Federal Register / Vol. 76, No. 41 / Wednesday, March 2, 2011 / Rules and Regulations 11351 

1 75 FR 25151 (May 7, 2010). The proposed rule 

was issued following a petition filed by the 

National Customs Brokers and Forwarders 

Association of America, Inc. (NCBFAA) requesting 

the Commission to exercise its authority under 46 

U.S.C. 40103 to exempt NVOCCs from provisions of 

the Shipping Act requiring publication and 

adherence to rate tariffs for ocean transportation to 

the extent such transportation is provided under 

individually negotiated rates with shipping 

customers and memorialized in writing. Petition 

No. P1–08, Petition of the National Customs Brokers 

and Freight Forwarders Association of America, 

Inc. for Exemption from Mandatory Rate Tariff 

Publication (‘‘Petition’’), published for comment on 

August 11, 2008. After consideration of the Petition 

and the comments received, the Commission 

determined to initiate a rulemaking to relieve 

licensed NVOCCs from the costs and burdens of 

tariff rate publication. 

2The Commission received written comments on 

the NPR from: Congressmen Mike Doyle, 14th 

District, Pennsylvania and Tim Murphy, 18th 

District, Pennsylvania (Joint Congressional 

Commenter); the Department of Justice, Antitrust 

Division, Transportation, Energy & Agriculture 

Section; the Department of Transportation, Office of 

General Counsel; Econocaribe Consolidators, Inc.; 

John S. Connor, Inc.; AIReS, A1 Relocation 

Solutions; J.W. Allen & Co., Inc.; C.H. Powell 

Company, NVOCC Division; The Camelot 

Company; BDG International, Inc.; Hanseatic 

Container Line Ltd. and Mid-America Overseas, 

Inc.; Lori Fleissner, President, Global Fairways, 

Inc.; M.E. Dey & Co., Inc.; Nakamura (USA) Inc.; CV 

International; Mohawk Global Logistics; NACA 

Logistics (USA) Inc. d/b/a Vanguard Logistics 

Services; BDP Transport, Inc., CaroTrans 

International, Inc. and Mallory Alexander 

International Logistics, LLC (Joint Commenters); 

UPS Ocean Freight Services; UTi, United States, 

Inc.; DHL–Danzas d/b/a DHL Global Forwarding d/ 

b/a Danmar Lines Ltd.; Ocean World Lines, Inc.; 

Alfred Balguerie, S.A.; Damco A/S; Trans Service 

Line; Schenkerocean Limited; CDS Global Logistics, 

Inc.; Juerge Bandle, Senior Vice President, Kuehne 

+ Nagel, Inc., agent of Blue Anchor Line, Division 

of Transpac Container System Ltd., Hong Kong; 

Panalpina, Inc. as agent for and on behalf of 

Pantainer, Ltd.; New York New Jersey Foreign 

Freight Forwarders & Brokers Association, Inc. 

(NYNJFFF&BA); National Industrial Transportation 

League (NIT League); Transportation Intermediaries 

Association (TIA); National Customs Brokers and 

Forwarders Association of America, Inc. (NCBFAA); 

China Association of Shipping Agencies & NonVessel-Operating Common Carriers (CASA); British 

International Freight Association; FedespediFederazione Nazionale delle Imprese di Spedizioni 

Internazionali; Albert Saphir d/b/a ABS Consulting; 

Stan Levy, Stan Levy Consulting, LLC; The 

Descartes Systems Group, Inc.; RateWave Tariff 

Continued 

[FR Doc. 2011–4650 Filed 3–1–11; 8:45 am] 

BILLING CODE 6560–50–P 

FEDERAL MARITIME COMMISSION 

46 CFR Parts 520 and 532 

[Docket No. 10–03] 

RIN 3072–AC38 

Non-Vessel-Operating Common Carrier 

Negotiated Rate Arrangements 

AGENCY: Federal Maritime Commission. 

ACTION: Final rule. 

SUMMARY: The Federal Maritime 

Commission is exempting licensed nonvessel-operating common carriers that 

enter into negotiated rate arrangements 

from the tariff rate publication 

requirements of the Shipping Act of 

1984 and certain provisions and 

requirements of the Commission’s 

regulations. 

DATES: The final rule is effective April 

18, 2011. 

FOR FURTHER INFORMATION CONTACT: 

Legal information: Elisa Holland, 

202–523–5740, 

generalcounsel@fmc.gov. 

Technical information: George A. 

Quadrino, 202–523–5800; Gary G. 

Kardian, 202–523–5856, 

tradeanalysis@fmc.gov. 

SUPPLEMENTARY INFORMATION: 

I. Background 

a. Summary of Proposed Rule 

On May 7, 2010, the Federal Maritime 

Commission (FMC or Commission) 

issued a notice of proposed rulemaking 

(NPR), pursuant to its authority under 

sections 16 and 17 of the Shipping Act 

of 1984 (Shipping Act), 46 U.S.C. 40103 

and 46 U.S.C. 42101, seeking comments 

on a proposal to exempt licensed nonvessel-operating common carriers 

(NVOCCs) from the rate publication 

requirements of the Shipping Act, 

subject to certain conditions.1 The 

Commission found that it was within its 

statutory authority under Section 16 of 

the Shipping Act to grant such an 

exemption, subject to certain 

conditions, as doing so would not result 

in substantial reduction in competition 

or be detrimental to commerce, 

consistent with the Shipping Act. See 

46 U.S.C. 40103(a). As proposed, the 

exemption would relieve licensed 

NVOCCs from their tariff rate 

publication obligations when entering 

into a ‘‘negotiated rate arrangement’’ 

(NRA). An NRA is defined as ‘‘a written 

and binding arrangement between a 

shipper and an eligible NVOCC to 

provide specific transportation service 

for a stated cargo quantity, from origin 

to destination, on and after the receipt 

of the cargo by the carrier or its agent 

(or the originating carrier in the case of 

through transportation).’’ Proposed 

Section 532.3(a). The use of NRAs 

would be subject to several conditions, 

including (1) NVOCCs who use NRAs 

would be required to continue 

publishing standard rules tariffs 

containing contractual terms and 

conditions governing shipments, 

including any accessorial charges and 

surcharges, and would be required to 

make their rules tariffs available to 

shippers free of charge; (2) NRA rates 

charged by NVOCCs must be mutually 

agreed and memorialized in writing by 

the date cargo is received for shipment; 

and (3) NVOCCs who use NRAs must 

retain documentation confirming the 

agreed rate and terms for each shipment 

for a period of five years, and must 

make such documentation promptly 

upon request available to the 

Commission pursuant to the 

Commission’s regulations at 46 CFR 

515.31(g). 

Licensed NVOCCs, to the extent they 

enter into NRAs, would be exempt by 

regulation from the following provisions 

of the Shipping Act: Section 8(a), 

codified at 46 U.S.C. 40501(a)–(c) 

(obligation to publish an automated rate 

tariff); Section 8(b), codified at 46 U.S.C. 

40501(d) (time volume rates); Section 

8(d), codified at 46 U.S.C. 40501(e) 

(tariff rate increases may not be effective 

on less than 30 days notice but 

decreases may be effective 

immediately); Section 8(e), codified at 

46 U.S.C. 40503 (carrier refunds due to 

a tariff error); and Section 10(b)(2)(A), 

codified at 46 U.S.C. 41104 (requiring 

adherence to published tariff rates). 

The Commission also sought public 

comment on whether the exemption 

should be extended to the prohibitions 

of Section 10(b)(4), codified at 46 U.S.C. 

41104(4) (prohibiting common carriers 

from unfair or unjustly discriminatory 

practices in services pursuant to a 

tariff), and Section 10(b)(8), codified at 

46 U.S.C. 41104(8) (prohibiting common 

carriers from undue or unreasonable 

preference or advantage or undue or 

unreasonable prejudice or disadvantage 

for tariff service). Additionally, the 

Commission requested interested parties 

to submit comments on whether the 

exemption should be extended to 

foreign-based NVOCCs who are 

unlicensed but bonded pursuant to 46 

CFR 515.21(a)(3), and on which 

elements, if any, qualify an NRA for a 

‘‘safe harbor’’ that affords a presumption 

that the corresponding shipment is not 

subject to the tariff rate publication 

requirement. 

b. Comments Received 

The Commission received a total of 

forty-four public comments: one 

comment from two members of 

Congress; two comments from other 

federal agencies; nineteen from U.S.- 

based, licensed NVOCCs; seven from 

foreign unlicensed NVOCCs; four from 

U.S.-based trade associations; three from 

foreign-based trade associations; two 

from consultants; and six from tariff 

publishers and their employees.2 On 

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11352 Federal Register / Vol. 76, No. 41 / Wednesday, March 2, 2011 / Rules and Regulations 

Services, Inc.; Laurie Zack-Olson; Dart Maritime 

Service, Inc.; Distribution Publications, Inc.; and 

the Kaslea Corporation d/b/a U.S. Traffic Service. 

3Oral comments were made by from the 

following individuals: Edward D. Greenberg, 

Counsel for National Customs Brokers & Forwarders 

Association of America, Inc.; Paulette Kolba, Vice 

President of Ocean Compliance, Panalpina, Inc. as 

agent for Pantainer Ltd.; Robert J. Schott, President, 

SEASCHOTT, Division of AIRSCHOTT, Inc.; Robert 

A. Voltmann, President & CEO, Transportation 

Intermediaries Association; Neil Barni, President, 

CargoSphere; James E. Devine, President, 

Distribution Publications, Inc.; Stan Levy, 

President, Stan Levy Consulting; Gerard P. Wardell, 

President, and Laurie A. Zack-Olson, Vice President 

of Tariff Operations, RateWave Tariff Services, Inc. 

4See Motor Vehicle Manufacturers Association of 

the United States, Inc. and Wallenius Lines, N.A.— 

Joint Application for exemption from certain 

requirements of the Shipping Act of 1984 for certain 

limited shipments of passenger vehicles, Petition, 

26 S.R.R. 1269 (1994) (Commission denied a 

petition for exemption based on the pre-Ocean 

Shipping Reform Act version of Section 16 of the 

Shipping Act of 1984). 

May 24, 2010, the Commission held a 

public meeting to receive oral 

comments.3 The Commission 

considered all comments in developing 

this final rule. A discussion of 

significant comments and the 

Commission’s response to those 

comments as well as minor 

modifications and clarifications made to 

the proposed rule is provided below. 

II. The Authority of the Commission to 

Grant the Exemption 

The strong balance of the comments 

expressed general support for exempting 

NVOCCs who use NRAs from the tariff 

rate publication requirements of the 

Shipping Act and the Commission’s 

regulations. Notably, the Department of 

Justice opined that the proposed 

elimination of the NVOCC tariff 

publication requirements would meet 

the Section 16 exemption authority 

standard and would be an appropriate 

exercise of the Commission’s authority. 

Other commenters agreed with this 

analysis, further stating that the 

proposed exemption will allow 

NVOCCs to be more flexible and more 

responsive to their shippers, and will 

promote competition and commerce by 

eliminating substantial regulatory costs 

to NVOCCs, a savings that could be 

passed on to their customers. A number 

of commenters argued that the ability to 

enter into NRAs would allow them to 

quickly adjust service offerings and 

rates due to rapidly changing rates and 

surcharges imposed by ocean common 

carriers. Most commenters opined that 

the proposed rule would not result in a 

substantial reduction in competition or 

be detrimental to commerce and, in fact, 

would increase competition and 

promote commerce by making it easier 

and more efficient for NVOCCs to quote 

rates and to devote their resources to 

serving their customers. The NCBFAA 

argued that the issuance of the 

exemption for NVOCCs would increase, 

not decrease, competition in the NVOCC 

industry, and would not be detrimental 

to commerce, but would instead 

increase NVOCC efficiency, 

substantially reduce unnecessary costs, 

save jobs, permit NVOCCs to expend 

scarce resources in positive ways and 

allow NVOCC’s to reduce rates for their 

shippers. Conversely, several 

commenters opined that the NPR did 

not meet these standards and was 

therefore beyond the Commission’s 

current statutory authority. 

The Commission issued the NPR 

pursuant to its authority under section 

16 of the Shipping Act, which allows 

the Commission to exempt future 

activity from the requirements of the 

Shipping Act if the Commission finds 

that the exemption will not result in a 

substantial reduction in competition or 

be detrimental to commerce. 46 U.S.C. 

40103. The Commission may attach 

conditions to such an exemption and 

may, by order, revoke an exemption. 

The Commission has granted 

exemptions in the past. For example, in 

2004, the Commission used its authority 

under Section 16 to exempt NVOCCs 

who entered into negotiated service 

arrangements (NSAs) from the Shipping 

Act’s tariff publication requirements.. 

The Commission has also denied such 

requests for exemption in the past.4

The Commission, as previously 

stated, is authorized to grant an 

exemption under Section 16 when it 

finds that the exemption will not result 

in a substantial reduction in 

competition and, separately, will not be 

detrimental to commerce. The relevant 

competitive considerations in 

determining whether to grant the 

exemption and allow licensed NVOCCs 

to enter into NRAs were: competition 

among NVOCCs; competition between 

NVOCCs and VOCCs; competition 

among VOCCs; and competition among 

shippers. 

With regard to competition among 

NVOCCs, the Commission’s records 

show that as of February 10, 2011, there 

were 3,368 NVOCCs licensed in the 

United States and 1,125 foreign 

unlicensed NVOCCs, indicating that 

customers can choose among a wide 

array of competing service providers. 

Additionally, allowing licensed 

NVOCCs the ability to opt out of the 

tariff rate publishing requirements of the 

Shipping Act could reduce entry costs 

for additional potential competitors in 

the NVOCC market, thereby resulting in 

more service providers and even greater 

competition. The Commission believes 

that allowing licensed NVOCCs to opt 

out of the requirement to publish tariff 

rates will enhance competition, rather 

than result in a substantial reduction in 

competition among licensed NVOCCs. 

One commenter voiced concerns that 

granting the exemption will put VOCCs 

at a competitive disadvantage to 

NVOCCs as not all cargo moves under 

VOCC service contracts. That lone 

commenter is not a transportation 

provider, either as an NVOCC or a 

VOCC. Such issues were not raised by 

any VOCC. Some commenters have 

argued that NVOCCs and VOCCs do not 

compete against each other, as NVOCCs 

tend to service small-to-medium sized 

shippers and VOCCs tend to serve larger 

customers that sign service contracts. 

The record demonstrated, however, that 

many shippers use both NVOCCs and 

VOCCs at one time or another, thereby 

creating a competitive market. 

The Joint Commenters, citing 

generally accepted industry statistics, 

noted that since the implementation of 

the Ocean Shipping Reform Act of 1998 

(OSRA), over 90% of shippers’ dealings 

with ocean common carriers have been 

in the form of confidential service 

contracts, rather than through tariff 

rates. Thus, VOCCs would appear to 

have had a statutory competitive 

advantage over NVOCCs, an advantage 

that will be somewhat reduced by this 

rule. As a result, NVOCCs will likely 

become more competitive with VOCCs. 

Providing NVOCCs the ability to opt 

out of tariff rate publishing is highly 

unlikely to reduce competition among 

VOCCs. All NVOCC cargo must 

eventually move with a VOCC which, in 

turn, competes with other VOCCs for 

NVOCC cargo. If NVOCCs were able to 

somehow increase their cargo share due 

to their ability to opt out of rate tariff 

publishing, then those VOCCs who are 

more reliant on NVOCC cargo could 

conceivably capture more cargo from 

VOCCs that do not rely as much on 

NVOCC cargo. This, however, is in the 

Commission’s view extremely 

speculative and, if such a scenario 

actually came about, we believe that it 

would be more likely to lead to changed 

business models by affected VOCCs and 

ultimately lead to increased competition 

overall. Thus, the Commission finds 

that granting the exemption would not 

result in a substantial reduction in 

competition among VOCCs. 

Finally, many commenters asserted 

that their customers do not inquire as to 

published tariff rates, making such 

published rates effectively useless. 

Other commenters stated that their 

customers consult with multiple carriers 

directly, by e-mail or phone, in search 

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Federal Register / Vol. 76, No. 41 / Wednesday, March 2, 2011 / Rules and Regulations 11353 

5Several commenters suggested that the 

Commission initiate a proceeding to review and 

reform its tariff regulations for NVOCCs and 

VOCCs. The Commission does not believe such 

action alone would provide benefits to NVOCCs or 

their customers that are as timely or significant as 

this final rule. 

6Section 16, 46 U.S.C. 40103. 

7See Executive Order No. 13534, 75 FR 37756 

(March 10, 2010). 

8Objections by commenters to certain of the 

conditions imposed on NRAs in the NPR are 

discussed, infra. 

9 Indeed, VOCCs are ocean common carriers even 

when most of their business is done under service 

contracts. 

10The Shipping Act defines a common carrier as 

a person who holds itself out to the general public 

to provide transportation by water of passengers or 

cargo between the United States and a foreign 

country for compensation; assumes responsibility 

for the transportation from the port or point of 

receipt to the port or point of destination; and uses, 

for all or part of that transportation, a vessel 

operating on the high seas or the Great Lakes 

between a port in the United States and a foreign 

port. 46 U.S.C. 40102(6). Similarly, Black’s Law 

Dictionary defines a common carrier as a 

commercial enterprise that holds itself out to the 

public as offering to transport freight or passengers 

for a fee. Black’s Law Dictionary (8th ed. 2004). A 

common carrier is ‘‘bound to take all goods of the 

kind which he usually carries, unless his 

conveyance is full, or the goods be specially 

dangerous; but may charge different rates to 

different customers.’’ Thomas E. Holland, The 

Elements of Jurisprudence 299 (13th ed. 1924). 

of the best quote and do not consult 

published tariffs. Several commenters 

stated that their shipper customers have 

never used a published tariff to review 

the marketability of an ocean freight 

rate.5 Accordingly, the record 

demonstrates that shippers, for the most 

part, do not presently use published 

NVOCC tariffs for price information. 

Exempting such publication 

requirements, therefore, would have 

little effect on competition and, 

certainly, would not have a substantial 

impact. The Commission also notes that 

since the advent of confidential service 

contracts offered by VOCCs and, to 

some extent, NSAs offered by NVOCCs, 

it appears that pricing competition has 

increased rather than decreased. For 

these reasons, the Commission does not 

believe that allowing NVOCCs to opt out 

of the requirement to publish tariff rates 

will result in a substantial reduction in 

competition among shippers. 

The Commission’s authority under 

section 16 to grant exemptions from the 

statutory requirements of the Shipping 

Act, in whole or in part, requires the 

Commission to find not only that the 

exemption will not result in a 

substantial reduction in competition, 

but also that the exemption will not ‘‘be 

detrimental to commerce.’’ 6 Ensuring 

that any exemption granted by the 

Commission is not detrimental to U.S. 

commerce is of particular importance at 

this time, considering the goal of the 

Administration’s National Export 

Initiative to double U.S. exports over the 

next five years.7

Initially, it is significant that no 

shipper or carrier—NVOCC or VOCC— 

has appeared in this proceeding to 

object to granting the exemption or to 

allege economic harm resulting from 

providing NVOCCs the option of 

entering into NRAs,8 a matter of 

significance in previous exemption 

cases. See, Petition for Exemption from 

Tariff Filing Requirements Previously 

Granted, etc., 22 S.R.R. 1040, 1043 

(1984); Tariff Filing Notice Periods— 

Exemptions, 24 S.R.R. 1604, 1605–06 

(1989). Indeed, the NIT League, a large 

organization of shippers in the United 

States, has submitted comments in 

support of the grant of the exemption. 

Moreover, the Commission has 

already concluded in this proceeding 

that authorizing licensed NVOCCs to 

enter into NRAs, subject to the 

conditions imposed, will reduce 

NVOCC operating costs and increase 

competition in the U.S. trades. 

Consequently, the Commission believes 

that allowing NRAs as proposed will 

result in a benefit to commerce. 

Accordingly, after reviewing all of the 

comments received, and in light of the 

relief sought and the conditions 

proposed in the NPR, the Commission 

finds that permitting licensed NVOCCs 

the option of operating under NRAs 

would not be detrimental to commerce. 

Numerous commenters argued that 

because shippers do not access NVOCC 

tariffs, the maintenance of such tariffs 

serves no purpose and imposes 

additional costs on NVOCCs. The Joint 

Commenters argued that the exemption, 

as proposed, will allow NVOCCs to 

eliminate unnecessary costs. In contrast, 

several commenters questioned whether 

any cost saving experienced by NVOCCs 

would be passed on to shippers and 

whether there will be a net gain in jobs 

since jobs could be lost as the function 

of coordinating rate filings and 

submitting them to a tariff publisher 

will no longer exist. However, with a 

highly competitive industry consisting 

of more than 3,300 licensed NVOCCs 

competing for cargo, the Commission 

believes it is likely any cost savings 

realized through use of NRAs will be 

passed through to shippers in the form 

of more competitive rates. Residual 

savings to NVOCCs, as well as savings 

from lower rates to shippers, will 

provide funds for reinvestment and 

growing their respective businesses. 

Accordingly, providing this exemption 

would likely result in economic growth 

that would ultimately increase jobs. 

Notwithstanding the ability of 

NVOCCs to enter into NSAs, a number 

of commenters expressed the view that 

there remained a need for NRAs that 

would exempt NVOCCs from tariff rate 

publication. One NVOCC commented 

that while some shippers may wish to 

work under a contract/NSA basis and 

some NVOCCs may wish to issue an 

NSA to obtain a volume commitment, 

most small-to-medium enterprises work 

on a quotation basis, often for a variety 

of services, and these companies do not 

want or need to engage in a formal 

contract process. Although several 

commenters suggested the Commission 

revisit NSAs and their relatively 

infrequent usage by NVOCCs, the 

Commission does not believe it is 

necessary at this time to initiate such a 

proceeding, as NSAs were implemented 

to give NVOCCs and their customers 

additional flexibility to structure their 

shipping transactions and their usage is 

voluntary. NVOCCs’ lack of widespread 

NSA usage does not bear on the 

question of whether the Commission 

should grant the instant exemption, 

except that it does tend to corroborate 

a point argued by supporters of the 

exemption—that NRAs are necessary 

because the business models of many 

NVOCCs are not conducive to using 

NSAs. 

Several commenters questioned 

whether NVOCCS entering into NRAs 

would continue to be common carriers 

at all. The answer is clearly yes. 

Entering into an NRA with a shipper, as 

opposed to providing service at tariff 

rates, would not change the common 

carrier status of an NVOCC.9 The 

publishing of a tariff is not what 

characterizes an entity as a common 

carrier, and NVOCCs would still be 

required to publish a rules tariff.10

Rather, the existence of a common 

carrier triggers the requirement to 

publish a tariff. 

As discussed by the TIA, common 

carriage existed from 1916 to 1961 

under the Shipping Act of 1916 without 

a statutory requirement that common 

carriers file or publish tariffs. Congress 

added a filing requirement in 1961 at 

the time dual rate loyalty agreements 

were authorized for conferences and 

carriers. The tariff provision was 

intended to protect shippers against 

sudden and unannounced rate 

increases. H. Rep. No. 498, 87th Cong., 

1st Sess. at 2–3 (1961); S. Rep. No. 860, 

87th Cong., 1st Sess. at 10–19 (1961). 

Congress changed the filing requirement 

to a publication requirement in 1998 

with the passage of the OSRA. The 

ability of an NVOCC to enter into NRAs 

with its shipper customers in lieu of 

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11354 Federal Register / Vol. 76, No. 41 / Wednesday, March 2, 2011 / Rules and Regulations 

11The NPR defined ‘‘rate’’ for the purposes of 

NRAs as the ‘‘price stated for providing a specified 

level of transportation service for a stated cargo 

quantity’’. Proposed Section 532.3(b). 

12A shipment, as defined in 46 CFR 520.2, is ‘‘all 

of the cargo carried under the terms of a single bill 

of lading.’’ 

13This initial choice may be modified by a 

licensed NVOCC at any time thereafter by further 

amendment of its FMC–1. 

moving cargo under a published tariff 

rate, and to assess different rates to 

different customers, does not disqualify 

an NVOCC as a common carrier. The 

responsibilities associated with 

common carriage remain and NVOCCs 

entering into NRAs continue to be 

subject to the applicable requirements 

and strictures of the Shipping Act, 

including oversight by the Commission. 

For example, NVOCCs will continue to 

be subject to requirements that they 

establish and observe ‘‘just and 

reasonable regulations and practices,’’ 

46 U.S.C. 41102(c), and prohibitions 

against false billing, false classification, 

false weighing or measurement, 

retaliating against shippers, engaging in 

unfair practices, and unreasonably 

refusing to deal or negotiate, 46 U.S.C. 

41104(1), (3), (4), and (10). 

The Commission recognizes the 

rapidly changing nature of the current 

shipping environment and believes that 

the ability of NVOCCs to enter into 

NRAs may increase competition and 

promote commerce by allowing 

NVOCCs to better serve their shipper 

customers. Based on the comments 

received and the Commission’s 

experience, it appears that a vast 

majority of shippers obtain information 

regarding rates directly from NVOCCs 

without consulting published tariffs. It 

also appears that the systems used by 

NVOCCs to generate rate quotations are 

duplicated by those necessary to comply 

with tariff publishing requirements and 

the continuing requirement to publish 

rate tariffs may result in unnecessary 

costs to NVOCCs and their shipper 

customers. The decision to enter into an 

NRA rests with each shipper and 

NVOCC and is purely voluntary. Those 

licensed NVOCCs who find it more 

advantageous to use published tariff 

rates for some or all of their business 

may continue to do so, while those 

licensed NVOCCs and shippers who 

believe it will be more advantageous to 

enter into negotiated rate arrangements 

may choose to do so, within the 

requirements of the NRA regulations. 

Allowing licensed NVOCCs to enter 

into NRAs in lieu of publishing tariff 

rates will not result in substantial 

reduction in competition among 

NVOCCs, between NVOCCs and VOCCs, 

among VOCCs, or among shippers. The 

Commission has also found that use of 

NRAs by licensed NVOCCs will not be 

detrimental to commerce. It is, 

therefore, within the authority of the 

Commission to permit licensed NVOCCs 

to enter into NRAs with their customers 

subject to the terms and conditions set 

forth in this regulation. 

III. The Scope of an NRA 

The Commission received a large 

number of comments and questions 

concerning the scope of an NRA. 

a. Cargo Quantity 

Commenters questioned the meaning 

of ‘‘cargo quantity’’ in the definition of 

rate,11 specifically whether a single 

NRA could cover more than one 

shipment. Pursuant to Proposed Section 

532.5(d), an NRA must clearly specify 

the rate and to which shipment 12 or 

shipments such rate will apply. 

Therefore, the term ‘‘cargo quantity’’ 

contemplates that an NRA may cover 

more than one shipment so long as all 

shipments are specified in the NRA. 

b. Election To Use Exemption 

A number of commenters questioned 

whether an NVOCC that elects to use 

NRAs may also move cargo pursuant to 

tariff rates. Under the final rule, 

NVOCCs are not required to choose to 

move all of their cargo under either 

NRAs or tariff rates. Eligible NVOCCs 

may choose to use NRAs on whatever 

basis best suits the market they serve. In 

order to ensure clarity as to whether an 

NVOCC is moving cargo under either an 

NRA or a tariff rate for a particular cargo 

quantity, Proposed Section 532.6(a)(1) 

has been modified to include a 

requirement that an NVOCC moving 

cargo pursuant to an NRA for a 

particular cargo quantity (either 

shipment or shipments), must place a 

prominent notice to that effect on its 

bills of lading or equivalent documents 

for that cargo quantity, in addition to 

the general notice in its rules tariff and 

its FMC–1 filed with the Commission. 

All licensed NVOCCs will need to 

access the Commission’s FMC–1 form in 

order to make an initial choice 13 among 

(1) Moving all cargo pursuant to tariff 

rates; (2) moving all cargo pursuant to 

NRAs; or (3) moving cargo either via 

tariff rates or via NRAs. The 

Commission intends to modify the 

FMC–1 form to allow NVOCCs to notify 

the Commission of their intentions in 

advance of the effective date of the Final 

Rule and will make an announcement 

via its Web site when the ability to do 

so is available. 

c. Rate: Base and Surcharge 

There were also numerous comments 

filed regarding the meaning of ‘‘rate’’ in 

an NRA and its relationship to 

surcharges, accessorials, and rules 

tariffs. A number of commenters 

recommended including in the NRA all 

components of the transportation costs 

and argued NVOCCs should have the 

flexibility to structure NRAs from one 

extreme of merely containing base rates 

(with all other terms left to the rules 

tariff) to inclusion in the NRA of all 

terms. Commenters recommended that 

the NRA include information as to 

which surcharges are to be added to the 

rate, either in the NRA itself or by 

reference to the NVOCC’s rules tariff. 

The NIT League opined that parties to 

an NRA should be able to negotiate an 

all-inclusive rate or a base rate with 

itemized surcharges, or should be 

required to specifically incorporate and 

identify which surcharges or 

accessorials from the rules tariff will 

apply. In a related comment, 

NYNJFFF&BA questioned how an 

NVOCC would implement general rate 

increases in the context of an NRA. 

The Commission believes that 

NVOCCs and their shipper customers 

should have flexibility in structuring 

NRAs. As is the case with respect to 

tariff rates, the rate stated in an NRA 

may specify the inclusion of all charges 

(an ‘‘all-in’’ rate) or specify the inclusion 

of only certain accessorials or 

surcharges. Without specifying 

otherwise, the NRA would only replace 

the base ocean freight rate or published 

tariff rate. If the rate contained in an 

NRA is not an all-in rate, the NRA must 

specify which surcharges and 

accessorials from the rules tariff will 

apply. To the extent surcharges or 

accessorials published in the NVOCC’s 

rules tariff will apply, the NRA must 

state that the amount of such surcharges 

and accessorials is fixed once the first 

shipment has been received by the 

NVOCC, until the last shipment is 

delivered. Rates stated in an NRA may 

not be increased via a GRI. 

d. Terms of an NRA 

The NCBFAA’s petition and the 

Commission’s proposed rule suggested 

an NRA accompanied by an exemption 

from the published tariff rate upon 

satisfaction of certain conditions. 

Neither proposed changes to rules 

tariffs, NSAs, or service contracts. One 

commenter on the proposed rule 

suggested that an NRA should be 

expanded to include such economic 

terms as credit and payment terms, late 

payment interest, freight collect or 

prepay, rate methodology, including 

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14An NRA may contain a maximum quantity 

limit in the case of an NRA covering multiple 

shipments. 

15See Fact Finding Investigation No. 27, 

Potentially Unlawful, Unfair or Deceptive Ocean 

Transportation Practices Related to the Movement 

of Household Goods or Personal Property in U.S.- 

Foreign Oceanborne Trades, Order issued June 23, 

2010. 

16The Commission’s Bureau of Licensing and 

Certification’s records, as of February 10, 2011, 

show a total of 5,576 entities operating in the U.S. 

trade as ocean transportation intermediaries: 1,083 

licensed freight forwarders, 1,724 licensed 

NVOCCs, 1,589 entities licensed as both freight 

forwarders and NVOCCs, 1,125 foreign unlicensed 

NVOCCs and 55 licensed foreign-based NVOCCs 

operating in the U.S. trade. 

17 In a typical dispute between a shipper and a 

foreign unlicensed NVOCC, the shipper is likely to 

have its own copy of the NRA documentation that 

would be at issue. Commission Staff reports that 

some disputes involving foreign unlicensed 

NVOCCs, however, can involve VOCCs, freight 

consignees, freight forwarders, notify parties, and 

other affected parties who may be listed on a bill 

of lading for a shipment, but who may not have 

their own copy of NRA documentation. 

18The issuance of a subpoena presupposes an 

active Commission investigation into violations of 

the Shipping Act. See 46 U.S.C. 41303. 

minimum quantities, time/volume 

arrangements, penalties or incentives, 

the methods for implementation of rate 

changes, or provisions for arbitration, 

forum selection for disputes and 

variance of per-package liability limits. 

Commission Staff raised concerns that 

expanding the scope of the NRA beyond 

rates could cause overlap and confusion 

between NRAs and NSAs, which must 

be filed with the Commission. At this 

time, the Commissioners hold differing 

views on the commenter’s proposal and 

the concerns raised by Commission 

Staff. Accordingly, the Commission will 

move forward with the current rule as 

proposed (and as requested in the 

Petition), under which an NRA is an 

alternative to a published rate and does 

not include other economic terms. Nor 

can an NRA under this final rule 

contain a volume commitment, 

minimum quantity commitment, or a 

penalty provision for failure to meet a 

minimum quantity.14 The Commission 

will commence proceedings to obtain 

and consider additional public 

comments on potential modifications to 

the final rule, including possible 

expansion of the terms that can be 

included in an NRA. The record in this 

proceeding will be incorporated into a 

new Commission proceeding. 

e. Affiliates 

Although treatment of affiliates was 

not a focus of the commenters, the 

Commission finds no reason to treat 

affiliates differently under NRAs than 

they are treated under NSAs. 

Accordingly, a definition of affiliate has 

been added to Proposed Section 532.3. 

With the mutual concurrence of the 

NRA parties, affiliates of the shipper are 

entitled to access the NRA rates, in 

which case, the names and addresses of 

eligible affiliates shall be identified in 

the NRA. Proposed Section 532.5(b) has 

been modified accordingly. 

f. Household Goods and Other 

Limitations 

The Commission received other 

comments regarding the scope of an 

NRA. One commenter, Mr. Levy, 

suggested that rates covering shipment 

of household goods and personal effects 

should not be exempted from tariff rate 

publication, citing the Surface 

Transportation Board’s rules governing 

domestic household goods carriage 

which require the publication of tariffs. 

Without opining on the merits of this 

suggestion, in light of the Commission’s 

ongoing Fact-Finding Investigation 

concerning household goods 

shipments,15 the Commission has 

determined not to adopt the suggestion 

at this time as it may be more 

appropriate to revisit this issue after the 

Commission has the benefit of the FactFinding Officer’s Final Report. Ms. 

Zack-Olson suggested that exemptions 

should be awarded on an individual 

basis based on certain criteria. The 

Commission notes that awarding the 

exemption on an NVOCC-by-NVOCC or 

customer-by-customer basis, based on 

specific criteria, would require an 

unnecessarily large expenditure of 

resources by both NVOCCs and the 

Commission and declines to adopt this 

suggestion. 

IV. Extension of the Exemption to 

Foreign, Bonded, Unlicensed NVOCCS 

The NPR proposed granting the 

exemption only to licensed NVOCCs, 

but requested comments on whether the 

exemption should be extended to 

foreign-based NVOCCs who are 

unlicensed, but bonded pursuant to 46 

CFR 515.21(a)(3) (hereinafter ‘‘foreign 

unlicensed NVOCCs’’).16 A large number 

of comments were received by the 

Commission in response to its query, 

with the strong majority of commenters 

supporting extension of the exemption 

to foreign unlicensed NVOCCs. 

Commenters mainly alleged adverse 

effects on competition and fears of 

discrimination or retaliation by 

regulators in other countries. 

Commenters argued that foreign 

unlicensed NVOCCs will be 

disadvantaged because they will 

continue to be required to publish rates. 

The Commission recognizes there are, 

and would continue to be, under this 

final rule, differences between licensed 

and foreign unlicensed NVOCCs, not 

just in tariff publication costs, but also 

licensing costs and bonding costs. 

However, the Commission does not 

believe that the balance of such 

differences would be of such a 

magnitude that it would lead to a 

substantial reduction in competition. 

Commenters also argued that, if the 

exemption is limited to licensed 

NVOCCs, discrimination against United 

States-based NVOCCs operating in 

foreign countries will occur. 

Commenters cited these specific 

examples of possible discrimination: the 

levying of special retaliatory customs 

tariffs or duties on American products; 

a new requirement that United Statesbased NVOCCs file tariffs; a requirement 

for United States-based NVOCCs to hold 

bonds in higher amounts than currently 

required; and a requirement that United 

States-based NVOCCs be licensed in 

foreign countries. Commission Staff, 

however, provided the Commissioners 

their view that these predictions of 

discrimination against United Statesbased NVOCCs operating in foreign 

countries are speculative, because the 

path to licensure is readily available to 

foreign-based NVOCCs to the same 

extent as United States-based entities. 

Foreign unlicensed NVOCCs may apply 

for and, if qualified, obtain an NVOCC 

license. Not only would this provide the 

benefit of NRAs but also reduced bond 

costs. Currently, fifty-five foreign-based 

NVOCCs hold FMC-issued licenses. 

Commission Staff raised concerns that 

extending the exemption to foreign 

unlicensed NVOCCs could hamper their 

ability to protect the shipping public, as 

the exemption is predicated, among 

other things, on the prompt availability 

of records. The Commission Staff 

reports that the ability of the 

Commission and some private 

disputants 17 to obtain NRA 

documentation from foreign unlicensed 

NVOCCs is likely to be adversely 

impacted by the foreign situs and 

unlicensed status of such companies. 

Presently, both the Commission and 

private litigants are able to access a 

foreign unlicensed NVOCC’s rates and 

rules tariffs. If such foreign unlicensed 

NVOCCs are permitted to use NRAs, the 

Commission would have less timely 

access to the rate information for those 

cargo quantities moving pursuant to 

NRAs. The Commission could be 

reduced to obtaining such information 

only with the cooperation of the foreign 

unlicensed NVOCC or its customer, or 

through a Commission issued subpoena 

or order,18 and those private parties 

without their own copies may only be 

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19The Commission’s decisions (both before and 

after the passage of OSRA with its requirement that 

United States-based NVOCCs be licensed), have 

noted repeatedly ‘‘the fact that foreign-based 

NVOCCs often ignore Commission proceedings and 

orders to furnish answers to BOE’s discovery 

requests.’’ Ever Freight Int’l. Ltd. et al., 28 S.R.R. 

329, 335 (1998); see also Refrigerated Container 

Carriers Pty. Ltd., 28 Continued * * * S.R.R. 799 

(1999) (‘‘BOE has had to deal with the practical 

problem of obtaining evidence * * * when 

respondents are located overseas, do not cooperate, 

and, indeed, ignore Commission proceedings 

altogether.’’); Kin Bridge Express Inc. and Kin Bridge 

Express, (U.S.A.) Inc., 28 S.R.R. 971 (1999). In 

Universal Logistics Forwarding Co., Ltd., 29 S.R.R. 

36, 37 (2001), a foreign NVOCC refused to respond 

to discovery requests or the Administrative Law 

Judge’s discovery order. The NVOCC was assessed 

civil penalties of $1,237,500. 29 S.R.R. 474, 475 

(2002). In Transglobal Forwarding Co., Ltd, 29 

S.R.R. 815, 821 (2002), a foreign NVOCC did not 

respond to Bureau of Enforcement discovery 

requests, and then failed to respond fully to an 

Administrative Law Judge order. The NVOCC was 

assessed civil penalties of $1,440,000. In Hudson 

Shipping (Hong Kong), Ltd. d/b/a Hudson Express 

Lines, 29 S.R.R. 702 (2002), a Hong Kong-based 

NVOCC refused to respond to Bureau of 

Enforcement discovery requests or an 

Administrative Law Judge order. Ultimately, the 

NVOCC was assessed $7.9 million in civil penalties. 

20Hague Conference on Private International 

Law, Hague Convention of 18 March 1970 on the 

Taking of Evidence Abroad in Civil and 

Commercial Matters, (Entered into force October 7, 

1972), U.N.T.S. 37/1976. 

21For example, neither Japan, Taiwan nor Brazil 

is a signatory to the Convention. 

22Most countries who are party to the Convention 

(with the exception of the Czech Republic, Israel, 

the Slovak Republic and the United States), have 

executed a declaration under Article 23 of the 

Convention that they will not execute letters of 

request issued for the purpose of obtaining pre-trial 

discovery of documents. These declarations are 

meant to prevent general requests whereby one 

party seeks to find out what documents are in the 

possession of another party. The countries who 

have executed some form of declaration under 

Article 23 include Argentina, Australia, Bulgaria, 

China, Cyprus, Denmark, Estonia, Finland, France, 

Germany, Greece, Hungary, India, Italy, Lithuania, 

Luxembourg, Mexico, Monaco, Continued * * * 

Netherlands, Norway, Poland, Portugal, Romania, 

South Africa, Seychelles, Singapore, Spain, Sri 

Lanka, Sweden, Switzerland, Turkey, Ukraine, 

United Kingdom, and Venezuela. Hague Conference 

on Private International Law (2011) available at 

http://www.hcch.net/ 

index_en.php?act=conventions.status &cid=82. 

able to obtain such information through 

the discovery process.19

Commission Staff raised several other 

concerns about extending this 

exemption to foreign unlicensed 

NVOCCs in the absence of published 

tariff rates. For foreign unlicensed 

NVOCCs, there is no application and 

approval process as there is for United 

States-based NVOCCs. The licensing 

process for United States-based 

companies includes a detailed review of 

the experience and character of the 

application’s Qualified Individual (QI) 

and the character, not only of the QI, but 

also of the major officers and 

shareholders. The QI must have a 

minimum of three years of qualifying 

NVOCC experience as verified by 

previous employers and personal 

references with knowledge of the QI’s 

qualifications, who are interviewed by 

telephone or via e-mail by the 

Commission’s Bureau of Certification 

and Licensing (BCL). BCL’s review of 

applicants includes a thorough vetting 

of the Commission’s complaint and 

enforcement records systems as well as 

commercial databases to analyze the 

applicant’s financial background, 

including unsatisfied liens and 

judgments and any criminal history. 

Any information not consistent with 

that provided by the applicant is 

investigated and may result in denial of 

the application. 

Accordingly, when the Commission 

approves a license for a United Statesbased applicant, it is acting upon 

substantive, verified information under 

the experience and character standards 

of Section 19 of the Shipping Act. By 

contrast, a foreign unlicensed NVOCC is 

not required to have a QI or anyone in 

its employ who has any experience 

shipping in the United States trades. 

Similarly, foreign unlicensed NVOCCs 

are not required to have the character 

necessary to provide NVOCC services to 

United States importers and exporters, 

as United States based companies do. 

The Commission knows little more than 

the name and address of such persons 

and the identity of their agent for 

service of process in the United States. 

Commenters suggested various 

methods to address this concern, 

including requiring all participating 

NVOCCs to agree in writing to produce 

NRA records as reasonably requested by 

the Bureau of Enforcement; requiring 

that foreign unlicensed NVOCCs 

maintain their NRA files at the offices 

of their U.S. agents or a third party Web 

site; or requiring that all foreign based 

NVOCCs place a statement in their rules 

tariff regarding the location of records 

and contact information. Another 

commenter suggested that the 

exemption be extended to unlicensed 

NVOCCs that are affiliates with licensed 

NVOCCs in good standing. 

Alternatively, one commenter suggested 

that the tariff rate exemption be limited 

to exports from the United States. 

These suggestions did not fully 

address the concerns raised by 

Commission Staff at this time. Congress, 

in providing for foreign-based 

companies to operate as NVOCCs, 

without being required to be licensed or 

vetted, recognized possible regulatory 

differences between United States and 

foreign-based NVOCCs. Congress 

directed the Commission to take into 

account that foreign-based unlicensed 

companies had not been reviewed as to 

experience and character and ‘‘to 

consider the difference in potential for 

claims against the bonds between 

licensed and unlicensed intermediaries 

when developing bond requirements.’’ 

Congress recognized the ‘‘diversity of 

activities’’ conducted by ocean 

transportation intermediaries and 

directed the Commission ‘‘to establish a 

range of licensing and financial 

responsibility requirements 

commensurate with the scope of 

activities conducted by different ocean 

transportation intermediaries and the 

past fitness of ocean transportation 

intermediaries in the performance of 

intermediary services.’’ S. R. Rep. No. 

105–61, at 30–32 (1997). Accordingly, 

Congress recognized that not all 

NVOCCs were to be treated equally from 

a regulatory perspective and that the 

Commission was to take into account 

those factors necessary to ensure the 

public is protected. 

Commission Staff has raised further 

concerns over its ability to protect the 

shipping public with respect to possible 

exempted operations of foreign 

unlicensed NVOCCs. The proposed rule 

provides that NRAs and associated 

records are subject to inspection and 

reproduction requests under 46 CFR 

515.31(g). However that provision only 

applies to a ‘‘licensee.’’ 

Absent that limitation, obtaining 

records located overseas can be difficult 

and may involve considerable delay. 

The Hague Convention on the Taking of 

Evidence Abroad in Civil and 

Commercial Matters 20 (Convention) 

provides procedures for obtaining 

evidence from entities in certain 

countries, but those procedures are time 

consuming and uncertain, at best. 

Moreover, while the United States is a 

signatory to the Convention, many of 

our trading partners are not.21 And, 

even among those nations party to the 

Convention, most have executed a 

‘‘declaration’’ that they will not honor 

requests to obtain pre-trial discovery of 

documentary evidence.22 The 

Commission Staff has raised concerns 

that Commission requests for 

documentation could be subject to delay 

due to the requirements of the 

Convention. 

Schenkerocean Limited cited the 

requirement that foreign unlicensed 

NVOCCs may only provide ocean 

transportation intermediary services in 

the United States through a licensed 

ocean transportation intermediary as 

support for the proposition that the 

Commission would have regulatory 

access to the bonds of both entities. If 

the licensed OTI in the United States 

acts as an agent, however, it is likely 

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23For example, the International Chamber of 

Commerce ICC eTerms 2004 provides a framework 

so that parties can agree to contract electronically. 

International Chamber of Commerce (2011), 

available at http://iccwbo.org/policy/law/id3668/ 

index.html. Similarly, the Supplement to the 

Uniform Customs and Practice for Documentary 

Credits for Electronic Presentation (eUCP), a 

supplement to the Uniform Customs and Practice 

for Documentary Credits (2007 Revision ICC 

Publication No. 600) (UCP) exists to accommodate 

presentation of electronic records alone or in 

combination with paper documents. The E-Sign Act 

of 2000, with some exceptions, prohibits the denial 

of legal effect, validity, or enforcement of a 

document solely because it is in electronic form. 15 

U.S.C. 7001 et seq. 

24This suggestion is similar to the requirement in 

46 CFR 502.7 that documents written in a foreign 

language other than English, filed with the 

Commission or offered in evidence in any 

proceeding before the Commission, be filed or 

offered in the language in which it is written and 

shall be accompanied by an English translation 

duly verified under oath to be an accurate 

translation. 

25The other requirements of 46 CFR 520.6 

generally address search capabilities and retriever 

selections. 

only the bond of the foreign NVOCC 

would be available to satisfy any civil 

penalty or reparation awards, not the 

bond of the United States-based 

company acting in an agency capacity. 

Commission Staff has raised concerns 

that the difficulties facing the 

Commission in compelling production 

of pertinent documentation and, what 

may be the inability of a private litigant 

to obtain documentation, could reduce 

the Commission’s ability to protect the 

shipping public. At this time, 

Commissioners hold differing views on 

the concerns the Staff has raised, and on 

the relevance and weight those concerns 

should be given in the Commission’s 

decision whether or not to extend the 

exemption to foreign unlicensed 

NVOCCs. Accordingly, the Commission 

will move forward with the current rule 

as proposed for licensed NVOCCs, but 

as noted above, will commence 

proceedings to obtain and consider 

additional public comment on potential 

modifications to the final rule, 

including possible extension of the 

exemption to include foreign unlicensed 

NVOCCs. The record in this proceeding 

will be incorporated into the new 

Commission proceeding. 

V. Memorialization of NRAs and 

Recordkeeping Requirements 

Several commenters asked for 

clarification as to whether an NRA 

could consist of an electronic 

communication such as an e-mail or a 

facsimile with one commenter arguing 

that both methods of communication are 

internationally acceptable. It is the 

Commission’s view that both may be 

satisfactory forms of NRA 

memorialization.23 UPS objected to the 

requirement of Proposed Section 

532.7(a) to retain associated records, 

and argued the regulation should 

require only the retention of those 

specific documents constituting the 

contract between the NVOCC and 

shipper and any document necessary to 

interpret and enforce the contract. The 

Commission notes that the wording in 

Proposed Section 532.7(a) is similar to 

that contained in the recordkeeping 

requirements for NSAs at 46 CFR 

530.15(a) and believes the requirement 

that NVOCCs maintain original NRAs 

and associated records is appropriate. 

RateWave Tariff Services, Inc. sought 

guidance on what the Commission 

means in Proposed Section 532.7(a) by 

‘‘associated records,’’ and recommended 

that the Commission provide a list of 

possible documents. Given the variety 

of documents which may be utilized by 

NVOCCs, it is impossible to provide a 

comprehensive list of documents and 

therefore, the Commission declines to 

do so. 

UPS argued that the required 

retention period for documentation 

should be shortened to three years. The 

requirement to maintain documentation 

for five years is, however, consistent 

with the statute of limitations for 

violations of the Shipping Act found at 

46 U.S.C. 41109(e). Therefore, the 

Commission believes it is necessary that 

documentation be available for five 

years. UPS also requested that the 

Commission clarify that the 

requirements of 46 CFR 515.33 do not 

apply to NRAs. That provision contains 

detailed requirements regarding the 

retention of financial data and shipment 

records by ocean freight forwarders. 

Since the requirements of 46 CFR 

515.33 apply only to freight forwarders, 

they would not apply to any NVOCC. 

Panalpina, Inc. recommended against 

a requirement for centralized record 

keeping and urged the Commission to 

model the NRA recordkeeping 

requirements on 46 CFR 515.33. 

Another commenter, Ms. Zack-Olson, 

argued that, for ease of access to 

documents by the Commission, the 

documents should be stored both in the 

shipping file and at a remote location 

such as a third-party Web site. Yet 

another commenter, Mr. Levy, also 

suggested that NRAs be filed with the 

Commission at no cost, arguing this 

would lead to better uniformity and 

access. The Commission declines to 

adopt these suggestions. Each NVOCC 

appears to be best able to determine the 

most suitable, efficient way for it to 

ensure compliance with the 

documentation, retention and access 

requirements of the Commission’s 

regulations. 

RateWave Tariff Services, Inc. 

requested that the Commission clarify 

when the five-year period for retaining 

NRAs and associated documents begins. 

CASA suggested the 5-year record 

keeping period be measured 

commencing from the date upon which 

the last shipment covered by an NRA is 

received by the NVOCC or its agent 

(including the originating carrier in the 

case of an NRA rate for through 

transportation). As discussed above, an 

NRA may cover a period of time and 

involve multiple shipments. In order to 

ensure availability of documentation, 

the Commission has determined that the 

5-year record keeping period should 

commence from the completion date of 

performance of the NRA by an NVOCC, 

rather than the date when the initial 

shipment is received by the carrier or its 

agent. Proposed Section 532.7(a) is 

modified accordingly. 

Mr. Levy recommended changing the 

wording of Proposed Section 532.7(b) to 

be consistent with the NSA regulations 

at 46 CFR 531.12(a), which state that 

records must be readily available and 

usable to the Commission. The 

Commission has modified Proposed 

Section 532.7(b) slightly in accord with 

this suggestion. Several commenters 

suggested that the Commission should 

specify that all NRA records be in 

English or contain a certified English 

translation.24 While it may not be 

necessary to require that the 

documentation for all NRA shipments 

be in English, Proposed Section 532.7(b) 

is modified to include a requirement 

that any records produced in response 

to a Commission request must be in 

English or accompanied by a certified 

English translation. 

Distribution Publications, Inc. 

asserted that, under Proposed Section 

532.2 (Scope and Applicability), 

NVOCCs who satisfy the requirements 

of the proposed regulations are exempt 

from 46 CFR 520.6. The Commission 

notes that Proposed Section 532.2 

exempts NVOCCs solely from the 

requirements of 46 CFR 520.6(e), which 

relates to rates, and not its other 

requirements.25 Dart Maritime Services, 

Inc. expressed a concern that data may 

cease to become available if the NPR is 

adopted without the continued 

requirements of 46 CFR 520.10(a). The 

Commission notes that an NVOCC’s 

rules tariff will continue to be subject to 

the history requirements of 46 CFR 

520.10(a) and NRAs will be subject to 

these requirements. Therefore, all 

documentation should be covered and 

consistent as to recordkeeping. 

RateWave Tariff Services, Inc. 

expressed concerns with the burden if 

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an NVOCC had to recreate an NRA 

every time anything in the original NRA 

changes. The Commission notes that an 

NRA, by definition, is a written and 

binding arrangement between a shipper 

and an NVOCC to provide specific 

transportation service for a stated cargo 

quantity from origin to destination and 

therefore, an NVOCC must enter into a 

new NRA for each specific 

transportation service and cargo 

quantity. An NVOCC may use a form 

agreement for an NRA and, in as much 

as an NRA may not contain other 

contractual terms, the requirement to 

enter into a new NRA for each stated 

cargo quantity should not be a 

significant burden. 

VI. Access to Rules Tariffs 

The NPR provided licensed NVOCCs 

offering NRAs the option of providing 

their rules tariff free of charge to the 

public or providing each prospective 

shipper with a copy of all the applicable 

terms set forth in its rules tariff. Upon 

further review and consideration of the 

comments received, which generally did 

not object to providing access to rules 

tariffs free of charge, Proposed Section 

532.4 has been amended to require 

licensed NVOCCs, as a condition to 

offering NRAs, to provide their rules 

tariffs to the public free of charge. UPS 

expressed concerns that shippers 

moving cargo in the absence of a tariff 

rate could shop through an NVOCC’s 

effective NRAs looking for the most 

advantageous rate. The rule only 

requires that access to an NVOCC’s rules 

tariff be available to the public and does 

not require public access to an NVOCC’s 

effective or proposed NRAs. 

VII. Terms of an NRA 

A number of commenters 

recommended that Proposed Section 

532.5(d) be changed to allow 

modification of the rate in an NRA at 

any time, as long as it is clearly stated 

in writing that the party to whom the 

request was made agrees to the change. 

The commenters argued that what was 

important is that a shipper and 

consignee agree to the rate and the 

effective date. The Commission 

disagrees. While NRAs are defined as 

‘‘written and binding’’ arrangements, 

they function more like tariff rates and, 

like tariff rates, they may not be 

amended by the parties once the subject 

cargo has been received. The 

Commission believes maintaining the 

integrity of NRA rates protects both the 

shipper and the NVOCC. Accordingly, 

the Commission declines to modify the 

rule to allow for amendment of an NRA 

after receipt of the cargo by the carrier 

or its agent. To address situations where 

an NRA may cover multiple 

‘‘shipments,’’ the word ‘‘initial’’ is added 

to Proposed Section 532.5(e) to clarify 

that an NRA may not be modified after 

the time the initial shipment in an NRA 

is received by the carrier or its agent. 

RateWave Tariff Services, Inc. 

questioned whether an NRA may be 

canceled, (for example, if an NVOCC 

bases its NRA on the service of a 

specific VOCC which then changes its 

service level). By definition, an NRA is 

a written and binding arrangement 

between a shipper and an eligible 

NVOCC and therefore, could only be 

canceled by operation of law or by 

agreement of both parties prior to 

receipt of the cargo. 

Several commenters recommended 

allowing an NRA to have an effective 

date. The definition of rate contained in 

the rule is ‘‘a price stated for providing 

a specified level of transportation 

service for a stated cargo quantity, from 

origin to destination, on or after a stated 

date or within a defined time frame.’’ 

Proposed Section 532.3(b) (emphasis 

added). Accordingly, an NRA may have 

an effective date or cover a particular 

period of time. 

Dart Maritime Services, Inc. 

questioned what methods or 

instruments will properly serve as 

acceptance by a shipper, given the use 

of generic e-mail addresses by NVOCC 

clients, and recommended that in order 

to have an ‘‘agreement’’ by both parties 

there must be some level of proof of 

identity from the authorizing party 

similar to that required in 46 CFR 

531.6(b)(9). The Commission has 

modified Proposed Section 532.5 

accordingly, requiring that an NRA 

contain the legal name and address of 

the parties and the names, title and 

addresses of the representatives of the 

parties agreeing to the NRA. RateWave 

Tariff Services, Inc. suggested that the 

Commission clarify that there is a 

requirement for a formal acceptance by 

the shipper before cargo begins moving 

under the NRA, noting that shippers 

often decide to use a rate quote before 

informing the NVOCC of their 

acceptance of the rate. This practice, 

they asserted, causes problems under 

current regulations and could also cause 

problems under the proposed 

regulation. While the Commission 

declines to specify in the rule what form 

the acceptance should take, as many 

processes can indicate acceptance, in 

order for a valid NRA to exist, Proposed 

Section 532.5(c) requires agreement by 

both shipper and NVOCC. 

Dart Maritime Services, Inc. suggested 

that Proposed Section 532.5 be amended 

to include the filing requirements of 46 

CFR 531.6(a) and selected requirements 

for NSA contents contained in 46 CFR 

531.6(b) (46 CFR 531.6(b)(1), (2), (3), (6), 

(8), and (9)). Similarly, RateWave Tariff 

Services, Inc. provided an 11-point list 

of suggested items to require for 

inclusion in an NRA. The Commission 

has included in Section 532.5(a) the 

requirement in 46 CFR 531.6(b)(9) that 

the arrangement be in writing. The other 

requirements and suggestions are 

already included or adequately 

addressed in the rule. 

Distribution Publications, Inc. 

contended that the exemptions in the 

Proposed Section 532.2 do not include 

46 CFR 520.5, Standard Tariff 

Terminology or its Appendix A, and 

argued that these standards should also 

be used in NRAs. The Commission 

notes that the purpose of the use of 

Standard Tariff Terminology per 46 CFR 

520.5 is to ‘‘facilitate retriever 

efficiency’’ which would not appear 

relevant for unfiled, unpublished NRAs. 

Although not addressed by the 

commenters, the Commission wishes to 

make clear that it did not intend to 

preclude an eligible NVOCC from 

entering into an NRA with another 

NVOCC. Accordingly, the term ‘‘NRA 

shipper’’ has been added to Proposed 

Section 532.3—Definitions. An NRA 

shipper is defined as ‘‘a cargo owner, the 

person for whose account the ocean 

transportation is provided, the person to 

whom delivery is to be made, a 

shippers’ association, or an ocean 

transportation intermediary, as defined 

in section 3(17)(B) of the Act (46 U.S.C. 

40102(16)), that accepts responsibility 

for payment of all applicable charges 

under the NRA.’’ Additionally, the 

definition of NRA in Proposed Section 

532.3(a) has been modified to read a 

written and binding arrangement 

between an NRA shipper and an eligible 

NVOCC and Proposed Section 532.5(c) 

is modified to require agreement by both 

the NRA shipper and the NVOCC 

(emphasis added). This definition is 

consistent with the Commission’s NSA 

regulations at 46 CFR 531.2. 

VIII. NRA Disputes, Dispute Resolution 

Services and Safe Harbor Provisions 

A number of commenters addressed 

the question of NRA disputes and the 

Commission’s question of what rate 

should apply in the event of a dispute. 

CV International opined that the 

principles of contract law currently 

manage the relationship between 

shippers and NVOCCs and the proposed 

rule appropriately adopts that system. 

Several commenters argued that, 

because the NRA is a mutually agreed 

upon rate tailored to the requirements of 

both parties, it should take precedence 

over a tariff rate. Commenters suggested 

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that the final rule should clarify that, in 

the event of a discrepancy between the 

terms set forth in the NRA and the 

NVOCC rules tariff, the terms of the 

NRA will govern. 

The TIA and NCBFAA pointed out 

that Section 13(f) of the Act, now 

codified at 46 U.S.C. 41109(d), makes 

the ‘‘amount billed and agreed upon in 

writing’’ between the carrier and the 

shipper controlling, even if the tariff for 

whatever reason does not conform to 

that rate. Both argued that this section 

answers the question asked in the 

NPRM as to whether the lower rate 

should prevail if there is a conflict 

between the tariff rate and the NRA rate. 

The Commission agrees with the 

commenters that, in the event of a 

dispute, the NRA rate will apply. Also, 

as with tariffs, to the extent the language 

of an NVOCC-drafted NRA is found to 

be unclear, that language is to be 

interpreted in favor of the shipper. 

With regard to disputes, commenters 

stated that most disputes are quickly 

resolved commercially between shipper 

and carrier, particularly when a longterm customer relationship is at stake, 

and disagreements under NRAs should 

be resolved like other commercial 

disputes, i.e., without the need for 

intervention by the Commission. 

Similarly, the NCBFAA did not believe 

there is a need to mandate that parties 

with NRA disputes bring them to the 

Commission’s Office of Consumer 

Affairs and Dispute Resolution Services 

(CADRS), as most disputes are resolved 

quickly and it is possible that a dispute 

may not be a potential violation of the 

Act, leaving the Commission without 

jurisdiction. The NCBFAA also argued 

that while parties may elect to use the 

services of CADRS, it is more 

appropriate to leave the choice of forum 

to the parties. The TIA stated that, if a 

dispute is brought to the Commission 

because it involves an alleged violation 

of the Shipping Act, in accordance with 

Commission regulations which strongly 

encourage alternative dispute resolution 

(ADR) procedures, they would not 

object to continuing such a requirement 

for complaints involving NRAs. 

The Commission concurs that the 

parties themselves are best able to 

resolve most disputes, quickly and 

without recourse to an outside party. 

Accordingly, the Commission does not 

impose, as some commenters appear to 

suggest, a requirement that all disputes 

be referred to CADRS. The Commission 

does note, however, that its current 

regulations, which allow disputes to be 

brought before the Commission at the 

discretion of the parties, and which 

encourage alternative dispute 

resolution, are equally applicable to 

NRAs. Some commenters, though, 

appear to misunderstand CADRS’ role 

in dispute resolution. CADRS provides 

a variety of ADR services. Some of these 

services, such as mediation, are ideal in 

situations where parties have a 

longstanding, commercial relationship 

and it is in their interest to continue that 

relationship. The parties themselves, in 

consultation with CADRS, decide which 

process is best for their situation. 

Ultimately, the parties determine the 

terms of any resolution; CADRS merely 

assists them in arriving at agreement. 

CADRS’ role is not limited to disputes 

involving possible violations of the 

Shipping Act. Rather, the full panoply 

of CADRS dispute resolution 

procedures, formal and informal, are 

available to assist the parties to resolve 

any dispute involving liner ocean 

transport, even when a Shipping Act 

violation is not involved. 

The Commission requested comments 

as to which elements should be required 

to qualify the NRA for a ‘‘safe harbor’’ 

status that would afford a presumption 

that the corresponding shipment is not 

subject to the tariff rate publication 

requirement. In response, the NIT 

League stated they supported the 

incorporation of a ‘‘safe harbor’’ 

provision, noting that shippers may 

already be entitled to protection 

pursuant to 46 U.S.C. 41109(d), while 

acknowledging the possibility that the 

Commission could determine that an 

NRA is defective prior to the issuance 

of an invoice for a particular shipment. 

The TIA, on the other hand, argued it 

is unnecessary in their view to prescribe 

a ‘‘safe harbor’’ for the form and content 

of NRAs as NVOCCs need flexibility. In 

light of the comments, the Commission 

declines to incorporate a ‘‘safe harbor’’ 

provision in the final rule. The 

Commission intends that the parties 

should have flexibility in tailoring the 

NRA to their specific situation. 

IX. Extending the Exemption to Sections 

10(b)(4) and 10(b)(8), 46 U.S.C. 41104(4) 

and (8) 

The Commission also sought public 

comment in the NPR as to whether the 

final rule should exempt NVOCCs 

entering into NRAs from the 

prohibitions contained in Sections 

10(b)(4) and 10(b)(8). Section 10(b)(4), 

46 U.S.C. 41104(4), prohibits a common 

carrier, for service pursuant to a tariff, 

from engaging in any unfair or unjustly 

discriminatory practice in the matter of 

rates or charges; cargo classifications; 

cargo space accommodations or other 

facilities, loading and landing of freight; 

or adjustment and settlement of claims. 

Section 10(b)(8), 46 U.S.C. 41104(8), 

prohibits a common carrier, for service 

pursuant to a tariff, from giving any 

undue or unreasonable preference or 

advantage or imposing any undue or 

unreasonable prejudice or disadvantage. 

Most commenters supported extending 

the exemption to both sections. As 

justification, some argued that the high 

level of competition between NVOCCs 

would make it difficult for them to 

discriminate and therefore these 

prohibitions were not necessary for 

NVOCCs entering into NRAs. Others 

argued that prohibiting NVOCCs from 

discriminating or providing preferences 

in NRAs would be inconsistent with the 

stated purpose of NRAs and contractbased shipping practices and NVOCCs 

entering into NRAs will by definition be 

discriminating. 

As a preliminary matter, the 

Commission Staff point out that cargo 

moving pursuant to an NRA may 

properly be interpreted as service 

pursuant to a tariff; tariff rules will 

apply, as will the prohibitions 

contained in Sections 10(b)(4) and 

10(b)(8). An NVOCC entering into an 

NRA is still a common carrier. As 

discussed above, an NRA is not a 

service contract or an NSA. An NRA 

merely replaces the requirement in the 

Commission’s regulations that an 

NVOCC publish a tariff rate. 

Commenters argue that, because an 

NVOCC may enter into NRAs with 

different shippers at different rates and 

will be discriminating, it needs to be 

exempt from Sections 10(b)(4) and 

10(b)(8). Section 10(b)(4) does not 

prohibit an NVOCC from discriminating 

by entering into or offering an NRA with 

different rates to different shippers, but 

rather prohibits any unfair or unjustly 

discriminatory practice by a common 

carrier in the matter of rate or charges; 

cargo classifications; cargo space 

accommodations or other facilities, 

loading and landing of freight; or 

adjustment and settlement of claims. 

(emphasis added). The Commission 

Staff is concerned that these provisions 

apply to more matters than just rate 

level whereas only the requirement to 

publish the rate is relieved by this 

exemption. Similarly, Section 10(b)(8) 

does not prohibit all preferences or 

advantages but rather prohibits giving 

any undue or unreasonable preference 

or advantage or imposing any undue or 

unreasonable prejudice or disadvantage. 

(emphasis added). Neither of these 

prohibitions prevents an NVOCC from 

entering into an NRA with different 

shippers at different rates. The 

Commission Staff is concerned that, 

despite entering into an NRA, a shipper 

may still need the protections offered by 

the prohibitions contained in these two 

sections and, therefore, as common 

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11360 Federal Register / Vol. 76, No. 41 / Wednesday, March 2, 2011 / Rules and Regulations 

carriers, NVOCCs will still be subject to 

the prohibitions contained in them. At 

this time, Commissioners hold differing 

views on the concerns the Staff raised, 

and on the relevance and weight those 

concerns should be given in the 

Commission’s decision. Accordingly, 

the Commission will move forward with 

the current rule as proposed, which will 

not exempt NVOCCs entering into NRAs 

from the prohibitions contained in 

section 10(b)(4) and 10(b)(8). However, 

as noted above, the Commission will 

commence proceedings to obtain and 

consider additional comments on 

potential modifications to the final rule, 

including whether to exempt NVOCCs 

entering into NRAs from the 

prohibitions contained in section 

10(b)(4) and 10(b)(8). The record in this 

proceeding will be incorporated into the 

new Commission proceeding. 

X. Regulatory Flexibility Act 

One commenter complained, with 

regard to the Regulatory Flexibility Act, 

5 U.S.C. 601 et seq, that the 

Commission’s explanation in the NPR 

was unclear as to whether small 

business entities meant importers and 

exporters, the companies who use 

NVOCCs or the NVOCCs themselves. 

The commenter further argued that the 

NPR’s statement that the economic 

impact will be small, seems to 

contradict the NCBFAA’s petition, 

which claimed that the regulatory cost 

is huge. The Regulatory Flexibility Act 

directs agencies to give particular 

attention to the potential impact of 

regulation on small businesses and 

other small entities and requires 

consideration of regulatory alternatives 

that are less burdensome to small 

entities. The Commission’s comments 

on the Regulatory Flexibility Act in its 

NPR were directed to NVOCCs as the 

regulated entities affected by the rule. 

NVOCCs are free to choose whether or 

not to take advantage of this rulemaking. 

Therefore, the Commission concludes 

the economic impact of the rule will be 

minor and it will not have a significant 

economic impact on a substantial 

number of small entities (i.e. NVOCCs). 

To the extent there is substantial 

economic impact, it would improve the 

economic condition of NVOCCs. 

VI. Statutory Reviews 

In accordance with the Regulatory 

Flexibility Act, 5 U.S.C. 601 et seq., the 

Chairman of the Federal Maritime 

Commission has certified to the Chief 

Counsel for Advocacy, Small Business 

Administration, that the Final Rule will 

not have a significant economic impact 

on a substantial number of small 

entities. Although NVOCCs as an 

industry include small entities, the 

Final Rule establishes an optional 

method for NVOCCs to carry cargo for 

their customers to be used at their 

discretion. The rule would pose no 

economic detriment to small business 

entities. Rather, it exempts NVOCCs 

from the otherwise applicable 

requirements of the Act when such 

entities comply with the rules set forth 

herein and will have a positive impact. 

This regulatory action is not a ‘‘major 

rule’’ under 5 U.S.C. 804(2). 

In accordance with the Paperwork 

Reduction Act, 44 U.S.C. 3507, the 

Commission has submitted estimated 

burdens of collection of information 

authorized by this Final Rule to the 

Office of Management and Budget. The 

estimated annual burden for the 

estimated 3,242 annual respondents is 

$865,343.00. No comments were 

received on this estimate. The 

Commission has received OMB 

approval for this collection of 

information pursuant to the Paperwork 

Reduction Act of 1995, as amended. In 

accordance with that Act, agencies are 

required to display a currently valid 

control number. The valid control 

number for this collection of 

information is 3072–0071. 

List of Subjects 

46 CFR Part 520 

Common carrier, Freight, Intermodal 

transportation, Maritime carrier, 

Reporting and recordkeeping 

requirements. 

46 CFR Part 532 

Exports, Non-vessel-operating 

common carriers, Ocean transportation 

intermediaries. 

Accordingly, the Federal Maritime 

Commission amends 46 CFR part 520 

and adds 46 CFR Part 532 as follows: 

PART 520—CARRIER AUTOMATED 

TARIFFS 

■ 1. The authority 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. 

■ 2. In 520.13, add a new section (e) to 

read as follows: 

§ 520.13 Exemptions and exceptions. 

* * * * * 

(e) NVOCC Negotiated Rate 

Arrangements. A licensed 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. 

■ 3. Add part 532 to read as follows: 

PART 532—NVOCC NEGOTIATED 

RATE ARRANGEMENTS 

Subpart A—General Provisions 

Sec. 532.1 Purpose. 

Sec. 532.2 Scope and applicability. 

Sec. 532.3 Definitions. 

Subpart B—Procedures Related to NVOCC 

Negotiated Rate Arrangements 

Sec. 532.4 Duties of the NVOCC rules tariff. 

Sec. 532.5 Requirements for NVOCC 

negotiated rate arrangements. 

Sec. 532.6 Notices. 

Subpart C—Recordkeeping Requirements 

Sec. 532.7 Recordkeeping and audit. 

Sec. 532.91 OMB control number assigned 

pursuant to the Paperwork Reduction 

Act. 

Authority: 46 U.S.C. 40103. 

Subpart A—General Provisions 

§ 532.1 Purpose. 

The purpose of this Part, pursuant to 

the Commission’s statutory authority, is 

to exempt licensed and bonded nonvessel-operating common carriers 

(NVOCCs) from the tariff rate 

publication and adherence requirements 

of the Shipping Act of 1984, as 

enumerated herein. 

§ 532.2 Scope and applicability. 

This Part exempts NVOCCs duly 

licensed pursuant to 46 CFR 515.3; 

holding adequate proof of financial 

responsibility pursuant to 46 CFR 

515.21; and meeting the conditions of 

46 CFR 532.4 through 532.7; from the 

following requirements and prohibitions 

of the Shipping Act and the 

Commission’s regulations: 

(a) The requirement in 46 U.S.C. 

40501(a)–(c) that the NVOCC include its 

rates in a tariff open to public 

inspection in an automated tariff 

system; 

(b) 46 U.S.C. 40501(d); 

(c) 46 U.S.C. 40501(e) 

(d) 46 U.S.C. 40503; 

(e) the prohibition in 46 U.S.C. 

41104(2)(A); 

(f) the Commission’s corresponding 

regulation at 46 CFR 520.3(a) that the 

NVOCC include its rates in a tariff open 

for public inspection in an automated 

tariff system; and 

(g) the Commission’s corresponding 

regulations at 46 CFR 520.4(a)(4), 

520.4(f), 520.6(e), 520.7(c), (d), 520.8(a), 

520.12, and 520.14. Any NVOCC failing 

to maintain its bond or license as set 

forth above, or who has had its tariff 

suspended by the Commission, shall not 

be eligible to invoke this exemption. 

§ 532.3 Definitions. 

When used in this part, 

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Federal Register / Vol. 76, No. 41 / Wednesday, March 2, 2011 / Rules and Regulations 11361 

(a) ‘‘NVOCC Negotiated Rate 

Arrangement’’ or ‘‘NRA’’ means a written 

and binding arrangement between an 

NRA shipper and an eligible NVOCC to 

provide specific transportation service 

for a stated cargo quantity, from origin 

to destination, on and after receipt of 

the cargo by the carrier or its agent (or 

the originating carrier in the case of 

through transportation). 

(b) ‘‘Rate’’ means a price stated for 

providing a specified level of 

transportation service for a stated cargo 

quantity, from origin to destination, on 

and after a stated date or within a 

defined time frame. 

(c) ‘‘Rules tariff’’ means a tariff or the 

portion of a tariff, as defined by 46 CFR 

520.2, containing the terms and 

conditions governing the charges, 

classifications, rules, regulations and 

practices of an NVOCC, but does not 

include a rate. 

(d) ‘‘NRA shipper’’ means a cargo 

owner, the person for whose account the 

ocean transportation is provided, the 

person to whom delivery is to be made, 

a shippers’ association, or an ocean 

transportation intermediary, as defined 

in section 3(17)(B) of the Act (46 U.S.C. 

40102(16)), that accepts responsibility 

for payment of all applicable charges 

under the NRA. 

(e) ‘‘Affiliate’’ means two or more 

entities which are under common 

ownership or control by reason of being 

parent and subsidiary or entities 

associated with, under common control 

with or otherwise related to each other 

through common stock ownership or 

common directors or officers. 

Subpart B—Procedures Related to 

NVOCC Negotiated Rate Arrangements 

§ 532.4 NVOCC rules tariff. 

Before entering into NRAs under this 

Part, an NVOCC must provide electronic 

access to its rules tariffs to the public 

free of charge. 

§ 532.5 Requirements for NVOCC 

negotiated rate arrangements. 

In order to qualify for the exemptions 

to the general rate publication 

requirement as set forth in section 

532.2, an NRA must: 

(a) Be in writing; 

(b) contain the legal name and address 

of the parties and any affiliates; and 

contain the names, title and addresses of 

the representatives of the parties 

agreeing to the NRA; 

(c) be agreed to by both NRA shipper 

and NVOCC, prior to the date on which 

the cargo is received by the common 

carrier or its agent (including originating 

carriers in the case of through 

transportation); 

(d) clearly specify the rate and the 

shipment or shipments to which such 

rate will apply; and 

(e) may not be modified after the time 

the initial shipment is received by the 

carrier or its agent (including originating 

carriers in the case of through 

transportation). 

§ 532.6 Notices. 

(a) An NVOCC wishing to invoke an 

exemption pursuant to this part must 

indicate that intention to the 

Commission and to the public by: 

(1) A prominent notice in its rules 

tariff and bills of lading or equivalent 

shipping documents; and 

(2) By so indicating on its Form FMC– 

1 on file with the Commission. 

Subpart C—Recordkeeping 

§ 532.7 Recordkeeping and audit. 

(a) An NVOCC invoking an exemption 

pursuant to this part must maintain 

original NRAs and all associated 

records, including written 

communications, in an organized, 

readily accessible or retrievable manner 

for 5 years from the completion date of 

performance of the NRA by an NVOCC, 

in a format easily produced to the 

Commission. 

(b) NRAs and all associated records 

and written communications are subject 

to inspection and reproduction requests 

under section 515.31(g) of this chapter. 

An NVOCC shall produce the requested 

NRAs and associated records, including 

written communications, promptly in 

response to a Commission request. All 

records produced must be in English or 

be accompanied by a certified English 

translation. 

(c) Failure to keep or timely produce 

original NRAs and associated records 

and written communications will 

disqualify an NVOCC from the 

operation of the exemption provided 

pursuant to this part, regardless of 

whether it has been invoked by notice 

as set forth above, and may result in a 

Commission finding of a violation of 46 

U.S.C. 41104(1), 41104(2)(A) or other 

acts prohibited by the Shipping Act. 

§ 532.91 OMB control number issued 

pursuant to the Paperwork Reduction Act. 

The Commission has received OMB 

approval for this collection of 

information pursuant to the Paperwork 

Reduction Act of 1995, as amended. In 

accordance with that Act, agencies are 

required to display a currently valid 

control number. The valid control 

number for this collection of 

information is 3072–0071. 

By the Commission. 

Karen V. Gregory, 

Secretary. 

[FR Doc. 2011–4599 Filed 3–1–11; 8:45 am] 

BILLING CODE 6730–01–P 

DEPARTMENT OF DEFENSE 

Defense Acquisition Regulations 

System 

48 CFR Part 207 

RIN 0750–AG45 

Defense Federal Acquisition 

Regulation Supplement; Preservation 

of Tooling for Major Defense 

Acquisition Programs (DFARS Case 

2008–D042) 

AGENCY: Defense Acquisition 

Regulations System, Department of 

Defense (DoD). 

ACTION: Final rule. 

SUMMARY: DoD is issuing a final rule 

amending the Defense Federal 

Acquisition Regulation Supplement 

(DFARS) to implement section 815 of 

the National Defense Authorization Act 

for Fiscal Year 2009. Section 815 

addresses the preservation of tooling for 

major defense acquisition programs. 

DATES: Effective Date: March 2, 2011. 

FOR FURTHER INFORMATION CONTACT: Ms. 

Meredith Murphy, 703–602–1302. 

SUPPLEMENTARY INFORMATION: 

I. Background 

Section 815 of the National Defense 

Authorization Act for Fiscal Year 2009 

(Pub. L. 110–417) impacts the 

acquisition planning process. Section 

815, entitled ‘‘Preservation of Tooling 

for Major Defense Acquisition 

Programs,’’ mandates the publication of 

guidance requiring the ‘‘preservation 

and storage of unique tooling associated 

with the production of hardware for a 

major defense acquisition program 

through the end of the service life of the 

end item associated with such a 

program.’’ The statute states that the 

guidance must— 

• Require that the milestone decision 

authority (MDA) approve a plan for the 

preservation and storage of ‘‘such 

tooling prior to Milestone C approval;’’ 

• Require the MDA to periodically 

review the plan to ensure that it remains 

adequate and in the best interest of DoD; 

and 

• Provide a mechanism for the 

Secretary of Defense to waive the 

requirement under certain 

circumstances. 

DoD published a proposed rule in the 

Federal Register (75 FR 25159) on May 

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