Federal Register / Vol. 69, No. 212 / Wednesday, November 3, 2004 / Proposed Rules 63981

NARA-approved agency records 

schedule with a very short-term 

retention) on the electronic mail system 

itself, without the need to copy the 

record to a paper or electronic 

recordkeeping system, provided that: 

(i) Users do not delete the messages 

before the expiration of the NARAapproved retention period, and 

(ii) The system’s automatic deletion 

rules ensure preservation of the records 

until the expiration of the NARAapproved retention period. 

(3) Except for those electronic mail 

records within the scope of paragraph 

(b)(2) of this section, 

(i) Agencies must not store the 

recordkeeping copy of electronic mail 

messages that are Federal records only 

on the electronic mail system, unless 

the system has all of the features 

specified in paragraph (b)(1) of this 

section. 

(ii) If the electronic mail system is not 

designed to be a recordkeeping system, 

agencies must instruct staff on how to 

copy Federal records from the electronic 

mail system to a recordkeeping system.

* * * * *

3. Amend § 1234.32 by revising 

paragraph (d) to read as follows:

§ 1234.32 Retention and disposition of 

electronic records.

* * * * *

(d) Electronic mail records may not be 

deleted or otherwise disposed of 

without prior disposition authority from 

NARA (44 U.S.C. 3303a). 

(1) Electronic mail records with very 

short-term (transitory) value. Agencies 

may use the disposition authority in 

General Records Schedule 23, Item 7 for 

electronic mail records that have very 

short-term retention periods (e.g., 90, 

120, or 180 days). (see 36 CFR 

1234.24(b)(2)). 

(2) Other records on the electronic 

mail system. When an agency has taken 

the necessary steps to retain the record 

in a scheduled recordkeeping system, 

the identical version that remains on the 

user’s screen or in the user’s mailbox 

has no continuing value. Therefore, 

NARA has authorized deletion of the 

version of the record on the electronic 

mail system under General Records 

Schedule 20, Item 14, after the record 

has been preserved in a recordkeeping 

system along with all appropriate 

transmission data. If the records in the 

recordkeeping system are not 

scheduled, the agency must follow the 

procedures at 36 CFR part 1228. 

(3) Records in recordkeeping systems.

The disposition of electronic mail 

records that have been transferred to an 

appropriate recordkeeping system is 

governed by the records schedule or 

schedules that control the records in 

that system. If the records in the 

recordkeeping system are not 

scheduled, the agency must follow the 

procedures at 36 CFR part 1228.

Dated: July 29, 2004. 

John W. Carlin, 

Archivist of the United States.

[FR Doc. 04–24403 Filed 11–2–04; 8:45 am] 

BILLING CODE 7515–01–P

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 52

[R07–OAR–2004–IA–0004; FRL–7833–8] 

Approval and Promulgation of State 

Implementation Plan; State of Iowa

AGENCY: Environmental Protection 

Agency (EPA).

ACTION: Proposed rule.

SUMMARY: EPA is proposing to approve 

a revision to the Iowa state 

implementation plan (SIP) for the 

purpose of revising open burning rules. 

This revision includes a provision that 

allows the Iowa Department of Natural 

Resources to require the submittal of 

additional information when a variance 

from open burning rules is requested, 

reemphasizes the state’s obligation to 

protect the National Ambient Air 

Quality Standards (NAAQS) with regard 

to open burning, clarifies National 

Emissions Standards for Hazardous Air 

Pollutants (NESHAP) guidance for 

disaster rubbish, updates guidance for 

training fires, and provides clarification 

to the existing open burning rules 

covering agricultural structures.

DATES: Comments on this proposed 

action must be received in writing by 

December 3, 2004.

ADDRESSES: Comments may be mailed to 

Heather Hamilton, Environmental 

Protection Agency, Air Planning and 

Development Branch, 901 North 5th 

Street, Kansas City, Kansas 66101. 

Comments may also be submitted 

electronically or through hand delivery/

courier; please follow the detailed 

instructions in the Addresses section of 

the direct final rule which is located in 

the rules section of this Federal 

Register.

FOR FURTHER INFORMATION CONTACT:

Heather Hamilton at (913) 551–7039, or 

by e-mail at hamilton.heather@epa.gov.

SUPPLEMENTARY INFORMATION: In the 

final rules section of the Federal 

Register, EPA is approving the state’s 

SIP revision as a direct final rule 

without prior proposal because the 

Agency views this as a noncontroversial 

revision amendment and anticipates no 

relevant adverse comments to this 

action. A detailed rationale for the 

approval is set forth in the direct final 

rule. If no relevant adverse comments 

are received in response to this action, 

no further activity is contemplated in 

relation to this action. If EPA receives 

relevant adverse comments, the direct 

final rule will be withdrawn and all 

public comments received will be 

addressed in a subsequent final rule 

based on this proposed action. EPA will 

not institute a second comment period 

on this action. Any parties interested in 

commenting on this action should do so 

at this time. Please note that if EPA 

receives adverse comment on part of 

this rule and if that part can be severed 

from the remainder of the rule, EPA may 

adopt as final those parts of the rule that 

are not the subject of an adverse 

comment. For additional information, 

see the direct final rule which is located 

in the rules section of this Federal 

Register.

Dated: October 26, 2004. 

James B. Gulliford, 

Regional Administrator, Region 7.

[FR Doc. 04–24531 Filed 11–2–04; 8:45 am] 

BILLING CODE 6560–50–P

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.

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-vesseloperating 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, 

Secretary@fmc.gov.

63982 Federal Register / Vol. 69, No. 212 / Wednesday, November 3, 2004 / Proposed Rules 

1They 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.

FOR FURTHER INFORMATION CONTACT: 

Amy W. Larson, General Counsel, 

Federal Maritime Commission, 800 

North Capitol Street, NW., 

Washington, DC 20573–0001, (202) 

523–5740, generalcounsel@fmc.gov.

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. §§ 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’’).

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 

Federal Register / Vol. 69, No. 212 / Wednesday, November 3, 2004 / Proposed Rules 63983

2Although 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. § 1703.

3The 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 nonperformance. Id.

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.

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.

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 restates 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 readjust 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 midsized 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 

63984 Federal Register / Vol. 69, No. 212 / Wednesday, November 3, 2004 / Proposed Rules 

4Section 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.

‘‘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).

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 assetbased 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. 

Federal Register / Vol. 69, No. 212 / Wednesday, November 3, 2004 / Proposed Rules 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 marketbased 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 nonregulated 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 

63986 Federal Register / Vol. 69, No. 212 / Wednesday, November 3, 2004 / Proposed Rules 

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 nonNVOCC 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). 

Federal Register / Vol. 69, No. 212 / Wednesday, November 3, 2004 / Proposed Rules 63987

5The 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).

6Section 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.

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

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

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 

63988 Federal Register / Vol. 69, No. 212 / Wednesday, November 3, 2004 / Proposed Rules 

7The 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.

permitted to offer NSAs in their 

capacity as carriers.7

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-bySection 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/nonelectronic 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 portto-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 nonperformance (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 

Federal Register / Vol. 69, No. 212 / Wednesday, November 3, 2004 / Proposed Rules 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 

63990 Federal Register / Vol. 69, No. 212 / Wednesday, November 3, 2004 / Proposed Rules 

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

§ 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.

§ 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.

§ 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 § 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 

Federal Register / Vol. 69, No. 212 / Wednesday, November 3, 2004 / Proposed Rules 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.

§ 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.

§ 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

§ 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 nonperformance (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 

§ 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 

§ 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.

§ 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 

§ 531.5 and Appendix A to this part, a 

detailed notice of: 

(a) Correction; 

(b) Cancellation; 

(c) Adjustment of accounts, by rerating, 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.

63992 Federal Register / Vol. 69, No. 212 / Wednesday, November 3, 2004 / Proposed Rules 

§ 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 § 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 § 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 § 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 § 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 § 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

§ 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 

§ 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

§ 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 

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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 § 531.3(e) and 

§ 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.

§ 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

§ 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.

§§ 531.13–531.98 [RESERVED]

§ 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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1Public Law 74–255, 49 Stat. 543, August 9, 

1935.

2Public Law 98–554, Title II, 98 Stat. 2832, 

October 30, 1984.

3See the section below headed Motor Carrier 

Responsibilities for a discussion of the Federal 

appellate court decisions and the section headed 

Collection and Retention of Supporting Documents 

for a discussion of the administrative decisions.

4See the section headed Regulatory Impact 

Analysis for the discussion of how the agency 

estimated the $14.2 million costs.

By the Commission. 

Bryant L. VanBrakle, 

Secretary.

[FR Doc. 04–24467 Filed 11–2–04; 8:45 am] 

BILLING CODE 6730–01–C

DEPARTMENT OF TRANSPORTATION

Federal Motor Carrier Safety 

Administration 

49 CFR Parts 379, 381, 385, 390, and 

395

[Docket No. FMCSA–1998–3706] 

RIN 2126–AA76

Hours of Service of Drivers; 

Supporting Documents

AGENCY: Federal Motor Carrier Safety 

Administration (FMCSA), DOT.

ACTION: Supplemental notice of 

proposed rulemaking (SNPRM); request 

for comments. 

SUMMARY: The FMCSA intends to clarify 

that each motor carrier has the duty 

under the current regulations to: Verify 

the accuracy of drivers’ hours of service 

(HOS) and records of duty status 

(RODS), and this obligation extends to 

the HOS and RODS of independent 

drivers or owner-operators while 

driving for the motor carrier; ensure 

each driver collects and submits to the 

employing motor carrier all supporting 

documents with the RODS; and ensure 

all motor carriers know of the 

requirement to maintain supporting 

documents in a method that allows 

cross reference to the RODS. This notice 

also proposes a supporting document 

based self-monitoring system that would 

be the carrier’s primary method for 

ensuring compliance with the HOS 

regulations. In recognition of developing 

technologies, the FMCSA proposes to 

permit the use of electronic documents 

as a supplement to, and, in certain 

circumstances, in lieu of, paper 

supporting documents. The intended 

effect of this proposal is to provide 

clearer and more detailed definitions of 

‘‘supporting documents’’, ‘‘employee’’, 

‘‘driver’’, and a requirement for each 

motor carrier to use a self-monitoring 

system to verify accuracy of HOS and 

RODS.

DATES: We must receive your comments 

by January 3, 2005.

ADDRESSES: You may submit comments 

identified by DOT DMS Docket Number 

FMCSA–1998–3706 by any of the 

following methods: 

• Web site: http://dms.dot.gov.

Follow the instructions for submitting 

comments on the DOT electronic docket 

site. 

• Fax: 1–202–493–2251. 

• Mail: Docket Management Facility; 

U.S. Department of Transportation, 400 

Seventh Street, SW., Nassif Building, 

Room PL–401, Washington, DC 20590–

0001. 

• Hand Delivery: Room PL–401 on 

the plaza level of the Nassif Building, 

400 Seventh Street, SW., Washington, 

DC, between 9 a.m. and 5 p.m., Monday 

through Friday, except Federal 

Holidays. 

• Federal eRulemaking Portal: Go to 

http://www.regulations.gov. Follow the 

online instructions for submitting 

comments. 

Instructions: All submissions must 

include the agency name and docket 

number or Regulatory Identification 

Number (RIN) for this rulemaking. Note 

that all comments received will be 

posted without change to http://

dms.dot.gov, including any personal 

information provided. Please see the 

Privacy Act heading for further 

information.

Docket: For access to the docket to 

read background documents or 

comments received, go to http://

dms.dot.gov at any time or to Room PL–

401 on the plaza level of the Nassif 

Building, 400 Seventh Street, SW., 

Washington, DC, between 9 a.m. and 5 

p.m., Monday through Friday, except 

Federal Holidays. 

Privacy Act: Anyone is able to search 

the electronic form of all comments 

received into any of our dockets by the 

name of the individual submitting the 

comment (or signing the comment, if 

submitted on behalf of an association, 

business, labor union, etc.). You may 

review DOT’s complete Privacy Act 

Statement in the Federal Register

published on April 11, 2000 (65 FR 

19477) or you may visit http://

dms.dot.gov.

Comments received after the comment 

closing date will be included in the 

docket and we will consider late 

comments to the extent practicable. The 

FMCSA may, however, issue a final rule 

at any time after the close of the 

comment period.

FOR FURTHER INFORMATION CONTACT: Mr. 

Jerry Fulnecky, Office of Enforcement 

and Compliance, (202) 366–4553, 

FMCSA, Department of Transportation, 

400 Seventh Street, SW., Washington, 

DC 20590.

SUPPLEMENTARY INFORMATION: 

Legal Basis for the Rulemaking 

This rulemaking is required by, and 

based on, section 113 (Driver’s Record 

of Duty Status) of the Hazardous 

Materials Transportation Authorization 

Act of 1994, Pub. L. 103–311, August 

26, 1994, 108 Stat. 1673, at 1676 

(hereinafter the HMTAA). Section 113, 

however, assumes the existence of 

FMCSA’s more general authority to 

regulate the HOS of commercial motor 

vehicle (CMV) drivers and related 

matters. That authority is conferred by 

the Motor Carrier Act of 1935,1 now 

codified at 49 U.S.C. 31502(b), and the 

Motor Carrier Safety Act of 1984,2 49 

U.S.C. 31136(a).

Section 113(a) requires FMCSA to 

amend 49 CFR part 395 to improve both 

driver and carrier compliance with the 

HOS regulations and the effectiveness 

and efficiency of HOS enforcement, at a 

cost reasonable to the motor carrier 

industry. As described in detail later in 

the preamble, this proposal would close 

the loopholes that made it possible for 

some operators to obscure their 

violations of the HOS rules by failing to 

collect, retain, or properly to index, 

documents that could be used to check 

the accuracy of drivers’ RODS. Drivers—

both employees and owner-operators—

would be required to collect all 

documents that could be used to 

evaluate RODS data, put their name or 

the vehicle number on those documents 

and forward them to the employing 

motor carrier. The carrier would have to 

maintain these records and collect 

related documents from other sources 

that could be used to check each 

driver’s RODS. All of these records 

would have to be available to special 

agents in the same manner as RODS 

themselves. The enforceability of the 

HOS regulations would be substantially 

improved. As for the cost of the 

proposal, there would be none if motor 

carriers and drivers were in full 

compliance with the current supporting 

documents regulation, as interpreted by 

a series of administrative and Federal 

appellate court decisions.3 Because that 

is not the case, the costs will be borne 

by motor carriers not now collecting, 

retaining, and/or indexing supporting 

documents. FMCSA estimates the 

annual cost of the rule would be $14.2 

million,4 a modest sum given the very 

large carrier and driver population that 

would be covered by it. The