[Federal Register Volume 69, Number 212 (Wednesday, November 3, 2004)]
[Proposed Rules]
[Pages 63981-63997]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-24467]


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FEDERAL MARITIME COMMISSION

46 CFR Part 531

[Docket No. 04-12]
RIN 3072-AC30


Non-Vessel-Operating Common Carrier Service Arrangements

AGENCY: Federal Maritime Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Federal Maritime Commission proposes an exemption from the 
tariff publication requirements of the Shipping Act of 1984 for service 
arrangements made by non-vessel-operating common carriers, subject to 
the conditional filing requirements set forth in this new Part.

DATES: Submit an original and 15 copies of comments (paper), or e-mail 
comments as an attachment in WordPerfect 10, Microsoft Word 2003, or 
earlier versions of these applications, no later than November 19, 
2004.

ADDRESSES: Address all comments concerning this proposed rule to: 
Bryant L. VanBrakle, Secretary, Federal Maritime Commission, 800 North 
Capitol Street, NW., Room 1046, Washington, DC 20573-0001, 
<a href="/cdn-cgi/l/email-protection#d182b4b2a3b4a5b0a3a891b7bcb2ffb6bea7"><span class="__cf_email__" data-cfemail="6635030514031207141f26000b0548010910">[email protected]</span></a>.

[[Page 63982]]


FOR FURTHER INFORMATION CONTACT:
Amy W. Larson, General Counsel, Federal Maritime Commission, 800 North 
Capitol Street, NW., Washington, DC 20573-0001, (202) 523-5740, 
<a href="/cdn-cgi/l/email-protection#4522202b20372429262a302b362029052328266b222a33"><span class="__cf_email__" data-cfemail="a4c3c1cac1d6c5c8c7cbd1cad7c1c8e4c2c9c78ac3cbd2">[email protected]</span></a>.
Austin L. Schmitt, Director of Operations, Federal Maritime 
Commission,800 N. Capitol Street, NW., Washington, DC 20573-0001, (202) 
523-0988.

SUPPLEMENTARY INFORMATION:

I. Background

    Between July 25, 2003 and March 12, 2004, the Federal Maritime 
Commission (``FMC'' or ``Commission'') received eight petitions from 
seven individual non-vessel-operating common carriers (``NVOCCs'') and 
one trade association of NVOCCs (collectively ``Petitioners''), seeking 
various exemptions from the tariff publication and adherence 
requirements of the Shipping Act of 1984, 46 U.S.C. app. Sec. Sec.  
1701-1719 (``Shipping Act'').\1\ United Parcel Service, Inc. (``UPS''), 
C.H. Robinson Worldwide, Inc. (``CHRW''), Danzas Corporation d/b/a 
Danmar Lines Ltd., Danzas Ocean Services and DHL Danzas Air and Ocean 
(``Danmar''), BDP International, Inc. (``BDP''), and FEDEX Trade 
Networks Transport & Brokerage, Inc. (``FEDEX'') each requested 
individual exemptions from the tariff publication and adherence 
requirements of the Shipping Act. They argued that changes in the ocean 
freight industry since the passage of the Ocean Shipping Reform Act 
(``OSRA'') in 1998 warrant the Commission granting to NVOCCs the 
authority to contract confidentially with their shipper customers in 
the same manner as vessel-operating common carriers (``VOCCs'').
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    \1\ They were: Petition No. P3-03--Petition of United Parcel 
Service, Inc. for Exemption Pursuant to Section 16 of the Shipping 
Act of 1984 to Permit Negotiation, Entry and Performance of Service 
Contracts; Petition No. P5-03--Petition of the National Customs 
Brokers and Forwarders Association of America, Inc. for Limited 
Exemption from Certain Tariff Requirements of the Shipping Act of 
1984; Petition No. P7-03--Petition of Ocean World Lines, Inc., for a 
Rulemaking to Amend and Expand the Definition and Scope of ``Special 
Contracts'' to Include All Ocean Transportation Intermediaries; 
Petition No. P8-03--Petition of BAX Global, Inc. for Rulemaking; 
Petition No. P9-03--Petition of C.H. Robinson Worldwide, Inc. for 
Exemption Pursuant to Section 16 of the Shipping Act of 1984 to 
Permit Negotiation, Entry and Performance of Confidential Service 
Contracts; Petition No. P1-04--Petition of Danzas Corporation d/b/a 
Danmar Lines Ltd.; Danzas AEI Ocean Services and DHL Danzas Air and 
Ocean for Exemption from the Tariff Publishing Requirements of 
Section 8 of the Shipping Act of 1984, as Amended; Petition No. P2-
04--Petition of BDP International, Inc. for Exemption from the 
Tariff Publishing Requirements of Section 8 of the Shipping Act of 
1984, as amended; Petition No. P4-04--Petition of FEDEX Trade 
Networks Transport & Brokerage, Inc. for Exemption from the Tariff 
Publishing Requirements of Sections 8 and 10 of the Shipping Act of 
1984, as Amended.
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    The National Customs Brokers and Forwarders Association of America, 
Inc. (``NCBFAA''), a national trade association representing the 
interests of freight forwarders, NVOCCs and customs brokers, sought an 
exemption from the tariff publication requirements for all NVOCCs. 
NCBFAA presented arguments similar to UPS and CHRW, but also asserted 
that the Shipping Act's tariff publication requirements are outdated 
and impractical, and requested unconditional exemption for all NVOCCs 
from the provisions of the Shipping Act that require NVOCCs to 
establish, publish, maintain and enforce tariffs setting forth ocean 
freight rates, thereby allowing NVOCCs to offer confidential service 
contracts as carriers with their shipper customers. Ocean World Lines, 
Inc. (``OWL'') requested a rulemaking to expand the definition and 
scope of the term ``special contracts'' in the Commission's regulations 
to include NVOCCs if UPS' and/or NCBFAA's petitions are not granted. 
Finally, BAX Global, Inc. (``BAX'') sought a rulemaking to permit it 
and similar ``qualified'' NVOCCs to enter into confidential service 
contracts as ``ocean common carriers'' with their shipper customers. By 
the close of the comment period to the last of the petitions on April 
2, 2004, the Commission had received over 1,400 pages of filed comments 
from more than 80 commenters and 208 Members of Congress.
    On August 2, 2004, the National Industrial Transportation League 
(``NITL''), UPS, BAX, FEDEX, Transportation Intermediaries Association 
(``TIA''), CHRW, and BDP (collectively, ``Joint Commenters'') filed a 
Motion for Leave pursuant to Rule 73 of the Commission's Rules of 
Practice and Procedure, 46 CFR 502.73, in the proceedings referenced 
above to file Joint Supplemental Comments Requesting Expedited Adoption 
of a Conditional Exemption from Tariff Publication (``Joint 
Proposal''). Joint Commenters sought acceptance of the Joint Proposal 
into the record, arguing that the proposal reflects an updated, common 
approach to the various forms of relief requested in the original 
individual petitions. They urged the Commission to use its authority 
under section 16 of the Shipping Act to expeditiously grant NVOCCs a 
conditional exemption from the tariff publication and enforcement 
provisions in the Shipping Act and Commission regulations at 46 CFR 
part 520. Joint Commenters did not withdraw the existing petitions, and 
submitted that any Commission action on the proposed conditional tariff 
exemption should not supercede consideration of petitioners' individual 
requested relief from the tariff publication requirements. Joint 
Proposal at 2 n.2.
    The Commission granted the motion and reopened the comment period 
until September 30, 2004. 69 FR 54788 (September 10, 2004). Thirty-four 
comments were received from: NCBFAA; Danmar; ATEC Systems, Ltd. 
(``ATEC''); John S. Connor, Inc. (``Connor''); Phoenix International 
Freight Services, Ltd. (``Phoenix''); Airport Brokers Corporation 
(``ABC''); Fashion Accessories Shippers Association, Inc. (``FASA''); 
World Shipping Council (``WSC''); Yellow Roadway Corporation 
(``Yellow''); Exel Transportation Services Inc. (``Exel''); Landstar 
System, Inc. (``Landstar''); Worldlink Logistics, Inc. (``Worldlink''); 
SIRVA Corporation (``SIRVA''); C.H. Powell Company (``Powell''); 
Interlog USA, Inc. (``Interlog''); Latin American Forwarding Company 
(``LAFCO''); U.S. Department of Transportation (``DOT''); Alliance 
Shippers, Inc. d/b/a Alliance International (``Alliance''); Cargo 
Brokers International, Inc. (``CBI''); A.N. Deringer, Inc. 
(``Deringer''); Barthco International, Inc. (``Barthco''); USA 
Shipping, LLC (``USA''); Camelot Company (``Camelot''); All Freight 
International, Inc. (``All Freight''); ABS Consulting (``ABS''); 
Topocean Consolidation Service (``Topocean''); Antilles Freight Corp. 
(``Antilles''); Geologistics Corporation (``Geologistics''); Reilly 
Transportation Services, Inc. (``Reilly''); Navetrans Corp d/b/a Costa 
Rica Carriers (``Navetrans''); Thiel Logistics USA, Inc. (``Thiel''); 
Interport Services Corp. (``Interport''); Express Freight 
International, Inc. (``Express''); and the Honorable Robert E. Andrews 
of the U.S. House of Representatives.

II. Joint Proposal

    Joint Commenters assert that they now present a unified approach to 
the pending NVOCC tariff publication exemption proceedings that is 
intended to give ``clear direction'' to the Commission in its 
deliberations. Joint Proposal at 2-3. Reiterating their concerns 
submitted in the pending petitions and comments that the current 
regulatory scheme undermines competitiveness in the shipping industry, 
the Joint Commenters request that the Commission use its authority 
under section 16 of the Shipping Act to exempt certain NVOCC 
arrangements (hereinafter NVOCC Service

[[Page 63983]]

Arrangements, or ``NSAs'') \2\ with shippers from the tariff 
publication requirements in sections 8(a), (b), (d) and (e) of the 
Shipping Act and 46 CFR part 520 of the Commission's rules, as well as 
the tariff-related prohibited acts found in sections 10(b)(1), (2), (4) 
and (8) of the Shipping Act. Joint Proposal at 3, Appendix 1. The 
proposed exemption would apply to any written arrangements between an 
NVOCC and a shipper (excluding bills of lading, receipts or other 
transport documents), where the shipper pledges to provide a specific 
volume/portion of cargo over a fixed time period and the NVOCC commits 
to a defined rate and service level. Id.
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    \2\ Although referred to by the Joint Proposal as ``NVOCC 
Service Agreements'' we use the term ``arrangements'' in order that 
they not be confused with ``agreements'' as set forth in section 4 
of the Shipping Act, 46 U.S.C. app. Sec.  1703.
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    According to the Joint Commenters, the proposed exemption would be 
subject to the following conditions: (1) The arrangements and their 
essential terms must be filed confidentially with the Commission; \3\ 
(2) the NVOCC must publish a tariff that includes the origin and 
destination port ranges, commodity involved, minimum volume/portion, 
and duration of the agreement; and (3) the Commission would retain 
jurisdiction over NSAs to the same extent as it does over service 
contracts under the Shipping Act. Id.
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    \3\ The essential terms would include: (1) Origin and 
destination port ranges; (2) origin and destination geographic areas 
in the case of through intermodal movements; (3) list of 
commodities; (4) minimum volume/portion; (5) line-haul rate; (6) 
arrangement duration; (7) service commitments; (8) liquidated 
damages or indemnity provision for non-performance. Id.
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III. Replies to the Joint Proposal

A. Comments in Support of the Joint Proposal

    The World Shipping Council submits its support for the Joint 
Proposal with the understanding that the Commission will monitor the 
effects of the exemption and that a condition of the exemption will 
subject the new NSAs to the same regulatory requirements as VOCC 
service contracts. WSC at 1, 4. Danmar, All Freight and Topocean 
support the Joint Proposal because it would promote competition and 
benefit commerce by enabling NVOCCs to give shippers what they require: 
individually-tailored transportation packages. Danmar at 3; All Freight 
at 1; Topocean at 1, 5. These supporters urge the Commission to 
implement this regulatory reform as expeditiously as possible, as no 
new or additional issues are proposed and the Commission now has before 
it a fully developed record that more than adequately justifies the 
exemption. Danmar at 3; All Freight at 1; Topocean at 7.

B. Comments in Support of the NCBFAA Approach

    NCBFAA and the remaining commenters believe that while adoption of 
the Joint Proposal will provide some short-term relief, it fails to 
address the significant costs and burdens that currently fall upon 
NVOCCs. As such, these commenters prefer the exemption from the tariff 
publication requirements of the Shipping Act and the Commission 
regulations as proposed by the original NCBFAA petition. NCBFAA at 2-3; 
LAFCO at 1; ATEC at 1; Connor at 1.
    Commenters contend that NVOCCs or shippers will not benefit by 
transforming the burdens associated with tariff publication into the 
burdens of filing service contracts. Furthermore, commenters express 
concerns regarding the Commission's ability to oversee large volume of 
NSAs that will be generated by the Joint Proposal. NCBFAA at 3; Yellow 
at 3; Powell at 1-2; CBI at 1; Deringer at 1; Camelot at 2; 
Geologistics at 2; Andrews at 18, ABS at 1; ABC at 4. NCBFAA 
specifically re-states its belief that filing service contracts was 
primarily designed as part of the Commission's oversight of VOCCs with 
antitrust immunity. NCBFAA at 3. NCBFAA and Yellow discount any ``level 
playing field argument'' for requiring NVOCCs to file service contracts 
because they believe that NVOCCs have no such immunity, and therefore, 
there is no basis to support a requirement that NVOCCs file service 
contracts with the Commission. Id. at 3-4, Yellow at 5. As Phoenix 
explains, the ``free market will ensure that these prices are 
competitive.'' Phoenix at 1.
    NCBFAA, Connor and CBI specifically suggest that the Commission 
could condition the grant of the NCBFAA exemption from tariff 
publication by requiring an NVOCC to maintain in its own files the 
essential terms of those arrangements. NCBFAA at 5; Connor at 2; CBI at 
1. NCBFAA asserts that in the event of a dispute or alleged 
malpractice, the Commission would continue to have the ability to bring 
enforcement matters arising under the Shipping Act. NCBFAA at 5.
    Commenters assert that while they welcome the opportunity to engage 
in service contracting, it will be difficult for NVOCCs to structure 
NSAs with shippers to reflect the fluctuation in pricing schemes and 
schedules of the multiple VOCCs with whom NVOCCs contract. Phoenix at 
1; Powell at 2; CBI at 1. They explain that memorializing such 
transactions in NSAs to be filed with the Commission before the cargo 
moves is impractical, especially in light of the fact that NVOCCs must 
often re-adjust their rates in reaction to the ``spot market'' for VOCC 
rates. Powell at 2; Camelot at 2; CBI at 1; Antilles at 1.
    Moreover, Phoenix and Camelot aver that the majority of their 
customers have no interest in signing such arrangements because they 
must be able to select from a variety of service providers and such 
service arrangements would make it more cumbersome to shop for service 
in such a way. Phoenix at 1, Camelot at 2. Camelot contends that small- 
to mid-sized shippers ``will not only balk, but will run from any 
attempt to make them contractually accountable to an NVOCC, especially 
where the matter of dead freight penalties for unmoved cargo present 
themselves.'' Camelot at 2.
    The U.S. Department of Transportation reiterates the position it 
expressed in response to the original petitions: the Commission should 
grant NVOCCs an exemption from Shipping Act requirements to allow them 
the ability to contract confidentially with their shipping customers. 
DOT at 2-3, 6. DOT contends that the Commission should ``at the very 
least'' adopt the Joint Proposal, but urges the Commission also to 
consider points raised by the NCBFAA comments, namely whether a 
legitimate regulatory purpose would be served by requiring confidential 
filing of individual NSAs and the publication of their relevant 
essential terms. Id. at 3. DOT argues that conference oversight was 
Congress's rationale for enacting the VOCC service contract filing 
requirements, but is inapplicable to NSAs, as NVOCCs could not 
concertedly enter into pricing agreements under the Shipping Act even 
with the exemption at issue. Id. at 4. As such, DOT claims that the 
Commission should not impose any requirements on NVOCCs that serve no 
regulatory function. Id. at 5.
    FASA urges the Commission to either initiate a new proceeding and 
reopen the record for a public examination of the proposal, or reject 
the Joint Proposal and proceed to consideration of the pending 
petitions. FASA at 1. FASA asserts that the petitions raise important 
issues for the small and medium-sized shippers that it represents, as 
well as fundamental issues relating to the Commission's statutory 
authority to grant exemptions from core features of the Shipping Act. 
Id. Thus, FASA believes whether the Joint Proposal represents a common 
approach is irrelevant; further deliberation is not only necessary, but 
critical as the Shipping Act does not contemplate

[[Page 63984]]

``rulemaking by coalition action'' and the brushing aside of the 
``rights of numerous smaller, less vociferous, members of the shipping 
community whose interests deserve the agency's protection.'' Id. at 2. 
FASA avers that the Joint Proposal adds a new procedural dimension to 
the proceedings. Id. at 3. Further, FASA insists, the temporary 
exemption sought by the Joint Proposal would essentially confer all the 
relief requested in the underlying petitions already under 
consideration and could make any contrary, final determination by the 
Commission appear inconsistent with its prior action. Id. FASA worries 
that the Commission's deliberative process may be compromised by the 
premature adoption of such an exemption. Id.

IV. Discussion

    Section 8(a)(1) of the Shipping Act requires ``each common carrier 
* * * [to] keep open to public inspection in an automated tariff 
system, tariffs showing all its rates.'' 46 U.S.C. app. 1707(a)(1). 
Section 10(b)(2)(A) prohibits common carriers from ``provid[ing] 
service in the liner trade that is not in accordance with the rates * * 
* contained in a tariff * * * or a service contract.'' 46 U.S.C. app. 
1709(b)(2)(A). Section 3(19) of the Shipping Act defines a service 
contract as ``a written contract, other than a bill of lading or 
receipt, between one or more shippers and an individual ocean common 
carrier or an agreement between or among ocean common carriers.'' 46 
U.S.C. app. 1702(19) (emphasis added). The Shipping Act defines an 
ocean common carrier as ``a vessel-operating common carrier.'' 46 
U.S.C. app. 1702(16).
    The cumulative effect of these provisions is that, although both 
VOCCs and NVOCCs are common carriers under the Shipping Act, all NVOCC 
services must be provided according to the provisions of a published 
tariff, while VOCCs may provide service either under a published tariff 
or under a filed service contract. The eight petitions and the Joint 
Proposal seek an exemption, pursuant to section 16 of the Shipping Act, 
enabling NVOCCs to choose whether to offer their services under a 
published tariff or under an instrument akin to a service contract. To 
accomplish this, the Joint Proposal suggests the Commission adopt an 
exemption with conditions which would result in equivalent treatment 
for service contract-like arrangements offered by NVOCCs. NCBFAA and 
similar commenters, on the other hand, propose the Commission adopt an 
exemption from the Shipping Act's tariff publication requirements 
without the service contract-mirroring conditions.
    As explained in further detail below, the Commission has determined 
to issue a notice of proposed rulemaking (``NPR'') providing NVOCCs 
with the ability to enter into NSAs in lieu of moving all cargo under 
tariff rates. This determination, based on the Joint Proposal, would 
grant NVOCCs parity with VOCCs by permitting NVOCCs, in their capacity 
as carriers, to provide transportation to their shipper customers on a 
confidential basis.
    The proposed regulation defines an NSA as:

A written contract, other than a bill of lading or receipt, between 
one or more NSA shippers and an individual NVOCC in which the NSA 
shipper makes a commitment to provide a certain minimum quantity or 
portion of its cargo or freight revenue over a fixed time period, 
and the NVOCC commits to a certain rate or rate schedule and a 
defined service level. The NSA may also specify provisions in the 
event of nonperformance on the part of any party.

    The proposed rule is modeled after the current service contract 
rules at 46 CFR part 530, and the definition of ``NSA'' is based on the 
definition of ``service contract'' in the Shipping Act. 46 U.S.C. app. 
1702(9). See also 46 CFR 530.3(q). The Commission proposes that, as 
VOCCs currently do for service contract filing, NVOCCs wishing to avail 
themselves of the opportunity to offer NSAs request a log-on 
identification number and password from the Commission using proposed 
Form FMC-78. The Commission would then issue the registering NVOCC 
(``Registrant'') a log-on I.D. and password, and the Registrant would 
be able to file NSAs electronically via the internet. The proposed rule 
would also require NVOCCs, as VOCCs are required for service contracts, 
to publish an NSA's essential terms in an automated system and file the 
text of the NSA confidentially with the Commission.
    The general approach set forth in the Joint Proposal does not 
address a myriad of details which would arise from its implementation. 
We have determined that the exemption must be subject to the conditions 
set forth below to ensure the exemption will not have any of the 
negative effects proscribed by section 16.\4\ This includes a condition 
that the NVOCC execute an NSA with the NSA shipper and file it with the 
Commission. Without these conditions, detriment to commerce may arise 
from the Commission's inability to fulfill its statutory mandate to 
ensure NVOCCs are carrying out their common carrier duties. 
Furthermore, we believe that the proposed conditional exemption will 
promote ``competitive and efficient ocean transportation'' and will 
lead to ``a greater reliance on the marketplace.'' 46 U.S.C. app. 
1701(4).
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    \4\ Section 16 reads, in pertinent part, ``The Commission * * * 
may * * * exempt for the future any class of agreements between 
persons subject to this Act or any specified activity of those 
persons from any requirement of this Act if it finds that the 
exemption will not result in substantial reduction in competition or 
be detrimental to commerce. The Commission may attach conditions to 
any exemption and may, by order, revoke any exemption.'' 46 U.S.C. 
app. 1715.
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A. Changes in the Industry Since 1998

    The Joint Commenters, the original eight Petitioners and many 
commenters assert that since the passage of OSRA in 1998, a new 
commercial climate has developed in which shippers expect and demand 
the ability to negotiate individualized rates and services fitting 
their commercial needs. The original Petitioners contend that changes 
in economic, competitive and technology factors, as well as the 
improvement of supply chain management and services offered by VOCCs, 
have led to the emergence of sophisticated NVOCCs that are highly 
competitive, multinational companies with integrated logistics 
services. They also contend that many of these are asset-based 
companies that are generally more financially stable than NVOCCs 
typically were in 1998.
    The original Petitioners also maintain that the competitive 
landscape for VOCCs has changed significantly since 1998. They believe 
that there has been significant consolidation in the VOCC industry and 
that most VOCCs have established or allied themselves with ocean 
transportation intermediaries (``OTIs'') to provide the full range of 
integrated logistics services. The original Petitioners aver that they 
now face substantial competition from the VOCCs which provide logistics 
services and whose ability to offer confidential service contracts 
places them at a significant advantage over NVOCCs.
    The original Petitioners contend that NSAs would make the entire 
intermodal system more efficient by allowing NVOCCs to transport 
consistent volumes of cargo to VOCCs, which in turn will benefit all 
participants by enabling more uniform contract terms over the entire 
route of the shipment in a single NVOCC bill of lading. Finally, 
several of the original Petitioners and commenters on those original 
petitions believe that because of the delays they experience as a 
result of security regulations, such arrangements are also necessary to 
allow them to maintain the pace and volumes their shippers now expect.

[[Page 63985]]

B. Exemption Authority of the Commission

    In order for the Commission to grant an exemption under section 16 
of the Shipping Act, it must find such an exemption will meet two 
criteria: the exemption must not result in substantial reduction to 
competition, and must not be detrimental to commerce. 46 U.S.C. app. 
1715. Contrary to the assertions of some commenters and proponents, the 
statutory criteria for exemption do not include whether the 
requirements from which relief is sought are ``infrequently used by 
shippers'' or that the requirements ``serve no valid public policy.'' 
Even if the Commission believes an exemption from a requirement of the 
Shipping Act or its regulations might relieve burdens on the industry 
or be a good ``public policy'' choice, it cannot grant an exemption 
without a finding that the criteria of section 16 have been met.
    In proposing this new exemption, the Commission has concluded that 
it will not result in a substantial reduction in competition or be 
detrimental to commerce, as discussed in detail below. In addition, the 
Commission has determined that the carriage of cargo by NVOCCs under 
individualized arrangements concerns ``specified activity'' as that 
term is used in section 16, and that the tariff-publication requirement 
from which the Joint Proposal seeks exemption is a ``requirement'' of 
the Shipping Act under that section.
1. Judicial Interpretation
    The Commission has considered how courts have interpreted other 
agencies' exemption authority. The Supreme Court struck down an 
Interstate Commerce Commission (``ICC'') policy in Maislin Industries, 
U.S. Inc. v. Primary Steel, Inc., 497 U.S. 116, 126 (1990) 
(``Maislin''). In Maislin, the Court held that the ICC's policy of 
creating an exemption to relieve shippers' obligations to pay the filed 
rate when a shipper and carrier have privately negotiated a lower rate 
(known as the ``Negotiated Rates Policy'') was inconsistent with the 
Interstate Commerce Act (``ICA''), and that the ICC did not have the 
authority to release a shipper from liability for undercharges. The 
Court found that compliance with the filed rate, known as the ``filed 
rate doctrine,'' was ``utterly central'' to the administration of the 
ICA. Id. at 132 (citing Regular Common Carrier Conference v. United 
States, 793 F.2d 376, 379 (1986)). The Court found that ``the policy, 
by sanctioning adherence to unfiled rates, undermines the basic 
structure of the [ICA]'' and that, although it had the authority and 
expertise generally to adopt new policies when faced with new 
developments in the industry it regulates, ``it [did] not have the 
power to adopt a policy that directly conflicts with its governing 
statute.'' Id. at 132, 134. If strict adherence to the filed rate 
doctrine ``has become an anachronism * * * it is the responsibility of 
Congress to modify or eliminate these sections.'' Id. at 136. See also 
MCI Telecommunications Corp. v. American Tel. & Tel. Co., 512 U.S. 218 
(1994) (``MCI'') (striking down Federal Communications Commission's 
deregulation of tariff filing).
    The Commission has determined that it can distinguish its statutory 
authority to exempt NVOCCs from the provisions of the Shipping Act--
subject to certain conditions--from both Maislin and MCI. First, 
Maislin and MCI apply to other statutes and their regulatory regimes. 
See P6-89, Motor Vehicle Manufacturers Association of the United 
States--Application for Exemption of Vehicle Shipments from Portions of 
the Shipping Act of 1984, 25 S.R.R. 849, 855 (1989) (``MVMA I'') 
(policies underlying other transportation statutes do not ``establish 
that the exemption is consistent with the regulatory scheme established 
by the [Shipping] Act''). Second, OSRA's elimination of the absolutist 
``filed rate doctrine'' for more ``market based principles'' appears to 
define the Commission's new role as more market-based than the statutes 
at issue in Maislin and MCI. See section 13(f)(1), 46 U.S.C. app. 
1712(f)(1) (``Neither the Commission nor any court shall order any 
person to pay the difference between the amount billed and agreed upon 
in writing with a common carrier or its agent and the amount set forth 
in any tariff or service contract by that common carrier for the 
transportation service provided.'') Third, the Commission's 
determination to impose conditions on the requested exemption is 
consistent with the recent decision of the U.S. Court of Appeals for 
the Ninth Circuit in California v. Federal Energy Regulatory Comm'n, 
383 F.3d 1006 (9th Cir. 2004). In that case, the court upheld a 
decision of FERC to deregulate filed tariff requirements. Id. at 1013 
(citing 16 U.S.C. 824d(c)). Even though the Ninth Circuit described the 
filed rate doctrine as ``central to FERC's operations,'' it 
distinguished the case before it from MCI and Maislin because FERC had 
combined the provision with two requirements: first, an ex ante finding 
of the absence of market power; and second, sufficient post-approval 
reporting requirements. Id. The court of appeals found that the 
structure of market-based tariffs complied with the Federal Power Act 
only so long as it was coupled with enforceable post-approval reporting 
that would enable FERC to determine whether the rates were ``just and 
reasonable'' and whether market forces were truly determining the 
price. Id. at 1014. The Commission's proposed conditional exemption is 
analogous to the program found by the court of appeals to be within 
FERC's authority to deregulate.
2. Substantial Reduction in Competition
    Section 16 requires the Commission to find that a proposed 
exemption will not result in substantial reduction in competition 
before it may be granted. 46 U.S.C. app. 1715. The Commission's 
interpretation of this provision has been sparse, but the agency has 
not limited itself to consideration of the effects that the exemption 
may have on competition between VOCCs. The Commission, for example, 
analyzed competition between FMC-regulated carriers and non-regulated 
carriers in Docket No. 92-36, Reduction of Notice for Tariff Increases 
in the Domestic Offshore Trades, 26 S.R.R. 526, 528 (1992). It has also 
considered competition between large and small automobile shippers, 
first in MVMA I, 25 S.R.R. at 854, and again in P7-92, Motor Vehicle 
Manufacturers Association of the United States 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, 26 S.R.R. 1002 (FMC 1993) (order referring petition for 
further proceedings). In the present case, the Commission has 
determined that it may grant the requested relief only if it imposes 
conditions to ensure no substantial reduction in competition occurs.
a. Competition Among NVOCCs
    In order to ensure there is no substantial reduction in competition 
among NVOCCs, the exemption must be available to all NVOCCs compliant 
with section 19 of the Shipping Act and with the conditions of the 
exemption. ABC and FASA contend that the conditional exemption may 
cause some reduction in competition between large NVOCCs that can 
afford the administrative and legal costs of drafting, negotiating, 
filing and enforcing NSAs, and small NVOCCs that cannot. Because the 
approach we propose is optional, and it is consistent with the 
statutory scheme of the Shipping Act, we believe that it should

[[Page 63986]]

be available to compliant NVOCCs without regard to size or 
capitalization.
    The proposed regulation specifically does not permit two or more 
NVOCCs to offer NSAs in concert, as there is reason for concern that 
doing so may cause substantial reduction in competition due to the 
inability of either the Department of Justice under the antitrust laws 
or the Commission under the Shipping Act to oversee such concerted 
behavior. Section 7(a)(2)(B) of the Shipping Act provides that the 
antitrust laws do not apply to ``any activity or agreement within the 
scope of this Act, whether permitted under or prohibited by this Act, 
undertaken or entered into with a reasonable basis to conclude that * * 
* it is exempt under section 16 of this Act from any filing or 
publication requirement of this Act.'' 46 U.S.C. app. 1706(a)(2)(B). It 
could be argued that operating under an NSA would constitute activity 
that has been exempted under section 16 from the tariff publication 
requirement, and that such activity should therefore be exempt from the 
antitrust laws. This would mean that NSAs offered by two or more NVOCCs 
acting in concert would enjoy immunity from antitrust enforcement, even 
though their collusive activity is not monitored by the Commission. 
See, e.g. United States v. Tucor, 189 F.3d 834 (9th Cir. 1999) (section 
7(a)(4) of the Shipping Act immunizes NVOCCs from antitrust prosecution 
for the foreign inland segment of through transportation to the United 
States involving military household goods). In addition, we believe 
that the prohibitions of section 10(c) were intended to apply only to 
coordination between ocean common carriers as defined in section 4 of 
the Shipping Act, 46 U.S.C. app. 1703. Therefore, allowing two or more 
unrelated NVOCCs to offer NSAs in concert could present significant 
impediments to competition, as NVOCCs would be permitted to collude 
without the oversight of the Commission or the Department of Justice.
    In order to avoid this potential effect, the Commission proposes to 
define NSAs specifically as arrangements between NVOCCs and non-NVOCC 
shippers in which the NVOCC acts as a carrier offering a service and 
the non-NVOCC shipper receives the service as a customer of the NVOCC. 
We expect that this will ensure that NVOCCs are not granted antitrust 
immunity that was not intended by Congress.
    Further, the proposed rule would not permit an NVOCC to enter into 
an NSA in its capacity as a shipper; it would limit the definition of 
``NSA shipper'' to beneficial cargo owners and shippers' associations 
with no NVOCC members. Section 7(a)(2) provides antitrust immunity to 
``any activity'' under the Shipping Act that has been ``exempt[ed] 
under section 16 * * * from any filing or publication requirement.'' 
Section 7(a) does not on its face limit the scope of antitrust immunity 
to VOCCs, and does not limit the scope of that immunity to transactions 
between carriers and other carriers. In other words, section 7(a)'s 
grant of immunity to ``any activity'' that has been exempted from the 
Shipping Act's filing or publication requirements could be read to 
include transactions between carriers and shippers. Under Tucor, the 
immunity would likely be interpreted to include an NSA entered into 
between an NVOCC acting as a carrier and an NVOCC acting as a shipper.
    Because of the dual role (as carriers and shippers) occupied by 
NVOCCs, allowing them to enter into NSAs as shippers could result in 
such arrangements being immune from antitrust prosecution. The 
particular difficulty about this is that NVOCCs--in their capacity as 
carriers--are engaged in competition with one another. It is possible 
that NVOCCs could affect shipping rates through collusive arrangements 
in which one NVOCC is characterized as a carrier and the other is 
characterized as a shipper. Authorizing a mechanism by which they could 
collude on price, free from antitrust enforcement, could ``result in a 
substantial reduction in competition.'' 46 U.S.C. app. 1715.
    We would emphasize that the proposed limitation on the definition 
of ``shipper'' would not undermine parity between NVOCCs and VOCCs, 
because their situations are not analogous: VOCCs do not occupy a dual 
role in the transportation chain, and do not compete against most of 
their shippers. Although VOCCs could be said to be engaged in 
competition against NVOCCs and are nonetheless permitted to offer 
service contracts to NVOCCs acting as shippers, the same concerns do 
not arise from such arrangements as would arise if NVOCCs were 
permitted to enter into NSAs as shippers. This is, again, because 
section 7(a)(2) would appear to confer antitrust immunity on any 
activity that has been exempted from filing or publishing requirements. 
A service contract between a VOCC and an NVOCC acting as a shipper 
would not fall under such an exemption, as it is already authorized by 
the Shipping Act. See 46 U.S.C. app. 1703(19) and 1703(17)(B). An NSA 
between two NVOCCs, however, would fall under the exemption, and would 
arguably be immune from antitrust prosecution.
    We request comment on issues surrounding the potential activities 
of NVOCC affiliates under NSAs. In light of the potentially broad 
applicability of antitrust immunity under the Shipping Act found in 
Tucor, we believe it is prudent to permit only one NVOCC to offer an 
NSA in its capacity as a carrier. However, it may be possible for the 
Commission to permit wholly-owned subsidiaries of the NVOCC to 
participate as carrier parties to an NSA. Thus, we seek input on the 
viability and likelihood of such arrangements.
b. Competition Between NVOCCs and VOCCs
    In order to ensure there is no substantial reduction in competition 
between NVOCCs and VOCCs, the Commission proposes that the exemption be 
conditioned on the same statutory and regulatory requirements and 
protections applicable to VOCCs' service contracts: namely, filing of 
executed agreements; publication of essential terms of those 
agreements; and confidential treatment, similar to that set forth in 46 
CFR part 530.
    Section 8(a)(1) requires that, except with regard to certain 
commodities, ``each common carrier * * * keep open to public inspection 
in an automated tariff system, tariffs showing all its rates, charges, 
classifications, rules, and practices.'' 46 U.S.C. app. 1707(a)(1). 
This requirement does not differentiate between VOCCs and NVOCCs, and 
it is clear that VOCCs generally must comply with this requirement. 
However, implicitly, VOCCs do enjoy an alternative to the requirement 
that they show ``all'' rates, etc. in a tariff, because they may 
include such matters in their filed service contracts. It appears 
necessary, therefore, to explicitly exempt NVOCCs from the requirement 
of section 8(a)(1) that they publish all rates, etc. in a tariff on the 
condition that those rates, etc. are contained in a filed NSA. Under 
the proposed rule, NVOCCs would remain subject, as VOCCs are, to the 
general requirement of section 8(a)(1) that they maintain a tariff. 
With the exemption we propose, NVOCC licensure will continue to require 
publication of a tariff, although every rate an NVOCC charges will not 
be required to be published therein, if the rate is filed in an NSA. 
This approach also preserves the Commission's remedial authorities for 
tariff prohibition, cancellation and suspension pursuant to sections 
11(b)(2) and 11(b)(3) for NVOCCs. 46 U.S.C. app. 1710(b)(2), (b)(3).

[[Page 63987]]

    The Shipping Act excepts certain commodities from the requirement 
that conditions for their carriage be reflected in a published tariff 
or a filed service contract, and the Commission has likewise exempted 
the provision of certain services from the tariff publication 
requirements of sections 8(a)(1) and section 8(c)(2). Sections 8(a)(1) 
and 8(c)(2) excepts the following commodities: bulk cargo, forest 
products, recycled metal scrap, new assembled motor vehicles, waste 
paper and paper waste; the Commission has exempted the Department of 
Defense cargo and U.S. mail from the service contract filing 
requirements of section 8(c)(2) in its rules at 46 CFR 530.13. The 
proposed rule mirrors the provisions of the Commission's rules on 
service contracts for excepted and exempted commodities and services.
    The prohibited acts contained in sections 10(b)(1), (2), (5) and 
(9), 46 U.S.C. app. 1709(b)(1), (2), (5), (9), apply to cargo moved 
under service contract. To ensure consistency with VOCC treatment, the 
Commission proposes identical administrative prohibitions applicable to 
NSAs. The prohibited actions applicable only to tariffs would not apply 
to cargo moved under an NSA, but would still remain in effect, as they 
do for VOCCs, for cargo handled under a tariff.\5\
---------------------------------------------------------------------------

    \5\ The following prohibitions, which are now applicable to all 
common carriers, including NVOCCs, would remain applicable to cargo 
movements regardless of whether they are accomplished under an NSA, 
under a published tariff, or under a filed service contract: section 
10(b)(3) (retaliation); section 10(b)(7) (deferred rebates); section 
10(b)(10) (unreasonable refusal to deal or negotiate); section 
10(b)(11) (moving cargo for unlicensed OTIs); section 10(b)(13) 
(disclosure of shipper information); and section 10(d)(1) 
(unreasonable practices).
---------------------------------------------------------------------------

    Section 10(b)(1) reads, in pertinent part, ``No common carrier * * 
* may * * * allow any person to obtain transportation for property at 
less than the rates or charges established by the carrier in its tariff 
or service contract by means of false billing, false classification, 
false weighing, false measurement, or by any other unjust or unfair 
device or means.'' 46 U.S.C. app. 1709(b)(1). A rate established in an 
NSA becomes the legal rate for the subject shipment. To ensure the 
Commission has the same oversight over cargo carried under an NSA with 
respect to the prohibitions contained in section 10(b)(1), the 
Commission proposes that this provision be made applicable by 
regulation.
    The Shipping Act prohibits VOCCs from discriminating against ports 
though service contracts. 46 U.S.C. app. 1709(b)(5), 1709(b)(9). The 
NPR includes provisions prohibiting this to mirror the requirements the 
Shipping Act places on VOCC service contracting.
c. Competition Among Shippers
    To ensure competition among shippers is not substantially harmed, 
the Commission proposes to require the publication of the essential 
terms of all NSAs in automated systems and the filing of the full text 
of those arrangements with the Commission. Publication of NSA essential 
terms will enable shippers to determine, as they currently are able for 
VOCC-offered service contracts, general information on the services 
NVOCCs are offering their competitors. This will enable shippers to 
gather information on general market conditions as they evaluate their 
own transportation needs, and potentially identify any prohibited 
conduct.
3. Detriment to Commerce
    The ``detrimental to commerce'' criterion was carried over to the 
present statute from 1966 amendments to section 35 of the Shipping Act, 
1916, although the use of the phrase since has been removed from other 
provisions of the Shipping Act. In P7-92, 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, 26 S.R.R. 
1269 (ALJ recommended decision) (administratively final, April 29, 
1994) (``MVMA ALJ''), drawing on the Commission's reasoning in Docket 
No. 65-45, Investigation of Ocean Rate Structures in the Trade between 
United States North Atlantic Ports and Ports in the United Kingdom and 
Eire--North Atlantic United Kingdom Freight Conference, Agreement 7100, 
and North Atlantic Westbound Freight Association, Agreement 5850, 12 
F.M.C. 34, 35 (1968), the ALJ found ``detriment to commerce'' must mean 
``something harmful'' other than one of the other criteria of the 
exemption provision. MVMA ALJ at 1300. Interpreting the two criteria of 
section 16 identically would be contrary to the well-accepted canon of 
construction which requires that meaning be given to every provision of 
a statute; if ``detriment to commerce'' had the same meaning as ``no 
substantial reduction in competition,'' it would be mere surplusage. 
See, e.g., Babbitt v. Sweet Home Chapter of Communities for a Great 
Oregon, 515 U.S. 687, 697-698 (1995).
    Although the conditions placed on the proposed exemption to ensure 
that it is not detrimental to commerce may overlap to a certain extent 
with the conditions ensuring against reduction in competition, the 
analysis is distinct. Many important shipper protections provided for 
in the Shipping Act relating to service contracts offered by VOCCs 
ensure against detriment to commerce. Thus, the Commission proposes 
making applicable to carriage under an NSA, those provisions of the 
Shipping Act that would be applicable to service contracts.
    Section 10(a)(1) reads, ``No person may knowingly and willfully, 
directly or indirectly, by means of false billing, false 
classification, false weighing, false report of weight, false 
measurement, or by any other unjust or unfair device or means obtain or 
attempt to obtain ocean transportation for less than the rates or 
charges that would otherwise be applicable.'' 46 U.S.C. app. 
1709(a)(1). This provision is at the heart of the ``filed rate 
doctrine''--that there must always be an ``applicable'' or ``legal'' 
rate. Just as rates provided under service contracts are ``applicable 
rates,'' so compliant NSA rates would be applicable rates. Doing away 
with the requirements that common carriers publish tariffs and adhere 
to rates that are either published in those public tariffs available to 
all-comers, or adhere to rates filed in their service contracts or 
NSAs, would likely undercut those principles and thereby cause 
detriment to commerce.\6\
---------------------------------------------------------------------------

    \6\ Section 8(d) reads, in pertinent part, ``No new or initial 
rate or change in an existing rate that results in an increased cost 
to the shipper may become effective earlier than 30 calendar days 
after publication.'' 46 U.S.C. app. 1707(d). As an NSA rate under 
the proposed exemption would not be considered a tariff rate, it 
would not be held to this requirement. Furthermore, this protection 
does not appear necessary for shippers who negotiate service 
contracts as the shipper is a party to the negotiation. The same is 
not true for shippers who move cargo under tariffs, which are ``take 
it or leave it'' terms.
---------------------------------------------------------------------------

    Section 10(b)(12) of the Shipping Act prohibits VOCCs from 
knowingly and willfully entering into service contracts with an NVOCC 
that does not have a license and bond, insurance, or other surety as 
required by sections 8 and 19 of the Shipping Act, or with an affiliate 
of such an NVOCC. 46 U.S.C. app. 1709(b)(12). Because the NPR permits 
NVOCCs to participate in NSAs only in their capacity as carriers, it is 
not necessary to adopt section 10(b)(12) as a parallel administrative 
violation. However, the NPR does contain a requirement that only those 
NVOCCs who are in compliance with the licensing, bonding and tariff 
publishing requirements of the Shipping Act be

[[Page 63988]]

permitted to offer NSAs in their capacity as carriers.\7\
---------------------------------------------------------------------------

    \7\ The NPR does not relieve NVOCCs from any of the requirements 
applicable to them under section 19 of the Shipping Act or the 
Commission's regulations relating to licensure, financial 
responsibility, or the compensation NVOCCs may pay freight 
forwarders. 46 U.S.C. app. 1718. The Commission's regulations at 46 
CFR part 515 outline the general duties of OTIs, including NVOCCs. 
The draft regulation does not contradict any requirement of these 
regulations. Specifically, we have considered that 46 CFR 535.31(g) 
requires licensees to make all records connected with its OTI 
business available to the Commission. While we believe the 
requirements of these provisions would apply equally to NSA-related 
records, the proposed rule includes a records-retention provision 
specifically applicable to NSAs. These requirements also correspond 
to the Commission's requirements for service contracts. Similarly, 
NVOCCs will not be relieved of the requirement under 46 CFR 
515.42(b) and (d) regarding freight forwarder compensation and 
certifications.
---------------------------------------------------------------------------

    Section 10(b)(11), 46 U.S.C. app. 1709(b)(11), contains a slightly 
different prohibition (it forbids acceptance of cargo from a non-
compliant NVOCC for movements rated under tariffs and service 
contracts). As the Commission proposes that NVOCCs may only offer NSAs 
as carriers, and may not act as shippers, and that only compliant 
NVOCCs may offer NSAs, we believe it is not necessary to provide 
equivalent shipper protections to movements under an NSA.
    Therefore, to ensure the exemption does not result in any detriment 
to commerce, the proposed rule requires NVOCCs to file their NSAs 
electronically with the Commission, to retain the original (in the same 
manner that service contracts offered by VOCCs are now filed) and 
prohibits noncompliant NVOCCs from offering NSAs. These conditions will 
enable the Commission to perform audits of these arrangements to ensure 
against malpractices by which shippers may be harmed.

V. Proposed Regulation--Section-by-Section Analysis

Section 531.1 Purpose

    The NPR proposes an exemption from certain provisions of the 
Shipping Act. Section 531.1 sets for the purpose for the exemption and 
its conditions.

Section 531.2 Scope and Applicability

    This provision indicates that only individual NVOCCs compliant with 
the requirements of section 19 of the Shipping Act, 46 U.S.C. app. 
1718, and the Commission's regulations at 46 CFR part 515, may enter 
into an NSA with one or more NSA shippers subject to the requirements 
of these rules. Further, it states that any NVOCC who fails to maintain 
its bond or license or has had its tariff suspended or cancelled by the 
Commission is ineligible to offer and file NSAs.

Section 531.3 Definitions

    This section sets forth the definitions of terms to be used in this 
part. This section defines an NVOCC service arrangement (``NSA'') as 
``a written contract, other than a bill of lading or receipt, between 
one or more NSA shippers as defined in this regulation and an 
individual NVOCC in which the NSA shipper makes a commitment to provide 
a certain minimum quantity or portion of its cargo or freight revenue 
over a fixed time period, and the NVOCC commits to a certain rate or 
rate schedule and a defined service level. The NSA may also specify 
provisions in the event of nonperformance on the part of any party.'' 
This definition largely tracks the definition of ``service contract'' 
as set forth in the Commission's current rules at 46 CFR part 530.3(q), 
except that the phrase ``such as, assured space, transit time, port 
rotation, or similar service features'' has been eliminated. The 
definition also differs from the statutory definition of service 
contract inasmuch as it adds the phrase ``or freight revenue,'' which 
is consistent with the current regulatory definition. This phrase was 
originally added to the Commission's definition of ``service contract'' 
in its 1984 rulemakings. As the Commission explained, the definition 
was modified ``to recognize that such contracts may be based upon the 
amount or revenue provided by the shipper as well as a specific minimum 
volume of cargo.'' Docket No. 84-21, Publishing and Filing Tariffs by 
Common Carriers in the Foreign Commerce of the United States--Service 
Contracts and Time/Volume Contracts, 46 CFR part 580, 49 FR 24701 (June 
14, 1984) (interim rule).
    The proposed rule defines ``NSA shipper'' as ``a cargo owner, the 
person for whose account the ocean transportation is provided, the 
person to whom delivery is to be made, or a shippers' association. The 
term does not include NVOCCs or a shippers' associations whose 
membership includes NVOCCs.'' This definition of NSA shipper is 
different from that of ``shipper'' in the Commission's regulations on 
service contracts at 46 CFR part 530 and section 3(21) of the Shipping 
Act, 46 U.S.C. app. 1702(21). This is because the Commission has 
determined, for the reasons outlined above, that NVOCCs, and groups 
that include NVOCCs, should not be able to obtain NSAs as shipper 
parties.

Section 531.4 Confidentiality

    This provision reflects the Commission's intent to keep NSAs and 
their amendments confidential, to the full extent permitted by law. 
However, the Commission shall provide certain information to other 
agencies of the Federal government of the United States as it sees fit. 
Also, the parties to a filed NSA may agree to disclose information 
contained in it. Breach of any confidentiality agreement contained in 
an NSA by either party will not, on its own, be considered a violation 
of these rules.

Section 531.5 Duty to File

    As the Commission's rules provide for the filing of service 
contracts in 46 CFR part 530, the proposed rule requires the NVOCC 
party to an NSA to file the NSA, amendments and notices and to publish 
the statement of essential terms. No such obligation is placed on the 
NSA shipper party to the NSA.
    The proposed rule also provides that, similar to the provision set 
forth in section 13(f)(1) of the Shipping Act, 46 U.S.C. app. 
1712(f)(1), the Commission shall not order any person to pay the 
difference between an amount billed and an amount in an NSA.
    Further, this section provides that the filing may be done by an 
agent or publisher. This section sets for the requirements for 
registration that must be undertaken before an NVOCC may file its NSAs 
into the Commission's automated NSA system. There is no provision for 
paper-based/non-electronic filing.

Section 531.6 NVOCC Service Arrangements

    This section sets forth the form and manner requirements for NSAs. 
It also provides that an NSA must be filed prior to any cargo moves 
pursuant to that NSA or amendment. The NSA as filed must include the 
complete terms of the NSA, including, but not limited to the origin 
port ranges in the case of port-to-port movements and geographic areas 
in the case of through intermodal movements; the destination port 
ranges in the case of port-to-port movements and geographic areas in 
the case of through intermodal movements; the commodity or commodities 
involved; the minimum volume or portion; the service commitments; the 
line-haul rate; the liquidated damages for non-performance (if any); 
the duration of the NSA, including the effective date and expiration 
date; the legal names and business addresses of the NSA parties; the 
names, titles and addresses of the representatives signing the NSA for 
the

[[Page 63989]]

parties; and the date upon which the NSA was signed; a description of 
the shipment records which will be maintained to support the NSA and 
the address, telephone number, and title of the person who will respond 
to a request by making shipment records available to the Commission for 
inspection; and all other provisions of the NSA. The terms of the NSA 
may not be uncertain, vague or ambiguous or make reference to terms not 
explicitly contained in the NSA itself unless those terms are contained 
in a publication widely available to the public and well known within 
the industry.
    This section also requires that, for service pursuant to an NSA, 
that no NVOCC may, either alone or in conjunction with any other 
person, directly or indirectly provide service in the liner trade that 
is not in accordance with the rates, charges, classifications, rules 
and practices contained in a filed NSA; engage in any unfair or 
unjustly discriminatory practice in the matter of rates or charges with 
respect to any port; or give any undue or unreasonable preference or 
advantage or impose any undue or unreasonable prejudice or disadvantage 
with respect to any port.
    The format requirements are as follows. Each NSA must include a 
unique NSA number of more than one (1) but less than ten (10) 
alphanumeric characters in length (``NSA Number''); a consecutively 
numbered amendment number no more than three digits in length, with 
initial NSAs using ``0'' (``Amendment number''); and an indication of 
the method by which the statement of essential terms will be published. 
This section makes provisions for any malfunction of the Commission's 
electronic filing system.

Section 531.7 Notices

    This section requires that, within thirty days of the occurrence of 
correction, cancellation, adjustment, final settlement of any adjusted 
account and any change to the name, legal name and/or business address 
of any NSA party, the NVOCC shall file a notice, pursuant to the same 
procedures as those followed for the filing of an amendment to the NSA.

Section 531.8 Amendment, Correction, Cancellation, and Electronic 
Transmission Errors

    This section describes the procedures for amendment, correction, 
cancellation and electronic transmission errors. Amendment to an NSA 
may only be done by mutual agreement of the parties. A filing fee will 
be assessed at the same rate as presently assessed in the Commission's 
rules at 46 CFR 530.10(c).

Section 531.9 Publication

    This section sets out the requirements for the essential terms 
(``ET'') publication for each NSA filed with the Commission. It also 
describes the Commission's publication at http://www.fmc.gov of a 
listing of the locations of all NSA essential terms publications and 
requires that the ET publication indicate the date upon which it has 
most recently been updated.

Section 531.10 Excepted and Exempted Commodities

    This section lists the commodities and services for which no NSA 
filing may be made.

Section 531.11 Implementation

    This section provides that performance under an NSA or amendment 
thereto may not begin before the day it is effective and filed with the 
Commission.

Section 531.12 Recordkeeping and Audit

    This section sets forth the requirement that all original signed 
NSAs and related records must be retained by the NVOCC for five years 
from the termination of each NSA in an organized, readily accessible or 
retrievable manner. It also requires every NVOCC, upon written request 
of the FMC's Director, Bureau of Enforcement, any Area Representative 
or the Director, Bureau of Trade Analysis, to submit copies of 
requested original NSAs or their associated records within thirty days 
of the date of the request.

Appendix A, Form FMC-78 and Instructions

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

VI. Statutory Reviews and Request for Comments

    In accordance with the Regulatory Flexibility Act, 5 U.S.C. 601 et 
seq., the Chairman of the Federal Maritime Commission certifies that 
this rule, if promulgated, will not have a significant economic impact 
on a substantial number of small entities. The Commission recognizes 
that the majority of businesses that would be affected by this rule 
qualify as small entities under the guidelines of the Small Business 
Administration. The rule, however, would establish 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 Shipping Act when such entities comply with the 
rules set forth herein.
    This regulatory action is not a ``major rule'' under 5 U.S.C. 
804(2).
    The collection of information requirements contained in this 
proposed 46 CFR part 531 have been submitted to the Office of 
Management and Budget (``OMB'') for review under section 3504(h) of the 
Paperwork Reduction Act of 1980, as amended. The estimated total annual 
burden for the estimated 110 annual respondents is 165,932 manhours. 
This estimate includes, as applicable, the time needed to review 
instructions, develop, acquire, install, and utilize technology and 
systems for the purposes of collecting, validating, and verifying 
information, processing and maintaining information, and disclosing and 
providing information; adjust the existing ways to comply with any 
previously applicable instructions and requirements; train personnel to 
respond to a collection of information, search existing data sources, 
gathering and maintain the data needed, and complete and review the 
collection of information; and transmit or otherwise disclose the 
information.
    The Chairman of the Federal Maritime Commission, pursuant to 5 CFR 
1320.13, has requested emergency processing of the proposed collection 
of information described in proposed Form FMC-78 and that OMB determine 
to approve or disapprove that proposed collection of information by 
November 12, 2004. Inasmuch as the exemption is deregulatory and 
voluntary, OMB's approval of the collection of information required for 
the registration form prior to the effective date of the proposed 
regulation will permit the FMC to prepare for the effectiveness of the 
proposed rule by allowing the agency's staff to begin processing the 
registration requests and issuing identification numbers and passwords 
to NVOCCs intending to take advantage of the exemption. The Commission 
is not permitted to collect information until OMB has approved of it. 
As the proposed rule will expand by ten-fold the number of common 
carriers eligible to file their service arrangements with the FMC, it 
is necessary to begin the process of registering such industry 
participants before the rule goes into effect. This regulatory 
oversight is at the heart of the FMC's mission, and will likely be 
disrupted if the agency cannot

[[Page 63990]]

begin processing the registration requests as soon as possible. For 
these reasons, the Chairman has determined that this collection of 
information is essential to the mission of the agency and that the FMC 
cannot reasonably comply with the normal clearance procedures under 
this part because the use of the normal clearance procedures is 
reasonably likely to disrupt the collection of information and the 
efficient implementation of the proposed rule.
    Send comments regarding the burden estimate or any other aspect of 
this collection of information, including suggestions for reducing this 
burden, to Austin L. Schmitt, Director of Operations, Federal Maritime 
Commission, 800 North Capitol Street, NW., Washington, DC 20573; and to 
the Office of Information and Regulatory Affairs, Office of Management 
and Budget, Attention: Desk Officer for the Federal Maritime 
Commission, Washington, DC 20503.

List of Subjects for 46 CFR Part 531

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

    Accordingly, the Federal Maritime Commission proposes to add 46 CFR 
part 531 as follows:

PART 531--NVOCC SERVICE ARRANGEMENTS

Subpart A--General Provisions
Sec.
531.1 Purpose.
531.2 Scope and applicability.
531.3 Definitions.
531.4 Confidentiality.
531.5 Duty to file.
Subpart B--Filing Requirements
531.6 NVOCC service arrangements.
531.7 Notices.
531.8 Amendment, correction, cancellation, and electronic 
transmission errors.
Subpart C--Publication of Essential Terms
531.9 Publication.
Subpart D--Exceptions and Implementation
531.10 Excepted and exempted commodities.
531.11 Implementation.
Subpart E--Recordkeeping and Audit
531.12 Recordkeeping and Audit
531.13-531.98 [RESERVED]
531.99 OMB control numbers assigned pursuant to the Paperwork 
Reduction Act.
Appendix A to Part 531--Instructions for the Filing of NVOCC Service 
Arrangements
Exhibit 1 to Part 531--NVOCC Service Arrangement Registration [FORM 
FMC-78]

    Authority: 46 U.S.C. app. 1715.

Subpart A--General Provisions


Sec.  531.1  Purpose.

    This part exempts NVOCCs from certain provisions of the Shipping 
Act. The purpose of this part is to facilitate the filing of NVOCC 
service arrangements (``NSAs'') and the publication of certain 
essential terms of those NSAs as they are exempt from the otherwise 
applicable provisions of the Shipping Act of 1984 (``Act''). This part 
enables the Commission to review NSAs to ensure that they and the 
parties to them comport with the conditions of the exemption as set 
forth below.


Sec.  531.2  Scope and applicability.

    Only individual NVOCCs compliant with the requirements of section 
19 of the Act and the Commission's regulations at 46 CFR part 515 may 
enter into an NSA with one or more NSA shippers subject to the 
requirements of these rules. Any NVOCC who has failed to maintain its 
bond or license or had its tariff suspended or cancelled by the 
Commission is ineligible to offer and file NSAs.


Sec.  531.3  Definitions.

    When used in this part:
    (a) Act means the Shipping Act of 1984 as amended by the Ocean 
Shipping Reform Act of 1998;
    (b) Amendment means any change to a filed NSA which has prospective 
effect and which is mutually agreed upon by all parties to the NSA.
    (c) Authorized person means an NVOCC or duly appointed agent who is 
authorized to file NSA on behalf of the NVOCC and to publish the 
corresponding statement of essential terms and is registered by the 
Commission to file under Sec.  531.5 and Appendix A to this part.
    (d) BTA means the Commission's Bureau of Trade Analysis, or its 
successor bureau.
    (e) BCL means the Commission's Bureau of Certification and 
Licensing, or its successor bureau.
    (f) Cancellation means an event which is unanticipated by the NSA, 
in liquidated damages or otherwise, and is due to the failure of the 
NSA shipper to tender minimum cargo as set forth in the contract, 
unless such tender was made impossible by an action of the NVOCC.
    (g) Commission or FMC means the Federal Maritime Commission.
    (h) Common carrier means a person holding 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 that:
    (1) Assumes responsibility for the transportation from the port or 
point of receipt to the port or point of destination; and
    (2) Utilizes, 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 port in a foreign country, except that the term 
does not include a common carrier engaged in ocean transportation by 
ferry boat, ocean tramp, or chemical parcel tanker, or by a vessel when 
primarily engaged in the carriage of perishable agricultural 
commodities:
    (i) If the common carrier and the owner of those commodities are 
wholly owned, directly or indirectly, by a person primarily engaged in 
the marketing and distribution of those commodities; and
    (ii) Only with respect to those commodities.
    (i) Correction means any change to a filed NSA that has retroactive 
effect.
    (j) Effective date means the date upon which an NSA or amendment is 
scheduled to go into effect by the parties to the NSA. An NSA or 
amendment becomes effective at 12:01 a.m. Eastern Standard Time on the 
beginning of the effective date. The effective date cannot be prior to 
the filing date of the NSA or amendment with the Commission.
    (k) Expiration date means the last day after which the entire NSA 
is no longer in effect.
    (l) File or filing (of NSAs or amendments thereto) means the use of 
the Commission's electronic filing system for receipt of an NSA or an 
amendment thereto by the Commission, consistent with the method set 
forth in Appendix A of this part, and the recording of its receipt by 
the Commission.
    (m) OIT means the Commission's Office of Information Technology, or 
its successor office.
    (n) NSA shipper means a cargo owner, the person for whose account 
the ocean transportation is provided, the person to whom delivery is to 
be made, or a shippers' association. The term does not include NVOCCs 
or a shippers' associations whose membership includes NVOCCs.
    (o) NVOCC service arrangement (``NSA'') means a written contract, 
other than a bill of lading or receipt, between one or more NSA 
shippers and an individual NVOCC in which the NSA shipper makes a 
commitment to provide a certain minimum quantity or portion of its 
cargo or freight revenue over a fixed time period, and the NVOCC 
commits to a certain rate or rate schedule and a defined service level. 
The NSA may also specify provisions in

[[Page 63991]]

the event of nonperformance on the part of any party.
    (p) Statement of essential terms means a concise statement of the 
essential terms of an NSA required to be published under this part.


Sec.  531.4  Confidentiality.

    (a) All NSAs and amendments to NSAs filed with the Commission 
shall, to the fullest extent permitted by law, be held in confidence by 
the Commission.
    (b) Nothing contained in this part shall preclude the Commission 
from providing certain information from or access to NSAs to another 
agency of the Federal government of the United States.
    (c) Parties to a filed NSA may agree to disclose information 
contained in it. Breach of any confidentiality agreement contained in 
an NSA by either party will not, on its own, be considered a violation 
of these rules.


Sec.  531.5  Duty to file.

    (a) The duty under this part to file NSAs, amendments and notices, 
and to publish statements of essential terms, shall be upon the NVOCC 
party to the NSA.
    (b) The Commission shall not order any person to pay the difference 
between the amount billed and agreed upon in writing with a common 
carrier or its agent and the amount set forth in an NSA by that common 
carrier for the transportation service provided.
    (c) Filing may be accomplished by any duly agreed-upon agent, as 
the parties to the NSA may designate, and subject to conditions as the 
parties may agree.
    (d) Registration. (1) Application. Authority to file or delegate 
the authority to file must be requested by a responsible official of 
the NVOCC in writing by submitting to BTA, either by mail to 800 N. 
Capitol Street, NW., Washington, DC 20573, or by facsimile to (202) 
523-5767, a completed NSA Registration Form (FMC-78) (Exhibit 1 to this 
part).
    (2) Approved registrations. OIT shall provide approved Registrants 
a log-on identification number (``I.D.'') and password for filing and 
amending NSAs, and notify Registrants of such approval via U.S. mail.

Subpart B--Filing Requirements


Sec.  531.6  NVOCC service arrangements.

    (a) Authorized persons shall file with BTA, in the manner set forth 
in Appendix A of this part, a true and complete copy of every NSA or 
amendment before any cargo moves pursuant to that NSA or amendment.
    (b) Every NSA filed with the Commission shall include the complete 
terms of the NSA including, but not limited to, the following:
    (1) The origin port ranges in the case of port-to-port movements 
and geographic areas in the case of through intermodal movements;
    (2) The destination port ranges in the case of port-to-port 
movements and geographic areas in the case of through intermodal 
movements;
    (3) The commodity or commodities involved;
    (4) The minimum volume or portion;
    (5) The service commitments;
    (6) The line-haul rate;
    (7) Liquidated damages for non-performance (if any);
    (8) Duration, including the:
    (i) Effective date; and
    (ii) Expiration date;
    (9) The legal names and business addresses of the NSA parties; the 
names, titles and addresses of the representatives signing the NSA for 
the parties; and the date upon which the NSA was signed. Subsequent 
references in the NSA to the signatory parties shall be consistent with 
the first reference.
    (10) A description of the shipment records which will be maintained 
to support the NSA and the address, telephone number, and title of the 
person who will respond to a request by making shipment records 
available to the Commission for inspection under Sec.  531.12; and
    (11) All other provisions of the NSA.
    (c) Certainty of terms. The terms described in paragraph (b) of 
this section may not:
    (1) Be uncertain, vague or ambiguous; or
    (2) Make reference to terms not explicitly contained in the NSA 
itself unless those terms are contained in a publication widely 
available to the public and well known within the industry.
    (d) Other requirements. (1) For service pursuant to an NSA, no 
NVOCC may, either alone or in conjunction with any other person, 
directly or indirectly, provide service in the liner trade that is not 
in accordance with the rates, charges, classifications, rules and 
practices contained in a filed NSA.
    (2) For service pursuant to an NSA, no NVOCC, may, either alone or 
in conjunction with any other person, directly or indirectly, engage in 
any unfair or unjustly discriminatory practice in the matter of rates 
or charges with respect to any port; and
    (3) For service under an NSA, no NVOCC may, either alone or in 
conjunction with any other person, directly or indirectly, give any 
undue or unreasonable preference or advantage or impose any undue or 
unreasonable prejudice or disadvantage with respect to any port.
    (e) Format requirements. Every NSA filed with BTA shall include, as 
set forth in Appendix A to this part:
    (1) A unique NSA number of more than one (1) but less than ten (10) 
alphanumeric characters in length (``NSA Number''); and
    (2) A consecutively numbered amendment number no more than three 
digits in length, with initial NSAs using ``0'' (``Amendment number''); 
and
    (3) An indication of the method by which the statement of essential 
terms will be published.
    (f) Exception in case of malfunction of Commission electronic 
filing system. (1) In the event that the Commission's electronic filing 
system is not functioning and cannot receive NSAs filings for twenty-
four (24) continuous hours or more, affected parties will not be 
subject to the requirements of paragraph (a) of this section and Sec.  
531.11 that an NSA be filed before cargo is shipped under it.
    (2) However, NSAs which go into effect before they are filed due to 
a malfunction of the Commission's electronic filing system pursuant to 
paragraph (f)(1) of this section, must be filed within twenty-four (24) 
hours of the Commission's electronic filing system's return to service.
    (3) For an NSA that is effective without filing due to a 
malfunction of the Commission's filing system, failure to file that NSA 
within twenty-four (24) hours of the Commission's electronic filing 
system's return to service will be considered a violation of these 
regulations.
    (g) Failure to comply with the provisions of this section shall 
result in the application of the terms of the otherwise applicable 
tariff.


Sec.  531.7  Notices.

    Within thirty (30) days of the occurrence of any event listed 
below, there shall be filed with the Commission, pursuant to the same 
procedures as those followed for the filing of an amendment pursuant to 
Sec.  531.5 and Appendix A to this part, a detailed notice of:
    (a) Correction;
    (b) Cancellation;
    (c) Adjustment of accounts, by re-rating, liquidated damages, or 
otherwise;
    (d) Final settlement of any account adjusted as described in 
paragraph (c) of this section; and
    (e) Any change to the name, legal name and/or business address of 
any NSA party.

[[Page 63992]]

Sec.  531.8  Amendment, correction, cancellation, and electronic 
transmission errors.

    (a) Amendment. NSAs may be amended by mutual agreement of the 
parties. Amendments shall be filed electronically with the Commission 
in the manner set forth in Sec.  531.5 and Appendix A to this part.
    (1) Where feasible, NSAs should be amended by amending only the 
affected specific term(s) or subterms.
    (2) Each time any part of an NSA is amended, the filer shall assign 
a consecutive amendment number (up to three digits), beginning with the 
number ``1.''
    (3) Each time any part of a filed NSA is amended, the ``Filing 
Date'' will be the date of filing of the amendment.
    (b) Correction. (1) Requests shall be filed, in duplicate, with the 
Commission's Office of the Secretary within forty-five (45) days of the 
NSA's filing with the Commission, accompanied by remittance of a $276 
service fee, and shall include:
    (i) A letter of transmittal explaining the purpose of the 
submission, and providing specific information to identify the initial 
or amended NSA to be corrected;
    (ii) A paper copy of the proposed correct terms.
    (2) Corrections shall be indicated as follows:
    (i) Matter being deleted shall be struck through; and
    (ii) Matter to be added shall immediately follow the language being 
deleted and be underscored;
    (3) An affidavit from the filing party attesting with specificity 
to the factual circumstances surrounding the clerical or administrative 
error, with reference to any supporting documentation;
    (4) Documents supporting the clerical or administrative error; and
    (5) A brief statement from the other party to the NSA concurring in 
the request for correction.
    (6) If the request for correction is granted, the carrier party 
shall file the corrected provisions using a special case number as 
described in Appendix A to this part.
    (c) Electronic transmission errors. An authorized person who 
experiences a purely technical electronic transmission error or a data 
conversion error in transmitting an NSA filing or an amendment thereto 
is permitted to file a Corrected Transmission (``CT'') of that filing 
within 48 hours of the date and time of receipt recorded in the 
Commission's electronic filing system (excluding Saturdays, Sundays and 
legal public holidays). This time-limited permission to correct an 
initial defective NSA filing is not to be used to make changes in the 
original NSA rates, terms or conditions that are otherwise provided for 
in Sec.  531.6(b). The CT tab box in the Commission's electronic filing 
system must be checked at the time of resubmitting a previously filed 
NSA, and a description of the corrections made must be stated at the 
beginning of the corrected NSA in a comment box. Failure to check the 
CT box and enter a description of the correction will result in the 
rejection of a file with the same name, as documents with duplicate 
file names or NSA and amendment numbers are not accepted by the FMC's 
electronic filing system.
    (d) Cancellation. (1) An account may be adjusted for events and 
damages covered by the NSA. This shall include adjustment necessitated 
by either liability for liquidated damages appearing in the NSA as 
filed with the Commission under Sec.  531.6(b)(7), or the occurrence of 
an event described below in paragraph (d)(2) of this section.
    (2) In the event of cancellation as defined in Sec.  531.3(3):
    (i) Further or continued implementation of the NSA is prohibited; 
and
    (ii) The cargo previously carried under the NSA shall be re-rated 
according to the otherwise applicable tariff provisions.
    (e) If the amendment, correction or cancellation affects an 
essential term required to be published under Sec.  531.9, the 
statement of essential terms shall be changed as soon as possible after 
the filing of the amendment to accurately reflect the change to the NSA 
terms.

Subpart C--Publication of Essential Terms


Sec.  531.9  Publication.

    (a) Contents. All authorized persons who choose to file NSAs under 
this part are also required to make available to the public, 
contemporaneously with the filing of each NSA with the Commission, and 
in tariff format, a concise statement of the following essential terms:
    (1) The port ranges:
    (i) Origin; and
    (ii) Destination;
    (2) The commodity or commodities involved;
    (3) The minimum volume or portion; and
    (4) The duration.
    (b) Certainty of terms. The terms described in paragraph (a) of 
this section may not:
    (1) Be uncertain, vague or ambiguous; or
    (2) Make reference to terms not explicitly detailed in the 
statement of essential terms, unless those terms are contained in a 
publication widely available to the public and well known within the 
industry.
    (c) Location. The statement of essential terms shall be published 
as a separate part of the individual NVOCC's automated tariff system.
    (d) References. The statement of essential terms shall contain a 
reference to the ``NSA Number'' as described in Sec.  531.6(e)(1).
    (e) Terms. (1) The publication of the statement of essential terms 
shall accurately reflect the terms as filed with the Commission.
    (2) If any of the published essential terms include information not 
required to be filed with the Commission but filed voluntarily, the 
statement of essential terms shall so note.
    (f) Commission listing. The Commission will publish on its Web 
site, http://www.fmc.gov, a listing of the locations of all NSA 
essential terms publications.
    (g) Updating statements of essential terms. To ensure that the 
information contained in a published statement of essential terms is 
current and accurate, the statement of essential terms publication 
shall include a prominent notice indicating the date of its most recent 
publication or revision. When the published statement of essential 
terms is affected by filed amendments, corrections, or cancellations, 
the current terms shall be changed and published as soon as possible in 
the relevant statement of essential terms.

Subpart D--Exceptions and Implementation


Sec.  531.10  Excepted and exempted commodities.

    (a) Statutory exceptions. NSAs for the movement of the following, 
as defined in section 3 of the Act, the Commission's rules at 46 CFR 
530.3 or 46 CFR 520.1, are not subject to the conditions of this 
exemption:
    (1) Bulk cargo;
    (2) Forest products;
    (3) Recycled metal scrap;
    (4) New assembled motor vehicles; and
    (5) Waste paper or paper waste.
    (b) Commission exemptions. The following commodities and/or 
services are not subject to the conditions of this exemption:
    (1) Mail in foreign commerce. Transportation of mail between the 
United States and foreign countries.
    (2) Department of Defense cargo. Transportation of U.S. Department 
of Defense cargo moving in foreign commerce under terms and conditions

[[Page 63993]]

approved by the Military Transportation Management Command and 
published in a universal service contract. An exact copy of the 
universal service contract, including any amendments thereto, shall be 
filed with the Commission as soon as it becomes available.
    (c) Inclusion of excepted or exempted matter. (1) The Commission 
will not accept for filing NSAs which exclusively concern the 
commodities or services listed in paragraph (a) or (b) of this section.
    (2) NSAs filed with the Commission may include the commodities or 
services listed in paragraph (a) or (b) of this section only if:
    (i) There is a tariff of general applicability for the 
transportation, which contains a specific commodity rate for the 
commodity or service in question; or
    (ii) The NSA itself sets forth a rate or charge which will be 
applied if the NSA is canceled, as defined in Sec.  531.3(e) and Sec.  
531.8(d).
    (d) Waiver. Upon filing an NSA pursuant to paragraph (c) of this 
section, the NSA shall be subject to the same requirements as those for 
NSAs generally.


Sec.  531.11  Implementation.

    Generally. Performance under an NSA or amendment thereto may not 
begin before the day it is effective and filed with the Commission.

Subpart E--Recordkeeping and Audit


Sec.  531.12  Recordkeeping and audit.

    (a) Records retention for five years. Every NVOCC shall maintain 
original signed NSAs, amendments, and their associated records in an 
organized, readily accessible or retrievable manner for a period of 
five (5) years from the termination of each NSA. These records must be 
kept in form that is readily available and usable to the Commission; 
electronically maintained records shall be no less accessible than if 
they were maintained in paper form.
    (b) Production for audit within 30 days of request. Every NVOCC 
shall, upon written request of the FMC's Director, Bureau of 
Enforcement, any Area Representative or the Director, Bureau of Trade 
Analysis, submit copies of requested original NSAs or their associated 
records within thirty (30) days of the date of the request.


Sec. Sec.  531.13-531.98  [RESERVED]


Sec.  531.99  OMB control numbers assigned 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-XXXX.

Appendix A to Part 531--Instructions for the Filing of NVOCC Service 
Arrangements

    NSAs shall be filed in accordance with the instructions found on 
the Commission's home page, http://www.fmc.gov.

A. Registration, Log-On I.D. and Password

    To register for filing, an NVOCC or authorized agent must submit 
the NSA Registration Form (Form FMC-78) to BTA. A separate NSA 
Registration Form is required for each individual that will file 
NSAs. BTA will direct OIT to provide approved filers with a log-on 
identification number (``I.D.'') and password. Filers who would like 
a third party (agent/publisher) to file their NSAs must so indicate 
on Form FMC-78. Authority for filing can be transferred by 
submitting an amended registration form requesting the assignment of 
a new log-on I.D. and password. The original log-on ID will be 
canceled when a replacement log-on I.D. is issued. Log-on I.D.s and 
passwords may not be shared with, loaned to or used by any 
individual other than the individual registrant. The Commission 
reserves the right to disable any log-on I.D. that is shared with, 
loaned to or used by parties other than the registrant.

B. Filing

    After receiving a log-on I.D. and a password, a filer may log-on 
to the NSA filing area on the Commission's home page and file NSAs. 
The filing screen will request such information as: filer name, 
organization number (``Registered Persons Index'' or ``RPI'' 
number); NSA and amendment number; effective date and file name. The 
filer will attach the entire NSA file and submit it into the system. 
When the NSA has been submitted for filing, the system will assign a 
filing date and an FMC control number, both of which will be 
included in the acknowledgment/confirmation message.
BILLING CODE 6730-01-P

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    By the Commission.
Bryant L. VanBrakle,
Secretary.

[FR Doc. 04-24467 Filed 11-2-04; 8:45 am]
BILLING CODE 6730-01-C


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