[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