FMC Issues Proposed Rule to Provide Tariff Publication Exemption for NVOCC Service Arrangements Subject to Certain Filing Requirements

The FMC states that its determination to issue this proposed rule, which is based on a joint proposal, would grant NVOCCs parity with vessel operating common carriers (VOCCs), by permitting them, in their capacity as carriers, to provide transportation to their shipper customers on a confidential basis.

This Part I of a multi-part series of summaries on this proposed rule. See future issues of ITT for additional summaries.

Highlights of the FMC's Section-By-Section Analysis of the Proposed Rule

The following are highlights of the FMC's section-by-section analysis of the proposed rule, which would add a new Part 531 to 46 CFR (partial list):

NSA Definition. 46 CFR 531.3 would define an NVOCC service arrangement (NSA) as:

"a written contract, other than a bill of lading or receipt, between one or more NSA shippers as defined in this regulation and an individual NVOCC in which the NSA 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 NVOCC commits to a certain rate or rate schedule and a defined service level. The NSA may also specify provisions in the event of nonperformance on the part of any party."

Definition of NSA shipper. 46 CFR 531.3 would define an NSA shipper as:

"a cargo owner, the person for whose account the ocean transportation is provided, the person to whom delivery is to be made, or a shippers' association. The term does not include NVOCCs or a shippers' associations whose membership includes NVOCCs."

Confidentiality of NSAs. 46 CFR 531.4 would reflect the FMC's intent to keep NSAs and their amendments confidential, to the full extent permitted by law. However, the FMC will provide certain information to other federal government agencies as it sees fit. Also, the parties to a filed NSA may agree to disclose information contained in it.

Duty to file. 46 CFR 531.5 would require the NVOCC party to an NSA to file the NSA, amendments and notices and to publish the statement of essential terms. No such obligation would be placed on the NSA shipper party to the NSA.

NSAs. 46 CFR 531.6 would set forth the form and manner requirements for NSAs, and would provide that an NSA would have to be filed prior to any cargo moves pursuant to that NSA or amendment.

The NSA as filed would have to include the complete terms of the NSA, including, but not limited to:

the origin port ranges in the case of port-to-port movements and geographic areas in the case of through intermodal movements;

the destination port ranges in the case of port-to-port movements and geographic areas in the case of through intermodal movements;

the commodity or commodities involved;

the minimum volume or portion;

the service commitments;

the line-haul rate;

the liquidated damages for non-performance (if any);

the duration of the NSA, including the effective date and expiration date;

the legal names and business addresses of the NSA parties;

the names, titles and addresses of the representatives signing the NSA for the parties;

the date upon which the NSA was signed;

a description of the shipment records which would be maintained to support the NSA and the address, telephone number, and title of the person who would respond to a request by making shipment records available to the FMC for inspection; and

all other provisions of the NSA.

1. CFR 531.6 would also require that, for service pursuant to an NSA, no NVOCC would be able to, either alone or in conjunction with any other person, directly or indirectly (i) provide service in the liner trade that is not in accordance with the rates, charges, classifications, rules and practices contained in a filed NSA; (ii) engage in any unfair or unjustly discriminatory practice in the matter of rates or charges with respect to any port; or (iii) give any undue or unreasonable preference or advantage or impose any undue or unreasonable prejudice or disadvantage with respect to any port.

Publication of essential terms. 46 CFR 531.9 would list the essential terms (ET) and set out the requirements for their publication, for each NSA filed with the FMC. This section would also describe the FMC's publication on its Web site of a listing of the locations of all NSA essential terms publications, and would require that the ET publication indicate the date upon which it had most recently been updated.

Appendix A, Form FMC-78 and its instructions for filing NSAs electronically. Under the proposed rule, the requirements for registration would have to be undertaken before an NVOCC would be able to file its NSAs into the FMC's automated NSA system.

Proposed Appendix A, together with Form FMC-78 and its associated instructions, would set forth the registration requirements for filing NSAs electronically with the FMC's automated NSA system.

The joint proposal was drafted by many of the same petitioners who submitted eight petitions from July 2003 through March 2004. (See ITT's Online Archives or 10/29/04 news, 04102905, for BP summary of the FMC's press release announcing its vote to issue this proposed rule, including a list of the companies/associations who submitted the eight petitions and joint proposal.)

- written comments must be submitted no later than November 19, 2004

FMC proposed rule (D/N 04-12, served 10/28/04) available at http://www.fmc.gov/Dockets/04-12%20Proposed%20Rule.htm