[Federal Register Volume 63, Number 246 (Wednesday, December 23, 1998)]
[Proposed Rules]
[Pages 71062-71076]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-33894]
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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: Notice of Proposed Rulemaking.
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SUMMARY: The Federal Maritime Commission (``Commission'' or ``FMC'')
proposes to revise its regulations governing service contracts between
shippers and ocean common carriers to reflect changes made to the
Shipping Act of 1984 (``1984 Act''), the Ocean Shipping Reform Act of
1998 and the Coast Guard Authorization Act of 1998). Specifically, the
Commission proposes to revise its regulations implementing section 8(c)
of the 1984 Act and create a new regulation which would govern only
service contract filings. The Commission is proposing to establish new
rules for service contract filing and essential terms publication,
revise its regulations to include the newly permitted agreement and
multiple shipper-party service contracts, and make other conforming
changes. The Commission is also proposing an electronic filing system
for service contracts which is intended to reduce the filing burden on
parties and accommodate the efficient processing and review of what is
predicted to be a large number of filed contracts.
DATES: Submit comments on or before January 22, 1999.
ADDRESSES: Address all comments concerning this proposed rule to:
Joseph C. Polking, Secretary, Federal Maritime Commission, 800 North
Capitol Street, NW., Room 1046, Washington, DC 20573-0001.
FOR FURTHER INFORMATION CONTACT:
Thomas Panebianco, General Counsel, Federal Maritime Commission, 800
North Capitol Street, NW., Washington, DC 20573-0001, (202) 523-5740
Bryant L. VanBrakle, Director, Bureau of Tariffs, Certification and
Licensing, Federal Maritime Commission, 800 North Capitol Street, NW.,
Washington, DC 20573-0001, (202) 523-5796
SUPPLEMENTARY INFORMATION: The Ocean Shipping Reform Act of 1998, Pub.
L. 105-258, 112 Stat. 1902 (``OSRA'') was signed into law on October
14, 1998. OSRA makes several changes to the existing system by which
the Federal Maritime Commission (``FMC'' or ``Commission'') regulates
ocean shipping in the foreign commerce of the
[[Page 71063]]
United States. OSRA makes significant changes to the provisions
governing service contracts under the 1984 Act. On November 13, 1998,
the Coast Guard Authorization Act of 1998, Pub. L. 105-383, 112 Stat.
3411, was signed by the President. That Act also amends the 1984 Act by
redefining the term ``common carrier.'' Accordingly, the Commission now
proposes to update, redesignate and clarify its rules to implement the
changes mandated by these laws. This supplemental information presents
these changes in detail.
The proposal seeks to carry over existing regulations (particularly
46 CFR 514.7 and 514.17) where they comport with the revisions to the
1984 Act made by OSRA and where they represent a sound approach. The
purpose, scope, applicability and definition sections, found in
proposed regulations Secs. 530.1, 530.2, 530.3 and 530.4 are adapted
from current Secs. 514.1(b) (purpose), 514.1(a) (scope) and 514.2
(definitions). These proposed rules envision an electronic filing
system for service contracts, and coordinate the publication of
essential terms under section 8(c) of the 1984 Act with the publication
of tariffs under proposed regulation 46 CFR part 520.
OSRA fundamentally revises the statutory scheme for tariffs and
service contracts. Tariffs are no longer required to be filed with the
Commission. Service contracts, on the other hand, are required to be
filed confidentially with the Commission, and must contain specified
essential terms. Similarly, while OSRA preserves the requirement that
certain essential terms be published, that requirement has been
significantly scaled back and includes only the following terms: (1)
Origin and destination port ranges; (2) the commodity or commodities
involved; (3) the minimum volume or portion; and (4) the duration of
the service contract. Just as significant to service contracting is the
repeal of the ``me-too'' right for similarly situated shippers.
Carriers will no longer be required to offer the same contract terms to
similarly situated shippers.
Another significant change made by OSRA is the authorization of
non-conference ocean common carrier agreements to enter into service
contracts. Furthermore, under OSRA, unrelated, multiple shippers may
enter into service contracts without necessarily being members of
shippers' associations. These changes significantly free parties to
make service contracts centered around the realities of the
marketplace.
The Commission is mindful of several competing interests regarding
the filing of service contracts. First, the filing requirements must be
crafted with an appreciation for regulated entities' interests in
simple, speedy and straightforward filing procedures. Second, they must
enable the Commission to fulfill its statutory duty to guard against
section 10 violations and section 6(g) matters. This responsibility on
the part of the Commission is especially important now that service
contracts will be confidential; potentially aggrieved parties will rely
on Commission oversight. This will be complicated by the predicted
increase in the sheer number of service contracts filed. It is with
these goals in mind that the Commission proposes the following
regulations, designed to enable the Commission to fulfill its
regulatory mandate while imposing a minimal burden on regulated
parties.
The Proposed Rule
The proposed rule redesignates the Commission's rules on service
contracts currently in 46 CFR part 514 into a new part, 46 CFR part
530. The following discussion covers the proposed rule's treatment of
service contract filings; essential terms publications; carrier duty to
disclose to collective bargaining agreements; confidentiality; excepted
commodity (``mixed'') and global contracts; re-rating; and
miscellaneous matters.
General filing requirements
Filing requirements in the existing regulations (46 CFR part 514)
as well as in the proposed regulations, govern initial filings,
amendments, and notices of correction and cancellation. In an attempt
to update and streamline the filing system, as well as enable the
Commission to fulfill its statutory monitoring duty over service
contracts, the Commission is proposing to initiate a filing system
which would be completely electronic. Due to the volume of service
contract filings the Commission expects after May 1, 1999, adoption of
an electronic, as opposed to a paper-based, system appears to be the
most practical approach.
Given the exceptionally short legislative deadlines and limitations
on resources available to the Commission, the only viable approach to
implementing an electronic filing system at this juncture would be to
create a system adapted from the Commission's currently used filing
system for the Essential Terms (``ETs'') of service contracts. The
proposed rule reflects this approach. It envisions accepting only
electronic filings (including amendments to service contracts filed
prior to May 1, 1999); amendments to paper-filed service contracts
would also necessitate the re-filing in electronic form of the
underlying, i.e. initial, contract itself.
While the creation of an entirely new, tailor-made service contract
filing system could have benefits over the proposed approach in terms
of simplicity or flexibility, the creation of such a new system simply
is not possible before May 1, 1999. The Commission invites comments on
approaches to establishing such a new system, however, and if warranted
and financially feasible could pursue such a strategy as a longer-term
goal, treating the proposed system as a transitional solution.
The Commission has determined not to propose continuing the paper
filing of service contracts, based on an assessment that an increased
volume of contracts would create unworkable administrative burdens on
both the industry and the agency and could substantially impair the
Commission's ability to fulfill its oversight, enforcement, and
monitoring responsibilities. However, commenters are welcome to address
this matter as well.
The proposed regulation includes the details of this system. See,
Sec. 530.9 and Appendix A. The Commission solicits from the industry
its views on the benefits and limitations of this approach and any
suggested alternatives.
Registration of filers
The proposed rule carries over the existing filing fees for service
contract and amendment filings, and for corrections to service
contracts. Also, provision has been made to ``grandfather''
organizations currently registered to file essential terms
publications, with no requirement that they submit a further
registration fee. All individuals who presently possess an organization
maintenance log-on be issued a new log-on and password for the new
system. All other potential service contract filers must pay the
requisite fee and be registered for service contract filing prior to
filing service contracts. The proposed rule would also ``grandfather''
software which was certified by the old system, but would allow
software providers to test their filing software if they so desired for
the same certification fee.
Publication of essential terms
OSRA continues to require the publication of certain essential
terms of service contracts. Section 8(c)(3) instructs carrier parties
to service contracts to make these essential terms
[[Page 71064]]
available to the public ``in tariff format.'' The proposed regulation
suggests that carriers and conferences should be able to satisfy this
obligation in the same way they publish their tariff information under
proposed 46 CFR part 520. Comments are solicited on any other options
which might also be feasible and which would affect compliance with the
publication requirement of the Act.
In an effort to assist the shipping public find statements of
essential terms published according to this part, the Commission
anticipates making a list of the locations of all such publications
available on the FMC website. 46 CFR 530.13(f). The Commission requests
comments this proposal.
OSRA removes the requirement that carriers and conferences provide
``me-too'' rights to similarly situated shippers on their service
contracts. Similarly, OSRA no longer requires carriers and conferences
to publish most of the essential terms of service contracts filed with
the Commission. It appears that allowing carriers and conferences to
publish their (non-confidential) essential terms by the same method
they publish their tariffs is the most efficient approach to the
publication requirement. Therefore, the proposed rule cross-references
the technical requirements of the newly proposed tariff publication
regulations to effectuate the essential terms publication required
under this part.
Agreements and service contracting
Commission regulation governing the filing of individual carrier
and conference service contracts remains, for the most part, the same
as it had been under previous Commission regulation. However, there has
been one significant change by OSRA: The additional authority for an
``agreement'' (as opposed to only a ``conference'') to enter into
service contracts. This raises several issues which the Commission will
address in this rulemaking.
Often, non-conference agreements do not create a central
secretariat or authority to act on the agreement's behalf, nor do they
maintain a common tariff. Unlike conferences, therefore, such
agreements may have no uniform or standard method for filing or
publishing the agreement service contract matters.1
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\1\ Indeed, while the statute speaks of a ``carrier or an
agreement'' entering into a contract, in instances where the
agreement is not a distinct legal entity, the Commission anticipates
that it is the multiple carrier members, rather than the agreement
itself, who would be signatories to such a contract.
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With regard to non-conference agreements, the proposed rule
indicates that any of the agreement parties to the service contract may
file; if none of the parties properly files, the liability for such
failure to file would rest equally on all agreement members party to
the contract.
The question arises of how to require publication of statements of
essential terms by agreements which do not have a common tariff. The
proposed rule requires that each member of a non-conference agreement
publish the statement of essential terms in its individual tariff, and
reflect in its statement of essential terms the identity of the other
carrier parties. 46 CFR 530.13(b). The Commission welcomes any comments
as to alternative approaches by which non-conference agreement carriers
may satisfy the publication requirement of section 8(c)(3) of the Act
as revised by OSRA.
A similar issue arises with the Commission's policy regarding the
filing by conferences of service contracts to which fewer than all
members are parties. In the past, the Commission's policy has been to
impose on the conferences the duty to file and publish the service
contract material for service contracts entered into under the
conference agreement, in which fewer than all the members would
participate. 46 CFR 514.4(d)(5)(B). For service contracts outside the
scope of the conference, the conference retained the authority to file
on behalf of its member(s), but the carrier(s) involved also had a
separate duty to file. 46 CFR 514.4(d)(5)(B)(2)(ii).
It appears necessary to revisit these policies at this time. A
requirement that conferences file service contracts entered into by a
subset of its membership would seem inconsistent with OSRA's new
prohibition on agreement members being required to disclose the terms
of their contracts, as well as other provisions regarding independent
and confidential service contracting. Therefore, we are proposing that,
for filing and publication purposes, contracts entered into by some,
but not all, of a conference's members be treated in the same manner as
non-conference agreement contracts. 46 CFR 530.5, 530.13.
Finally, the Commission must resolve how to handle re-rating issues
which might arise under non-conference agreement service contracts. By
definition, agreements do not have common tariffs at which carriage
under a terminated or canceled contract could be re-rated. Therefore,
if a service contract is rejected for not meeting the filing
requirements, deadlines, etc., the issue of which rate should be
applied to cargo which moved under that contract presents itself. One
approach to this problem would be to re-rate the cargo at the tariff
rate for that commodity of the carrier which actually moved the cargo.
46 CFR 530.16. While this is the approach presented in the proposed
regulations, the Commission is interested to hear any others which
might be suggested in the comments.
Duty to Disclose to Labor Organizations
In light of the confidentiality of service contracts and some of
their essential terms, OSRA amends section 8(c)(4) to require that a
carrier which is a party to or is subject to a collective bargaining
agreement with a labor organization must respond within a reasonable
period of time to that labor organization's request regarding the
carrier's responsibility for certain activities related to cargoes
transported under a service contract. The Commission is proposing, at
46 CFR 530.8, certain definitions of ``reasonable period of time'' for
responding to a labor organization's request for information under
section 8(c)(4) of the Act. This definition reflects the concern that
labor organizations are apprised of the handling responsibility for
cargo before that cargo arrives at the discharge port. The Commission
expects that aggrieved labor organizations will use existing Commission
processes in the event of noncompliance by a carrier. The Commission
would entertain proposals for more specific and stringent rules if the
existing standards and procedures prove inadequate in practice.
Commission Confidentiality
Proposed regulation 46 CFR 530.4 seeks to amend the confidentiality
provision as follows: ``Nothing contained in this part shall preclude
the Commission from providing certain information from service
contracts to another agency of the Federal government of the United
States as deemed necessary.'' Other federal agencies, in the
administration of their statutorily mandated responsibilities, may have
a need for service contract information which will otherwise be filed
confidentially with the Commission and which under the existing 1984
Act is disclosed in the published essential terms statement. In an
April 1, 1998 floor statement, the Senate bill's sponsor, Senator
Hutchison, noted that
Federal agencies have expressed concerns over how they are to
ensure ocean carrier compliance with United States cargo preference
law requirements concerning shipping rates in an era of service
contract rate confidentiality. The FMC is encouraged
[[Page 71065]]
to work with affected Federal agencies to address this concern.
Cong. Rec. S3320,(daily ed. April 21, 1998)(statement of Sen.
Hutchison). Similarly, in an October 1, 1998 floor exchange, the
Chairman of the Senate Committee on Commerce, Science and
Transportation, Senator McCain, asked Senator Hutchison
to clarify the ability of the FMC to share confidential service
contract rate and service information with other Federal agencies to
ensure that the U.S.-fleet shipping rates for preference cargo
shipments meet statutory requirements.
Cong. Rec. S11302 (daily ed. Oct. 1, 1998)(Statement of Sen. McCain).
Senator Hutchison replied,
. . . I want to make it clear that the FMC is authorized to
share with another Federal agency service contract information that
parties of the service contract have legally decided to protect from
public disclosure in order to enable that Federal agency to ensure
the compliance of U.S.-flag ocean common carriers with cargo
preference law shipping rate requirements. Of course, that
confidential service contract information would remain protected
from disclosure to the public consistent with the Shipping Act of
1984, as amended by the Ocean Shipping Reform Act of 1998, and other
applicable Federal Laws.
Cong. Rec. S11302 (daily ed. Oct. 1, 1998)(Statement of Sen.
Hutchison). Thus, it is clear that the confidentiality afforded to
service contract information is limited to nondisclosure to the public,
and was not intended by Congress to fetter other Federal agencies in
their oversight responsibilities.2 It is therefore the
intention of the Commission to allow access to filed contracts to
Federal government agencies where appropriate; any such disclosures
will not jeopardize the statutory aim of nondisclosure of confidential
service contract information to nongovernmental entities.
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\2\ With respect to Department of Defense cargo preference law
oversight, moreover, it also appears that the Federal Acquisition
Regulations, 48 CFR 9.104-1(g), 9.105-1(c)(3), 15.404-1(a)(1), and
15.403-3(a), would provide the Department access to the service
contract information in any event, although in a less efficient and
more cumbersome manner.
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Service Contracts With NVOCCs as Shipper Parties
Service contracts with non-vessel-operating common carriers
(``NVOCCs'') remain subject to special requirements for certification
of NVOCCs'' financial responsibility. See 46 CFR 514.7(e) and 46 CFR
530.7. The financial responsibility procedures in this proposed rule
comport with the proposed regulation at 46 CFR Sec. 515.27 (dealing
with financial responsibilities of ocean transportation
intermediaries).
Exceptions and Rejection
Congress has directed the Commission to refuse to accept any
service contract dealing with commodities excepted from application by
section 8(c)(2) or receiving an exemption under section 16 of the 1984
Act. S.Rep. No. 105-61, 105th Cong. 1st Sess., at 23
(1997)(``Report''). The Commission proposes to continue to permit the
filing of service contracts which include both excepted and non-
excepted commodities (``mixed'' contracts), in lieu of requiring the
parties to rewrite their contracts to separate excepted and non-
excepted commodities for filing purposes. Therefore, the Commission
seeks comments on proposed regulation 46 CFR 530.14, particularly
regarding the burden that would result to filers if service contracts
were required to be drafted specifically so that excepted commodities
were not covered. The proposal indicates that the Commission would
refuse to accept for filing service contracts which exclusively cover
excepted commodities, in keeping with the Report language.3
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\3\ The Commission solicited comment on this subject in Docket
No. 85-6, Notice of Inquiry Concerning the Interpretation of Section
8(a) and (8)(c) of the Shipping Act of 1984, as well as Docket No.
86-6, Service Contracts. In Docket No. 86-6, the Commission issued
its Final Rule, 52 FR 23989 (June 26, 1989), and noted that
``service contracts often include a mixture of exempt and non-exempt
commodities, so that a shipper can obtain a better contract rate.
Presumably, the ability to offer service contracts on mixed
commodities also benefits carriers.'' Id. at 23996. The Commission
assumes that the same holds true for the shipping industry today,
but solicits comment on industry practice and the burden which would
be imposed if the Commission were to require that filed service
contracts cover only non-excepted commodities.
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Global Service Contracts
Members of the carrier industry have suggested that the Commission
should accept filings of service contracts which include terms covering
both U.S.-to-foreign and foreign-to-foreign movements of cargo
(hereinafter ``global contracts''). Clearly, the foreign-to-foreign
activity lies outside the Commission's jurisdiction to regulate. This
issue was before the Commission previously in Docket No. 92-20, Service
Contracts in Foreign-to-Foreign Trades, Advance Notice of Proposed
Rulemaking, 57 Fed. Reg. 18855 (May 1, 1992). That proceeding was
discontinued, as carriers, conferences and shippers' associations
strongly opposed the proposal to allow the filing of global service
contracts. In their comments in that proceeding, several carriers and
conferences noted that there was no business efficiency reason to allow
the filing of global service contracts as ``there was no commercial
need'' for the ability to so. In contrast, several large shippers
expressed their desire to have the ability to enter into global service
contracts and to thereby simplify and aggregate their traffic and
logistics operations.
Many commenters in that proceeding suggested that global
contracting would severely interfere with or complicate ``me-too''
rights. Furthermore, the National Customs Brokers and Forwarders
Association of America stated that allowing such global contracts would
give rise to discrimination in favor of large global shippers that
could commit to larger worldwide volumes. However, Congress has
eliminated the Commission's mandate to guard against unreasonable
discrimination (except with regard to clearly defined protected
classes), retooling the Act to place more emphasis on individual
contracting and the marketplace.
There remains a concern, however, that allowing global service
contracts, in which rates in U.S. trades will depend on minimum volume
commitments calculated on a global basis, will complicate the
Commission's ability to monitor and enforce carriers' compliance with
their filed contract rates. While there is merit to this point, the
legal obstacles do not appear to be insurmountable. There is no bright-
line geographic limit to the Commission's ability to compel information
from carriers. Rather, information sought must be ``not unreasonable''
and ``reasonably relevant'' to a lawful Commission inquiry. United
States v. Morton Salt Company, 338 U.S. 632 (1950); Far East Conference
v. Federal Maritime Commission, 337 F.2d 146 (D.C. Cir. 1964).
Therefore, if information about the volumes moving in foreign-to-
foreign commerce is relevant to the question of what rate applies in a
U.S.-to-foreign trade (clearly a matter within the Commission's
jurisdiction), then it would appear that such information may be
compelled by the Commission. Moreover, we note that proper
administration of certain sections of the 1984 Act, i.e., section
13(b)(5), redesignated as 13(b)(6) by OSRA, would seem to require that
the Commission have the ability to compel information about cross-
trades. However, as a practical matter, auditing arrangements with
global quantities will undoubtedly generate substantial challenges.
Some of the objections in Docket No. 92-20 focused on whether
global
[[Page 71066]]
volumes were consistent with the requirement for the filing of minimum
volume commitments in public essential terms. While that issue was more
important when parties had the right to ``me-too'' the terms, it still
has some significance. The Commission proposes an approach that, when
parties have a unitary minimum volume commitment covering U.S.-and
foreign-to-foreign trades, it publish the amount in its public
essential terms publication, but clearly indicate for the public that
the volume includes quantities moving in foreign-to-foreign trades.
Furthermore, the concerns that conferences and niche carriers had
in 1992 may have disappeared completely with the ability of non-
conference agreements to enter into service contracts. Under OSRA,
alliances, along with individual carriers, will have the ability to
offer global service contracts. This ability, of course, will also be
affected by the Commission's approach on the treatment of less-than-
total agreement service contracts, as discussed more fully above.
Another question raised in Docket 92-20 was whether filing of
global contracts would somehow extend other provisions of the Act, such
as the prohibited acts in section 10, to the foreign-to-foreign legs.
It is clear, however, that there would be no authority for the
Commission to spontaneously extend its jurisdiction in this manner.
Therefore, it appears that there is little policy or legal necessity to
require parties to artificially structure their commercial dealings to
be coextensive with the Commission's regulatory jurisdiction. Rather, a
more sound approach would seem to be for carriers to enter into
contracts based on the requirements of the global market, for carriers
to submit them in their true and complete totality, and for the
Commission to regulate those carriers, their agreements and service
contracts to the extent of its authority, and not beyond.
It appears that the significant revisions to the 1984 Act
necessitating sweeping changes to the service contract filing
regulations, make this proposed rulemaking proceeding an opportune
moment for the Commission to revisit the issues presented by the
acceptance of filing for both mixed and global contracts. In light of
the regulatory changes mandated by OSRA, the current proposal seeks to
reduce the burden on the entities subject to the section 8(c) filing
and publication requirements, together with recognition of the
Commission's need to have the ability to easily access and search the
filed documents. Thus, the proposed regulation allows the filing of
service contracts which include (but are not limited to) excepted and
exempted commodities and service outside the U.S. foreign trades. The
Commission is concerned that it not overburden its filers, or encourage
them to create artificial documents which do not reflect the actual
underlying business agreement which the service contract represents.
Inland Portions of Through Movements to Europe
Unlike the United States, it appears that the European Commission
(``E.C.'')--while permitting conference service contracts for the ocean
movement of cargo--prohibits conference contracts which cover the
movement of cargo to inland points in Europe. Therefore, it seems that
carriers in the U.S.-European trade may participate in a conference
service contract covering U.S.-Europe ocean movements, and sign an
individual service contract covering European inland transport for the
same shipper customer. A question has arisen as to whether these
contracts for European inland transport must be filed with the
Commission. It would seem that filing would be consistent with
statutory requirements to the extent the contracts establish the
European inland portion of a through rate charged by a carrier in a
U.S.-Europe intermodal movement. However, the Commission welcomes
comments on how it could minimize the regulatory burdens occasioned by
these differences in regulatory regimes, to the extent it may do so
given its own statutory responsibility.
Cross-Referencing Tariffs
Presently, most filed service contracts contain re-occurring terms
common to all of a carrier's or conference's service contracts
(including matters such as free time and demurrage, bunkering rates,
currency matters, etc.) the complete text of which would be very
cumbersome for the carrier party to file with the service contract.
Therefore, service contracts almost always make cross-reference to
terms contained in that carrier's or conference's tariff or an
essential terms publication.
The Commission recognizes that it was Congress' intent, by lifting
the requirement that tariffs be filed with the Commission, to allow
parties to service contracts more freedom and flexibility in their
commercial arrangements. The proposed rule, Sec. 530.9(c)(2), thus
permits filed service contracts to refer to terms outside the four
corners of the filed service contract, but only if they are contained
in the carrier's or conference's tariff publication.
Another option for the system is to allow service contract filers
to file with the Commission a ``general rules'' filing as a part of
their service contract register. This might be useful for filers which
file multiple service contracts with duplicative and/or commonly
applicable items (e.g. rules for hazardous cargo, equipment
interchanges, mileage guide publications, location groups, inland
rates, and bills of lading); rather than repeatedly submitting the text
of these amendments in each contract filing, filers could simply
reference their ``general rules'' filing. This would also maintain the
confidentiality of such terms. Filing and amendments to these ``general
rules'' would be subject to the filing requirements of service
contracts and amendments. The Commission wishes to hear how the
industry views this issue and what options may be available for its
resolution.
Rejection of Service Contract Filings
Commission regulations currently outline the procedures for
rejection of service contracts and essential terms filed with the
Commission. 46 CFR 514.7(j). The Commission rejects service contracts
or their amendments which do not conform to the requirements of the
1984 Act or Commission regulation, including timeliness of filing and
adequacy and accuracy of the publication of the statement of essential
terms. The proposed regulation adapts the current rejection rules as
necessary to meet the changes to the 1984 Act made by OSRA. The
proposed regulations also provide for ``non-acceptance,'' a new term
reflecting the congressional mandate that the Commission not accept for
filing service contracts which cover only excepted commodities,
consistent with congressional directives.
The proposed regulations also anticipate re-rating for service
contracts with non-conference agreements. Such re-rating will be made,
under proposed regulation 46 CFR part 530 subpart E, at the tariff rate
of the carrier which actually carried the cargo in question.
The definitions of ocean common carrier and conference are changed
to reflect the concerns the Commission discussed in its proposed
Agreements rulemaking. See, 46 CFR part 535.
The reporting requirements contained in 46 CFR part 530 have been
submitted to the Office of Management and Budget (OMB). The estimated
total annual burden for the estimated 155 annual respondents is 303,953
manhours. This estimate includes, as applicable, the
[[Page 71067]]
time needed to review instructions, develop, acquire, install, and
utilize technology and systems for the purposes of collecting,
validating, and verifying information, processing and maintaining
information, and disclosing and providing information; adjust the
existing ways to comply with any previously applicable instructions and
requirements; train personnel to respond to a collection of
information, search existing data sources, gathering and maintain the
data needed, and complete and review the collection of information; and
transmit or otherwise disclose the information.
Send comments regarding the burden estimate to the Office of
Information and Regulatory Affairs, Office of Management and Budget,
Attention Desk Officer for the Federal Maritime Commission, New
Executive Office Building, 725 17th Street, NW, Washington, DC 20503
within 30 days of publication in the Federal Register.
The FMC would also like to solicit comments to: (a) Evaluate
whether the proposed collection of information is necessary for the
proper performance of the functions of the agency, including whether
the information will have practical utility; (b) evaluate the accuracy
of the Commission's burden estimates for the proposed collection of
information; (c) enhance the quality, utility, and clarity of the
information to be collected; and (d) minimize the burden of the
collection of information on respondents, including the use of
automated collection techniques or other forms of information
technology. Comments submitted in response to this proposed rulemaking
will be summarized and/or included in the final rule and will become a
matter of public record.
The Chairman certifies, pursuant to section 605 of the Regulatory
Flexibility Act, 5 U.S.C. 605, that the proposed amendments will not,
if promulgated, have a significant impact on a substantial number of
small entities. The affected universe of the parties is limited to
vessel-operating common carriers. 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 for 46 CFR Parts 514 and 530
Freight, Maritime carriers, Reporting and recordkeeping
requirements.
For the reasons set out in the preamble, the Commission proposes to
remove 46 CFR part 514 and to add new 46 CFR part 530 to subchapter B
to read as follows:
PART 514--[REMOVED]
PART 530--SERVICE CONTRACTS
Subpart A--General Provisions
Sec.
530.1 Purpose.
530.2 Scope and applicability.
530.3 Definitions.
530.4 Confidentiality.
530.5 Duty to file.
530.6 Service contracts with NVOCCs.
530.7 Certification of shipper status.
530.8 Duty to labor organizations.
Subpart B--Filing Requirements
530.9 Service contracts.
530.10 Notices.
530.11 Amendment, correction, and cancellation.
530.12 Filing fees and other costs.
Subpart C--Publication of Essential Terms
530.13 Publication.
Subpart D--Exceptions
530.14 Exceptions.
Subpart E--Rejection
530.15 Contract non-acceptance, rejection and notice.
530.16 Implementation, prohibition and rerating.
Subpart F--Recordkeeping and Audit
530.17 Recordkeeping and audit.
Appendix A to Part 530--Instructions for the Filing of Service
Contracts
Exhibit 1 to Part 530--Filer Registration Form and Instructions
Authority: 46 U.S.C. App. 1704, 1705, as amended by Pub. L. 105-
258. 112 Stat. 1902.
Subpart A--General Provisions
Sec. 530.1 Purpose.
The purpose of this part is to facilitate filing of service
contracts and publication of certain essential terms of those service
contracts as required by section 8(c) of the Shipping Act of 1984
(``Act''). This part enables the Commission to review service contracts
to ensure that these contracts and the parties to them comport to the
requirements of the Act. It is also the purpose of this part to
implement electronic filing provisions for service contracts to
facilitate compliance and minimize the burden on the oceanborne
commerce of the United States.
Sec. 530.2 Scope and applicability.
An individual ocean common carrier or an agreement between or among
ocean common carriers may enter into a service contract with one or
more shippers subject to the requirements of the Act.
Sec. 530.3 Definitions.
When used in this part:
(a) Act means the Shipping Act of 1984 as amended by the Ocean
Shipping Reform Act of 1998.
(b) Agreement means an understanding, arrangement, or association
(written or oral) and any modification or cancellation thereof which
has been filed and effective under 46 CFR part 535 with the Federal
Maritime Commission. The term does not include a maritime labor
agreement.
(c) Authorized person means a carrier itself or a duly appointed
agent thereof who is authorized to file service contracts on behalf of
the carrier party to a service contract and to publish the
corresponding statement of essential terms and registered by the
Commission to file under Sec. 530.5(d) and appendix A of this part.
(d) BTCL means the Commission's Bureau of Tariffs, Certification
and Licensing or its successor bureau.
(e) Common carrier means a person holding itself out to the general
public to provide transportation by water of passengers or cargo
between the United States and a foreign country for compensation that:
(1) Assumes responsibility for the transportation from the port or
point of receipt to the port or point of destination; and
(2) Utilizes, for all or part of that transportation, a vessel
operating 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, or by a vessel when
primarily engaged in the carriage of perishable agricultural
commodities:
(i) If the common carrier and the owner of those commodities are
wholly owned, directly or indirectly, by a person primarily engaged in
the marketing and distribution of those commodities and
(ii) Only with respect to those commodities.
(f) Conference means an agreement between or among two or more
ocean common carriers which provides for the fixing and adherence to
uniform tariff rates, charges, practices and conditions of service
relating to the receipt, carriage, handling and/or delivery of
passengers or cargo for all members; but the term does not include
joint service, consortium, pooling, sailing, or transshipment
agreements.
[[Page 71068]]
(g) Controlled carrier means an ocean common carrier that is, or
whose operating assets are, directly or indirectly owned or controlled
by a government. Ownership or control by a government shall be deemed
to exist with respect to any ocean common carrier if:
(1) A majority portion of the interest in the carrier is owned or
controlled in any manner by that government, by any agency thereof, or
by any public or private person controlled by that government; or
(2) That government has the right to appoint or disapprove the
appointment of a majority of the directors, the chief operating officer
or the chief executive officer of the carrier.
(h) File or filing (of service contracts or amendments thereto)
means use of the Commission's electronic filing system for receipt of a
service contract or amendment and the recording of its receipt.
(i) Labor agreement means a collective-bargaining agreement between
an employer subject to the Act, or group of such employers, and a labor
organization or an agreement preparatory to such a collective-
bargaining agreement among members of a multi-employer bargaining
group, or an agreement specifically implementing provisions of such a
collective-bargaining agreement or providing for the formation,
financing, or administration of a multi-employer bargaining group, but
the term does not include an assessment agreement.
(j) 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 a
chemical parcel tanker.
(k) Non-vessel-operating common carrier (``NVOCC'') means an ocean
transportation intermediary as defined by section 3(17)(B) of the Act.
(l) Service contract means a written contract between one or more
shippers and an individual ocean common carrier or an agreement between
or among ocean common carriers, in which the shipper makes a commitment
to provide a certain minimum quantity or portion of its cargo or
freight revenue over a fixed time period, and the individual ocean
common carrier or the agreement commits to a certain rate or rate
schedule and a defined service level, such as, assured space, transit
time, port rotation, or similar service features. The contract may also
specify provisions in the event of nonperformance on the part of any
party.
(m) Shipper means a cargo owner; the person for whose account the
ocean transportation is provided; the person to whom delivery is to be
made; a shippers' association; or an NVOCC that accepts responsibility
for payment of all applicable charges under the service contract.
(n) Statement of essential terms means a concise statement of the
essential terms of a service contract required to be published under
Sec. 530.13 of this part.
Sec. 530.4 Confidentiality.
All service contracts and amendments to service contracts filed
with the Commission shall, to the full extent permitted by law, be held
in confidence. Nothing contained in this part shall preclude the
Commission from providing certain information from or access to service
contracts to another agency of the Federal government of the United
States.
Sec. 530.5 Duty to file.
(a) Generally. The duty under this part to file service contracts
and notices, and to publish statements of essential terms shall be upon
the carrier party or conference which is the signatory to the service
contract.
(b) Agreements. A service contract entered into by all members of a
non-conference agreement may be filed by any member of that agreement,
as the carrier parties may so designate. Signatories to a service
contract required to file a service contract under this part shall be
jointly and severally liable for a failure to file the service
contract.
(c) Conferences.--(1) The duty to file shall be upon the conference
for service contracts entered into by a conference on behalf of its
full membership.
(2) A service contract entered into by fewer than all the members
of a conference may be filed by any participating carrier, as the
participating carriers may so designate. Signatories to a service
contract required to file a service contract under this part shall be
jointly and severally liable for a failure to file the service
contract.
(d) Registration.--(1) Application. Authority to file or delegate
the authority to file must be requested by a responsible official of
the service contract carrier party in writing, by submitting to BTCL
the Registration Form in Exhibit 1 to this part and the appropriate fee
as defined under Sec. 530.12.
(2) Approved registrations. BTCL shall grant Registrants with
software certified by BTCL a log-on ID and password for filing and
amending service contracts.
(3) Software certification. Certification of software may be
requested by appointment through the Commission's Office of Information
Resources Management (``OIRM'') and payment of the appropriate fee as
set forth in Sec. 530.12. OIRM will test the software as set out in
appendix A to this part. Organizations certified prior to May 1, 1999
for the batch filing of ``Essential Terms Publications'' (``ETs'') in
the Commission's former ``Automated Tariff Filing Information System''
(``ATFI'') are not required to re-certify their software but may if
they so choose using the same procedure as for initial certification.
(4) Emergencies. In an emergency, a person, already authorized to
maintain and edit its firm's organization record under appendix A to
this part, may change a ``publisher'' under Appendix A to this part,
verbally notify BTCL, and promptly submit the proper documents.
(5) Prior registration and certification. Each organization
registered to file essential terms publications before May 1, 1999 will
be issued a log-on ID and password for access to file service contracts
under the Commission's electronic filing system.
Sec. 530.6 Service contracts with NVOCCs.
No ocean common carrier or agreement among ocean common carriers
may execute or file any service contract in which a contract party, an
affiliate of such contract party, or a member of a shippers'
association, entitled to receive service under the contract, is an
NVOCC, unless such NVOCC has a published tariff and proof of financial
responsibility as required by sections 8 and 19 of the Shipping Act of
1984 and Commission regulations under this part, and 46 CFR parts 515
and 520.
Sec. 530.7 Certification of shipper status.
(a) Certification. The shipper contract party shall sign and
certify on the signature page of the service contract its shipper
status (e.g., owner of the cargo, shippers' association, NVOCC, or
specified other designation), and the status of every affiliate of such
contract party or member of a shippers' association entitled to receive
service under the contract.
(b) Proof of tariff and financial responsibility. If the
certification completed by the contract party under paragraph (a) of
this section identifies the contract party or an affiliate or member of
a shippers' association as an
[[Page 71069]]
NVOCC, the ocean common carrier, conference or agreement shall obtain
proof that such NVOCC has a published tariff and proof of financial
responsibility as required under sections 8 and 19 of the 1984 Act
before signing the service contract. An ocean common carrier,
conference or agreement can obtain such proof by the same methods
prescribed in Sec. 515.27 of this chapter.
(c) Joining shippers' association during term of contract. If an
NVOCC joins a shippers' association during the term of a service
contract and is thereby entitled to receive service under the contract,
the NVOCC shall provide to the ocean common carrier, agreement or
conference the proof of compliance required by paragraph (b) of this
section prior to making any shipments under the contract.
(d) Reliance on NVOCC proof; independent knowledge. An ocean common
carrier, agreement or conference executing a service contract shall be
deemed to have complied with section 10(b)(12) of the Act upon meeting
the requirements of paragraphs (a) and (b) of this section, unless the
carrier party had reason to know such certification or documentation of
NVOCC tariff and bonding was false.
Sec. 530.8 Duty to labor organizations.
(a) In response to a written request transmitted from a labor
organization with which it is a party or is subject to the provisions
of a collective bargaining agreement with a labor organization, an
ocean common carrier shall state, within a reasonable period of time,
whether it is responsible for the following work at dock areas and
within port areas in the United States with respect to cargo
transported under a service contract:
(1) The movement of the shipper's cargo on a dock area or within
the port area or to or from railroad cars on a dock area or within a
port area;
(2) The assignment of intraport carriage of the shipper's cargo
between areas on a dock or within the port area;
(3) The assignment of the carriage of the shipper's cargo between a
container yard on a dock area or within the port area and a rail yard
adjacent to such container yard; or
(4) The assignment of container freight station work and
maintenance and repair work performed at a dock area or within the port
area.
(b) Terms. (1) For the purposes of this section, the terms dock
area and within the port area shall have the same meaning and scope as
defined in the applicable collective bargaining agreement.
(2) For the purposes of this section, a reasonable period of time
means:
(i) If the cargo in question is due to arrive in less than five (5)
days from the date of receipt of the request as defined in paragraph
(a) of this section, two (2) days from the date of receipt of the
request; but
(ii) If cargo in question is due to arrive in more than five (5)
days from the date of receipt of the request as defined in paragraph
(a) of this section, four (4) days from the date of receipt of the
request.
(3) For the purposes of this section, movement includes, but is not
necessarily limited to, the normal and usual aspects of the loading and
discharging cargo in containers; placement, positioning and re-
positioning of cargo or of containers; the insertion and removal of
cargo into and from containers; and the storage and warehousing of
cargo.
(4) For the purposes of this section, assignment includes, but is
not limited to, the carrier's direct or indirect control over the
parties which, the manner by which, or the means by which the shipper's
cargo is moved, regardless of whether such movement is completed within
or outside of containers.
(5) For the purposes of this section, transmit includes first-class
mail, by facsimile, by telegram, hand-delivery, or electronic mail
(``e-mail'').
(c) Applicability. This section requires the disclosure of
information by an ocean common carrier only if there exists an
applicable and otherwise lawful collective bargaining agreement which
pertains to that carrier.
(d) Disclosure not deemed admission or agreement. No disclosure
made by an ocean common carrier shall be deemed to be an admission or
agreement that any work is covered by a collective bargaining
agreement.
(e) Dispute resolution. Any dispute regarding whether any work is
covered by a collective bargaining agreement and the responsibility of
the ocean common carrier under such agreement shall be resolved solely
in accordance with the dispute resolution procedures contained in the
collective bargaining agreement and the National Labor Relations Act,
and without reference to this section.
(f) Jurisdiction and lawfulness. Nothing in this section has any
effect on the lawfulness or unlawfulness under the Shipping Act of
1984, the National Labor Relations Act, the Taft-Hartley Act, the
Federal Trade Commission Act, the antitrust laws, or any other federal
or state law, or any revisions or amendments thereto, of any collective
bargaining agreement or element thereof, including any element that
constitutes an essential term of a service contract under section 8(c)
of the Act.
Subpart B--Filing Requirements
Sec. 530.9 Service contracts.
(a) Authorized persons pursuant to Sec. 530.5 of this part shall
file electronically, in the manner set forth in appendix A to this
part, with BTCL a true and complete copy of every service contract
before any cargo moves pursuant to that service contract, and as
specified by this part.
(b) Every service contract filed with the Commission shall include
the complete terms of the contract, including, but not limited to, the
following:
(1) The origin port ranges in the case of port-to-port movements
and geographic areas in the case of through intermodal movements;
(2) The destination port ranges in the case of port-to-port
movements and geographic areas in the case of through intermodal
movements;
(3) The commodity or commodities involved;
(4) The minimum volume or portion;
(5) The service commitments;
(6) The line-haul rate;
(7) Liquidated damages for non-performance (if any);
(8) Duration;
(9) The legal names and business addresses of the contract parties;
the legal names of affiliates entitled to access the contract; the
names, titles and addresses of the representatives signing the contract
for the parties; and the date upon which the service contract was
signed. An agreement service contract must identify the FMC Agreement
Number(s) under which the service contract is filed. Carriers,
conferences and/or agreements which enter into contracts that include
affiliates must in each instance either:
(i) List the affiliates' business addresses; or
(ii) Certify that this information will be provided to the
Commission upon request within ten (10) business days of such request.
However, the requirements of this section do not apply to amendments to
contracts that have been filed in accordance with the requirements of
this section unless the amendment adds new parties or affiliates.
Subsequent references in the contract to the contract parties shall be
consistent with the first reference (e.g., (exact name), ``carrier,''
``shipper,'' or ``association,'' etc.);
(10) A certification of shipper status in accordance with
Sec. 530.7;
(11) A description of the shipment records which will be maintained
to
[[Page 71070]]
support the contract and the address, telephone number, and title of
the person who will respond to a request by making shipment records
available to the Commission for inspection under Sec. 530.17; and
(12) All other provisions of the contract.
(c) Certainty of terms. The terms described in paragraph (b)(1)-(8)
of this section may not:
(1) Be uncertain, vague or ambiguous; or
(2) Make reference to terms not explicitly detailed in the service
contract filing itself, unless those terms are contained in a tariff
publication in accordance with the requirements of 46 CFR part 520.
(d) Other requirements. Every service contract filed with BTCL
shall also include, in the manner set forth in appendix A to this part:
(1) A unique service contract number, and consecutively numbered
amendment number, if any, of more than one (1) but less than ten (10)
alphanumeric characters in length (``SC Number''); and
(2) A number of more than one (1) but less than ten (10)
alphanumeric characters in length which is the same number assigned to
the filer's publication of statement of essential terms (``ET
Number'').
Sec. 530.10 Notices.
(a) Notice to the Commission. Within 10 days of the occurrence of
any event listed below, there shall be filed with the Commission,
pursuant to the same procedures as those followed for the filing of an
amendment pursuant to Sec. 530.11 and appendix A to this part, a
detailed notice of:
(1) Correction (clerical or administrative errors);
(2) Cancellation;
(3) Termination by mutual agreement, breach or default not covered
by the service contract;
(4) Adjustment of accounts, by rerating, liquidated damages, or
otherwise under Sec. 530.16;
(5) Final settlement of any account adjusted as described in
Sec. 530.16; and
(6) Any change to:
(i) The name of a basic contract party; or
(ii) The list of affiliates, including changes to legal names and
business addresses, of any contract party entitled to receive or
authorized to offer services under the contract.
(b) Notice to contract party. A proposed final accounting or
rerating shall be issued to the appropriate contract party within 60
days of termination, discontinuance, breach or default of the service
contract, for:
(1) Liability for liquidated damages provided for by the service
contract; or
(2) Termination, breach or default not covered by the contract.
Sec. 530.11 Amendment, correction, and cancellation.
(a) Amendment. Service contracts may be amended by mutual agreement
of the parties to the contract and shall be filed electronically with
the Commission in the manner set forth in Sec. 530.9 and appendix A to
this part.
(b) Corrections. Either party to a filed service contract may
request permission to correct clerical or administrative errors in the
terms of a filed contract. Requests shall be filed, in duplicate, with
the Commission's Office of the Secretary within 45 days of the
contract's filing with the Commission, accompanied by remittance of a
$233 service fee, and shall include:
(1) A letter of transmittal explaining the purpose of the
submission, and providing specific information to identify the initial
or amended service contract to be corrected;
(2) A paper copy of the proposed correct terms. Corrections shall
be indicated as follows:
(i) Matter being deleted shall be struck through; and
(ii) Matter to be added shall immediately follow the language being
deleted and be underscored;
(3) An affidavit from the filing party attesting with specificity
to the factual circumstances surrounding the clerical or administrative
error, with reference to any supporting documentation;
(4) Documents supporting the clerical or administrative error; and
(5) A brief statement from the other party to the contract
concurring in the request for correction.
(6) If the request for correction is granted, the carrier,
agreement or conference shall file the corrected contract provisions
using a special case number as described in appendix A to this part.
(c) Cancellation.--(1) Events anticipated by the contract;
rerating. 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 under Sec. 530.9(b)(8), or the
occurrence of an event described in paragraph (c)(2) of this section.
(2) Events not anticipated by the service contract. In the event of
a contract termination which is not provided for in the contract itself
and which results from mutual agreement of the parties or because the
shipper party has failed to tender the minimum quantity or portion
required by the service contract:
(i) Further or continued implementation of the service contract is
prohibited; and
(ii) The cargo previously carried under the contract shall be
rerated according to the otherwise applicable tariff provisions as set
forth in Sec. 530.16.
Sec. 530.12 Filing fees and other costs.
(a) Under the authority of the Independent Offices Appropriation
Act, 31 U.S.C 9701, the Commission assesses a filing fee for the filing
of service contracts, modifications and corrections thereto. Unless
otherwise provided in this part, checks, drafts or money orders shall
be remitted and made payable to ``Federal Maritime Commission'' 800 N.
Capitol Street, NW., Washington, DC 20573.
(b) Unless otherwise specified, overdue payments will be charged
interest in accordance with the rate established by the Department of
the Treasury for each 30-day period or portion thereof that the payment
is overdue. In addition to any other remedy and penalty provided by law
and regulation, if payment is overdue for 90 days the Commission may
suspend or terminate electronic filing access.
(c) Fees. (1) Service contracts and amendments. The filing fee
shall be $1.63 per filing for all initial and amended service contract
filings. Within 10 calendar days after the end of each month, the
Office of Budget and Financial Management shall send a billing
statement for each filer.
(2) Filer registration. $91 for initial registration for one firm
and one individual; and $91 for additions and changes. No fee will be
assessed to continue filer registration for organizations registered
for batch filing with the Commission prior to May 1, 1999.
(3) Filing Guide. $25 for diskette; $49 for paper format. Requests
for filing guides should be made in writing and addressed to: ``BTCL
Manuals,'' Federal Maritime Commission, Washington, DC 20753. A check
for the appropriate amount should be made to the ``Federal Maritime
Commission.''
(4) Corrections. $233 for corrections to service contracts under
Sec. 530.11(c).
(5) Software certification. $496 per test submission.
Subpart C--Publication of Essential Terms
Sec. 530.13 Publication.
(a) Contents. All authorized persons who have a duty to file
service contracts under Sec. 530.5 are also required to make available
to the public,
[[Page 71071]]
contemporaneously with the filing of each service contract with the
Commission, and in tariff format, a concise statement of the following
essential terms:
(1) The port ranges:
(i) Origin;
(ii) Destination;
(2) The commodity or commodities involved;
(3) The minimum volume or portion; and
(4) the duration.
(b) Method. The statement of essential terms shall be published as
a separate part in the filer's tariff publication, conforming to the
format requirements set forth in 46 CFR part 520. Where there is more
than one carrier party to the service contract each of the carrier
parties to the service contract shall publish the essential terms in
their individual tariff publication pursuant to 46 CFR part 520; except
however, when the carrier parties comprise the full membership of a
conference, publication shall be made in the conference tariff.
(c) References. The statement of essential terms shall contain the
same number as that for the confidentially filed service contract (``ET
Number'').
(d) Terms. (1) If any of the essential terms include figures for
commodities exempt under the Act or moving outside of the United States
trades, the statement of essential terms shall so note.
(2) If there are common carrier parties to the contract other than
the carrier within whose tariff publication the essential terms appear,
they shall be identified in the statement of essential terms.
(e) Agents. Common carriers, conferences, or agreements may use
agents to meet their publication requirement under this part.
(f) Location. The Commission will publish on its website,
www.fmc.gov, a listing of the locations of all service contract
essential terms publications as defined in paragraph (a) of this
section. The Commission will update this list on a periodic basis.
(g) 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 most recent
publication or revision. When the published statement of essential
terms are affected by filed amendments pursuant to Sec. 530.9 or
corrections pursuant to Sec. 530.11(c), the current terms shall be
immediately changed and published in the relevant statement of
essential terms.
(h) Commission monitoring. The Commission shall periodically
monitor the publications of statements of essential terms to ensure
that they conform to the corresponding filed terms.
Subpart D--Exceptions
Sec. 530.14 Exceptions.
(a) Except as provided in paragraphs (b)(1) and (b)(2) of this
section, the Commission will not accept for filing service contracts
which exclusively concern bulk cargo, forest products, recycled metal
scrap, new assembled motor vehicles, waste paper or paper waste, as
those terms are defined in section 3 of the Act or service contracts
exempted under section 16 of the Act. Such service contracts
transmitted to the Commission for filing under appendix A to this part
shall be rejected and the filer shall be notified of the rejection.
(b) Inclusion in service contracts. An excepted commodity or
exempted service listed in paragraph (a) of this section may be
included in a service contract filed with the Commission, but only if:
(1) There is a tariff of general applicability for the
transportation, which contains a specific commodity rate for the
excepted commodity; or
(2) The contract itself sets forth a rate or charge which will be
applied if the contract is rejected or otherwise terminated.
(c) Waiver of exemption. Upon filing under this section, the
service contract shall be subject to the same requirements as those for
contracts involving non-excepted commodities.
Subpart E--Rejection
Sec. 530.15 Contract non-acceptance, rejection and notice.
(a) Non-acceptance. The Commission shall not accept for filing any
service contracts which relate exclusively to excepted commodities as
described under Sec. 530.14(a). The Commission shall immediately notify
the filer of the non-acceptance.
(b) Notice of intent to reject. (1) Within 20 days after the
initial filing of an initial or amended service contract, the
Commission may reject, or notify the filing party of the Commission's
intent to reject, a service contract that does not conform to the
requirements of the 1984 Act or this part. The Commission will provide
an explanation of the reasons for such rejection or intent to reject.
(2) Except for rejection on the ground that the service contract or
amendment thereto was not filed before cargo moved under it, or other
major deficiencies (such as not containing terms required by
Sec. 530.9(b)(1)-(8)) the parties will have 20 days after the date
appearing on the notice of intent to reject to resubmit an
appropriately modified contract.
Sec. 530.16 Implementation; prohibition and rerating.
(a) Performance under a service contract or amendment thereto may
begin without prior Commission authorization on the day it is effective
consistent with Sec. 530.5, except for rejection under Sec. 530.15;
(b) When the filing parties receive notice that an initial or
amended service contract or statement of essential terms has been
rejected under Sec. 530.15:
(1) Further or continued implementation of the service contract is
prohibited;
(2) All services performed under the contract shall be rerated in
accordance with the otherwise applicable tariff provisions for such
services with notice to the shipper within 5 days of the date of
rejection; and
(3) Detailed notice shall be given to the Commission under
Sec. 530.10 within 10 days of:
(i) The rerating or other account adjustment resulting from
rejection under this paragraph; or
(ii) Final settlement of the account adjusted under Sec. 530.11.
(c) If the rejected service contract was that of an agreement with
no common tariffs, the re-rating shall be in accordance with the
published tariff rates of the carrier which actually transported the
cargo which were in effect at the time the cargo was transported.
(d) Nothing in this section applies to service contracts
unacceptable for filing with the Commission pursuant to Sec. 530.15(a).
Subpart F--Recordkeeping and Audit
Sec. 530.17 Recordkeeping and audit.
(a) Records retention for five years. Every common carrier or
agreement shall maintain original signed service contracts, amendments,
and their associated records in an organized, readily accessible or
retrievable manner for a period of five (5) years from the termination
of each contract.
(b) [paragraph (b) is stayed until further notice.] Where
maintained. (1) Service contract records shall be maintained in the
United States, except that service contract records may be maintained
outside the United States if the Chairman or Secretary of an agreement
or President or Chief
[[Page 71072]]
Executive Officer of the carrier certifies annually by January 1, on a
form to be supplied by the Commission, that service contract records
will be made available as provided in paragraph (c) of this section.
(2) Penalty. If service contract records are not made available to
the Commission as provided in paragraph (c) of this section, the
Commission may cancel any carrier's or agreement's right to maintain
records outside the United States pursuant to the certification
procedure of paragraph (b) of this section.
(c) Production for audit within 30 days of request. Every carrier
or agreement shall, upon written request of the FMC's Director, Bureau
of Enforcement, any Area Representative or the Director, Bureau of
Economics and Agreements Analysis, submit copies of requested original
service contracts or their associated records within 30 days of the
date of the request.
(d) Agreement service contracts. In the case of service contracts
made by agreements, the penalties for a failure to maintain records
pursuant to this section shall be jointly and severally on all of the
agreement members party to the service contract in question.
Appendix A--Instructions for the Filing of Service Contracts
Part I--Filing Guide
Service contract filing will be done in accordance with the
instructions to service contract filers found in the Service
Contract Filing Guide (``Filing Guide''). Filers may inspect a copy
of the Filing Guide at the Commission's Bureau of Tariffs,
Certification, and Licensing (``BTCL'') (or its successor), 800 N.
Capitol St., NW, Suite 940, Washington, DC. The Filing Guide may be
purchased from BTCL for a fee specified in 46 CFR 530.12.
The Filing Guide includes the following items:
(a) Transaction set. The transaction set format includes all
transaction set segments and segment definitions.
(b) Data Element Dictionary (``DED''). The data element
dictionary contains the definition of data elements (e.g., amendment
number, date formats, etc.).
Part II--Filing
In all cases, the filing is processed as soon as possible after
submission/receipt of the filing. The FMC's service contract filing
system (``system'') assigns the filing date, which is the date an
electronically transmitted (``on-line batch'') filing session file
transfer is initiated, assuming there has been a successful file
transfer. After the filing is processed, a filing-results message is
placed in the filer's electronic mailbox on the central site system.
A. Procedure. Filing is performed by transmission of prepared
service contract material to the FMC system over dial-up lines from
the filer's own computer, using Filing Guide service contract
transaction set formats and the KERMIT or ZMODEM file transfer
protocols. The conclusion of the file transfer sequence is a
positive keyboard entry to initiate the transfer and a response that
indicates completion of that submission. The modem must be v.34
compatible.
B. General format requirements.
1. Database format. The FMC service contract database is
structured from service contract data elements and the service
contract terms formed by logical grouping of those elements.
2. Transmission. On-line batch transmission of service contracts
to the FMC computer is governed by the transaction sets contained in
the Filing Guide. Service contract filings not complying with the
regulations in this part or the formats and valid codes contained in
the Filing Guide are subject to rejection.
3. Adding new transaction data. Requests for major changes or
additions to the transaction set format and/or data shall be
submitted in writing to BTCL, with sufficient detail and reasons for
each proposed change. A contact person and telephone number also
should be provided in case of questions.
(a) A proposed major change (other than a correction), such as
to a transaction set, will require formal configuration management
procedures and a minimum of thirty days' advance notice of the
change in the Federal Register and the ``Service Contract System
News'', available at system log-on, and by other established
Commission communications procedures.
(b) Minor changes will be entered into the system and published
as soon as possible. Such minor changes include additions to any of
the standard terminology published in appendix A to part 520.
C. Hardware and software requirements.
The basic equipment necessary to file service contracts is a
personal computer (``PC''), a VT-100 emulation software package, and
a modem. The transmitted filing session must be formatted to comply
with the transaction sets. The transmission may be via the use of
KERMIT or ZMODEM file transfer protocols after establishing a link
for on-line batch filing with the FMC central site computer.
The Commission will not make available to the public software
packages for firms to use in formulating service contract filings.
The Commission has released the Filing Guide (with transaction set)
into the public domain so that qualified commercial firms can
develop filing software for the general market. Firms which develop
filing software, must, by appointment through the Commission's
Office of Information Resources Management and payment of the fee
set forth in Sec. 530.12, test their formatting of service contracts
transaction set format by submission of that data to the FMC central
site computer before they will be permitted to transmit any filings.
The data must be submitted via on-line batch transmission over dial-
up telecommunications links using the required file transfer
protocols. Testing will require submission of sample service
contract filings to the FMC system, with an evaluation of the actual
results of the attempted filings to ensure that the transaction set
formats are properly employed and that the filing results are
consistent with the filer's expectations. Organizations certified
prior to May 1, 1999 for the batch filing of ``Essential Terms
Publications'' (``ETs'') in the Commission's former ``Automated
Tariff Filing Information System'' (``ATFI'') are not required to
re-test their software but may if they so choose using the same
procedure as for initial registrants.
D. Registration, Log-on ID and Password.
1. System identifications (``IDs'') for filing log-on and
initial password are obtained by submitting the Service Contract
Registration Form (Exhibit 1 to this part), along with the proper
fee under Sec. 530.12 and other necessary documents, including
delegation of authority, as prescribed by this part, to BTCL. A
separate Service Contract Registration Form is required for each
individual that will file service contracts with the FMC. However,
each organization certified prior to May 1, 1999 to perform batch
filing of ET publications in the Commission's former ``ATFI''
system, will be issued a new log-on ID and password for access to
file service contracts.
2. Log-on IDs and passwords may not be shared with or loaned to
or used by any individual other than the individual registrant. The
Commission reserves the right to disable any log-on ID that is
shared with, loaned to or used by parties other than the registrant.
3. 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.
E. Connecting to the Service Contract Filing System.
If service contract filer equipment (hardware and software) is
compatible with the configurations specified in this section and
have been tested in accordance with Part II C. of this appendix, and
the proper log-on ID and password have been obtained under this
section, filing services are available to filers registered under
this section, over commercial telecommunications using standard
(v.34 compatible) asynchronous modems with data rates up to 28800
baud. The dial-up procedures are set forth in the Filing Guide.
F. Major menu selections.
Proper connection will lead the filer to the ``Logo Menu,''
which allows selections by any filer for ``Organization Maint.,''
``Mailbox,'' ``Service Contract System News,'' ``Change Password,''
``Screen Setup,'' and ``Logout.'' Additionally, a registered filer
can access ``Begin File Transfer'' to initiate the on-line batch
filing of a service contract. Upon the selection of ``Begin File
Transfer'' the filer will be presented the option to select KERMIT
or ZMODEM and to commence the file transfer.
G. Conformity checks.
Certain service contract data submitted to the FMC for filing
are screened for compliance with conformity checks, and certain data
not automatically rejected by the conformity checks are flagged for
[[Page 71073]]
Commission examiner review. The conformity checks are syntax checks,
validity checks and associative checks. The system will generally
not accept service contracts which fail conformity checks.
Commercially developed batch filing software can be designed to
accomplish the same functionality. However, all proposed filings of
service contracts must undergo the routine system conformity checks
before they can be received into the database. Filers will be
notified of automatic rejections at this stage by electronic mail,
with a follow-up letter if the electronic mail has not been read
within 10 days of dispatch. The conformity checks are:
1. Syntax Checks. Service contracts will be checked for file
integrity, proper data types, field lengths, and logical sequence
according to the Filing Guide's transaction sets. Data not
conforming to the data element format or type in the Filing Guide's
DED and the sequence requirements of the transaction sets and
segment definitions will result in rejections of submitted service
contracts to include the possible rejection of an entire filing if
form and format errors are extensive enough to preclude processing.
2. Validity Checks. Certain data elements of filed service
contracts will also be checked for data validity by type against the
DED's published reference tables, such as amendment codes, amendment
numbers and valid dates.
3. Associative Checks. The system uses associative checks to
identify logical conformity with established service contract filing
rules. The following are some representative types of associative
checks performed by the system.
(a) Any initial service contract or amendment must have:
(i) A valid organization number.
(ii) No suspended carrier or object status.
(iii) Appropriate filing authority.
(iv) Filing date (system-assigned) equal to or less than the
effective date.
(v) Valid and appropriate filing/amendment codes.
(vi) Valid and appropriate filing, effective, termination and
expiration dates.
(vii) When used, valid special case number and filing/amendment
code ``S,'' with no other filing/amendment codes entered.
(viii) Each service contract must have a new (unique to carrier/
conference/agreement) service contract number. The service contract
number must be paired with a unique essential terms number and the
pair must remain constant for all amendments and must be consistent
between the filed service contracts and the published statement of
essential terms.
H. Filing/amendment codes.
1. Codes. Filing/amendment codes must be valid Filing Guide
codes and the effective, termination (if any) and expiration dates
must match the corresponding dates published in the statement of
essential terms.
2. Multiple symbols. Filed service contracts frequently can be
coded with more than one symbol. Accordingly, the field, ``Amendment
Type,'' will allow up to three different, compatible symbols
(Amendment codes and definitions are presented in the Filing Guide
and the Standard Terminology Appendix to 46 CFR part 520).
I. Control dates and history.
1. Filing date. The filing date is the date any service contract
or amendment is processed by the system. Filers will have a filing
date automatically assigned to all service contracts and amendments
filed according to the start time of the file transfer, for file
transfers that are successfully completed, U.S. Eastern Time Zone.
Filers should plan the transmission of filing session files to allow
for retransmission(s) starting during the same U.S. Eastern Time
Zone date, in case the results of the initial transmission(s) are
not successful.
2. Effective date. The effective date is the date upon which a
service contract or amendment is scheduled to go into effect by the
filer. Specifically, a service contract or amendment becomes
effective at 12:01 a.m. on the beginning of the effective date. The
effective date of the corresponding statement of essential terms
cannot be prior to the filing date of the service contract or
amendment with the Commission.
3. Expiration date. The expiration date is the last day, after
which the entire service contract is no longer in effect.
Part III--Organization Record and Register
A. Organization Record. The organization record is the master
record for all service contract information in the system for a
specific firm. Upon Commission acceptance of registration, a
``shell'' organization record, specific to the requestor, is
established and contains the organization number, organization name
and organization type. The firm's authorized representative can then
access the newly established organization record, using the special
access log-on ID and password to file the address for the firm's
home office, and complete the affiliations, d/b/a, and publisher
lists as appropriate. To maximize security of the data, maintenance
(editing) of the organization record will be permitted only to the
individual in the firm holding the special access log-on ID and
password for organization record maintenance.
B. Service Contract Register. Each organization must create a
service contract register (``register'') prior to the filing of any
service contracts or amendments thereto (and including ``general
rules'' filings). The register is a directory subordinate to which
service contracts and their amendments are filed. Each organization
may create more than one register (e.g., according to location
groups). Each register must include a record reflecting the filer's
name, organization number and status (e.g. ocean common carrier/
conference) which identifies the filer. At the option of the filer,
the register may also include the filer's service contract rules,
i.e. the stated terms and conditions set by the carrier, agreement,
or conference party to a service contract which govern the
application of service contract rates, charges and other matters.
Part IV--Service Contracts
As required by Sec. 530.9, each service contract filed with the
Commission shall include the following:
A. Service Contract Title. The filer's title of the service
contract (generally descriptive of the commodity and/or service).
B. SC Number (Service contract number). The ``SC Number'' is
defined by the filer and shall be entered in the appropriate field.
C. ET Number (statement of essential terms number). The ``ET
Number'' is defined by the filer and shall be entered in the
appropriate field. (Note: Service contracts must have a new (unique
to carrier/conference/agreement) service contract number for the
initial filing. The service contract number must be paired with a
unique essential terms number and the pair must remain constant for
all amendments and must be consistent between the filed service
contracts and the published essential terms documents.)
D. Amendment Number. Where feasible, service contracts should be
amended by amending only the affected specific term(s) or subterms.
Each time any part of a service contract is amended, the filer shall
assign a consecutive amendment number (up to three digits),
beginning with the number ``1.'' (The amendment number field must be
``0'' or void for the initial filing). Each time any part of the
service contract is amended, the ``Filing Date'' will be the date of
filing of the amendment.
E. FMC File Number. The FMC File Numbers will be system-assigned
as initial service contract filings are received and processed. The
FMC File Numbers will be assigned sequentially and will start at a
number designated by the FMC. The FMC File Number will be provided
to filers in the acknowledgment message (via electronic mail) for
filings.
F. Effective Date. The service contract must indicate the
effective date and the expiration date governing the duration of the
contract. The duration must also be set forth in Term No. 8 where
the duration of the contract shall be stated as a specific fixed
time period, with a beginning date (effective date) and an ending
date (expiration date).
G. Amendment Codes. All amendment codes listed in the Filing
Guide, except ``G'' and ``S'', may be used in any combination, with
up to three amendment codes for amendments.
H. Special case symbol and number. The ``S'' amendment code must
be used singly, and in conjunction with a validated special case
number for corrections to service contracts.
I. Filing Date. The filing date is automatically set by the
system whenever a service contract or amendment thereto is filed.
J. Contract terms (``terms''). Terms Nos. 1 to 11 shall address
the subjects and bear the terms'' titles for the respective numbers
exactly as provided in this section. (Note: If a subject is not
included, such as No. 12, the number must be listed with the
appropriate title and the designation ``NA.'' All terms may be
subdivided into subterms to facilitate amendment).
1. Origin (No. 1). ``Origin'' includes the origin port range(s) in
the case of port-to-port movements, and the origin geographic area(s)
in the case of through intermodal movements, except that the origin and
destination of cargo moving under the contract need not be stated in
the form of ``port ranges'' or ``geographic
[[Page 71074]]
areas,'' but shall reflect the actual locations agreed to by the
contract parties. Service contracts shall only employ locations
(points) that are valid, published locations in the National Imagery
and Mapping Agency (``NIMA'') gazetteer and ports published or approved
for publication in the World Port Index (Pub. No. 150).
2. Destination (No. 2). ``Destination'' includes the destination
port range(s) in the case of port-to-port movements, and the
destination geographic area(s) in the case of through intermodal
movements, except that the origin and destination of cargo moving under
the contract need not be stated in the form of ``port ranges'' or
``geographic areas,'' but shall reflect the actual locations agreed to
by the contract parties. Service contracts shall employ only locations
(points) that are valid, published locations in the National Imagery
and Mapping Agency (``NIMA'') gazetteer and ports published or approved
for publication in the World Port Index (Pub. No. 150).
3. Commodities (No. 3). Term No. 3 shall include commodities
covered by the service contract. For each commodity filed in this term,
a separate formatted commodity index entry is required. To the maximum
extent possible, service contracts should use the U.S. Harmonized
Tariff Schedule (``US HTS'') for commodity coding and associated
terminology.
4. Minimum quantity or portion (No. 4). Term No. 4 shall address
the minimum quantity or portion of cargo and/or amount of freight
revenue necessary to obtain the rate or rate schedule(s). The minimum
quantity or cargo committed by the shipper may be expressed as a fixed
percentage of the shipper's cargo.
5. Service commitments (No. 5). Term No. 5 shall address the
service commitments of the carrier, conference or specific members of a
conference, agreement or specific members of an agreement, such as
assured space, transit time, port rotation or similar service features.
6. Rates or rate schedule(s) (No. 6). Term No. 6 shall contain the
contract rates or rate schedules, including any additional or other
charges (e.g., general rate increases, surcharges, terminal handling
charges, etc.) that apply, and any and all conditions and terms of
service or operation or concessions which in any way affect such rates
or charges.
7. Liquidated damages for non-performance, if any (No. 7). Term No.
7 shall include liquidated damages for non-performance, if there is
such provided for in the service contract.
8. Duration of the contract (No. 8). The duration of the contract
shall be stated as a specific, fixed time period, with a beginning date
(effective date) and ending date (expiration date).
9. Signature date, contract parties, signatories and affiliates,
if any (No. 9). The identification of contract parties must be
included as follows:
(a) the legal names and business addresses of the contract
parties. (Note: if the service contract is entered into by an
agreement or conference, this shall include the corresponding
agreement number on file with the Commission);
(b) the legal names, titles, and addresses of representatives
signing the contract for the parties and the date the contract was
signed; and
(c) the legal name(s) and business address(es) of affiliates
entitled to access the contract, if any. Subsequent references in
the contract to the contract parties shall be consistent with the
first reference (e.g., (exact name), ``carrier,'' ``shipper,'' or
``association, etc.). (Note: This term must name every affiliate of
each contract party named under Sec. 530.9(d)(4) entitled to receive
or authorized to offer services under the contract, except that in
the case of a contract entered into by all of the parties of a
conference, agreement or shippers' association, individual members
need not be named unless the contract includes or excludes specific
members.)
10. Shipper's Status Certification and Affiliates, if any. (No.
10). The shipper signatory(ies) must certify its status and that of
any affiliates in accordance with Sec. 530.7 of this part.
11. Records (No. 11). Term No. 11 must contain:
(a) A description of the shipment records which will be
maintained to support the contract; and
(b) The address, title, and telephone number of the person who
will respond to a request by making the original signed service
contract and shipment records available to the Commission for
inspection under Sec. 530.17 of this part.
12. Other Provisions of the Contract (No. 100-999). Any term of
a service contract not otherwise specifically provided for in this
section shall be entered after the above terms and in numerical
order, beginning with No. 100.
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[[Page 71076]]
Exhibit 1--Instructions for Service Contract Registration [Form FMC-83]
Instructions
Line 1. Registration. Indicate whether this is the initial
(first time) registration or an amendment to an existing Service
Contract Registration.
Line 2. Registrant. This must be the full legal name of the firm
or individual registering for the FMC's Service Contract Filing
System and any trade names. The registrant name should match the
corporate charter or business license, conference membership, etc.
It should be noted that the registrant name cannot be changed by the
registrant after the registration without submission of an amended
registration fee.
Line 3. Address of Home Office. The complete street address
should be shown in addition to the post office box. Also, provide
the registrant's Federal Taxpayer Identification Number (``TIN''
Number).
Line 4. Billing Address if Different. This should be completed
if the billing address differs from the home office address. Show
the firm name (if different from the registrant), street address and
post office box (if applicable).
Line 5. Organization Number. Complete if known. (Regulated
Persons Index or ``RPI'' number.)
Line 6. Registrant Type. Indicate the type of organization. A
registrant cannot be more than one type. This data cannot be changed
by the registrant after registration without submission of an
amended registration form.
Line 7. Permissions Requested and Person Granted These
Permissions.
Maintenance of Organization Record--The person listed in line 8
is authorized to access the organization maintenance functions
(i.e., modify organization information, assign publishers,
affiliations, and d/b/as).
Service Contract Filing--The person listed in line 8 is
authorized only to submit filings.
Line 8. Certified for Batch Filing. Indicate whether the
registrant was registered with software certified to perform batch
filings prior to May 1, 1999. Otherwise, the registrant must first
be certified for batch filing as outlined in 46 CFR part 530. After
certification, the registrant can submit an amended registration
form to request permission for a person in their organization to
perform the batch filing. If the person already has an existing log-
on, the log-on (not the password) should be listed on the requesting
form. Also, the certification date received from the FMC should be
listed on the requesting form.
By the Commission.
Joseph C. Polking,
Secretary.
[FR Doc. 98-33894 Filed 12-22-98; 8:45 am]
BILLING CODE 6730-01-P