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