOD) from performing their statutory duties. The Cargo
Preference Act of 1904, 10 U.S.C. 2631, and the Competition in
Contracting Act, 10 U.S.C. 2302, et seq., MTMC argues, are two statutes
whose requirements MTMC can fulfill only by having access to service
contract information. The Cargo Preference Act, asserts MTMC, requires
DOD to use U.S.-flag vessels for the transportation of Armed Forces'
supplies unless ``the freight charged by those vessels is excessive or
otherwise unreasonable,'' and prohibits the operators of those vessels
from charging rates that are ``higher than the charges made for
transporting like goods for private persons.'' MTMC at 5 (quoting 10
U.S.C. 2631(a)). Further, MTMC explains that the law requires that the
government purchase supplies and services at ``fair and reasonable''
prices. Id. (citing 10 U.S.C. 2304, 2305).
MTMC asserts that it ``relies upon access to tariff and service
contract information to fulfil its statutory responsibilities with
regard to the Cargo Preference Act of 1904 and other related government
acquisition laws,'' and, thus, it is ``vital that government agencies
procuring ocean transportation services * * * have access to service
contract information concerning commodities, volumes, routing, service
commitments and rates.'' Id. MTMC argues that examination of publicly
available tariff rates is less relevant than the examination of service
contract rates in determining fair and reasonable rate levels in a
trade lane, because the vast majority of international cargo moves
under service contracts. MTMC also notes that the legislative history
of OSRA includes several assurances that government agencies would have
access to service contract information. MTMC at 6 (citing 144 Cong.
Rec. S3320, and 144 Cong Rec. at S11302).
Finally, MTMC asserts its intention to formally request an MOU
under which the Commission would release confidential service contract
information which MTMC will hold in confidence and will use only for
the purposes of enforcing the Cargo Preference Act and for fulfilling
the requirements of the Competition in Contracting Act.
The U.S. Industry Interests initially incorporate into their
comments by reference the arguments set forth in their comments filed
on January 22, 1999, in response to the NPR. The U.S. Industry
Interests then argue that making service contracts available to MTMC
and other Federal agencies will ensure that such information is made
available to government procurement officials responsible for the
contracts with carriers. Such disclosure, the U.S. Industry Interests
assert, would be inconsistent with the policies underlying OSRA,
namely, that carriers ``need the flexibility to keep service contract
terms confidential from a shipper who might use such information to
seek better terms for itself.'' U.S. Industry Interests at 3.
Assuming, however, that the legislative history does justify
disclosure of confidential service contract information to other
government officials in order to monitor compliance with the Cargo
Preference Act, the U.S. Industry Interests claim that the monitoring
function should be performed only by those officials who are
independent of the procurement activity.
If the Commission decides to defer the resolution of the
aforementioned issues, the U.S. Industry Interests urge the Commission
to add the following sentence to Sec. 530.4: ``Before doing so, the
Commission will enter into a Memorandum of Understanding (MOU) with
such agency setting forth the terms and conditions for use of such
information or contracts, and before executing any such MOU will
publish it in proposed form for public comment.'' U.S. Industry
Interests at 3-4. The U.S. Industry Interests argue that ``[s]uch
notice and comment is both appropriate and required given the potential
substantive impacts of interagency disclosure of confidential service
contract information, and also given the prohibitions of the Trade
Secrets Act, 18 U.S.C. 1905.'' U.S. Industry Interests at 4 & n.4
(citing Reynolds Metals Co. v. Rumsfeld, 564 F.2d 663, 669 (4th Cir.
1977), and Chem Serv., Inc. v. Environmental Monitoring Systems of EPA,
12 F.3d 1256, 1267 (3d Cir. 1993)).
The U.S. Industry Interests argue in a footnote that, under the
Trade Secrets Act, confidential information such as service contracts
can only be disclosed if they are ``authorized by law.'' U.S. Industry
Interests at 4 n.5. At a minimum, the U.S. Industry Interests assert,
OSRA only allows the Commission to disclose service contract
information to other Federal agencies for the purposes of the Cargo
Preference Act.1 However, the U.S. Industry Interests aver
that assuming, arguendo, that other disclosures would be ``authorized
by law,'' any MOU must be adopted in accordance with Administrative
Procedure Act (``APA''), 5 U.S.C. 501, et seq., notice and comment
procedures. Id. (citing Chrysler Corp. v. Brown, 441 U.S. 281, 302
(1979) (finding that when a Federal agency is relying on a federal
regulation as authorization to disclose confidential information to
another Federal agency under the exception to the Trade Secrets Act
that such disclosure be ``authorized by law,'' such authorization must
be based on a substantive agency regulation that has the force and
effect of law).2
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\1\ However, the U.S. Industry Interests refer to their January
22, 1999 comments to reiterate that they believe the Commission does
not have the authority to do this.
\2\ The U.S. Industry Interests cite this case in support of
their position that the MOU be adopted in accordance with notice and
comment procedures; however, this case is inapposite because it
speaks to what type of law is sufficient to satisfy the ``authorized
by law'' exception to the Trade Secrets Act. The Court found that
the law must be substantive, and therefore a procedural rulemaking
promulgated by an agency that was not noticed for public comment
would be insufficient. In the instant proceeding, as discussed
infra, the Commission is relying on OSRA, the Cargo Preference Act,
and the Competition in Contracting Act as its authorization for
disclosing service contract information to other Federal agencies.
Moreover, the case does not state that the MOU itself is innately
substantive and must be noticed for public comment, as the U.S.
Industry Interests suggest.
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The Federal Reports Act, 44 U.S.C. 3501, et seq. (which is part of
the Paperwork Reduction Act), governs the disclosure to other Federal
agencies of information obtained from the public by agency collection,
while the Trade Secrets Act, 18 U.S.C. 1905, governs the disclosure by
Federal employees of confidential information generally.
One of the main purposes of the Federal Reports Act is to minimize
the paperwork burden on the public by maximizing ``the utility of
information created, collected, maintained, used,
[[Page 23784]]
shared and disseminated by or for the Federal Government.'' 44 U.S.C.
3501(1), (2). In order to accomplish this purpose, the Federal Reports
Act encourages the sharing of information between Federal agencies by
providing that ``an agency may make available to another agency,
information obtained by a collection of information if the disclosure
is not inconsistent with applicable law.'' 44 U.S.C. 3510(a). The House
Report reiterates this intention: ``The Act promotes sharing and
disclosure of information for purposes of maximizing the utility of
information to users, both governmental and non-governmental. Sharing
of information among Government agencies also serves the goal of
minimizing the burden imposed on the public by Government collection of
information.'' H.R. Rep. No. 104-37, 104th Cong., 1st Sess. 31 (1995),
reprinted in 1995 U.S.C.C.A.N. 164, 194.3
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\3\ ``To the extent the legislation is a restatement of the 1980
[Paperwork Reduction] Act, as amended in 1986, the scope, underlying
purposes, basic requirements, and legislative history of the law are
unchanged. To the extent legislation modifies provisions in current
law, the amendments are made strictly for the purposes described in
this report, and in order to further the purposes of the original
law.'' H.R. Rep. No. 104-37 at 2, 1995 U.S.C.C.A.N. at 165.
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The only limitation Congress placed on inter-agency disclosure of
information is when such disclosure is ``inconsistent with applicable
law.'' 44 U.S.C. 3510(a). Section 3510 was unchanged by the 1980 and
1986 amendments, ``except for word changes for purposes of consistency
and clarity,'' (H.R. Rep. No. 104-37 at 53, 1995 U.S.C.C.A.N. at 216);
thus, the Commission can rely on the legislative history from the
previous amendments in order to determine what Congress intended by
``inconsistent with applicable law.'' The Senate Report states that
for the sharing of data to be inconsistent with applicable law, the
applicable law must prohibit the sharing of data between agencies or
must totally prohibit the disclosure to any one outside the agency.
A mere prohibition on disclosure to the public would not be
inconsistent with sharing the data with another agency unless the
sharing would inexorably lead to a violation of that prohibition.
S. Rep. No. 96-930, 96th Cong., 2d Sess. 50 (1980), reprinted in 1980
U.S.C.C.A.N. 6241, 6290.
Section 8(c)(1) of OSRA states that ``service contracts shall be
filed confidentially with the Commission.'' As was delineated in the
NPR (63 FR at 71064-71065) and the IFR (64 FR at 11188), the Commission
has found that Congress intended that such service contract information
would be held confidential by the Commission from the public, not other
Federal agencies.4 The legislative history indicates that
the drafters intended that the confidentiality provision not hamper
other Federal agencies which have legitimate needs to access service
contract information in order to carry out their statutory duties. The
Commission is required to protect information filed confidentially from
disclosure to the public, but it is not precluded from disclosing such
information to other Federal agencies where clearly warranted and
justified. Moreover, Congress did not attempt, through OSRA, to remove
other Federal agencies' access to pricing information necessary for the
administration of the Cargo Preference Act and the Competition in
Contracting Act. All three statutes must be read together to give each
validity. Therefore, the Commission declines to read OSRA as
repudiating the responsibilities assigned other agencies by those
statutes.
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\4\ In the IFR, the Commission addressed and rejected the U.S.
Industry Interests' argument that the colloquy between Senators
McCain and Hutchison is of limited value for the purpose of
legislative history because it followed, rather than preceded, the
adoption of the bill which became OSRA. 64 FR at 11188. The U.S.
Industry Interests seek to incorporate that argument by reference in
their comments made in response to the IFR. Because no new arguments
were made in regard to that issue, it is unnecessary for the
Commission to address that argument again.
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As OSRA intended service contract information to be kept
confidential from the public and not from other Federal agencies, the
disclosure of such information to other Federal agencies is not
``inconsistent with applicable law.'' Furthermore, sharing such
information with another Federal agency would not ``inexorably lead to
a violation'' of the prohibition against disclosure to the public,
because, as the Commission stated in the IFR, such information would
only be disclosed to an agency which enters an MOU with the Commission
assuring that such information is necessary to the fulfillment of its
statutory functions and that it will protect the confidentiality of
such information. 64 FR at 11188. Therefore, disclosure of service
contract information to other Federal agencies will not jeopardize the
statutory aim of non-disclosure of confidential service contract
information to non-governmental entities.
The U.S. Industry Interests argue that disclosing confidential
service contract information to other Federal agencies would violate
the Trade Secrets Act. It is unclear, however, whether the Trade
Secrets Act is applicable to the disclosure of confidential service
contract information between Federal agencies. Two cases have addressed
whether inter-agency disclosures of confidential information are
governed by the Federal Reports Act or the Trade Secrets Act: Shell Oil
Co. v. Department of Energy, 477 F. Supp. 413 (D. Del. 1979), aff'd,
631 F.2d 231 (3d Cir. 1980), cert. denied, 450 U.S. 1024 (1981), and
Emerson Electric Co. v. Schlesinger, 609 F.2d 898 (8th Cir. 1979). In
Shell Oil, the District Court of Delaware, affirmed by the Third
Circuit, held that the Trade Secrets Act applies to inter-agency
disclosures, 477 F.2d at 432, while the Eighth Circuit found in Emerson
Electric that because the Federal Reports Act controls the exchange of
information between Federal agencies, the Trade Secrets Act applies
only to the public disclosure of trade secret material, 609 F.2d at
907. The Supreme Court has yet to specifically address this conflict
among the circuits. Thus, while it is debatable whether the Trade
Secrets Act applies, we will assume it does for the purposes of this
discussion.
The Trade Secrets Act prohibits Federal employees from disclosing
trade secret information unless ``authorized by law.'' 19 U.S.C. 1905.
The U.S. Industry Interests argue that such disclosure of confidential
service contract information to other Federal agencies is not
authorized by law because there is no language in OSRA specifically
granting that authority and the legislative history relied on by the
Commission followed, rather than preceded, the adoption of S. 414, the
Senate bill which became OSRA. As was discussed, supra, this argument
is unconvincing because section 8(c)(2) remained unchanged in the final
version of OSRA, and the statements were made on the same day the
Senate passed S. 414.
Furthermore, the Cargo Preference Act requires DOD to use U.S.-flag
vessels to transport supplies unless ``the freight charged by those
vessels is excessive or unreasonable,'' and prohibits those vessel
operators from charging rates that are ``higher than the charges made
for transporting like goods for private persons.'' 10 U.S.C. 2631(a)
(emphasis added). Moreover, the Supreme Court has recognized that the
Competition in Contracting Act requires that the government be charged
``fair and reasonable'' prices for the purchase of supplies and
services. Paul v. United States, 371 U.S. 245 (1963); see also 10
U.S.C. 2304, 2305. These statutes appear premised on the assumption
that certain pricing information will be made available to the relevant
agencies.
[[Page 23785]]
The Cargo Preference Act entitles DOD to the same rates that other
commercial shippers are charged for the transportation of like goods.
5 As the majority of international cargo will be moving
under service contracts, we agree with MTMC's argument that the
examination of publicly available tariff rates will be less indicative
of what are fair and reasonable rate levels than the examination of
service contract rates. As tariff and service contract rates could vary
significantly, DOD would need to have access to such service contract
rate information to ensure that it is being offered equivalent rates
for like services and thus fulfill its statutory mandate. Moreover,
Federal agencies may require access to such service contract rate
information in order to comply with the requirement of the Competition
in Contracting Act that they purchase fair and reasonable rates.
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\5\ The U.S. Industry Interests point out that the Cargo
Preference Act does not require that the government be given rates
lower than commercial shippers. Neither MTMC nor the Commission has
proffered this argument, and in fact we agree that the statute only
requires that the government receive equivalent rates for like
goods.
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Therefore, OSRA and the accompanying legislative history, the Cargo
Preference Act, and the Competition in Contracting Act all authorize
the disclosure of confidential service contract information filed with
the Commission to other Federal agencies. The U.S. Industry Interests,
however, further argue that, assuming that the legislative history
authorizes the disclosure of confidential service contract information
to other Federal agencies, such disclosure would be limited to
fulfilling the requirements only of the Cargo Preference Act. As
discussed, supra, the legislative history only prohibits disclosure to
the public and reflects that any Federal agency that requires access to
confidential service contract information as necessary to its statutory
functions may be entitled to it. Because the legislative history of
OSRA indicates that Congress did not wish to limit the agencies with
which the Commission should cooperate, but instead used the term
``other federal agencies,'' the Commission interprets this to include
agencies other than DOD, as well as laws other than the Cargo
Preference Act of 1904. Therefore, these regulations do not attempt to
define every situation in which the requested information is relevant
to the purposes of the requesting agency.
The U.S. Industry Interests also assert that disclosing service
contract information to other Federal agencies would necessarily
guarantee that an agency's procurement official would use that
information to seek better terms for the agency. Assuming that another
Federal agency is entitled to such information in order to monitor
compliance with the Cargo Preference Act, the U.S. Industry Interests
argue that only an employee at the requesting agency who is independent
of the procurement process should have access to the information for
such monitoring. Thus, the U.S. Industry Interests' suggestion would
compel the Commission to dictate by MOU how DOD conducts its
procurement procedures in order to obtain service contract information.
The Commission will not attempt to dictate internal DOD procedures or
policy. Furthermore, this issue is beyond the scope of this proceeding.
Finally, the U.S. Industry Interests request that the Commission
add language to Sec. 530.4 to require it to enter an MOU with any
agency to which it discloses confidential service contract information
and, prior to execution of such MOU, to publish it for public comment.
The U.S. Industry Interests argue that because of the ``potential
substantive impact'' of such an MOU, it must be adopted in accordance
with notice and comment procedures under the APA. We disagree. An MOU
can be formulated in the course of a rulemaking proceeding, but it need
only be subjected to notice and comment procedures if it makes a
substantive impact on individual rights and obligations. 5 U.S.C.
551(4), 553; see also Paralyzed Veterans of America v. West, 138 F.3d
1434, 1436 (Fed. Cir. 1998); Chem Serv., Inc. v. Environmental
Monitoring Systems of EPA, 12 F.3d 1256, 1267 (3d Cir. 1993); and
Reynolds Metal Com. v. Rumsfeld, 564 F.2d 663, 669 (4th Cir. 1977).
Thus, the MOU would have to either diminish or increase the rights or
obligations of the parties to a service contract in order to be
considered substantive. See Reynolds Metal Com., 564 F.2d at 669.
The parties to a service contract must file the service contract
confidentially with the Commission. Because DOD or other Federal
agencies are authorized to collect the same information in order to
comply with the Cargo Preference Act and the Competition in Contracting
Act (as authorized by the Federal Acquisition Regulations, 48 CFR parts
9, 15), the service contract parties' right to confidentiality would
not be diminished by disclosing this information pursuant to an MOU. A
Federal agency that needs service contract information to fulfill its
statutory functions would appear to be entitled to such information
already. As such, even if an MOU were promulgated by a rulemaking, it
would be procedural under section 553 of the APA, not subject to notice
and comment. The Commission declines to add language to Sec. 530.4 to
require rulemaking or notice and comment procedures before it can
execute an MOU with another Federal agency.
Moreover, the Commission is not inclined to add language to the
rule itself requiring that it enter an MOU. Such language was not
noticed in the rule for public comment, and therefore, is beyond the
scope of this proceeding. As we have already stated in the
supplementary information section of the IFR,
the Commission shall require a requesting federal agency to enter
into a Memorandum of Understanding that it will protect the
confidentiality of any information it receives from the Commission
and that such information is necessary to its statutory functions,
and adopts as final the language in Sec. 530.4 of the proposed
regulations.
64 FR at 11188. The Commission therefore adopts as final the language
of Sec. 530.4 as it appeared in the IFR.
D. Section 530.5(a), (b)--Duty to File and Filing by Agents
NITL supports the Commission's regulations placing the duty to file
upon the carrier party (Sec. 530.5(a)), but allowing the service
contract to be filed by a ``duly agreed upon agent as the parties to
the service contract may designate, and subject to conditions as the
parties may agree.'' Sec. 530.5(b). NITL points out that this
clarification is important due to the changes made by OSRA which
authorize individual contracting by members of carrier agreements and
which allow for confidentiality of contract terms. NITL asserts that
the language of the rule properly provides for flexibility, and leaves
the matter appropriately as one to be decided by the parties to the
contract. Because the use of an agent for filing may increase risks to
confidentiality, NITL points out, some shippers may legitimately prefer
that an agent not be used, and insist on a provision against such use
of agents in their service contracts.
NITL's commentary does not request any further clarification or
change to the Commission's IFR. This section of the IFR is confirmed as
final.
E. Section 530.6--Shipper Status Certifications
1. Extending Provisions to Groups of two or More Unrelated Shippers
Sections 530.6(a) and Sec. 530.8(b)(9) of the Commission's IFR
carry over an exception for shippers' associations to the requirement
that all shippers list their names and addresses and that all shippers
certify their status in their
[[Page 23786]]
service contracts. DuPont recommends that the Commission extend these
provisions for shippers' associations to include unrelated groups of
shippers which choose to enter into a single service contract, and make
conforming changes to Sec. 530.9(e)(2) for this expansion. DuPont
asserts that the exception for shippers' associations was created in
response to ``marketplace realities'' and that it ``helps protect the
integrity of the shippers'' association without unduly interfering with
the ability of the FMC to enforce the law.'' DuPont at 2. Extending
this provision to unrelated groups of shippers which enter into service
contracts, DuPont argues, would result in ``more equitable treatment''
of shippers which join together to enter into service contracts,
whether as members of associations or as unrelated groups.
This request was not raised in comments responding to the NPR, and
the Commission declines now to expand its treatment of shippers'
associations to unrelated groups of shippers. As of yet, the Commission
has had little indication, besides DuPont's brief and rather general
comments, of how unrelated groups of shippers will come together to
enter into service contracts. Furthermore, there is difficulty in
expanding the treatment of shippers' associations to unrelated shippers
groups: while shippers' associations generally can provide a list of
members who are legally obligated to fulfill the terms of a service
contract, shippers who are unrelated may not be able to provide such a
list, because one shipper cannot impose such obligations on other,
unrelated shippers who have not signed the service contract. When the
shipper status certification was first introduced, the Commission found
that the requirement of section 10(b)(15) of the Act (certification)
(renumbered as section 10(b)(12) by OSRA) required that ``such
certification should encompass not only the signatory shipper, but any
affiliates or members of the shippers' associations entitled to ship
under the service contract.'' 56 FR 1496. Therefore, DuPont's request
is denied.
2. Shipper Status Certifications Generally
NITL reiterates the comments it made to the Commission in response
to the NPR: namely that the shipper status certification is unnecessary
and that its purpose is unclear. NITL argues that because parties are
free to complain to the Commission if they believe they were treated in
an illegal fashion, and because OSRA has narrowed the discrimination
prohibitions, the Commission should conduct investigations on a case-
by-case basis rather than take the IFR's monitoring approach, to
justify the status certification requirement. NITL at 9.
The Commission has examined this comment previously and rejected
it. When the Commission examined the predecessor of Sec. 530.5
(originally Sec. 581.11) in 1991, it found that this approach would
give the Commission ``the opportunity to closely monitor all service
contracts to ensure that they are not improperly used by NVOCCs not in
compliance with the Act.'' Docket 91-1, Bonding of Non-Vessel-Operating
Common Carriers, 56 FR 51987, 51992. We reiterate that the shipper
status certification requirement serves both to remind shippers in what
capacity they may enter into service contracts, and to assist carriers
to ensure they enter into a service contract only with compliant
NVOCCs.
Sea-Land, OCWG, and NITL take exception to the following statement
in the supplementary information section of the IFR which was part of
the Commission's reasoning behind a requirement that a shipper status
certification be filed with each service contract:
OSRA prohibits discrimination and refusals to deal based on
anything other than valid transportation factors (such as volumes)
and the regulation as proposed intends to guard against such
discrimination, prohibited by section 10(b)(10) of the Act.
64 FR at 11190. The comments maintain that this language misinterprets
the scope of the prohibited acts under the OSRA. The three commenters
complain first, that the Commission improperly confused refusals to
deal and negotiate with discrimination, and second, that the statement
incorrectly expands the Act's prohibitions on discrimination.
NITL asserts that the Commission's statement is an over-broad
characterization of the discrimination prohibitions of the Act which
have been substantially narrowed by OSRA with respect to service
contracts. NITL urges the Commission to clarify the application of the
discrimination prohibitions with regard to service contracts. Sea-Land
also requests that the Commission clarify that service contracting
discrimination prohibitions are limited to sections 10(b)(5), 10(b)(9),
10(c)(7) and 10(c)(8). Concurring with Sea-Land's comments, OCWG argues
that differentiating service contract rates and terms between shippers
for any reasons other than those prescribed in sections 10(c)(7) and
(8) is entirely lawful in joint service contracts offered by ocean
common carriers. OCWG at 3-4.
We concede that in our effort to be succinct, the statement
objected to by the commenters was over-broad and unclear. OSRA does
retain prohibitions against refusals to deal and negotiate as well as
against discrimination in certain circumstances in section
10.6 Sections 10(b)(5), 10(b)(9), 10(c)(7) and 10(c)(8) of
the Act refer to discrimination; section 10(b)(10) of the Act prohibits
unreasonable refusals to deal; and section 10(c)(1) prohibits concerted
action resulting in unreasonable refusals to deal. Further
clarification is unnecessary.
---------------------------------------------------------------------------
\6\ Section 10 of the Act reads, in pertinent part,
(b) Common carriers. No common carrier, either alone or in
conjunction with any other person, directly or indirectly, may--
* * * * *
(5) for service pursuant to a service contract, engage in any
unjustly discriminatory practice in the matter of rates or charges
with respect to any port;
* * * * *
(9) for service pursuant to a service contract, give any undue
or unreasonable preference or advantage or impose any undue or
unreasonable prejudice or disadvantage with respect to any port.
* * * * *
(10) unreasonably refuse to deal or negotiate;
* * * * *
(c) Concerted action. No conference or group of two or more
common carriers may--
* * * * *
(1) Boycott, or take any other concerted action resulting in an
unreasonable refusal to deal.
* * * * *
(7) for service pursuant to a service contract, engage in any
unjustly discriminatory practice in the matter of rates or charges
with respect to any locality, port, or persons due to those persons'
status as shippers' associations or ocean transportation
intermediaries; or
(8) for service pursuant to a service contract, give any undue
or unreasonable preference or advantage or impose any undue or
unreasonable prejudice or disadvantage with respect to any locality,
port, or persons due to those persons' status as shippers'
associations or ocean transportation intermediaries.
---------------------------------------------------------------------------
F. Section 530.7--Duty to Labor Organizations
ILWU comments that the incorporation of the word ``ordinarily''
into the regulation's definition of ``reasonable period of time'' to
respond to a labor request, ``invites a delayed response from the
carriers, and inevitably raises a host of tangential issues that will
have to be investigated and perhaps even litigated.'' ILWU urges the
Commission to avoid this potential waste of resources by deleting
``ordinarily'' from the definition of ``reasonable period of time.''
We find no reason to revise the approach taken by the Commission in
the IFR; only experience under this new statutory provision will reveal
whether more stringent regulations are warranted. The Commission
reiterates its expectation that carriers will comply
[[Page 23787]]
with the spirit of the legislation and respond promptly to requests
from labor organizations for information.
G. Section 530.8--Filing of Service Contracts
1. Transition Issues and Contingency Plans
OCWG, CENSA and NITL express concern about the Commission's filing
systems' abilities to accommodate the rush of filings they predict to
occur early in May. NITL supports the Commission's decision to accept
before May 1, 1999, service contracts in the new system effective on or
after May 1, 1999. This, NITL asserts, should avoid an anticipated rush
of filings on May 1 and likewise avoid overburdening the internet-based
system on May 1. CENSA comments that, because neither of the proposed
electronic systems are currently operational, in the event the
internet-based system is not available at least ten days prior to May
1, 1999 (which is April 21, 1999), filers should be permitted to file
in the current paper format until the system is operational, and should
be granted a grace period after the system is operational (implicitly
also 10 days) before filers will be required to use the new system.
Similarly, OCWG urges the Commission to adopt a contingency plan
for the filing of service contracts in the event that the internet-
based system is not available for filing by April 20, 1999. OCWG
asserts that thousands of service contracts will be filed for effect on
May 1, and as such, the volume of filings both before and after May 1
will be enormous. OCWG suggests that the Commission allow for paper or
diskette filing beginning April 20 and continuing until 30 days after
the internet-based filing system becomes available. This, OCWG argues,
would allow both the industry and the Commission to make a more gradual
transition, and is similar to the approach the Commission took when it
made the transition from paper tariffs to the Commission's Automated
Tariff Filing Information (``ATFI'') system. Finally, OCWG comments
that it would not object if those service contracts filed in paper
format during the transition period were required to be re-filed via
the internet system at a later date, provided there was a reasonable
period allowed for making such refilings. Such a contingency plan, OCWG
suggests, would provide for a smooth transition to electronic filing
while ensuring there is no commercial disruption due to the
unavailability of the internet-based system.
The Commission's IFR introduced two service contract filing
systems: option 1 (``internet-based'') and option 2 (``dial-up'').
Presently, the Commission is confident that both systems will be
available on May 1. Indeed, the internet-based system will accept
filings on April 26. In addition, as announced in press releases and on
the Commission's website, the Commission's Office of Information
Resources Management (``OIRM'') conducted certification sessions for
the dial-up system in which filers test their filing software on April
22 and 23.
The Commission has taken other steps to help filers be prepared to
file as soon as the Commission's systems are operational. On April 8,
1999, OIRM sent letters to entities currently registered to do batch
filing in the ATFI system, requesting an indication of their intent to
register in the new systems. Another reminder of the registration
requirement was also placed on the Commission's website by OIRM. Based
on all of the above preparations, therefore, a transitional alternative
filing plan is not deemed necessary.
As for the ongoing contingency plans suggested by the comments, the
Commission is confident that the systems will be able to receive a
large volume of filings in the early days of May. Both systems will be
available to receive filings 24 hours each day and 7 days per week.
Therefore, the times that filing will be unavailable to filers would
appear to be rare. Of course, there may be minutes or hours in which
either of the systems will be ``down'' and will be unavailable to
receive filings, whether for scheduled maintenance or for unscheduled
interruptions due to telephonic or other systemic problems. Contrary to
the commenters' concerns, however, the Commission does not anticipate
that these brief periods of unavailability will create interruptions of
commercial transactions on the scale implied by the comments.
However, the Commission wishes to further allay concerns as to the
capability of the systems to accept the amount of filings that may
occur around May 1, or at some time in the future, by providing for a
suspension of the timeliness requirement of the rules in the event that
the filing systems malfunction. The Commission therefore has adopted a
limited exception from the requirements of Secs. 530.8(a) and 530.14(a)
(that the service contract must be filed before any cargo may be
carried under it) in situations in which the Commission's filing
systems are unavailable for twenty-four (24) consecutive hours or more.
This limited exception requires filing to be done at the latest by
twenty-four (24) hours after the system returns to service. Also, this
limited exception will only arise in situations where the Commission
has verified that the filing system is unavailable to all filers, and
not, for instance, when the filer's own computers or communications
systems are non-functional. The Commission therefore adds paragraph (e)
to Sec. 530.8.
2. Appendix A--Registration
While the Commission received no formal comments on the matter,
several informal requests for information indicate that there is some
confusion over registration for filing under both internet-based and
dial-up systems. First, all of a carrier's, conference's or agreement's
service contracts must be filed in one and only one of the systems.
Second, while a carrier, conference or agreement may only be registered
to file in one of the systems, a publisher which files on behalf of
many carrier parties, may be registered in both systems. However, the
regulation requires that a publisher must file an entity's service
contracts in only one of the systems. Therefore, to make this clear, we
revise Appendix A paragraph I., Registration, Log-on ID and Password.
H. Section 530.8(c)(2)--Cross-Referencing
As it appears in the IFR, Sec. 530.8(c) reads,
(c) Certainty of terms. The terms described in paragraph (b) of
this section may not:
(1) Be uncertain, vague or ambiguous; or
(2) Make reference to terms not explicitly contained in the
service contract filing itself, unless those terms are contained in
a publication widely available to the public and well known within
the industry.
CENSA is concerned that the revision of Sec. 530.8(c)(2) may confuse
filers and lead them to mistakenly conclude that a service contract may
not refer to a tariff or a service contract register filing. CENSA
points out that, as originally proposed by the Commission in the NPR,
Sec. 530.8(c)(2) specifically permitted cross-referencing to tariff
publications. OCWG also comments that in revising Sec. 530.8(c)(2), the
Commission inadvertently omitted language which would have allowed
cross-referencing to tariffs and service contract registers. Both CENSA
and OCWG suggest that the Commission revise the provision to read as
follows:
. . . make reference to terms not explicitly contained in the
service contracts filing itself, unless those terms are contained
in: (i) a tariff publication in accordance with the requirements of
46 CFR part 520; or (ii) a service contract register filed with the
Commission; or (iii) a publication widely available to the public
and well known within the industry.
[[Page 23788]]
P&O supports the OCWG comments on this section. P&O requests that
the Commission also clarify that service contracts may cross-reference
their own or their conference tariff; their service contract register;
or publications that are widely available to the public and well known
within the industry (including, for example, whether published as a
tariff relating to hazardous materials or privately published as a
register for intermodal equipment). Further, P&O argues that cross-
referencing will be an essential element in multi-trade service
contracts, and the Commission must ensure that its regulations on
cross-referencing do not preclude carriers from making such multi-trade
contracts in a ``commercially acceptable manner.'' P&O does not
elaborate with particularity on how such multi-trade contracts might be
affected.
In its NPR, which proposed only one filing system modeled on ATFI,
the Commission specifically solicited comments from the industry on
whether the provision of a ``service contract register,'' in which
service contract boilerplate may be filed, would be desirable. The
comments were generally positive, and the Commission determined that
the first proposed system (``dial-up'') would have the capability of
such register filings. There were few other details given in the IFR
regarding register filings. 64 FR at 11197.
There is a dichotomy between the two filing systems due to their
technological configurations and their distinct approaches to filing:
the dial-up system requires an ``organizational record'' filing which
has the ability to also accept ``register'' filings; the internet-based
system has neither ``organizational record'' requirements nor
provisions for ``register'' filings. With the major revisions made in
the IFR, the technological question of whether such a ``register''
would be part of the internet-based system was not specifically
discussed.
The guiding concept of the internet-based filing system was
principally that the carrier party to the service contract would be
able to file the complete, commercial agreement it had entered into
with the shipper party. The matter of a register was not specifically
considered for the internet-based system, because that system, in
contrast to the dial-up system, would allow ``free text'' and not
require the more rigidly formatted line items of the dial-up system.
For the internet-based system, the principle was that the filer would
simply transmit the contract as agreed to by the parties and executed
by them, via the internet and into the Commission's database. In other
words, whatever document the parties had signed would be identical to
the document transmitted to the Commission. All the ``boilerplate'' of
such contracts would be included in them, thereby eliminating any
necessity for a ``register'' filing. Indeed, such ``register'' filings
would appear to impose additional burdens of multiple filings for what
could now easily be accomplished in a single filing.
Furthermore, the Commission is concerned that adopting the language
suggested by the three aforementioned commenters may lead to situations
in which shippers are party to service contracts referring to
boilerplate which is filed in a service contract register which the
shipper may have never read, and to which it would necessarily have no
access from the Commission after filing. Therefore, the Commission has
added a caveat to the allowance for cross-referencing material
contained in a service contract register: the material filed in the
service contract register and referred to in the service contract must
be available to the other parties to the contract. Further, we wish to
make it absolutely clear that changes to boilerplate which affect
service contracts must be treated as amendments, and as such, subject
to the mutual agreement of the parties. Such ``registers'' will only be
available in the dial-up system.
Finally, because tariffs are published and widely available, cross-
referencing to those publications in service contracts does not appear
to pose any new issues. The Commission notes, therefore, that a tariff
published pursuant to part 520 of the Commission's regulations will be
considered ``a publication widely available and well known within the
industry'' for the purposes of cross-referencing in service contracts.
The Commission therefore revises Sec. 530.8(c) to clarify its
approach to cross-referencing, particularly references to ``service
contract register'' filings.
I. Section 530.10--Cancellation
AAEI comments that Sec. 530.10 directly contradicts section 13(f)
of the Act as revised by OSRA.7 AAEI asserts that
Sec. 530.10 imposes the following choice on parties to service
contracts: that they contemplate a shortfall (i.e. a failure to meet
minimum cargo commitments) with a liquidated damages provision or they
will be subject to Sec. 530.10(d), which states that further or
continued implementation of the service contract is prohibited; and
that the cargo previously carried under it is to be re-rated at
otherwise applicable tariff rates. AAEI doubts the legality of this
provision, and asserts that it contradicts the ``black and white letter
of the law in section 112(c)(3)'' of OSRA. AAEI further states that the
failure of a contract to include a liquidated damages clause does not
render the contract illusory. AAEI asks the Commission to consider
whether it ``makes sense'' for example, to require the re-rating of
9,900 FEUs of cargo which has already been shipped when there has been
a shortfall of only 100 FEUs in a service contract commitment for
10,000 FEUs. Finally, AAEI asserts that the proper penalty for
fraudulent misrepresentation by a shipper is the imposition of monetary
penalties, not the re-rating of previously carried cargo.
---------------------------------------------------------------------------
\7\ Section 13(f) reads, in pertinent part,
Neither the Commission nor any court shall order any person to
pay the difference between the amount billed and agreed upon in
writing with a common carrier or its agent and the amount set forth
in any tariff or service contract by that common carrier for the
transportation service provided.
---------------------------------------------------------------------------
DuPont comments that the Commission's proposed ``solution * * * is
worse than the original problem it sought to cure.'' DuPont at 5.
DuPont, relying on its ``vast experience in the field of transportation
contracting'' asserts that ``no matter how expert, complete and
thorough negotiations are, the parties will inevitably experience
barriers to fulfilling all of their obligations.'' DuPont at 5.
Mandating re-rating, in situations in which the parties in good faith
cannot meet their contractual obligations and elect to mutually
terminate, is inappropriate in DuPont's estimation.
DuPont therefore urges the Commission to revise Sec. 530.10(d)(2)
to make re-rating permissible, but not mandatory, subject to Commission
order, and proposes the provision read as follows:
In the event of cancellation as defined in Sec. 530.10(a)(3) * *
* (ii) the cargo previously carried under the contract * * * may,
pursuant to order by the FMC based upon its finding of a purposeful
violation of applicable regulation, be re-rated according to the
otherwise applicable tariff provisions.
This provision, DuPont asserts, would permit more lenient treatment of
the ``unsophisticated, small, or first time shipper (or carrier) for
its lack of foresight or experience'' and re-rating would only be
imposed if the Commission found an intent to defraud or avoid
compliance. DuPont at 6.
AAEI appears to have misread both the Commission's supplementary
information and the text of the IFR itself. The supplementary
information makes it clear that other provisions (i.e.
[[Page 23789]]
not only liquidated damages provisions) can ensure that the service
contract has a fall-back rate for shortfalls. 64 FR at 11204. The text
of the regulation itself defines cancellation as
an event which is unanticipated by the service contract, in
liquidated damages or otherwise, and is due to the failure of the
shipper party to tender minimum cargo as set forth in the contract,
unless such tender was made impossible by an action of the carrier
party. Sec. 530.10(a)(3)(emphasis added).
The regulation, rather than being a penalty provision, is a method by
which the ``applicable rate'' can be determined, and is invoked only
when the parties have chosen not to make other provisions.
DuPont's recommendation that the re-rating provision be subject to
Commission order, not automatic, and optional for the Commission to
impose, may create uncertainty in the industry. DuPont's comment
indicates its belief that this requirement is a penalty provision.
Again, the requirement in Sec. 530.10 for re-rating is only a last
resort means of determining the applicable rate when the contract
parties make no other provision and fail to amend the contract.
``Penalizing'' Shippers for Operating Under Unfiled Service
Contracts
NITL states that it is unfair to ``penalize'' shippers for
violations of Secs. 530.8(a) or 530.14(a) (which require that a service
contract or amendment be properly filed with the Commission before
cargo moves under it) when they have no control over the timeliness or
method of such filing or ensuring that the filing is not defective.
NITL asserts that shippers which tender cargo for carriage under a
service contract which they believe to have been filed, should not be
subject to such violations. NITL describes a scenario in which an
innocent shipper may have been told by its carrier that the service
contract has been filed, and then would be subject to penalties for
violation of Commission regulations. NITL complains that it is not
clear what the consequences for a shipper would be in such a case, and
requests that the Commission clarify that it will not hold a shipper
liable for penalties and will protect the shipper from re-rating in
such a situation.
DuPont expresses concern about shipper parties not receiving
independent, written confirmation of service contract and amendment
filings, but facing re-rating or penalties, as well as legal defense
costs for failure to file or improper filing. To eliminate this
potential problem, therefore, DuPont urges the Commission to provide
shipper parties with written (or electronic) notice when service
contracts or amendments are filed or rejected within 5 working days of
the filing or rejection. This approach, DuPont suggests, would
eliminate the potential for a recreation of the motor carrier filed
rate problem. In the alternative, DuPont proposes that shippers be held
harmless and permitted to carriage pursuant to an otherwise valid
contract which the carrier either failed to file or failed to notify
the shipper if rejected by the Commission.
There are several reasons why the Commission declines to adopt
DuPont's suggestion either to hold shippers harmless from such failures
to file or to require that the Commission send confirmation of filing
to the shipper as well as to the carrier. First, the filing requirement
has been part of the Act and Commission regulation since 1984, and we
are unaware of any shipper having been held to have violated section
10(a)(1) of the Act when it had a reasonable belief that the carrier
had duly filed the service contract. Second, we note that shippers may
require confirmation of filing from their carrier as part of the
negotiation process, if they wish to do so. Third, the shipper may have
some indication of whether or not a service contract has been duly
filed by verifying that the ET for that service contract has been
published by the carrier. Finally, with respect to NITL's scenario, the
Commission's position can only be determined in the course of
proceedings with parties in interest arguing the facts before an
administrative law judge. We note only that while it is not the shipper
party who has the obligation to file under Commission regulations, if
it operates under an unfiled service contract, it may violate section
10(a)(1) of the Act. That section only applies to knowing and willful
actions, however, rather than a question of absolute liability, and
would therefore not apply to a shipper unknowingly victimized by a
carrier's failure to file. Furthermore, there is nothing in the
legislation which suggests that the Commission can immunize shippers
from the assessment of civil penalties. However, under section 13(f), a
shipper's culpability is part of any consideration in an assessment of
civil penalties.
In response to DuPont's comments, and as the Commission has already
discussed in the IFR, section 13(f) would appear to protect a shipper
against a claim by a carrier for undercharges. 64 FR at 11204. The
Commission has already stated its position in the IFR, namely that
section 13(f) does not operate to nullify section 10 requirements; that
the Act must be read so that every section is given meaning and
harmonizes with the others; 8 that section 13(f) should not
be interpreted so as to make service contracts illusory, or allow
parties to take advantage of service contract rates without being bound
to a contract; 9 and that the Commission's provisions for
maximum flexibility (e.g., amendments, contingencies, and liquidated
damages) are adequate methods by which the parties may avoid the
application of Sec. 530.10 and protect their commercial interests.
Therefore, the Commission makes no revision to this section and adopts
it as final as it appeared in the IFR.
---------------------------------------------------------------------------
\8\ As stated in Sutherland on Statutory Construction at
Sec. 46.05 at 103:
A statute is passed as a whole and not in parts or sections and
is animated by one general purpose and intent. Consequently, each
part or section should be construed in connection with every other
part or section so as to produce a harmonious whole. Thus, it is not
proper to confine interpretation to the one section to be construed.
The Commission must ``strive to implement the policy of the
legislature and harmonize all provisions of the statute.'' Id. at
104.
\9\ Section 10(b)(1) reads, in pertinent part: No common carrier
* * * may allow any person to obtain transportation for property at
less than the rates or charges established by the carrier in its * *
* service contract by means of * * * any other unjust or unfair
device or means;
(2) Provide service in the liner trade that--(A) is not in
accordance with the rates, charges, classifications, rules, and
practices contained in a * * * service contract entered into under
section 8 of this Act * * *
---------------------------------------------------------------------------
J. Section 530.12--Publication
P&O, ETM, OCWG and CENSA comment that the IFR is unclear as to
whether the statements of essential terms of service contracts
(hereinafter ``ETs''), currently required to be filed in the ATFI
system, will remain adequate for compliance with Sec. 530.12 after May
1, 1999. ETM urges that the publication of ETs in ATFI be sufficient
for publication under the new regulations, and further that such ETs
not be required to be ``re-published'' in a new private system.
ETM argues that ETs of service contracts effective prior to May 1,
1999 were filed in ATFI for two reasons: to meet the filing
requirements of the Act and to allow for public notice of the
eligibility period for ``me-too'' shippers. As for the ``me-too''
aspect of the publication, P&O and ETM assert that because no further
``me-too'' eligibility is required after the end of the eligibility
period, and because the ETs are available to interested parties
(presumably in the then-historical ATFI system), to require the re-
publishing of such ETs would provide no benefit to anyone and would
impose a substantial
[[Page 23790]]
burden on carriers. ETM appears to assert that service contracts filed
effective prior to May 1, 1999 may have an eligibility period which
runs beyond May 1, 1999, and that this may be a problem for similarly
situated shippers accessing the privately maintained Carrier Automated
Tariff Systems (``CATS'') pursuant to Commission regulations at part
520 after May 1, rather than ATFI.
Further, ETM argues, requiring such re-publication would be
duplicative and burdensome; the FMC staff would be inundated with
reviewing re-published ETs as well as new ETs and determining which
publication required a simultaneous filing and which did not. ETM also
argues that the filing requirements of OSRA are met if service
contracts effective prior to May 1, 1999 are electronically filed by
use of ATFI, and, therefore, further filing or re-publication of either
ETs or the service contracts themselves should not be required. ETM
proposes that the Commission issue the following guidelines for the
transition period:
1. Except for amended service contracts, all service contracts
with an effective date prior to May 1, 1999 and with an eligibility
period that expires no later than April 30, 1999, shall not require
re-publication of essential terms or re-filing of the contract on or
after May 1, 1999;
2. Amended service contracts with an effective date prior to May
1, 1999 and with an eligibility period that expires no later than
April 30, 1999 shall not require re-publication of essential terms
or re-filing of the contract on or after May 1, 1999;
3. Amended service contracts with an effective date prior to May
1, 1999 but with an eligibility period that expires no later than
April 30, 1999 shall not be re-filed but the essential terms are to
be re-published in the Carrier's Automated Tariff System and
reference to the eligibility period should be stated in the duration
clause;
4. All service contract amendments with an effective date of May
1 or later shall be filed in accordance with the provisions of 46
CFR part 530 and the essential terms shall be re-published in the
Carrier's Automated Tariff System.
CENSA also asserts that requiring the re-publication of ETs of
``carry over'' service contracts will not benefit the carriers, their
customers or the Commission. CENSA points out that many service
contracts will continue. P&O, CENSA and OCWG urge the Commission to
grant a blanket exemption from such republication; or in the
alternative, give carriers and conferences a period of time over which
to re-publish these ETs in their CATS.
P&O agrees with CENSA and ETM that ETs previously published in ATFI
should not be required to be republished in CATS by May 1, 1999,
because there is little regulatory purpose in such a requirement and
because republication is time-consuming and expensive.10
Furthermore, P&O argues, republication will create confusion because
new service contract numbers will have to be assigned to such re-
published ETs. P&O suggests the Commission grant a blanket exemption,
or alternatively that it extend the time for republication to the date
of amendment of the ETs or October 1, 1999, whichever comes first.
---------------------------------------------------------------------------
\10\ P&O comments that it will have 350 such service contracts.
---------------------------------------------------------------------------
OCWG also comments that existing service contract ETs, which are
published in the Commission's ATFI system, should not be required to be
published again in a private tariff publication after May 1, 1999. OCWG
asserts that it represents carriers which collectively will have
thousands of service contracts which would be affected by such a
requirement. Such republication, OCWG asserts, would be burdensome and
will have no little or no benefit because there will be no right to
``me-too'' after May 1. Instead of requiring republication as of May 1,
OCWG contends, the Commission should require ETs for contracts in
effect prior to May 1 be republished the first time the contract is
amended after May 1, or by October 1, whichever is later.
1. Eligibility for ``Me-Tooing'
First, with regard to eligibility periods for ``me-too'' rights, it
is clear that OSRA completely eliminates ``me-tooing'' of service
contracts. OSRA is effective May 1, 1999, and therefore, no shipper can
assert ``me-too'' rights after May 1, 1999, regardless of what the
eligibility period of the service contract may have been under the Act
prior to OSRA's effective date.
2. Accessability to and Maintenance of ATFI
Second, regarding accessability and content in the ATFI database,
the Commission reiterates that it will maintain ATFI for historical
information only, and access to ATFI will continue as it has been done
in the past, by registration, log on and password. ATFI will become
exclusively historical on April 30, 1999, as filers will cease to have
the ability to file and amend ETs, but will continue to be able to
retrieve them.
3. Republication
OSRA requires that ``when a service contract is filed
confidentially with the Commission, a concise statement of essential
terms * * * shall be published and made available to the general public
in tariff format.'' Section 8(c)(3). The Commission has determined that
the simplest and least burdensome way for filers to comply with this
requirement of the Act is to require publication of ETs as part of the
privately published tariff systems. This publication requirement
ensures that the shipping public has access to certain very general
information on service contracts filed with the Commission. However,
for service contracts currently in effect, ETs of such service
contracts may not be as readily accessible to the extent that they are
still in the ATFI system. Allowing currently effective service
contracts' ETs to appear in two places (i.e. the ATFI historical
database and the active CATS publication) may add a degree of
complexity for those seeking access to the ETs, but any confusion would
be minimal, especially as compared to the cost and burden on the filers
if republication were required.
Therefore, the Commission will not require that ETs for service
contracts previously filed in the ATFI system, but which continue in
effect after May 1, be published in the CATS system. However, the
Commission wishes to make it clear that pre-May 1 service contracts
which are amended after May 1 will require republication of ETs as soon
as possible after the filing of the amendment (comporting with the
requirement of Sec. 530.12(g)) regardless of whether or not the four
essential terms are affected by the amendment.
K. Amendment Filing
Although the Commission received no formal comment on this matter,
several informal inquiries have indicated that filers need further
guidance as to how pre-May 1 service contracts are to be amended after
May 1. The internet filing system will not require the re-filing of the
original service contract. The dial-up system, however, will require
that the filer re-file a restatement of the service contract. This is
due to the fact that the dial-up system requires a data file with which
amendments must be associated; amendments may not stand on their own.
In the dial-up system, all reissued service contracts will be required
to:
(1) Have a current effective date which is no earlier than the
system assigned filing date (Appendix to Part 530, section II. H. 2);
(2) Employ an amendment code of ``I'' and an amendment number of
``null'' or ``0'' (Sec. 530.10(b)(2) and Appendix to Part 530, section
II D.);
(3) Contain all twelve mandatory terms and the exact term titles
[[Page 23791]]
(Appendix to Part 530, section IV. (Format Requirements));
(4) Reflect the latest version of each mandatory term, optional
term and any Register Rules for each pre-OSRA term and rule; and
(5) State at term 12 that the service contract was ``reissued'' and
cross-reference the FMC File Number of the pre-OSRA filing of the ET
filing(s) in ATFI.
L. Section 530.12 (c)--Multiple Carrier Party Contracts-Publication
of ETs
CENSA characterizes Sec. 530.12(c) as giving multiple carrier
parties the option of publishing either in their individual tariffs or
in a conference tariff, which CENSA asserts is ``logical and
reasonable.'' CENSA believes, however, that the rule's language is
contradicted by the language of the supplementary information, which
requires that ``essential terms of an individual service contract
entered into by multiple carrier parties to a conference must be filed
in the conference tariff.'' CENSA urges the Commission to revise the
supplementary information to confirm that carriers would have an option
of where to publish the ETs of a multi-carrier contract. CENSA asserts
that this flexibility would not hinder the Commission's ability to
carry out its regulatory responsibilities.
OCWG urges the Commission to revise Sec. 530.12(c) as follows:
(c) Location. The statement of essential terms shall be
published in an automated tariff publication in accordance with
520.12(c)(1) through (4) and in conformance with the format
requirements set forth in part 520 of this chapter. The statement of
essential terms may be published in the following locations:
(1) Conference service contracts. In the conference tariff(s).
(2) Individual service contracts. In the carrier's individual
tariff publication or in the tariff publication of a conference of
which the carrier is a member, at the carrier's option.
(3) Multi-party contracts. For a multi-party individual service
contract entered into pursuant to the authority of a conference
agreement, in each of the participating carriers' individual tariff
publications or in the tariff publication of the conference, at the
carriers' option.
(4) All other service contracts. In the individual tariffs of
the participating carrier(s).
The foregoing language, OCWG asserts, would increase carrier
flexibility by giving the members of a conference the choice of where
to publish. It would also, OCWG asserts, make clear that individual
carrier members of conferences may have their own tariff in which they
may publish ETs even if they participate in a conference rate tariff.
OCWG argues that this may be necessary to comply with the legal
requirements of other jurisdictions, particularly those of the European
Union. Giving carriers these options, OCWG argues, would not inhibit or
discourage individual contracting, nor would it complicate the
Commission's compliance monitoring. ETs belonging to carriers/
conferences and individual/agreement service contracts but published in
the same tariff, OCWG asserts, will be easily distinguished because the
ET must contain the FMC agreement number for conference and non-
conference agreement service contracts. OCWG also complains that
allowing agents to file, but restricting who the carrier party may
appoint to publish ``makes little sense.'' OCWG at 8. They argue that
because carriers are ``very unlikely to permit anyone other than their
employees or their tariff publisher to access their tariff
publication,'' the approach of the IFR ``effectively prohibits carriers
from using an agreement secretariat to publish the ETs of their
individual service contracts.'' OCWG at 8.
We agree with CENSA that there appear to be conflicting approaches
to publishing between the text of the rule itself and the language of
the supplementary information. The supplementary information included a
discussion of the competing interests behind the publication
requirement for multiple carrier service contracts: on the one hand
avoiding confusion to the public and ensuring that ETs can be located
by the public, and on the other, minimizing the burden on the
publishing carriers. 64 FR at 11200-11201.
Despite OCWG's and CENSA's arguments regarding flexibility for
publication of multi-party ETs, however, the Commission has revised the
language of the regulation to make it clear that conference ETs must
appear with the conference tariff; individual ETs must appear with the
individual tariff; and non-conference agreement ETs must appear with
each of the individual carriers' tariffs. Where non-conference
agreement or conference ETs may appear is not optional. While allowing
such options would give carriers ``increased flexibility,'' we are not
persuaded that doing so has the same implications as those for filing
of confidential terms, and therefore it appears not to be particularly
relevant whether or not it is ``entirely consistent with the approach
the Commission has taken with respect to the filing of service
contracts.'' OCWG at 8.
OSRA clearly distinguishes filing from publication. The publication
of ETs is required in order that the information is reasonably
available to the public. If the Commission were to allow the option
suggested by these comments, the public may only with significant
difficulty ever be able to find non-conference agreement ETs or
conference ETs. This would not appear consistent with the statutory
requirement that the ETs be ``made available to the public.''
The Commission has already determined that having ETs published
alongside the carrier party's CATS is the simplest and least
duplicative approach to such publication. As the Commission stated in
the IFR, the statement of essential terms of
[i]ndividual carrier service contracts are to be published alongside
that carrier's tariff matter * * * * Multi-party service contracts
entered into under the authority of a conference must be published
alongside the conference tariff, and not in the individual member's
tariff * * * * For service contracts jointly entered into by
multiple parties of a non-conference agreement, the publication of
the statement of essential terms will be published as for individual
service contracts [i.e. in each of the individual carrier's tariffs]
but note must be made of the relevant FMC-designated Agreement
number.
64 FR at 11200-11201.
For independent individual service contracts entered into by a
conference member, therefore, ETs must be published with the individual
carrier's tariff publication, and not with the conference's tariff. As
the Commission previously found, ``[a]llowing such would lead to public
confusion.'' 64 FR at 11201. For multi-party service contracts, the IFR
appears to allow non-conference agreements a choice as to where their
ETs could be published (i.e. in a conference's tariff or in an
individual tariff). The language of Sec. 530.12(c)(2) is revised to
clarify that for non-conference agreement service contracts, the ETs
must be published in each of the individual participating carriers'
tariffs, noting the FMC-assigned agreement number pursuant to which the
service contract is entered.
CENSA alternatively asserts that the Commission should permit non-
conference agreements to ``create a tariff in which the ETs of the
service contracts of its members may be published either by themselves
in their own tariffs, or through an agreement secretariat created for
that purpose.'' CENSA at 2. Such an approach, CENSA argues, would
neither hinder individual contracting nor compromise the
confidentiality of contract terms. Furthermore, CENSA comments, such an
approach could enhance the Commission's ability to
[[Page 23792]]
determine the level of contracting taking place pursuant to a non-
conference agreement, because the ETs would all be published in a
single tariff.
Allowing non-conference agreements to publish tariffs may be
convenient; however, sections 3(7) and 8(a) of the Act reserve the
ability to publish a tariff solely for ``carriers and conferences.''
Non-conference agreements are precluded from publishing tariffs by the
statute. If the IFR's approach to the publication of ETs for non-
conference agreements or for individual carrier members of conferences
becomes overly burdensome or confusing to the public, and another
approach is therefore warranted, the Commission may then revise the
regulations to address such concerns. Before having had experience with
the practices of the industry and the concerns of the public, however,
it appears to be more prudent to leave this approach in place.
Therefore, the Commission has revised the language of Sec. 530.12(c)(2)
to clarify with which tariff system multiple carrier service contracts
must be filed and to correct a numbering error which appeared in the
IFR.
Although the Commission received no formal comments on the
provision, there has been informal inquiry about the meaning of the
provision of Sec. 530.12 which requires that ETs ``be published as a
separate part in the filer's automated tariff publication, conforming
to the format requirements of part 520 of this chapter.'' As this
language was merely intended to indicate that ETs be located in the
carrier's automated tariff system, the Commission has deleted the
phrase ``conforming to the format requirements of part 520 of this
chapter,'' and to change the term ``publication'' to ``system.'' The
balance of the paragraph adequately indicates that ETs must be
published in the carrier's automated tariff system. Therefore,
Sec. 530.12(c) is revised to address both the issues concerning
multiple carrier party service contract filing and format requirements.
M. Section 530.13--Exceptions and Exemptions
USPS urges the Commission to continue a specific exemption to the
requirements of this part for the transportation of mail between the
United States and foreign countries. USPS recommends that
Sec. 530.13(a) be revised to include an exemption to the requirements
of the regulation for mail. USPS points out that mail had been granted
an exemption in 1976 (Docket No. 75-41, June 22, 1976) to the tariff
filing requirements and further argues that this exemption should be
carried forward for service contract filing as well.11 Nor,
USPS asserts, did the order find that such an exemption would deprive
the shipping public of a means for determining the rates for the
carriage of mail, because, with respect to mail, there is no ``shipping
public'' other than foreign governments which set the rates applicable
to the transportation of their mail. Finally, USPS notes that the 1976
exemption order recognized that under 39 U.S.C. 5005(b)(3), USPS'
contracts for the carriage of mail are available for inspection by the
general public.
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\11\ In that order the Commission found that, while it may move
in foreign commerce, mail is not a U.S. export or an item of trade
between countries, and thus it is apparent that the exemption would
not be detrimental to the commerce of the United States.
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USPS cites 46 CFR 514.3(b)(2) of the Commission's former
regulations to support its proposition that service contracts for the
carriage of mail in the U.S.-foreign trade are exempt from both tariff
and service contract filing requirements. Under current practice,
furthermore, carriers under contract with the USPS do not file their
service contracts with the Commission. USPS argues that there is
nothing contained in OSRA which would require a change from current
practice. For the foregoing reasons, therefore, USPS urges the
Commission to carry forward the exemption for mail to the Commission's
regulation on service contracts.12
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\12\ USPS also argues that the current regulations, 46 CFR
Sec. 514.3(b)(2) indicate that the Commission recognizes that mail
transportation is exempt from the Act itself, as well as from its
implementing regulations. Further, USPS argues, the Postal
Reorganization Act not only preempts the application of the Shipping
Act to mail transportation, but further exempts mail transportation
by the USPS from all other federal contract laws except those listed
in 39 U.S.C. Sec. 410(b). 39 U.S.C. Sec. 5001 et seq. Finally, USPS
contends, mail is not cargo, and for that reason the Commission's
requirements do not apply to contracts for its movement.
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USPS' comment was the only comment regarding section 16 exemptions
the Commission received, with the exception of the Household Goods
Forwarders Association of America's comments to the proposed rule. USPS
did not comment on the NPR, and the Commission did not consider in the
IFR whether exemptions which had appeared in the combined tariff and
service contract part of the Commission's former regulations (part 514)
would continue to have application.
The Commission's regulations on tariffs and service contracts were
originally contained in separate parts of the CFR. Subsequently,
however, when the ATFI filing system was adopted to accept ETs, the
Commission combined its service contract and tariff regulations into
one part. As USPS' comment has brought to the Commission's attention
that it had inadvertently failed to consider in the IFR the extension
of certain exemptions which had been contained in the combined tariffs/
service contract rule, the Commission will carry forward the section 16
exemptions the Commission had previously granted and which have
relevance for the service contract filing requirements of this part.
The Commission has therefore revised Sec. 530.13 to include the
relevant Commission exemptions, and further to indicate that terms not
particularly defined in this section will have the same meaning they
have as defined by the Act itself or by 46 CFR part 520 (Carrier
Automated Tariff Systems).
As the Commission previously noted in the IFR, which it now
confirms as final, it has received approval from the Office of
Management and Budget for this collection of information pursuant to
the Paperwork Reduction Act of 1995, as amended. Also as noted in the
IFR, in accordance with that Act, agencies are required to display a
currently valid control number. The valid control number for this
collection of information is 3072-0065. 64 FR 11206.
List of Subjects in 46 CFR Part 530
Freight, Maritime carriers, Reporting and recordkeeping
requirements.
Accordingly, the interim final rule removing 46 CFR part 514 and
adding 46 CFR part 530 which was published at 64 FR 11186-11215 on
March 8, 1999, is adopted as a final rule with the following changes:
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, 1707, 1716.
2. Amend Sec. 530.3 by revising paragraph (m) to read as follows:
Sec. 530.3 Definitions.
* * * * *
(m) Motor vehicle means a wheeled vehicle whose primary purpose is
ordinarily the non-commercial transportation of passengers, including
an automobile, pickup truck, minivan or sport utility vehicle.
* * * * *
3. Amend Sec. 530.8 by revising paragraph (c) and adding paragraph
(e) to read as follows:
Sec. 530.8 Service Contracts.
* * * * *
[[Page 23793]]
(c) Certainty of terms. The terms described in paragraph (b) of
this section may not:
(1) Be uncertain, vague or ambiguous;
(2) Make reference to terms not explicitly contained in the service
contract itself unless:
(i) Those terms are contained in a publication widely available to
the public and well known within the industry; or
(ii) Those terms are contained in a service contract register
filing duly filed in the Commission's dial-up filing system and are
available to all parties to the service contract. Service contract
register filings are subject to the same requirements of this part as
service contracts and amendments.
* * * * *
(e) Exception in case of malfunction of Commission filing system.
(1) 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, affected parties will not be subject to
the requirements of paragraph (a) of this section and Sec. 530.14(a)
that a service contract be filed before cargo is shipped under it.
(2) However, service contracts which go into effect before they are
filed, pursuant to paragraph (e)(1) of this section, must be filed
within twenty-four (24) hours of the Commission's filing systems'
return to service.
(3) Failure to file a service contract that goes into effect before
it is filed, pursuant to paragraph (e)(1) of this section, within
twenty-four (24) hours of the Commission's filing systems' return to
service will be considered a violation of Commission regulations.
4. Amend Sec. 530.10 by revising paragraph (d)(1) to read as
follows:
Sec. 530.10 Amendment, correction, and cancellation.
* * * * *
(d) Cancellation. (1) An account may be adjusted for events and
damages covered by the service contract. This shall include adjustment
necessitated by either liability for liquidated damages appearing in
the service contract as filed with the Commission under
Sec. 530.8(b)(7), or the occurrence of an event described below in
paragraph (d)(2) of this section.
* * * * *
5. Amend Sec. 530.12 by redesignating the second paragraph (c) and
paragraphs (d) through (g) as paragraph (d) and paragraphs (e) through
(h), respectively, and by revising paragraph (c) and newly redesignated
paragraphs (d) through (h) to read as follows:
Sec. 530.12 Publication.
* * * * *
(c) Location. (1) Generally. The statement of essential terms shall
be published as a separate part of the individual carrier's automated
tariff system.
(2) Multi-party service contracts. For service contracts in which
more than one carrier participates or is eligible to participate, the
statement of essential terms shall be published:
(i) If the service contract is entered into under the authority of
a conference agreement, then in that conference's automated tariff
system;
(ii) If the service contract is entered into under the authority of
a non-conference agreement, then in each of the participating or
eligible-to-participate carriers' individual automated tariff systems,
clearly indicating the relevant FMC-assigned agreement number.
(d) References. The statement of essential terms shall contain a
reference to the ``SC Number'' as described in Sec. 530.8(d)(1).
(e) Terms. (1) The publication of the statement of essential terms
shall accurately reflect the terms as filed confidentially with the
Commission.
(2) If any of the published essential terms include information not
required to be filed with the Commission but filed voluntarily, the
statement of essential terms shall so note.
(f) Agents. Common carriers, conferences, or agreements may use
agents to meet their publication requirements under this part.
(g) Commission listing. The Commission will publish on its website,
www.fmc.gov, a listing of the locations of all service contract
essential terms publications.
(h) Updating statements of essential terms. To ensure that the
information contained in a published statement of essential terms is
current and accurate, the statement of essential terms publication
shall include a prominent notice indicating the date of its most recent
publication or revision. When the published statement of essential
terms is affected by filed amendments, corrections, or cancellations,
the current terms shall be changed and published as soon as possible in
the relevant statement of essential terms.
6. Revise Sec. 530.13 to read as follows:
Sec. 530.13 Exceptions and exemptions.
(a) Statutory exceptions. Service contracts for the movement of the
following, as defined in section 3 of the Act, Sec. 530.3 or Sec. 520.1
of this chapter, are excepted by section 8(c) of the Act from the
requirements of that section, and are therefore not subject to the
requirements of this part:
(1) Bulk cargo;
(2) Forest products;
(3) Recycled metal scrap;
(4) New assembled motor vehicles; and
(5) Waste paper or paper waste.
(b) Commission exemptions. Exemptions from the requirements of this
part are governed by section 16 of the Act and Rule 67 of the
Commission's Rules of Practice and Procedure, Sec. 502.67 of this
chapter. The following commodities and/or services are exempt from the
requirements of this part:
(1) Mail in foreign commerce. Transportation of mail between the
United States and foreign countries.
(2) Department of Defense cargo. Transportation of U.S. Department
of Defense cargo moving in foreign commerce under terms and conditions
negotiated and approved by the Military Transportation Management
Command and published in a universal service contract. An exact copy of
the universal service contract, including any amendments thereto, shall
be filed with the Commission as soon as it becomes available.
(c) Inclusion of excepted or exempted matter. (1) The Commission
will not accept for filing service contracts which exclusively concern
the commodities or services listed in paragraph (a) or (b) of this
section.
(2) Service contracts filed with the Commission may include the
commodities or services listed in paragraph (a) or (b) of this section
only if:
(i) There is a tariff of general applicability for the
transportation, which contains a specific commodity rate for the
commodity or service in question; or
(ii) The service contract itself sets forth a rate or charge which
will be applied if the contract is canceled, as defined in
Sec. 530.10(a)(3).
(d) Waiver. Upon filing a service contract pursuant to paragraph
(c) of this section, the service contract shall be subject to the same
requirements as those for service contracts generally.
7. Amend Appendix A to part 530 by revising the introductory text,
paragraph A under the heading Registration, Log-On ID and Password, and
by adding paragraph D under the same heading to read as follows:
Appendix A---Instructions for the Filing of Service Contracts
Service contracts shall be filed in accordance with one of the
methods described in this Appendix, at the filer's
[[Page 23794]]
option. Carriers, conferences, and agreements may only be registered
to file in one system at a particular time. Publishers may be
registered in both systems, but must file each carrier, conference
or agreement service contracts into only one system.
I. Registration, Log-On ID and Password
A. To register for filing, a carrier, conference, agreement or
publisher must submit the Service Contract Registration Form (Form
FMC-83) to BTCL. A separate Service Contract Registration Form is
required for each individual that will file service contracts.
However, each organization certified prior to May 1, 1999 to perform
batch filing of Essential Terms Publications in the Commission's
former Automated Tariff Filing Information (``ATFI'') system, will
be issued a new log-on ID and password for access to file service
contracts. Filers who wish a third party (publisher) to file their
service contracts must so indicate on Form FMC-83. Authority for
organizational filing can be transferred by submitting an amended
registration form requesting the assignment of a new log-on ID and
password. The original log-on ID will be canceled when a replacement
log-on ID is issued.
* * * * *
D. A carrier, conference, or agreement may be registered to file
its service contracts in only one of the Commission's filing systems
at any given time. A publisher which files on behalf of many
carriers, conferences or agreements may be registered to file into
both systems simultaneously, however, each of its clients' service
contracts must be filed in only one system. For example, a publisher
who files for carrier X and conference Y may file all of carrier X's
service contracts into the option 1 (internet-based) filing system,
and all of conference Y's service contracts into the option 2 (dial-
up) filing system, but cannot file some of carrier X's service
contracts in the option 1 filing system and some of carrier X's
service contracts in the option 2 filing system.
* * * * *
By the Commission.
Bryant L. VanBrakle,
Secretary.
[FR Doc. 99-11058 Filed 4-29-99; 4:01 pm]
BILLING CODE 6730-01-P
