81 FR 10198 - Service Contracts and NVOCC Service Arrangements

FEDERAL MARITIME COMMISSION

Federal Register Volume 81, Issue 39 (February 29, 2016)

Page Range		10198-10204
FR Document		2016-04264

The Federal Maritime Commission (FMC or Commission) is seeking comments on possible amendments to its rules governing Service Contracts and NVOCC Service Arrangements. These possible rule changes are intended to update, modernize, and reduce the regulatory burden.

Federal Register, Volume 81 Issue 39 (Monday, February 29, 2016)

[Federal Register Volume 81, Number 39 (Monday, February 29, 2016)]
[Proposed Rules]
[Pages 10198-10204]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-04264]


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FEDERAL MARITIME COMMISSION

46 CFR Parts 530 and 531

[Docket No. 16-05]
RIN 3072-AC53


Service Contracts and NVOCC Service Arrangements

AGENCY: Federal Maritime Commission.

ACTION: Advance notice of proposed rulemaking.

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SUMMARY: The Federal Maritime Commission (FMC or Commission) is seeking 
comments on possible amendments to its rules governing Service 
Contracts and NVOCC Service Arrangements. These possible rule changes 
are intended to update, modernize, and reduce the regulatory burden.

DATES: Submit comments on or before: March 30, 2016.

ADDRESSES: You may submit comments by the following methods:
     Email: [email protected]. Include in the subject line: 
``Docket 16-05, [Commentor/Company name].'' Comments should be attached 
to the email as a Microsoft Word or text-searchable PDF document. Only 
non-

[[Page 10199]]

confidential and public versions of confidential comments should be 
submitted by email.
     Mail: Karen V. Gregory, Secretary, Federal Maritime 
Commission, 800 North Capitol Street NW., Washington, DC 20573-0001.
    Docket: For access to the docket to read background documents or 
comments received, go to the Commission's Electronic Reading Room at: 
http://www.fmc.gov/16-05.
    Confidential Information: The Commission will provide confidential 
treatment for identified confidential information to the extent allowed 
by law. If your comments contain confidential information, you must 
submit the following:
     A transmittal letter requesting confidential treatment 
that identifies the specific information in the comments for which 
protection is sought and demonstrates that the information is a trade 
secret or other confidential research, development, or commercial 
information.
     A confidential copy of your comments, consisting of the 
complete filing with a cover page marked ``Confidential-Restricted,'' 
and the confidential material clearly marked on each page. You should 
submit the confidential copy to the Commission by mail.
     A public version of your comments with the confidential 
information excluded. The public version must state ``Public Version--
confidential materials excluded'' on the cover page and on each 
affected page, and must clearly indicate any information withheld. You 
may submit the public version to the Commission by email or mail.

FOR FURTHER INFORMATION CONTACT: For questions regarding submitting 
comments or the treatment of confidential information, contact Karen V. 
Gregory, Secretary, Phone: (202) 523-5725. Email: [email protected]. 
For technical questions, contact Florence A. Carr, Director, Bureau of 
Trade Analysis. Phone: (202) 523-5796. Email: [email protected]. 
For legal questions, contact Tyler J. Wood, General Counsel. Phone: 
(202) 523-5740. Email: [email protected].

SUPPLEMENTARY INFORMATION:

Background

    In 1984, Congress passed the Shipping Act of 1984 (the Shipping Act 
or the Act) 46 U.S.C. 40101 et seq., which introduced the concept of 
contract carriage under service contracts filed in paper format with 
the Federal Maritime Commission (Commission or FMC). The pricing of 
liner services via negotiated contracts, rather than exclusively by 
public tariffs, was a change that had profound effects on the liner 
industry. The Act also clarified the authority of conference members to 
offer intermodal pricing (the integration of ocean carriage with truck 
or rail service).
    FMC regulations require all ocean freight rates, surcharges, and 
accessorial charges in liner trades be published in ocean common 
carrier tariffs or agreed to in service contracts filed with the 
Commission. Contemporaneous with the filing of service contracts, 
carriers are also required to make available to the public a concise 
statement of essential terms in tariff format. Initially, service 
contracts filed with the Commission under the Act could not be amended. 
In 1992, FMC regulations were revised to allow for service contracts to 
be amended to adjust terms and/or rates.
    In 1998, Congress passed the Ocean Shipping Reform Act (OSRA), 
amending the Shipping Act of 1984 relating to service contracts. To 
facilitate compliance and minimize the filing burdens on the oceanborne 
commerce of the United States, service contracts and amendments 
effective after April 30, 1999 are required to be filed with the 
Commission in electronic format. The electronic filing of service 
contracts and amendments eliminated the regulatory burden of filing in 
paper format, saving ocean carriers both time and money. In addition, 
under OSRA, contracts between ocean common carriers and shippers can be 
agreed to on a confidential basis and the public no longer has access 
to view their contents.\1\ Service contracts and amendments continue 
today to be filed into the Commission's electronic filing system, 
SERVCON.
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    \1\ Prior to OSRA, contract rates were published in the 
essential terms tariff publication, thereby allowing similarly 
situated shippers to request and obtain similar terms. In enacting 
OSRA, Congress limited the essential terms publication to the 
following terms: The origin and destination port ranges, the 
commodities, the minimum volume or portion, and the duration.
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    In 2005, the Commission issued a rule exempting Non-Vessel-
Operating Common Carriers (NVOCCs) from certain tariff publication 
requirements of the Shipping Act, pursuant to section 16 of the 
Shipping Act, 46 U.S.C. 40103. 69 FR 75850 (December 20, 2004) (final 
rule). Under the exemption, NVOCCs are relieved from certain Shipping 
Act tariff requirements, provided that the carriage in question is 
performed pursuant to an NVOCC Service Arrangement (NSA) filed with the 
Commission and the essential terms are published in the NVOCC's tariff. 
46 CFR 531.1, 351.5, and 531.9
    On January 18, 2011, President Obama issued Executive Order 13563 
(E.O. 13563) to emphasize the importance of public participation in 
adopting regulations, promote integration and innovation in regulatory 
actions, utilize flexible approaches in achieving regulatory 
objectives, and ensure the objectivity of any scientific and 
technological information and process in regulatory actions. E.O. 13563 
requires executive agencies to develop a plan to periodically review 
their existing significant regulations to determine whether any such 
regulations should be modified, streamlined, expanded, or repealed so 
as to make such agencies' regulatory programs more effective and less 
burdensome in achieving the regulatory objectives. On July 11, 2011, 
Executive Order 13579 was issued to encourage independent regulatory 
agencies to also pursue the goals stated in E.O. 13563.
    On November 4, 2011, the Commission issued its Plan for 
Retrospective Review of Existing Rules (Retrospective Review Plan or 
Plan) and invited public comment on how it might improve existing 
regulations.\2\ The Plan included a review schedule for its existing 
regulations, which was updated on February 13, 2013. The updated Plan 
called for review of the existing rules for NVOCC Service Arrangements 
in 46 CFR part 531 from 2013 to 2014, and for review of Service 
Contracts regulations Part 530 in 2013.
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    \2\ A copy of the Retrospective Review Plan and comments filed 
in response to the plan that are within the scope of this rulemaking 
have been placed in the docket.
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    In response to the Commission's request for public comment, the 
National Customs Brokers and Forwarders Association of America, Inc. 
(NCBFAA) filed comments regarding Part 532, NVOCC Negotiated Rate 
Arrangements (NRAs), and Part 531, NVOCC Service Arrangements, on 
November 21, 2011. NCBFAA's comments supported the Commission's effort 
to review and streamline its regulations and indicated that several 
additional steps would significantly ease some of the obstacles that it 
claims have hindered utilization of Part 532, NVOCC NRAs, and Part 531, 
NVOCC Service Arrangements. The Commission also received the Comments 
of Ocean Common Carriers \3\ regarding Part 530,

[[Page 10200]]

Service Contracts on May 18, 2012. The carriers' comments largely 
focused on three areas that they believe changes in the service 
contract regulations would be beneficial, namely, introducing greater 
flexibility in the timing of service contract amendment filing, making 
adjustments to the service contract correction process, and expanding 
the list of commodities exempted from tariff and service contract 
filing. The comments are described in further detail in discussion of 
Parts 530 and 531 that follows.
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    \3\ The commenting carriers consisted of a total of 30 ocean 
carriers participating in the following agreements active at that 
time: The 14 members of the Transpacific Stabilization Agreement 
(TSA); 10 members of the Westbound Transpacific Stabilization 
Agreement (WTSA); 6 members of the Central America Discussion 
Agreement (CADA); 11 members of the West Coast South America 
Discussion Agreement (WCSADA); 5 members of the Venezuela Discussion 
Agreement (VDA); 3 members of the ABC Discussion Agreement (ABCDA); 
6 members of the United States Australasia Discussion Agreement 
(USADA); and, the 3 members of the Australia New Zealand United 
States Discussion Agreement (ANZUSDA). For comments, refer to 
Attachment B.
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    In September 2013, the Commission initiated the present regulatory 
review of Part 530, Service Contracts, and Part 531, NVOCC Service 
Arrangements. Executive Order 13563 served as guidance for the 
Commission in seeking ways in which the regulations should be modified, 
expanded, or streamlined in order to make the regulations more 
effective, reduce the regulatory burden, encourage public 
participation, make use of technology, and consider flexible 
approaches, keeping in mind the FMC's mission, strategic goals, and 
regulatory responsibilities.
    As part of its review, the Commission informally solicited views 
from various stakeholders in order to gather a broad range of 
perspectives. The discussions with stakeholders, including Vessel-
Operating Common Carriers (VOCCs), several major trade associations, 
licensed NVOCCs, beneficial cargo owners (BCOs), and shippers 
associations, were held on a confidential basis to promote a candid 
dialogue. The Commission asked stakeholders how existing regulations 
impact their businesses, what regulatory changes each stakeholder would 
recommend, and to quantify the cost of its regulatory burden.
    Below, on a section by section basis, is a discussion of issues on 
which the Commission is seeking public comment. Further, the public is 
invited to comment on any provisions contained in Parts 530 and 531.

Part 530--Service Contracts

Subpart A--General Provisions

Section 530.3 Definitions
Section 530.3 Affiliate
    Currently, there is no definition of affiliate in Sec.  530.3, 
Service Contracts. A definition of affiliate is provided for NVOCC 
Service Arrangements, in Sec.  531.3(b). In order to provide clarity 
and consistency, the Commission seeks comment on adding the definition 
of affiliate contained in Sec.  531.3(b) to Sec.  530.3.
Section 530.3(i) Effective Date
    Presently, the Commission's regulations require that a service 
contract or amendment be filed on or before the date it becomes 
effective. The Commission is seeking comment on whether it should amend 
the definition of effective date with respect to service contract 
amendments to allow the effective date of amendments to be before the 
filing date of the amendment.
Section 530.5 Duty To File
    In addition to converting to electronic filing in 1999, the 
Commission has made efforts to reduce the regulatory burden of filing 
service contracts and amendments into its SERVCON system. At the 
request of one ocean carrier, the Commission developed an automated web 
services process in 2006, which allows service contracts or NSAs and 
their amendments to be filed directly from a carrier's contract 
management system into SERVCON, thereby reducing the regulatory burden 
and error rate associated with manual processing. By ``pushing'' the 
unique data already entered in the filer's contract management systems 
directly to the SERVCON system, it eliminates the time and expense 
involved in manually logging into SERVCON to file contracts or NSAs. 
SERVCON then processes the filing and returns a confirmation number if 
the filing was successful, or an error message giving the reason it was 
not.
    Using web services to file service contracts and amendments reduces 
a carrier's cost and creates efficiencies for both the carrier and the 
Commission. The Commission has encouraged the use of web services to 
carriers throughout the years. Currently, 36% of all service contracts 
and amendments filed use web services. It is estimated, based on 
current carrier projections, that approximately 92% of contracts and 
amendments filed by April 1, 2016 should be filed using web services. 
Given the Commission's past experience, transitioning to web services 
can be accomplished in a relatively short period of time using 
carriers' in-house IT professionals.
    The Commission seeks comment on amending its regulations to ensure 
that carriers are aware of the availability of the automated web 
service process for filing service contracts and amendments.
Section 530.6 Certification of Shipper Status
    The provisions in this section set forth the requirement that 
shippers entering into service contracts certify their status and 
require vessel-operating common carriers (VOCCs) to obtain proof of an 
NVOCC's compliance with tariff and financial responsibility 
requirements. Carriers regularly use the FMC Web site, www.fmc.gov, to 
verify whether or not an NVOCC contract holder or affiliate is in good 
standing. Various carriers employ more rigid standards in certifying 
NVOCC status by requiring copies of the NVOCC's bond as well as the 
title page of its respective published tariffs. Further, many VOCCs 
include the NVOCC's 6-digit FMC Organization Number in the service 
contract, which indicates that the VOCC sought to ensure compliance 
with the requirements of Sec.  530.6.
    Carriers frequently ask about the FMC's electronic systems' 
capability to automatically verify whether an NVOCC party named in a 
service contract or amendment is in compliance with Sec.  530.6. While 
the FMC's SERVCON system does not currently have this capability, the 
technology exists to add this functionality in the future. One possible 
approach to accomplish this would be for the FMC to create a new data 
field in SERVCON which would require a VOCC to enter the NVOCC's 6-
digit FMC Organization Number when a NVOCC is a contract holder or 
affiliate. If multiple NVOCCs are party to a service contract, each 
NVOCC's respective Organization Number would be required to be listed 
in this field. SERVCON could be updated so that it would automatically 
determine at the time a contract or amendment is uploaded for filing, 
whether the NVOCC(s) is in good standing with the Commission. The 
development of such an automatic process could potentially save 
carriers a substantial amount of time currently spent verifying an 
NVOCC's status.
    Another option, which would require a substantial amount of SERVCON 
system programming and necessitate a standard service contract format 
to be adopted and agreed to by carriers, would be to require 
``metadata'' to be incorporated into service contracts that

[[Page 10201]]

would include the 6-digit FMC Organization Number of all NVOCC 
parties.\4\ For instance, with the required programming implemented 
this technology could be leveraged to identify during the filing 
process contracts or amendments which contain an NVOCC that is not in 
compliance with Sec.  530.6. If an NVOCC is not compliant, an alert 
would be sent to the carrier filing the contract or amendment and 
Commission staff.
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    \4\ ``Metadata is structured information that describes, 
explains, locates, or otherwise makes it easier to retrieve, use, or 
manage an information resource. Metadata is often called data about 
data or information about information.'' National Information 
Standards Organization (NIST), Understanding Metadata, NIST Press 
(2004), available at: http://www.niso.org/publications/press/UnderstandingMetadata.pdf (last visited Jan. 17, 2016).
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    Therefore, the Commission is seeking comment regarding whether the 
Commission should move forward in:
    (1) Requiring use of the 6-digit FMC Organization Number for NVOCCs 
who are a contract holder or affiliate in a service contract;
    (2) adding a data field in the Commission's electronic filing 
system (SERVCON) in order to enter the 6-digit FMC Organization Number 
when an NVOCC is party to a contract, or
    (3) requiring service contracts to be formatted to contain metadata 
that includes the 6-digit FMC Organization Number for each NVOCC that 
is a contract holder or affiliate in a service contract.

Subpart B--Filing Requirements

Section 530.8 Service Contracts
    In the filed Comments of Ocean Common Carriers, a number of 
carriers cite the filing of service contract amendments as the largest 
administrative burden for both carriers and their customers. Many ocean 
carriers believe that the service contract effective date requirement 
is overly burdensome and restrictive given current commercial 
practices, particularly with respect to amendments to contracts. The 
carriers claim that the vast majority of amendments are for minor 
revisions to commercial terms, such as a revised rate or the addition 
of a new origin/destination or commodity. The carriers advise that 
shippers will often tender cargo to them without first formally 
accepting their proposal. Therefore, according to ocean common 
carriers' comments, the carrier and shipper often agree on a rate 
without memorializing that agreement in a form that can be filed as an 
amendment. The carriers claim that filing amendments within 30 days 
would enable shippers and carriers to apply agreed-upon terms 
immediately and thus do business without disrupting or delaying that 
business.
    Based on the above practices, the carriers recommend that Sec.  
530.8(a) be amended to permit the contract parties to implement a 
service contract amendment immediately, provided that the amendment is 
entered into by the parties and filed within 30 days of whichever 
occurs first: (1) The date agreement on the amendment is reached; or 
(2) the date the carrier receives the cargo to which the amendment 
applies. Under this proposal, the carriers note that the Commission 
would still receive all service contract amendments, however, not prior 
to implementation.
    The revised regulation envisioned by the carriers would require 
that each filed amendment state the effective date of each change to 
the contract made by the amendment, so the Commission could determine 
the date from which any given rate or term was to apply. Carriers state 
that filing within 30 days would also reduce the filing burden by 
enabling carriers to aggregate several contract changes together in a 
single amendment. The carriers contend that the Commission would 
maintain the authority to request service contract records, including 
the evidence that the parties reached agreement on a particular term as 
of a particular date.
    When Commission staff met individually with large beneficial cargo 
owners (BCOs) and NVOCCs, those shippers relayed that they had not 
experienced delays as a result of carriers' inability to process 
service contract amendments in a timely manner prior to movement of 
their cargo. It was the shippers' understanding that the carriers' 
requirement to file amendments with the Commission prior to acceptance 
of the cargo protects rate and contract commitments. Shippers advised 
the Commission that carriers were responsive to their rate requests and 
the shippers were confident that VOCCs would honor the rates and 
contract commitments knowing their contracts were being filed with the 
Commission.
    In order to minimize the filing burden, the Commission is seeking 
comment on whether it should allow an amendment to be filed up to 30 
days after an amendment is reached by the parties. A change in the 
definition of effective date would only affect the filing date of the 
amendment, as the parties must still agree to the rates and/or contract 
terms prior to receipt of the cargo.
    In commenting on the carriers' suggestions, consideration should 
also be given to the manner in which service contracts and amendments 
would be filed into the FMC's SERVCON system. SERVCON is designed to 
process the filing of the initial service contract, designated as 
Amendment ``0,'' with subsequent amendments to the contract numbered 
sequentially, beginning with Amendment No. ``1''. If the definition of 
effective date is changed to allow amendments to be filed up to 30 days 
after the date on which they are agreed, and amendments are filed using 
the existing filing process, which requires sequential filing of 
amendments starting with Amendment No. 1, then no programming changes 
would be required in SERVCON.
    In connection with the 30-day period for filing service contract 
amendments, the carriers also proposed aggregating several contract 
changes in a single amendment in what, in effect, could be a monthly 
filing. In a monthly filing that consolidates a number of service 
contract amendments, it would be necessary for carriers to specify the 
effective date of each amendment. In some cases, for example, the same 
rate may change more than once in a monthly period. Since the SERVCON 
system is not designed to process multiple amendments in a single 
filing, this would require a substantial amount of reprogramming for 
the system to be able to capture both the effective date and amendment 
number should, for example, Amendments Nos. 7 through 12 be combined 
into a single document. Further, based on input from the Commission's 
Office of Information Technology, carriers would need to manually input 
the effective date of each amendment into SERVCON. Therefore, absent 
the requisite reprogramming, this process could possibly result in 
more, rather than less, of a filing burden. Additionally, consolidating 
several service contract amendments may also prevent carriers from 
using the Commission's web services technology in accordance with Sec.  
530.5, thereby offsetting the advantages of web services, which do not 
require manual input and are intended to reduce the burden of filing.
    The Commission seeks comments on whether it should revise its 
regulations to allow: (1) A service contract amendment to be filed 
individually and sequentially within 30 days of its effectiveness; or 
(2) any number of service contract amendments to be consolidated into a 
single document, but filed within 30 days of the effective date of the 
earliest of all amendments contained in the document. Any

[[Page 10202]]

clarifications or refinements to the suggestions made by the 
commenters, given the information technology constraints, are also 
requested.
Section 530.10 Amendment, Correction, Cancellation, and Electronic 
Transmission Errors
    In Comments of Ocean Common Carriers, the carriers noted that the 
current service contract correction procedures largely pre-date both 
service contract amendments (first permitted in 1992) and confidential 
individual carrier contracts introduced by OSRA, and maintain that 
these procedures are ``ill suited'' to the manner in which service 
contracts are employed today. The carriers identified a number of 
revisions to the requirements governing Service Contract Correction 
Requests at Sec.  530.10(c), some of which are discussed below.
    With respect to the forgoing carrier proposals, the Commission is 
considering stakeholder comments and staff experience regarding service 
contract correction requests, corrected transmissions, and the proposed 
``conforming amendment.'' An item by item discussion follows.

30 Day Grace Period

    The carriers propose that the Commission allow a 30 day grace 
period in which a carrier would not be required to file a service 
contract correction request (requesting retroactive effectiveness to 
correct a clerical or administrative error) or a formal amendment to 
the contract (effective upon filing or in the future), but rather, be 
permitted to submit a new type of filing, designated as a ``conforming 
amendment'' or some other special designation (in order to 
retroactively correct a ``typographical or clerical error'').
    The Commission questions whether this process would, in effect, be 
a substitute for the service contract correction process within the 
first 30 days after filing, without an affidavit and other 
documentation used for verification purposes that establishes the 
nature of the error and the parties' intent. The Commission also has 
concerns that the use of the term ``amendment'' in the proposed special 
designation ``conforming amendment'' could be confusing, as the 
submission would be a corrective filing, rather than an actual 
sequential amendment to the contract.
    There is an additional approach under which a service contract or 
amendment can currently be corrected that is somewhat similar to the 
proposed ``conforming amendment,'' though its application is limited to 
a narrow set of circumstances, that of a Corrected Transmission. 
Pursuant to Sec.  530.10(d), Electronic transmission errors, carriers 
may file a ``Corrected Transmission'' (CT) within forty-eight (48) 
hours of filing a service contract or amendment into SERVCON, however, 
only to correct a purely technical data transmission error or a data 
conversion error that occurred during uploading. A CT may not be used 
to make changes to rates, terms or conditions.
    While the vast majority of service contracts are uploaded into the 
Commission's electronic filing system, SERVCON, without encountering 
any problems, staff has noted that, when errors do occur, many times 
carriers do not discover the error until after the initial 48 hour 
period has passed. The vast majority of these mistakes are attributable 
to data entry errors on the SERVCON upload screen (e.g. the incorrect 
amendment or service contract number is entered, an incorrect effective 
date is typed, or the wrong contract or amendment is attached for 
uploading). Staff verifies that these are indeed purely clerical data 
errors that do not make changes to rates, terms, or conditions prior to 
accepting the CT filings.
    While incorporation of web services filing would reduce the 
occurrence of many of the technical and data transmission errors 
leading to a Corrected Transmission, the Commission is seeking comments 
on whether the current 48-hour period in which to file a CT after 
filing the original contract or amendment should be extended to thirty 
(30) days to afford carriers with a more realistic time frame to 
correct purely clerical data transmission errors. The Commission notes 
that extending the time period for filing CTs would also facilitate 
ensuring that the service contract terms and conditions agreed to by 
the carrier and shipper are those on file with the Commission in the 
SERVCON system while maintaining adequate shipper protections.

Extend Filing Period for Correction Requests to 180 Days

    The Commission is considering extending the time period for a 
service contract correction from forty-five (45) to one-hundred eighty 
(180) days. An error in a service contract may not be discovered until 
after cargo has moved, been invoiced on the bill of lading, the shipper 
reviews it and notes that the rate assessed is not the agreed upon 
rate. Given long transit times due to carriers' global pendulum 
services and slow steaming, in many cases this type of error is not 
discovered until well after 45 days has transpired. In other cases, 
shippers engage in audits of bills of lading and identify errors in the 
service contract that do not match the rates offered. Again, these 
audits may be well after the 45-day period. To provide needed 
flexibility in this process, the Commission is considering whether a 
longer time period in which to file is appropriate. The Commission 
seeks comment on extending the amount of time a service contract 
correction request can be filed from within 45 days of the contract's 
filing with the Commission up to 180 days.

Extend the Service Contract Correction Procedure To Include Unfiled 
Contracts and Amendments

    The ocean carriers provided a number of arguments in support of 
allowing the correction process to be utilized for unfiled service 
contracts and service contract amendments. Service contracts are 
required by law, under the Shipping Act, 46 U.S.C. 40502, to be filed 
with the Commission. Shippers advised that they believe that a filed 
contract provides them with the assurance that the rates and terms of 
the service contract will be adhered to by both the shipper and 
carrier.

Eliminate Carrier Affidavit and Significantly Reduce Filing Fee

    Carriers requested that the Commission eliminate the affidavit 
requirement for service contract correction requests and also 
significantly reduce the filing fee. The Commission's filing fee 
reflects time expended by Commission staff to research and verify 
information provided in the correction request and to conduct its 
analysis. The Commission could reduce the filing fee from $315 to 
around $100 or less by streamlining its internal processes, provided 
that the affidavit requirement is not eliminated. If the affidavit 
requirement were eliminated, staff time researching and verifying 
information would increase, and thus, the filing fee would need to be 
increased commensurate with the additional time required for processing 
and analysis. The Commission is seeking comment on these proposals.

Subpart C--Publication of Essential Terms

Section 530.12 Publication
    Several stakeholders advised the Commission that essential terms 
publications were no longer accessed by the public or useful to 
stakeholders. However, other stakeholders indicated that they do rely 
on them for various

[[Page 10203]]

purposes, such as during a grievance proceeding.

Subpart D--Exceptions and Implementation

Section 530.13 Exceptions and Exemptions
    Sec.  530.13(a) Statutory exceptions. In Comments of Ocean Common 
Carriers, the carriers recommend that the Commission, pursuant to its 
authority to grant exemptions from statutory requirements, expand the 
list of commodities which are exempt from the tariff publication and 
service contract filing requirements of 46 U.S.C. 40501(a)(1) and 
40502(b)(1). The carriers' rationale is that the existing list of 
exempt commodities: bulk cargo, forest products, recycled metal scrap, 
new assembled motor vehicles, waste paper or paper waste, was largely 
adopted to provide ocean common carriers serving the U.S. trades with 
greater flexibility to compete with bulk and tramp carriers serving 
both the U.S. and neighboring countries (Canada, Mexico), which do not 
require carriers to adhere to published tariffs. They assert that the 
exemption should apply to other, similar commodities.
    After the implementation of OSRA, carriers continued to offer 
service contracts to many shippers of exempt commodities. Many VOCCs 
today still offer service contracts for exempt commodities, while other 
carriers choose only to offer such contracts to a select group of 
customers. Various carriers opt to use exempt commodity tariffs instead 
of agreeing to offer service contracts. This may diminish a shipper's 
ability to conclude service terms such as free time, demurrage and 
detention, credit, and other terms that could be negotiated in service 
contracts. Further, a VOCC's standard governing rules tariff does not 
apply to exempt commodities and therefore, shipments of those 
commodities would not have the same protections under the Act and the 
Commission's regulations.
Section 530.14 Implementation.
    If the carriers' proposal to allow up to 30 days for filing service 
contract amendments is later adopted, corresponding changes would be 
made to Sec.  530.14.

Part 531--NVOCC Service Arrangements

Subpart A--General Provisions

Section 531.1 Purpose
    In their comments on the Commission's Retrospective Review Plan, 
NCBFAA states that NSAs are private, negotiated contracts between 
NVOCCs and their shipper customers.\5\ NCBFAA adds that the various 
NSAs that have been filed with the Commission provide little 
information that is of use to the agency.
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    \5\ NCBFAA recently filed a petition for rulemaking. Docket No. 
P2-15, Petition of the National Customs Brokers and Forwarders 
Association of America, Inc. for Initiation of Rulemaking (Apr. 18, 
2015). The Commission is currently reviewing the petition as well as 
the comments filed in response to the petition, and has not made a 
determination on whether to initiate a rulemaking. Therefore, the 
proposals presented by NCBFAA in its petition will not be addressed 
in this ANPRM.
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    NCBFAA indicated that, with the advent of NVOCC Negotiated Rate 
Arrangements (NRAs), it is less likely that NSAs will be used in the 
future. NCBFAA stated that it believes one of the main impediments to 
any significant industry use of the NSA procedure was caused by the 
Commission's perceived need to regulate them in the identical manner as 
ocean carrier service contracts. They further elaborate that, as a 
result, these privately- and individually-negotiated contracts between 
NVOCCs and their shipper customers are required to follow the same 
filing and essential term tariff procedures as are applicable to ocean 
carrier agreements with their customers.
    NCBFAA also states that NVOCCs do not enjoy antitrust immunity and 
therefore do not contain ``collectively established boilerplate terms 
and conditions or consider, let alone follow, `voluntary guidelines' 
relating to pricing or service conditions.'' NCBFAA further advocates 
that, inasmuch as there are situations where NVOCCs and their customers 
would like to enter into more formal, long-term arrangements, which 
cannot be accomplished through NRAs, the industry would benefit by 
having the Commission reexamine the need for continuing the filing of 
NSAs and the publication of essential terms.
Section 531.3 Definitions
Section 531.3(k) Effective Date
    Presently, the Commission's regulations require that an NSA or 
amendment be filed on or before the date it becomes effective. In 
response to filed VOCC comments, the Commission is considering whether 
to allow the filing of service contract amendments pursuant to Part 530 
to be delayed up to 30 days after an amendment is agreed to by the 
contract parties. In order to minimize the filing burden on NVOCCs as 
well, the Commission is seeking comment on whether it should, 
similarly, allow amendments to NSAs to be filed up to 30 days after an 
amendment is agreed to by the parties.
Section 531.5 Duty To File
    The Commission is considering and seeks comment on whether to amend 
the regulations so NVOCCs, like VOCCs, are aware of the availability of 
the automated Web service process in the filing of NSAs and amendments.

Subpart B--Filing Requirements

Section 531.6 NVOCC Service Arrangements
    Presently the Commission's regulations require that an NSA or 
amendment be filed on or before the date it becomes effective. If the 
Commission should later allow up to 30 days for filing NSA amendments, 
corresponding changes to Sec.  531.6 would be made.
Section 531.6(d) Other Requirements
    Pursuant to Sec.  531.6(d)(4), an NVOCC may not knowingly and 
willfully enter into an NSA with another NVOCC that is not in 
compliance with the Commission's tariff and proof of financial 
responsibility requirements. As discussed more fully under Sec.  530.6 
above pertaining to service contracts, the industry frequently refers 
to the Commission's Web site, www.fmc.gov, to verify whether or not an 
NVOCC contract holder or affiliate is compliant with these 
requirements.
    As noted previously, many VOCCs include all NVOCCs' 6-digit FMC 
Organization Number in their service contracts, and Commission staff 
notes this practice with respect to some NSAs as well. As VOCCs have 
frequently asked about the FMC's electronic systems' capability to 
automatically verify whether an NVOCC party named in a service contract 
or amendment is in compliance with FMC regulations at Sec.  530.6, the 
Commission is considering whether to facilitate this in the SERVCON 
system in which both service contracts and NSAs are filed. Therefore, 
the Commission seeks comment on whether NSAs should include the 6-digit 
FMC Organization Number for each NVOCC party to an NSA including 
affiliates. If so, comment is sought on the appropriate manner to 
update SERVCON to allow electronic verification of NVOCC status against 
the FMC's database of active NVOCCs. For further discussion of the 
technological changes being considered were this requirement to be 
implemented, see the more expansive explanation in Sec.  530.6 above.
Section 531.6(d)(5) Certification of Shipper Status
    Presently, the NSA regulations do not include a requirement that 
the NSA

[[Page 10204]]

shipper certify its status, which is a requirement for shippers under 
current service contract regulations in Part 530. The Commission seeks 
comment on whether to make these requirements consistent and uniform 
for NVOCCs and VOCCs, as both are common carriers, and such 
certification assists in compliance.
Section 531.8 Amendment, Correction, Cancellation, and Electronic 
Transmission Errors
    Under the Commission's regulations, VOCC service contracts and 
NVOCC service arrangements are both agreements between a common carrier 
and a shipper for the carriage of cargo. Given these congruencies, the 
Commission is considering whether changes being proposed by the VOCCs 
to the correction procedures for service contracts should be handled in 
a similar manner for NSAs. A complete discussion of the changes 
requested with respect to service contract amendment, correction, 
cancellation, and electronic transmission errors is included in Sec.  
530.10 above.

Subpart C--Publication of Essential Terms

Section 531.9 Publication
    In NCBFAA's comments regarding the Commission's Retrospective 
Review Plan, NCBFAA requested that the Commission consider whether the 
essential term tariff publication requirements are necessary.

Subpart D--Exceptions and Implementation

Section 531.10 Excepted and Exempted Commodities
    For consistency, the Commission is seeking comment on whether to 
treat VOCC service contracts and NVOCC service arrangements similarly 
with respect to exempted commodities. The Commission is requesting 
comment on whether it should add to this Part additional commodity 
exemptions approved by the Commission in Sec.  530.13.
Section 531.11 Implementation
    Proposed changes regarding the effective date of service contract 
amendments are under consideration by the Commission. If the Commission 
determines to make such changes to Part 530 (Service Contracts), it 
will consider whether to revise similar requirements for NSA amendments 
in Part 531 (NVOCC Service Arrangements), which would include Sec.  
531.11.

Regulatory Notices and Analysis

Regulatory Flexibility Act

    The Regulatory Flexibility Act, 5 U.S.C. 601 et seq., requires an 
agency to review regulations to assess their impact on small entities 
and prepare an initial regulatory flexibility analysis (IRFA), unless 
the agency head determines that the regulatory action will not have a 
significant impact on a substantial number of small entities. The 
Commission does not believe the proposed changes in this ANPRM would 
have a signification impact on a substantial number of small entities, 
but invites comments to facilitate the assessment of the potential 
impact of a rule implementing any of the proposals in this ANPRM.

Paperwork Reduction Act

    Under the Paperwork Reduction Act of 1995 (PRA), a person is not 
required to respond to a collection of information by a Federal agency 
unless the collection displays a valid OMB control number. There is no 
information collection requirement associated with this ANPRM.

Regulation Identifier Number

    The Commission assigns a regulation identifier number (RIN) to each 
regulatory action listed in the Unified Agenda of Federal Regulatory 
and Deregulatory Actions (Unified Agenda). The Regulatory Information 
Service Center publishes the Unified Agenda in April and October of 
each year. You may use the RIN contained in the heading at the 
beginning of this document to find this action in the Unified Agenda, 
available at: http://www.reginfo.gov/public/do/eAgendaMain.

    By the Commission.
Karen V. Gregory,
Secretary.
[FR Doc. 2016-04264 Filed 2-26-16; 8:45 am]
BILLING CODE P

Federal Register / Vol. 81, No. 39 / Monday, February 29, 2016 / Proposed Rules 10199

confidential and public versions of negotiated contracts, rather than published in the NVOCC’s tariff. 46 CFR
confidential comments should be exclusively by public tariffs, was a 531.1, 351.5, and 531.9
submitted by email. change that had profound effects on the On January 18, 2011, President
• Mail: Karen V. Gregory, Secretary, liner industry. The Act also clarified the Obama issued Executive Order 13563
Federal Maritime Commission, 800 authority of conference members to offer (E.O. 13563) to emphasize the
North Capitol Street NW., Washington, intermodal pricing (the integration of importance of public participation in
DC 20573–0001. ocean carriage with truck or rail adopting regulations, promote
Docket: For access to the docket to service). integration and innovation in regulatory
read background documents or FMC regulations require all ocean actions, utilize flexible approaches in
comments received, go to the freight rates, surcharges, and accessorial achieving regulatory objectives, and
Commission’s Electronic Reading Room charges in liner trades be published in ensure the objectivity of any scientific
at: http://www.fmc.gov/16-05. ocean common carrier tariffs or agreed and technological information and
Confidential Information: The to in service contracts filed with the process in regulatory actions. E.O.
Commission will provide confidential Commission. Contemporaneous with 13563 requires executive agencies to
treatment for identified confidential the filing of service contracts, carriers develop a plan to periodically review
information to the extent allowed by are also required to make available to their existing significant regulations to
law. If your comments contain the public a concise statement of determine whether any such regulations
confidential information, you must essential terms in tariff format. Initially, should be modified, streamlined,
submit the following: service contracts filed with the expanded, or repealed so as to make
• A transmittal letter requesting Commission under the Act could not be such agencies’ regulatory programs
confidential treatment that identifies the amended. In 1992, FMC regulations more effective and less burdensome in
specific information in the comments were revised to allow for service achieving the regulatory objectives. On
for which protection is sought and contracts to be amended to adjust terms July 11, 2011, Executive Order 13579
demonstrates that the information is a and/or rates. was issued to encourage independent
trade secret or other confidential In 1998, Congress passed the Ocean regulatory agencies to also pursue the
research, development, or commercial Shipping Reform Act (OSRA), amending goals stated in E.O. 13563.
information. the Shipping Act of 1984 relating to On November 4, 2011, the
• A confidential copy of your service contracts. To facilitate Commission issued its Plan for
comments, consisting of the complete compliance and minimize the filing Retrospective Review of Existing Rules
filing with a cover page marked burdens on the oceanborne commerce of (Retrospective Review Plan or Plan) and
‘‘Confidential-Restricted,’’ and the the United States, service contracts and invited public comment on how it might
confidential material clearly marked on amendments effective after April 30, improve existing regulations.2 The Plan
each page. You should submit the 1999 are required to be filed with the included a review schedule for its
confidential copy to the Commission by Commission in electronic format. The existing regulations, which was updated
mail. electronic filing of service contracts and on February 13, 2013. The updated Plan
• A public version of your comments amendments eliminated the regulatory called for review of the existing rules for
with the confidential information burden of filing in paper format, saving NVOCC Service Arrangements in 46
excluded. The public version must state ocean carriers both time and money. In CFR part 531 from 2013 to 2014, and for
‘‘Public Version—confidential materials addition, under OSRA, contracts review of Service Contracts regulations
excluded’’ on the cover page and on between ocean common carriers and Part 530 in 2013.
each affected page, and must clearly shippers can be agreed to on a In response to the Commission’s
indicate any information withheld. You confidential basis and the public no request for public comment, the
may submit the public version to the longer has access to view their National Customs Brokers and
Commission by email or mail. contents.1 Service contracts and Forwarders Association of America, Inc.
FOR FURTHER INFORMATION CONTACT: For
amendments continue today to be filed (NCBFAA) filed comments regarding
questions regarding submitting into the Commission’s electronic filing Part 532, NVOCC Negotiated Rate
comments or the treatment of system, SERVCON. Arrangements (NRAs), and Part 531,
In 2005, the Commission issued a rule NVOCC Service Arrangements, on
confidential information, contact Karen
exempting Non-Vessel-Operating November 21, 2011. NCBFAA’s
V. Gregory, Secretary, Phone: (202) 523–
Common Carriers (NVOCCs) from comments supported the Commission’s
5725. Email: secretary@fmc.gov. For
certain tariff publication requirements effort to review and streamline its
technical questions, contact Florence A.
of the Shipping Act, pursuant to section regulations and indicated that several
Carr, Director, Bureau of Trade
16 of the Shipping Act, 46 U.S.C. 40103. additional steps would significantly
Analysis. Phone: (202) 523–5796. Email:
69 FR 75850 (December 20, 2004) (final ease some of the obstacles that it claims
tradeanalysis@fmc.gov. For legal
rule). Under the exemption, NVOCCs have hindered utilization of Part 532,
questions, contact Tyler J. Wood,
are relieved from certain Shipping Act NVOCC NRAs, and Part 531, NVOCC
General Counsel. Phone: (202) 523–
tariff requirements, provided that the Service Arrangements. The Commission
5740. Email: generalcounsel@fmc.gov.
carriage in question is performed also received the Comments of Ocean
SUPPLEMENTARY INFORMATION: pursuant to an NVOCC Service Common Carriers 3 regarding Part 530,
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Background Arrangement (NSA) filed with the
Commission and the essential terms are 2 A copy of the Retrospective Review Plan and
In 1984, Congress passed the
comments filed in response to the plan that are
Shipping Act of 1984 (the Shipping Act 1 Prior to OSRA, contract rates were published in within the scope of this rulemaking have been
or the Act) 46 U.S.C. 40101 et seq., the essential terms tariff publication, thereby placed in the docket.
which introduced the concept of allowing similarly situated shippers to request and 3 The commenting carriers consisted of a total of

contract carriage under service contracts obtain similar terms. In enacting OSRA, Congress 30 ocean carriers participating in the following
limited the essential terms publication to the agreements active at that time: The 14 members of
filed in paper format with the Federal following terms: The origin and destination port the Transpacific Stabilization Agreement (TSA); 10
Maritime Commission (Commission or ranges, the commodities, the minimum volume or members of the Westbound Transpacific
FMC). The pricing of liner services via portion, and the duration. Continued

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10200 Federal Register / Vol. 81, No. 39 / Monday, February 29, 2016 / Proposed Rules

Service Contracts on May 18, 2012. The Part 530—Service Contracts services can be accomplished in a
carriers’ comments largely focused on relatively short period of time using
Subpart A—General Provisions
three areas that they believe changes in carriers’ in-house IT professionals.
the service contract regulations would Section 530.3 Definitions The Commission seeks comment on
be beneficial, namely, introducing amending its regulations to ensure that
Section 530.3 Affiliate
greater flexibility in the timing of carriers are aware of the availability of
Currently, there is no definition of the automated web service process for
service contract amendment filing, affiliate in § 530.3, Service Contracts. A
making adjustments to the service filing service contracts and
definition of affiliate is provided for amendments.
contract correction process, and NVOCC Service Arrangements, in
expanding the list of commodities § 531.3(b). In order to provide clarity Section 530.6 Certification of Shipper
exempted from tariff and service and consistency, the Commission seeks Status
contract filing. The comments are comment on adding the definition of The provisions in this section set
described in further detail in discussion affiliate contained in § 531.3(b) to forth the requirement that shippers
of Parts 530 and 531 that follows. § 530.3. entering into service contracts certify
In September 2013, the Commission their status and require vessel-operating
Section 530.3(i) Effective Date common carriers (VOCCs) to obtain
initiated the present regulatory review
of Part 530, Service Contracts, and Part Presently, the Commission’s proof of an NVOCC’s compliance with
regulations require that a service tariff and financial responsibility
531, NVOCC Service Arrangements.
contract or amendment be filed on or requirements. Carriers regularly use the
Executive Order 13563 served as
before the date it becomes effective. The FMC Web site, www.fmc.gov, to verify
guidance for the Commission in seeking Commission is seeking comment on whether or not an NVOCC contract
ways in which the regulations should be whether it should amend the definition holder or affiliate is in good standing.
modified, expanded, or streamlined in of effective date with respect to service Various carriers employ more rigid
order to make the regulations more contract amendments to allow the standards in certifying NVOCC status by
effective, reduce the regulatory burden, effective date of amendments to be requiring copies of the NVOCC’s bond
encourage public participation, make before the filing date of the amendment. as well as the title page of its respective
use of technology, and consider flexible published tariffs. Further, many VOCCs
approaches, keeping in mind the FMC’s Section 530.5 Duty To File
include the NVOCC’s 6-digit FMC
mission, strategic goals, and regulatory In addition to converting to electronic Organization Number in the service
responsibilities. filing in 1999, the Commission has contract, which indicates that the VOCC
As part of its review, the Commission made efforts to reduce the regulatory sought to ensure compliance with the
burden of filing service contracts and requirements of § 530.6.
informally solicited views from various
amendments into its SERVCON system. Carriers frequently ask about the
stakeholders in order to gather a broad
At the request of one ocean carrier, the FMC’s electronic systems’ capability to
range of perspectives. The discussions Commission developed an automated automatically verify whether an NVOCC
with stakeholders, including Vessel- web services process in 2006, which party named in a service contract or
Operating Common Carriers (VOCCs), allows service contracts or NSAs and amendment is in compliance with
several major trade associations, their amendments to be filed directly § 530.6. While the FMC’s SERVCON
licensed NVOCCs, beneficial cargo from a carrier’s contract management system does not currently have this
owners (BCOs), and shippers system into SERVCON, thereby capability, the technology exists to add
associations, were held on a reducing the regulatory burden and this functionality in the future. One
confidential basis to promote a candid error rate associated with manual possible approach to accomplish this
dialogue. The Commission asked processing. By ‘‘pushing’’ the unique would be for the FMC to create a new
stakeholders how existing regulations data already entered in the filer’s data field in SERVCON which would
impact their businesses, what regulatory contract management systems directly require a VOCC to enter the NVOCC’s 6-
changes each stakeholder would to the SERVCON system, it eliminates digit FMC Organization Number when a
recommend, and to quantify the cost of the time and expense involved in NVOCC is a contract holder or affiliate.
its regulatory burden. manually logging into SERVCON to file If multiple NVOCCs are party to a
Below, on a section by section basis, contracts or NSAs. SERVCON then service contract, each NVOCC’s
is a discussion of issues on which the processes the filing and returns a respective Organization Number would
confirmation number if the filing was be required to be listed in this field.
Commission is seeking public comment.
successful, or an error message giving SERVCON could be updated so that it
Further, the public is invited to
the reason it was not. would automatically determine at the
comment on any provisions contained Using web services to file service time a contract or amendment is
in Parts 530 and 531. contracts and amendments reduces a uploaded for filing, whether the
carrier’s cost and creates efficiencies for NVOCC(s) is in good standing with the
both the carrier and the Commission. Commission. The development of such
The Commission has encouraged the an automatic process could potentially
use of web services to carriers save carriers a substantial amount of
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Stabilization Agreement (WTSA); 6 members of the
Central America Discussion Agreement (CADA); 11 throughout the years. Currently, 36% of time currently spent verifying an
members of the West Coast South America all service contracts and amendments NVOCC’s status.
Discussion Agreement (WCSADA); 5 members of filed use web services. It is estimated, Another option, which would require
the Venezuela Discussion Agreement (VDA); 3 based on current carrier projections, that a substantial amount of SERVCON
members of the ABC Discussion Agreement
approximately 92% of contracts and system programming and necessitate a
(ABCDA); 6 members of the United States
Australasia Discussion Agreement (USADA); and, amendments filed by April 1, 2016 standard service contract format to be
the 3 members of the Australia New Zealand United should be filed using web services. adopted and agreed to by carriers,
States Discussion Agreement (ANZUSDA). For Given the Commission’s past would be to require ‘‘metadata’’ to be
comments, refer to Attachment B. experience, transitioning to web incorporated into service contracts that

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Federal Register / Vol. 81, No. 39 / Monday, February 29, 2016 / Proposed Rules 10201

would include the 6-digit FMC and carriers to apply agreed-upon terms In commenting on the carriers’
Organization Number of all NVOCC immediately and thus do business suggestions, consideration should also
parties.4 For instance, with the required without disrupting or delaying that be given to the manner in which service
programming implemented this business. contracts and amendments would be
technology could be leveraged to Based on the above practices, the filed into the FMC’s SERVCON system.
identify during the filing process carriers recommend that § 530.8(a) be SERVCON is designed to process the
contracts or amendments which contain amended to permit the contract parties filing of the initial service contract,
an NVOCC that is not in compliance to implement a service contract designated as Amendment ‘‘0,’’ with
with § 530.6. If an NVOCC is not amendment immediately, provided that subsequent amendments to the contract
compliant, an alert would be sent to the the amendment is entered into by the numbered sequentially, beginning with
carrier filing the contract or amendment parties and filed within 30 days of Amendment No. ‘‘1’’. If the definition of
and Commission staff. whichever occurs first: (1) The date effective date is changed to allow
Therefore, the Commission is seeking agreement on the amendment is amendments to be filed up to 30 days
comment regarding whether the reached; or (2) the date the carrier after the date on which they are agreed,
Commission should move forward in: receives the cargo to which the and amendments are filed using the
(1) Requiring use of the 6-digit FMC amendment applies. Under this existing filing process, which requires
Organization Number for NVOCCs who proposal, the carriers note that the sequential filing of amendments starting
are a contract holder or affiliate in a Commission would still receive all with Amendment No. 1, then no
service contract; service contract amendments, however, programming changes would be
(2) adding a data field in the not prior to implementation. required in SERVCON.
Commission’s electronic filing system The revised regulation envisioned by In connection with the 30-day period
(SERVCON) in order to enter the 6-digit the carriers would require that each for filing service contract amendments,
FMC Organization Number when an filed amendment state the effective date the carriers also proposed aggregating
NVOCC is party to a contract, or of each change to the contract made by several contract changes in a single
(3) requiring service contracts to be the amendment, so the Commission amendment in what, in effect, could be
formatted to contain metadata that could determine the date from which a monthly filing. In a monthly filing that
includes the 6-digit FMC Organization any given rate or term was to apply. consolidates a number of service
Number for each NVOCC that is a Carriers state that filing within 30 days contract amendments, it would be
contract holder or affiliate in a service necessary for carriers to specify the
would also reduce the filing burden by
contract. effective date of each amendment. In
enabling carriers to aggregate several
some cases, for example, the same rate
Subpart B—Filing Requirements contract changes together in a single
may change more than once in a
amendment. The carriers contend that
Section 530.8 Service Contracts monthly period. Since the SERVCON
the Commission would maintain the
system is not designed to process
In the filed Comments of Ocean authority to request service contract
multiple amendments in a single filing,
Common Carriers, a number of carriers records, including the evidence that the
this would require a substantial amount
cite the filing of service contract parties reached agreement on a
of reprogramming for the system to be
amendments as the largest particular term as of a particular date.
able to capture both the effective date
administrative burden for both carriers When Commission staff met and amendment number should, for
and their customers. Many ocean individually with large beneficial cargo example, Amendments Nos. 7 through
carriers believe that the service contract owners (BCOs) and NVOCCs, those 12 be combined into a single document.
effective date requirement is overly shippers relayed that they had not Further, based on input from the
burdensome and restrictive given experienced delays as a result of Commission’s Office of Information
current commercial practices, carriers’ inability to process service Technology, carriers would need to
particularly with respect to amendments contract amendments in a timely manually input the effective date of
to contracts. The carriers claim that the manner prior to movement of their each amendment into SERVCON.
vast majority of amendments are for cargo. It was the shippers’ Therefore, absent the requisite
minor revisions to commercial terms, understanding that the carriers’ reprogramming, this process could
such as a revised rate or the addition of requirement to file amendments with possibly result in more, rather than less,
a new origin/destination or commodity. the Commission prior to acceptance of of a filing burden. Additionally,
The carriers advise that shippers will the cargo protects rate and contract consolidating several service contract
often tender cargo to them without first commitments. Shippers advised the amendments may also prevent carriers
formally accepting their proposal. Commission that carriers were from using the Commission’s web
Therefore, according to ocean common responsive to their rate requests and the services technology in accordance with
carriers’ comments, the carrier and shippers were confident that VOCCs § 530.5, thereby offsetting the
shipper often agree on a rate without would honor the rates and contract advantages of web services, which do
memorializing that agreement in a form commitments knowing their contracts not require manual input and are
that can be filed as an amendment. The were being filed with the Commission. intended to reduce the burden of filing.
carriers claim that filing amendments In order to minimize the filing The Commission seeks comments on
within 30 days would enable shippers burden, the Commission is seeking whether it should revise its regulations
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comment on whether it should allow an to allow: (1) A service contract
4 ‘‘Metadata is structured information that
amendment to be filed up to 30 days amendment to be filed individually and
describes, explains, locates, or otherwise makes it
easier to retrieve, use, or manage an information
after an amendment is reached by the sequentially within 30 days of its
resource. Metadata is often called data about data parties. A change in the definition of effectiveness; or (2) any number of
or information about information.’’ National effective date would only affect the service contract amendments to be
Information Standards Organization (NIST), filing date of the amendment, as the consolidated into a single document,
Understanding Metadata, NIST Press (2004),
available at: http://www.niso.org/publications/
parties must still agree to the rates and/ but filed within 30 days of the effective
press/UnderstandingMetadata.pdf (last visited Jan. or contract terms prior to receipt of the date of the earliest of all amendments
17, 2016). cargo. contained in the document. Any

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10202 Federal Register / Vol. 81, No. 39 / Monday, February 29, 2016 / Proposed Rules

clarifications or refinements to the application is limited to a narrow set of error is not discovered until well after
suggestions made by the commenters, circumstances, that of a Corrected 45 days has transpired. In other cases,
given the information technology Transmission. Pursuant to § 530.10(d), shippers engage in audits of bills of
constraints, are also requested. Electronic transmission errors, carriers lading and identify errors in the service
may file a ‘‘Corrected Transmission’’ contract that do not match the rates
Section 530.10 Amendment,
(CT) within forty-eight (48) hours of offered. Again, these audits may be well
Correction, Cancellation, and Electronic
filing a service contract or amendment after the 45-day period. To provide
Transmission Errors
into SERVCON, however, only to correct needed flexibility in this process, the
In Comments of Ocean Common a purely technical data transmission Commission is considering whether a
Carriers, the carriers noted that the error or a data conversion error that longer time period in which to file is
current service contract correction occurred during uploading. A CT may appropriate. The Commission seeks
procedures largely pre-date both service not be used to make changes to rates, comment on extending the amount of
contract amendments (first permitted in terms or conditions. time a service contract correction
1992) and confidential individual While the vast majority of service request can be filed from within 45 days
carrier contracts introduced by OSRA, contracts are uploaded into the of the contract’s filing with the
and maintain that these procedures are Commission’s electronic filing system, Commission up to 180 days.
‘‘ill suited’’ to the manner in which SERVCON, without encountering any
service contracts are employed today. problems, staff has noted that, when Extend the Service Contract Correction
The carriers identified a number of errors do occur, many times carriers do Procedure To Include Unfiled Contracts
revisions to the requirements governing not discover the error until after the and Amendments
Service Contract Correction Requests at initial 48 hour period has passed. The The ocean carriers provided a number
§ 530.10(c), some of which are discussed vast majority of these mistakes are of arguments in support of allowing the
below. attributable to data entry errors on the correction process to be utilized for
With respect to the forgoing carrier SERVCON upload screen (e.g. the unfiled service contracts and service
proposals, the Commission is incorrect amendment or service contract contract amendments. Service contracts
considering stakeholder comments and number is entered, an incorrect effective are required by law, under the Shipping
staff experience regarding service date is typed, or the wrong contract or Act, 46 U.S.C. 40502, to be filed with
contract correction requests, corrected amendment is attached for uploading). the Commission. Shippers advised that
transmissions, and the proposed Staff verifies that these are indeed they believe that a filed contract
‘‘conforming amendment.’’ An item by purely clerical data errors that do not provides them with the assurance that
item discussion follows. make changes to rates, terms, or the rates and terms of the service
30 Day Grace Period conditions prior to accepting the CT contract will be adhered to by both the
filings. shipper and carrier.
The carriers propose that the While incorporation of web services
Commission allow a 30 day grace period filing would reduce the occurrence of Eliminate Carrier Affidavit and
in which a carrier would not be required many of the technical and data Significantly Reduce Filing Fee
to file a service contract correction transmission errors leading to a Carriers requested that the
request (requesting retroactive Corrected Transmission, the Commission eliminate the affidavit
effectiveness to correct a clerical or Commission is seeking comments on requirement for service contract
administrative error) or a formal whether the current 48-hour period in correction requests and also
amendment to the contract (effective which to file a CT after filing the significantly reduce the filing fee. The
upon filing or in the future), but rather, original contract or amendment should Commission’s filing fee reflects time
be permitted to submit a new type of be extended to thirty (30) days to afford expended by Commission staff to
filing, designated as a ‘‘conforming carriers with a more realistic time frame research and verify information
amendment’’ or some other special to correct purely clerical data provided in the correction request and
designation (in order to retroactively transmission errors. The Commission to conduct its analysis. The Commission
correct a ‘‘typographical or clerical notes that extending the time period for could reduce the filing fee from $315 to
error’’). filing CTs would also facilitate ensuring around $100 or less by streamlining its
The Commission questions whether that the service contract terms and internal processes, provided that the
this process would, in effect, be a conditions agreed to by the carrier and affidavit requirement is not eliminated.
substitute for the service contract shipper are those on file with the If the affidavit requirement were
correction process within the first 30 Commission in the SERVCON system eliminated, staff time researching and
days after filing, without an affidavit while maintaining adequate shipper verifying information would increase,
and other documentation used for protections. and thus, the filing fee would need to
verification purposes that establishes
Extend Filing Period for Correction be increased commensurate with the
the nature of the error and the parties’
Requests to 180 Days additional time required for processing
intent. The Commission also has
The Commission is considering and analysis. The Commission is
concerns that the use of the term
extending the time period for a service seeking comment on these proposals.
‘‘amendment’’ in the proposed special
designation ‘‘conforming amendment’’ contract correction from forty-five (45) Subpart C—Publication of Essential
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could be confusing, as the submission to one-hundred eighty (180) days. An Terms
would be a corrective filing, rather than error in a service contract may not be
discovered until after cargo has moved, Section 530.12 Publication
an actual sequential amendment to the
contract. been invoiced on the bill of lading, the Several stakeholders advised the
There is an additional approach under shipper reviews it and notes that the Commission that essential terms
which a service contract or amendment rate assessed is not the agreed upon rate. publications were no longer accessed by
can currently be corrected that is Given long transit times due to carriers’ the public or useful to stakeholders.
somewhat similar to the proposed global pendulum services and slow However, other stakeholders indicated
‘‘conforming amendment,’’ though its steaming, in many cases this type of that they do rely on them for various

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$10204 Federal Register / Vol. 81, No. 39 / Monday, February 29, 2016 / Proposed Rules shipper certify its status, which is a Subpart D—Exceptions and Commission does not believe the requirement for shippers under current Implementation proposed changes in this ANPRM service contract regulations in Part 530. would have a signification impact on a Section 531.10 Excepted and The Commission seeks comment on substantial number of small entities, but Exempted Commodities whether to make these requirements invites comments to facilitate the consistent and uniform for NVOCCs and For consistency, the Commission is assessment of the potential impact of a VOCCs, as both are common carriers, seeking comment on whether to treat rule implementing any of the proposals and such certification assists in VOCC service contracts and NVOCC in this ANPRM. compliance. service arrangements similarly with Paperwork Reduction Act respect to exempted commodities. The Section 531.8 Amendment, Correction, Under the Paperwork Reduction Act Commission is requesting comment on Cancellation, and Electronic of 1995 (PRA), a person is not required whether it should add to this Part Transmission Errors to respond to a collection of information additional commodity exemptions Under the Commission’s regulations, approved by the Commission in by a Federal agency unless the VOCC service contracts and NVOCC § 530.13. collection displays a valid OMB control service arrangements are both number. There is no information Section 531.11 Implementation collection requirement associated with agreements between a common carrier and a shipper for the carriage of cargo. Proposed changes regarding the this ANPRM. Given these congruencies, the effective date of service contract Regulation Identifier Number Commission is considering whether amendments are under consideration by changes being proposed by the VOCCs the Commission. If the Commission The Commission assigns a regulation to the correction procedures for service determines to make such changes to Part identifier number (RIN) to each contracts should be handled in a similar 530 (Service Contracts), it will consider regulatory action listed in the Unified manner for NSAs. A complete whether to revise similar requirements Agenda of Federal Regulatory and discussion of the changes requested for NSA amendments in Part 531 Deregulatory Actions (Unified Agenda). with respect to service contract (NVOCC Service Arrangements), which The Regulatory Information Service amendment, correction, cancellation, would include § 531.11. Center publishes the Unified Agenda in and electronic transmission errors is April and October of each year. You Regulatory Notices and Analysis may use the RIN contained in the included in § 530.10 above. Regulatory Flexibility Act heading at the beginning of this Subpart C—Publication of Essential document to find this action in the Terms The Regulatory Flexibility Act, 5 Unified Agenda, available at: http:// U.S.C. 601 et seq., requires an agency to www.reginfo.gov/public/do/ Section 531.9 Publication review regulations to assess their impact eAgendaMain. In NCBFAA’s comments regarding the on small entities and prepare an initial Commission’s Retrospective Review regulatory flexibility analysis (IRFA), By the Commission. Plan, NCBFAA requested that the unless the agency head determines that Karen V. Gregory, Commission consider whether the the regulatory action will not have a Secretary. essential term tariff publication significant impact on a substantial [FR Doc. 2016–04264 Filed 2–26–16; 8:45 am] requirements are necessary. number of small entities. The BILLING CODE P asabaliauskas on DSK5VPTVN1PROD with PROPOSALS VerDate Sep<11>2014 17:29 Feb 26, 2016 Jkt 238001 PO 00000 Frm 00073 Fmt 4702 Sfmt 9990 E:\FR\FM\29FEP1.SGM 29FEP1$

Document Created: 2016-02-27 02:05:27
Document Modified: 2016-02-27 02:05:27

Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Proposed Rules
Action		Advance notice of proposed rulemaking.
Dates		Submit comments on or before: March 30, 2016.
Contact		For questions regarding submitting comments or the treatment of confidential information, contact Karen V. Gregory, Secretary, Phone: (202) 523-5725. Email: [email protected] For technical questions, contact Florence A. Carr, Director, Bureau of Trade Analysis. Phone: (202) 523-5796. Email: [email protected] For legal questions, contact Tyler J. Wood, General Counsel. Phone: (202) 523-5740. Email: [email protected]
FR Citation		81 FR 10198
RIN Number		3072-AC53
CFR Citation		46 CFR 530 46 CFR 531