[Federal Register Volume 78, Number 138 (Thursday, July 18, 2013)]
[Rules and Regulations]
[Pages 42886-42889]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-17191]

[[Page 42886]]



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: Final rule.


SUMMARY: The Federal Maritime Commission (Commission) revises its rules 
to impose registration requirements on foreign-based unlicensed non-
vessel-operating common carriers 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.

DATES: Effective date: This Final Rule is effective July 19, 2013.
    Compliance date: Foreign-based unlicensed non-vessel-operating 
common carriers shall comply with the requirements of 46 CFR 515.19 no 
later than October 17, 2013.

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: [email protected].



    Under the Commission's current rule at 46 CFR part 532, titled 
NVOCC Negotiated Rate Arrangements, licensed non-vessel-operating 
common carriers (NVOCCs) that choose to enter into negotiated rate 
arrangements (NRAs) are exempted from the tariff rate publication 
requirements of the Shipping Act of 1984 and certain provisions and 
requirements of the Commission's regulations. At the time of the 
promulgation of the rule, the Commission determined to exempt only 
licensed NVOCCs because of concerns relating to the limited information 
available to the Commission about foreign-based unlicensed NVOCCs.
    On December 5, 2012, however, the Commission determined it could 
extend the exemption at 46 CFR part 532 to foreign-based unlicensed 
NVOCCs by implementing new registration and other requirements. A 
Notice of Proposed Rulemaking (NPRM) was published on February 26, 
2013. 78 FR 13011.


    The Commission received six comments: Federazione Nazionale delle 
Imprese di Spedizioni Internazionali (FEDESPEDI), International 
Federation of Freight Forwarders Association (FIATA), National Customs 
Brokers and Forwarders Association of America, Inc. (NCBFAA), 
Transportation Intermediaries Association (TIA), Unaffiliated Shippers 
of America (USOA), and UPS Ocean Freight Services, Inc. (UPS).
    FEDESPEDI supports the proposed rule and argues that the current 
rule is discriminatory. FEDESPEDI believes that granting the exemption 
to foreign-based unlicensed NVOCCs ``will contribute to a level playing 
field and, at the same time, will reduce operating costs for [its] 
members, allowing them to concentrate on quality and price, rather 
th[a]n expending unnecessary time and money on administrative 
    FIATA states that many of its members are NVOCCs. FIATA supports 
equal treatment of all NVOCCs, so that they are permitted to use the 
exemption whether or not they are licensed by the Commission. FIATA 
states that an NVOCC not using the exemption has the expense of 
maintaining tariff publication with no offsetting benefit to the 
shipping public. FIATA also states that the Commission has the ability 
to revoke the exemption for any NVOCC found to be abusing it. Like 
FEDESPEDI, FIATA believes that the proposed rule ``will resolve the 
problem of unequal playing fields for foreign-based NVOCCs and their 
competitors in the United States and will give them the same tools to 
serve their customers without additional costs.''
    NCBFAA supports the proposed rule. NCBFAA states that the extension 
of the exemption would increase competition by freeing foreign-based 
unlicensed NVOCCs from the burden of rate tariff publication 
obligation; that eliminating the costs of rate tariff publication for 
foreign-based unlicensed NVOCCs will better position them to serve 
their customers; and that removing the artificial distinction between 
U.S. and foreign NVOCCs will avoid possible regulatory measures of 
foreign governments seeking to level the playing field between their 
nationals and those of the U.S. NCBFAA notes that extending the NRA 
exemption will not remove any Shipping Act protections available to 
shippers because the exemption would not disturb or remove prohibitions 
for false billings, classifications or other unfair or unjust efforts 
to either obtain transportation at inappropriate rates or to otherwise 
engage in fraudulent billing practices. NCBFAA believes that the 
registration and other requirements suggested in the NPRM are 
reasonable and appropriate as they do not impose any burden on foreign 
entities that is greater than that currently borne by licensed NVOCCs. 
In particular, NCBFAA believes that the proposed registration process 
requiring foreign-based unlicensed NVOCCs to provide basic information 
about their identity, appoint an agent for service of process, or agree 
to comply with legitimate document requests is appropriate.
    TIA commends the Commission for moving forward with the NPRM. TIA 
states that the proposed extension will level the playing field for 
foreign-based unlicensed NVOCCs and their competitors in the U.S. and 
will give such NVOCCs the same tools to serve their customers without 
incurring additional cost.
    USOA asserts that, as there are many examples of foreign-based 
NVOCCs ``acting in manners which reflects extortion against [l]icensed 
US based NVOCCs,'' the Commission should not allow foreign-based 
unlicensed NVOCCs any exemption from the present requirements of the 
Shipping Act. USOA states that the NRA should not be available to 
foreign-based unlicensed NVOCCs ``except if there is a valid bonded 
tariff on file with FMC.''
    Although it appears that UPS does not oppose the extension of NRA 
to foreign-based unlicensed NVOCCs in general, UPS opposes the 
requirements in the NPRM for a formal renewal process every three years 
for such NVOCCs. UPS states that ``[t]his is an unnecessary regulatory 
burden that clearly will not facilitate Commission regulation or 
enforcement in any way, and does not otherwise benefit US commerce or 
shippers.'' UPS claims that because foreign-based NVOCCs are already 
required to update their information promptly under the proposed 
section 515.19(f), the three-year renewal requirement is unnecessary, 
burdensome and should be dropped. Alternatively, UPS suggests that 
proposed 46 CFR 515.19(d) be revised to allow submission of a 
certificate, in lieu of a renewal of registration.\1\

    \1\ UPS suggests that the proposed 46 CFR 515.19(d) be revised 
by adding to the end the reference ``. . . provided, however, that 
where applicable, a registered foreign NVOCC may submit in lieu of 
an updated registration form a certificate signed by a fully-
authorized representative reading: `[Name of NVOCC] hereby certifies 
that all information previously provided to the Commission in its 
registration form and updates in accordance with 46 CFR 515.19(f) 
continues to be accurate and complete.'''


[[Page 42887]]


    With the registration and other requirements proposed in the NPRM, 
the Commission believes that the shipping public will be adequately 
protected. The NPRM proposed:
     Foreign-based unlicensed NVOCCs must be registered with 
the Commission.
     Such registrations must be renewed regularly.
     Such registrations may be terminated or suspended for 
reasons enumerated in the 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.
    USOA's concern that the exemption should be available only to 
bonded and tariffed NVOCCs is misplaced. Regardless of whether foreign-
based unlicensed NVOCCs use the NRA rate tariff publication exemption, 
foreign-based unlicensed NVOCCs must nevertheless furnish proof of 
financial responsibility under the Shipping Act (46 U.S.C. 40902(a)) 
and the Commission's regulation (46 CFR 515.21), and must also publish 
a tariff \2\ as required by the Shipping Act (46 U.S.C. 40501(a)) and 
the Commission's regulation (46 CFR 520.3).

    \2\ NVOCCs are exempt from the tariff rate publication 
requirements for shipments moving under lawful NRAs. 46 CFR 532.2.

    UPS suggests that the proposed renewal requirement should be 
replaced by a filing of a certificate confirming that the information 
previously provided to the Commission continues to be accurate and 
complete. The Commission is currently working to automate the 
registration and renewal procedure, which it believes will allow 
registration and renewal with minimal burden to foreign-based 
unlicensed NVOCCs.
    Although the Commission's discussion of an NRA extension 
necessitated inclusion of the requirement of registration (and renewal) 
of foreign-based unlicensed NVOCCs in this rulemaking, the registration 
and renewal of such NVOCCs is not a condition only for NRA exemption. 
Even if a foreign-based unlicensed NVOCC does not use the NRA 
exemption, such an NVOCC must still register with the Commission under 
the final rule because the Commission believes that keeping updated 
information not only for foreign-based unlicensed NVOCCs that enter 
into NRAs, but also for all foreign-based unlicensed NVOCCs is 
necessary to better protect the shipping public.
    The extension of the NRA rule will increase competition among 
NVOCCs by providing a level playing field to all NVOCCs, and thus will 
not lead to a substantial reduction in competition. Further, with the 
additional requirements proposed in the NPRM and included in this final 
rule, the extension will not be detrimental to commerce.

Dates of Effectiveness and Compliance

    This Final Rule will become effective upon its date of publication 
in the Federal Register. Foreign-based unlicensed NVOCCs may file Form 
FMC-65 as the Final Rule provides. A foreign-based unlicensed NVOCC may 
enter into NRAs as specified in 46 CFR part 532 upon completion of the 
required registration.
    Mandatory compliance with the registration requirements of 46 CFR 
515.19 will be delayed until October 17, 2013 to provide time for 
foreign-based unlicensed NVOCCs to comply. Lawful operation by foreign-
based unlicensed NVOCCs requires compliance by this date.

Statutory Review

    In accordance with the Paperwork Reduction Act (PRA), 44 U.S.C. 
3501 et seq., the Commission submitted burdens of collection of 
information estimates under this Final Rule to the Office of Management 
and Budget (OMB). In the NPRM published on February 26, 2013, the 
Commission requested comments on the burden or any other aspect of the 
collection of information. The Commission received one such comment and 
discussed it in this Final Rule. The estimated time to fulfill the 
collection of information is 5,484 hours per year for part 515 and 
5,970 hours per year for part 532. The Commission has received OMB 
approval for this collection of information pursuant to the PRA. The 
valid control numbers for this collection of information are 3072-0018 
for 46 CFR part 515 and 3072-0071 for 46 CFR part 532.
    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 final 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 

    For the reasons stated in the Supplementary Information, the 
Federal Maritime Commission amends 46 CFR parts 515, 520, and 532 as 


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.

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

Sec.  515.19  Registration of foreign-based unlicensed NVOCC.

    (a) Any NVOCC whose primary place of business is located outside 
the United States and does not elect to become licensed by the 
Commission 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

[[Page 42888]]

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. Persons who have had a registration rejected may 
submit a new registration at any time.
    (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) Registered NVOCCs must report in writing to BCL any changes, 
within 30 days of such changes, to: legal name(s) or trade name(s); 
principal place of business address (including telephone number, 
facsimile number); contact 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).
    (g) Termination or suspension of registration.
    (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 or 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 
Stated 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 

3. In Sec.  515.24, revise paragraphs (b), (c), and (d) to read as 

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.
* * * * *

4. In Sec.  515.91, correct the reference ``3072-0012'' to read ``3072-


5. 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.

6. 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.


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

    Authority: 46 U.S.C. 40103.

8. 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.

9. Amend Sec.  532.2 as follows:
a. Revise introductory text to read as follows; and
b. Amend paragraph (g) by revising the second sentence to read as 

[[Page 42889]]

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 
* * * * *
    (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.

10. 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,
[FR Doc. 2013-17191 Filed 7-17-13; 8:45 am]