[Federal Register Volume 78, Number 38 (Tuesday, February 26, 2013)]
[Proposed Rules]
[Pages 13011-13013]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-04392]


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FEDERAL MARITIME COMMISSION

46 CFR Parts 515, 520, and 532

[Docket No. 11-22]
RIN 3072-AC51


Non-Vessel-Operating Common Carrier Negotiated Rate Arrangements; 
Tariff Publication Exemption

AGENCY: Federal Maritime Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Federal Maritime Commission proposes to impose 
registration requirements on foreign-based unlicensed non-vessel-
operating common carriers (NVOCCs) and to extend an exemption from 
certain provisions and requirements of the Shipping Act of 1984 and the 
Commission regulations to foreign-based unlicensed non-vessel-operating 
common carriers that agree to negotiated rate arrangements (NRAs). The 
extension of the exemption is to make NRAs more useful and to enhance 
competition among all NVOCCs.

DATES: Comments or suggestions due on or before: April 29, 2013.

ADDRESSES: Submit all comments concerning this proposed rule to: Karen 
V. Gregory, Secretary, Federal Maritime Commission, 800 North Capitol 
Street NW., Washington, DC 20573-0001, Phone: (202) 523-5725, Email: 
secretary@fmc.gov.

FOR FURTHER INFORMATION CONTACT: Rebecca A. Fenneman, General Counsel, 
Federal Maritime Commission, 800 North Capitol Street NW., Washington, 
DC 20573-0001, Phone: (202) 523-5740, Email: generalcounsel@fmc.gov.

SUPPLEMENTARY INFORMATION:
    Submit Comments: Submit an original and 5 copies in paper form, and 
if possible, send a PDF of the document by email to secretary@fmc.gov. 
Include in the subject line: Docket No. 11-22, Comments on Non-Vessel-
Operating Common Carrier Negotiated Rate Arrangements; Tariff 
Publication Exemption.

Background

    On March 2, 2011, the Commission published a final rule 
promulgating 46 CFR part 532, Docket No. 10-03, Non-Vessel-Operating 
Common Carrier Negotiated Rate Arrangements, which exempted licensed 
non-vessel-operating common carriers (NVOCCs) that enter into 
negotiated rate arrangements (NRAs) from the tariff rate publication 
requirements of the Shipping Act of 1984 and certain provisions and 
requirements of the Commission's regulations. 76 FR 11351 (Mar. 2, 
2011).
    However, concerns about extending the exemption to foreign-based 
unlicensed NVOCCs were raised by staff. Id. at 11355-11356. Foreign-
based unlicensed NVOCCs are not subject to the same stringent 
requirements as licensed NVOCCs, such as review of the experience and 
character of the shareholders, major officers, and Qualifying 
Individual of the license applicant. Accordingly, the Commission 
decided at the time to permit the NRAs only to licensed NVOCCs, while 
stating that it will commence proceedings to obtain and consider 
additional comments on potential modifications to the final rule, 
including possible extension of the exemption to foreign-based 
unlicensed NVOCCs. Id. at 11357.
    The Commission later issued a Notice of Inquiry, Docket No. 11-22, 
Non-Vessel-Operating Common Carrier Negotiated Rate Arrangements; 
Tariff Filing Exemption, seeking comments on ways to make the NRA rules 
more useful and on its possible extension to foreign-based unlicensed 
NVOCCs. 76 FR 80866 (Dec. 27, 2011). Adopting suggestions by a number 
of ocean transportation intermediaries and U.S. and foreign trade 
associations, the Commission published a direct final rule eliminating 
some of the technical requirements of the rule. 77 FR 33971 (June 8, 
2012). The Commission, however, decided to continue to consider other 
suggestions, including possible extension of the exemption to foreign-
based unlicensed NVOCCs, at a future date. Id. at 33972.

Discussion

    The Commission may exempt any specified future activity from any 
requirements of the Shipping Act of 1984 ``if the Commission finds that 
the exemption will not result in substantial reduction in competition 
or be detrimental to commerce.'' 46 U.S.C. 40103. The Commission may 
attach conditions to an exemption and may, by order, revoke an 
exemption. Id. In Docket No. 10-03, the Commission found that allowing 
licensed NVOCCs to opt out of the requirements to publish tariff rates 
will enhance competition, rather than result in a substantial reduction 
in competition among licensed NVOCCs. 76 FR 11351, 11352. After 
reviewing all of the comments received and in light of the conditions 
for using NRAs, the Commission also found that permitting licensed 
NVOCCs the option of operating under NRAs would not be detrimental to 
commerce. Id. at 11353.
    Commission staff, however, raised concerns that extending the 
exemption to foreign-based unlicensed NVOCCs could hamper the 
Commission's ability to protect the shipping public, as the exemption 
is predicated, among other things, on the prompt availability of 
records. Id. at 11353. There were also concerns about the lack of 
oversight of foreign-based unlicensed NVOCCs. Id. at 11356. The 
licensing process for licensed NVOCCs includes a detailed review of the 
experience and character of the applicant's Qualifying Individual, and 
the character of its major officers and shareholders. Id. Further, the 
Commission's Bureau of Certification and Licensing's review of 
applicants includes a thorough vetting of the Commission's complaint 
and enforcement records system as well as commercial databases to 
analyze the applicant's financial background. Id. While the Commission 
approves a license based upon substantive and verified information, the 
Commission knows little more than the name and address of foreign-based 
unlicensed NVOCCs. Id. Further, foreign-based unlicensed NVOCCs are not 
required to designate a Qualifying Individual. Id.
    Those discussions brought to light the need for a registration 
process for foreign-based unlicensed NVOCCs. The registration process 
requires such NVOCCs submit a registration form to the Commission that 
identifies the NVOCCs' legal name, trade name(s), principal address, 
contact information including name of a contact person, and name, 
address, and contact person for a

[[Page 13012]]

designated legal agent for service of process in the U.S. A proposed 
form is not included within this document.
    A strong majority of comments received by the Commission in Docket 
No. 10-03 \1\ supported extending the exemption of 46 CFR part 532 to 
foreign-based unlicensed NVOCCs. 76 FR 11351, 11355. With the 
imposition of the registration process and certain other requirements 
enumerated below, the Commission believes that extending the NRAs to 
foreign-based unlicensed NVOCCs will make the NRAs more useful and thus 
enhance competition among all NVOCCs. Pursuant to the Commission's 
above-referenced review and analysis under section 16 of the Shipping 
Act in Docket No. 10-03, the Commission now finds that, with the 
adoption of these conditions and requirements, extending the NRAs to 
foreign-based unlicensed NVOCCs will not result in substantial 
reduction in competition or be detrimental to commerce. Consequently, 
to encourage better and fair competition among NVOCCs generally, the 
Commission proposes to extend the exemption from the Shipping Act and 
the Commission's regulation contained in 46 CFR part 532 to foreign-
based unlicensed NVOCCs.
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    \1\ The Commission has incorporated the record in Docket No. 10-
03 into this proceeding, Docket No. 11-22. 77 FR 33971 (June 8, 
2012).
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    Without the registration requirements and other conditions, 
extending the exemption to foreign-based unlicensed NVOCCs may be 
detrimental to commerce by reducing the Commission's ability to protect 
the shipping public. Therefore, to address those concerns, the 
Commission proposes extending the exemption subject to the following:
     Foreign-based unlicensed NVOCCs must be registered with 
the Commission in accordance with Sec.  515.19 of this proposed rule.
     Such registrations are effective for 3 years, as stated in 
Sec.  515.19(d) of this proposed rule.
     Such registrations may be terminated or suspended pursuant 
to Sec.  515.19(g) of this proposed rule, which includes failure to 
comply with 46 CFR 515.24 Agent for service of process.
     As stated in Sec.  532.7 of this proposed rule, all NVOCCs 
that enter into NRAs are subject to the Commission's inspection and 
reproduction requests and must produce the requested NRAs promptly in 
response to a Commission request. All records produced must be in 
English or be accompanied by a certified English translation.

Statutory Review

    The collection of information requirements contained in this 
proposed 46 CFR parts 515 and 532 have been submitted to the Office of 
Management and Budget for review under section 3504(h) of the Paperwork 
Reduction Act of 1980, as amended. 44 U.S.C. 3501 et seq. Send comments 
regarding the burden estimate or any other aspect of this collection of 
information, including suggestions for reducing this burden, to Ronald 
D. Murphy, Managing Director, Federal Maritime Commission, 800 North 
Capitol Street NW., Washington, DC 20573, email: OMD@fmc.gov, or fax: 
(202) 523-3646; and to the Office of Information and Regulatory 
Affairs, Office of Management and Budget, Attention: Desk Officer for 
Federal Maritime Commission, 17th Street and Pennsylvania Avenue NW., 
Washington, DC 20503.
    According to the Small Business Administration's regulation, ``a 
small business is a business entity organized for profit, with a place 
of business located in the United States, and which operates primarily 
within the United States or which makes a significant contribution to 
the U.S. economy through payment of taxes or use of American products, 
materials or labor.'' 13 CFR 121.105(a)(1). As foreign-based unlicensed 
NVOCCs have their principal place of business in foreign countries and 
operate primarily in foreign countries, they are not small businesses 
as defined by the regulation and, thus, are not small entities under 
the Regulatory Flexibility Act (RFA). 5 U.S.C. 601-612. Therefore, this 
rulemaking is not subject to the RFA.
    This proposed rule is not a ``major rule'' under 5 U.S.C. 804(2).

List of Subjects

46 CFR Part 515

    Freight, Freight forwarders, Maritime carriers, Reporting and 
recordkeeping requirements.

46 CFR Part 520

    Freight, Intermodal transportation, Maritime carriers, Reporting 
and recordkeeping requirements.

46 CFR Part 532

    Exports, Non-vessel-operating common carriers, Ocean transportation 
intermediary.

    For the reasons stated in the SUPPLEMENTARY INFORMATION, the 
Federal Maritime Commission proposes to amend 46 CFR parts 515, 520, 
and 532 as follows:

PART 515--LICENSING, FINANCIAL RESPONSIBILITY REQUIREMENTS, AND 
GENERAL DUTIES FOR OCEAN TRANSPORTATION INTERMEDIARIES

0
1. The authority citation for part 515 continues to read as follows:

    Authority:  5 U.S.C. 553; 31 U.S.C. 9701; 46 U.S.C. 305, 40102, 
40104, 40501-40503, 40901-40904. 41101-41109, 41301-41302, 41305-
41307; Pub. L. 105-383, 112 Stat. 3411; 21 U.S.C. 862.

0
2. In subpart B, add new Sec.  515.19 to read as follows:


Sec.  515.19  Registration of foreign-based unlicensed NVOCC.

    (a) Any person whose primary place of business is located outside 
the United States that elects to operate as a registered NVOCC in the 
United States foreign trade shall register with the Commission by 
submitting to the Director of the Bureau of Certification and Licensing 
(BCL) a completed registration form, Form FMC-65 (Foreign-based 
Unlicensed NVOCC Registration/Renewal). A notice of each registration 
shall be published on the Commission's Web site www.fmc.gov. It is a 
violation of the Commission's regulations implementing the Shipping Act 
for a foreign-based unlicensed non-vessel-operating common carrier to 
provide NVOCC services in the U.S. foreign trade without a valid 
registration and an effective tariff.
    (b) A registration form which appears, upon submission, to be 
substantially incomplete may be rejected. If rejected, a notice, 
together with the reasons therefore, shall be sent to the foreign-based 
unlicensed NVOCC and the filing fee shall be refunded. Persons who have 
had a registration rejected may submit a new registration at any time 
together with the applicable fee.
    (c) Registrations are complete upon receipt of a registration form 
which meets the requirements of this section and upon evidence of 
financial responsibility being furnished pursuant to Sec.  515.21.
    (d) Registrations shall be effective for a period of three (3) 
years. Thereafter, registrations will be renewed for sequential three 
year periods upon submission of an updated registration form.
    (e) A tariff shall not be published and NVOCC service shall not 
commence until the Commission receives valid proof of financial 
responsibility from the registrant and a Form FMC-1 has been filed.
    (f) Any changes to legal name(s) or trade name(s), principal place 
of business address (including telephone number, facsimile number), 
contact

[[Page 13013]]

person and email address (including physical address if different from 
principal place of business), name of resident agent(s) (including 
physical address, mailing address, email address, telephone and 
facsimile number(s), and contact person) in the United States for 
receipt of service of judicial and administrative process (including 
subpoenas) must be reported to BCL within 30 days of such changes.
    (g) Termination or suspension of the registration of a registered 
NVOCC.
    (1) Grounds. A registration shall become automatically ineffective 
for a failure of a registered NVOCC to maintain proof of financial 
responsibility on file with the Commission. The effectiveness of such a 
registration may otherwise be terminated or suspended, after notice and 
the opportunity for a hearing, for any of the following reasons:
    (i) Violation of any provision of the Act, or any other statute or 
Commission order or regulation related to carrying on the business of 
an ocean transportation intermediary;
    (ii) Failure to respond to any lawful order or inquiry by the 
Commission or an authorized Commission representative;
    (iii) Making a materially false or misleading statement to the 
Commission in connection with a registration or renewal thereof;
    (iv) Failure to honor financial obligations to the Commission;
    (v) Failure to timely renew a registration;
    (vi) Failure to maintain a Form FMC-1 and a tariff in compliance 
with 46 CFR Part 520;
    (vii) Knowingly and willfully processing, booking, or accepting 
cargo from, or transporting cargo for the account of, an NVOCC that is 
not licensed or registered, or has not provided proof of financial 
responsibility or published an effective tariff; and
    (viii) Failure to designate and maintain a person in the United 
States as legal agent for the receipt of judicial and administrative 
process, including subpoenas, as required by Sec.  515.24.
    (2) [Reserved].
    (3) Publication of Notice. The Commission shall publish on the 
Commission's Web site, www.fmc.gov, a notice of each termination or 
suspension.
0
3. In Sec.  515.24, revise paragraphs (b), (c), and (d) to read as 
follows:


Sec.  515.24  Agent for service of process.

* * * * *
    (b) Service of administrative process, other than subpoenas, may be 
effected upon the legal agent by dispatching a copy of the document to 
be served by mail or courier service. Administrative subpoenas shall be 
served in accordance with Sec.  502.134 of this chapter.
    (c) If the designated legal agent cannot be served because of 
death, disability, unavailability, termination or expiration of the 
designation, or if a legal agent authorized to receive such service is 
not designated in compliance with this section, the Secretary of the 
Federal Maritime Commission will be deemed to be the legal agent for 
service of process. Any person serving the Secretary must also send to 
the ocean transportation intermediary, or group or association of ocean 
transportation intermediaries which provide financial coverage for the 
financial responsibilities of a member ocean transportation 
intermediary, by mail or courier service at the ocean transportation 
intermediary's, or group's, address published in its tariff, a copy of 
each document served upon the Secretary, and shall attest to that 
service at the time service is made upon the Secretary. For purposes of 
this paragraph, it is sufficient that a person seeking to serve process 
on an ocean transportation intermediary, or group of such 
intermediaries, affirm to the Commission's Secretary that: They have 
contacted, or attempted to contact, the designated agent to confirm 
whether it remained authorized to accept service of process; or, if no 
legal agent is designated in the tariff, that it has no knowledge of 
the identity of the ocean transportation intermediary's legal agent. 
Designation of the Commission's Secretary as the legal agent shall 
survive any cancellation of the OTI's license or tariff and shall 
continue for the entire period during which claims may be made under 
the OTI's financial responsibility instrument.
    (d) Designations of legal agent under paragraphs (a) and (b) of 
this section and provisions relating to service of process under 
paragraph (c) of this section shall be published in the ocean 
transportation intermediary's tariff, when required, in accordance with 
part 520 of this chapter.
* * * * *

PART 520--CARRIER AUTOMATED TARIFFS

0
4. The authority citation for part 520 continues to read as follows:

    Authority:  5 U.S.C. 553; 46 U.S.C. 305, 40101-40102, 40501-
40503, 40701-40706, 41101-41109.

0
5. In Sec.  520.13, revise paragraph (e) to read as follows:


Sec.  520.13  Exemptions and exceptions.

* * * * *
    (e) NVOCC negotiated rate arrangements. An NVOCC that satisfies the 
requirements of part 532 of this chapter is exempt from the requirement 
in this part that it include rates in a tariff open to public 
inspection in an automated tariff system.

PART 532--NVOCC NEGOTIATED RATE ARRANGEMENTS

0
6. The authority citation for part 532 continues to read as follows:

    Authority:  46 U.S.C. 40103.

0
7. Revise Sec.  532.1 to read as follows:


Sec.  532.1  Purpose.

    The purpose of this Part, pursuant to the Commission's statutory 
authority, is to exempt non-vessel-operating common carriers (NVOCCs) 
from the tariff rate publication and adherence requirements of the 
Shipping Act of 1984, as enumerated herein.
0
8. Amend Sec.  532.2 as follows:
0
a. Revise introductory text to read as follows; and
0
b. Amend paragraph (g) by revising the second sentence to read as 
follows.


Sec.  532.2  Scope and applicability.

    This Part exempts NVOCCs duly licensed pursuant to 46 CFR 515.3 or 
registered pursuant to 46 CFR 515.19, holding adequate proof of 
financial responsibility pursuant to 46 CFR 515.21, and meeting the 
requirements of 46 CFR 532.4 through 532.7, from the following 
requirements and prohibitions of the Shipping Act and the Commission's 
regulations:
* * * * *
    (g) * * * Any NVOCC failing to maintain its bond or license or 
registration as set forth above, or who has had its tariff suspended by 
the Commission, shall not be eligible to invoke this exemption.
0
9. In Sec.  532.7, revise paragraph (b) to read as follows:


Sec.  532.7  Recordkeeping and audit.

* * * * *
    (b) NRAs are subject to inspection and reproduction requests by the 
Commission. An NVOCC shall produce the requested NRAs promptly in 
response to a Commission request. All records produced must be in 
English or be accompanied by a certified English translation.
* * * * *

    By the Commission.
Karen V. Gregory,
Secretary.
[FR Doc. 2013-04392 Filed 2-25-13; 8:45 am]
BILLING CODE 6730-01-P