Ocean Common Carrier and Marine Terminal Operator Agreements Subject to the Shipping Act of 1984, 20302-20304 [05-7741]

Agencies

• Federal Maritime Commission

[Federal Register Volume 70, Number 74 (Tuesday, April 19, 2005)]
[Rules and Regulations]
[Pages 20302-20304]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-7741]


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FEDERAL MARITIME COMMISSION

46 CFR Parts 501 and 535

[Docket No. 03-15]


Ocean Common Carrier and Marine Terminal Operator Agreements 
Subject to the Shipping Act of 1984

AGENCY: Federal Maritime Commission.

ACTION: Final rule; Clarifications and corrections.

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SUMMARY: This document clarifies and corrects the regulations in 
sections 535.311 and 535.704 and appendix A of 46 CFR part 535 of the 
Final Rule published on November 4, 2004. These revisions to the 
regulations are non-substantive, and no further public comments on the 
Final Rule are necessary.

DATES: April 19, 2005.

FOR FURTHER INFORMATION CONTACT:
Amy W. Larson, General Counsel, Federal Maritime Commission, 800 North 
Capitol Street, NW., Room 1018, Washington, DC 20573-0001, (202) 523-
5740, E-mail: GeneralCounsel@fmc.gov.
Florence A. Carr, Director, Bureau of Trade Analysis, Federal Maritime 
Commission, 800 North Capitol Street, NW., Room 940, Washington, DC 
20573-0001, (202) 523-5796, E-mail: tradeanalysis@fmc.gov.

SUPPLEMENTARY INFORMATION: On October 27, 2004, the Federal Maritime 
Commission (``FMC'' or ``Commission'') adopted a Final Rule to amend 
its regulations in 46 CFR parts 501 and 535 on the delegation of the 
Commission's authorities, the filing of ocean common carrier and marine 
terminal operator agreements, and the reporting requirements for 
agreements pursuant to the Shipping Act of 1984 46 U.S.C. 1701-1719 
(``Shipping Act''). 69 FR 64298, November 4, 2004. This document 
revises certain sections of the regulation in part 535 of the Final 
Rule published on November 4, 2004. The revisions clarify the meaning 
of the regulations and correct certain omissions and errors in the 
regulations, which were not detected in the course of preparing the 
Final Rule for publication. The revisions are non-substantive in nature 
and do not alter the decision adopted by the Commission in this Final 
Rule. Therefore, no further public comments on the Final Rule are 
necessary. The following sections in the regulations of part 535 of the 
Final Rule have been revised.

[[Page 20303]]

1. Section 535.311 Low Market Share Agreements--Exemption

    As discussed in the supplementary information of the Final Rule, 
the Commission adopted a new regulation in section 535.311, which 
provides an exemption from the statutory 45-day waiting period for 
filed agreements that qualify as ``low market share agreements.'' Id. 
at 64399-64400. As adopted, section 535.311(a) states that:

    (a) Low market share agreement means any agreement among ocean 
common carriers which contains none of the authorities listed in 
535.502(b) and for which the combined market share of the parties in 
any of the agreement's sub-trade is either:
    (1) Less than 30 percent, if all parties are members of another 
agreement in the same trade or sub-trade containing any of the 
authorities listed in Sec.  535.502(b); or
    (2) Less than 35 percent, if all parties are not members of 
another agreement in the same trade or sub-trade containing any of 
the authorities listed in Sec.  535.502(b).

Id. at 64420
    Section 535.311(a) uses different levels of market share to apply 
the exemption based on whether the parties to the filed agreement are 
members of another agreement in the same trade or sub-trade with any 
authorities listed in section 535.502(b).\1\ As stated, the language in 
section 535.311(a) may reflect some ambiguity in the application of the 
exemption that was unintended by the Commission. In a literal sense, 
section 535.311(a) can be read to mean that the application of the 
exemption only accounts for the two extreme cases where all parties are 
members of another agreement, or where none of the parties are members 
of another agreement. The application of the exemption may appear 
ambiguous in cases where some, but not all, parties are members of 
another agreement in the same trade or sub-trade with the authorities 
listed in section 535.502(b).
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    \1\ Section 535.502(b) of the Final Rule includes any of the 
following authorities: (1) The discussion of, or agreement upon, 
whether on a binding basis under a common tariff or a non-binding 
basis, any kind of rate or charge; (2) the discussion of, or 
agreement on, capacity rationalization; (3) the establishment of a 
joint service; (4) the pooling or division of cargo traffic, 
earnings, or revenues and/or losses; or (5) the discussion of, or 
agreement on, any service contract matter.
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    As adopted, it is the intention of the Commission that the market 
share level of less than 30 percent only applies in cases where all 
parties are members of another agreement; otherwise, the market share 
level of less than 35 percent applies.\2\ To clarify the meaning of the 
exemption, as intended by the Commission, section 535.311(a)(2) has 
been revised to state that the market share level of less than 35 
percent applies if at least one party is not a member of another 
agreement in the same trade or sub-trade with any of the authorities 
listed in section 535.502(b).
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    \2\ The more stringent market share standard of less than 30 
percent applies for the exemption because parties to an agreement 
with none of the authorities in section 535.502(b) are afforded 
greater authority to act concertedly when they all participate in 
another agreement, such as a conference or rate discussion 
agreement, within the same trade or sub-trade. For such agreements 
where the market share is 30 percent or above, the full 45-day 
waiting period, after the agreement is filed, is necessary for the 
Commission to analyze and assess the potential competitive impact of 
the agreement in relation to the overall authority of the parties 
within the relevant trade or sub-trade. This is less of a concern 
when only some, but not all, parties are members of another 
agreement, and thus, the more flexible market share standard of less 
than 35 percent is appropriate for exempting such agreements from 
the 45-day waiting period.
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    A number of other minor revisions have also been made to section 
535.311. The introductory paragraph in section 535.311(a) has been 
revised to clarify that the unit of measurement for determining the 
combined market share of the parties shall be based on the volume of 
cargo carried by the parties. Cargo volume, whether measured in freight 
tons, containers, or other such units carried, is the standard unit of 
measurement used to derive the market share of ocean common carriers 
throughout the industry and in the FMC's regulations. In addition, the 
term ``sub-trade'' in the introductory paragraph of section 535.311(a) 
has been revised to use the grammatically correct plural form of the 
term, i.e., ``sub-trades.'' Further, the symbol ``Sec. '' has been 
added in the introductory paragraph in section 535.311(a) before the 
cite for section ``535.502(b).''

2. Section 535.704 Filing of Minutes

    As discussed in the supplementary information of the Final Rule, 
the Commission adopted a new regulation in section 535.704(d)(1) that 
exempts the parties' discussions of certain operational and 
administrative matters from the minutes requirements for agreements. 
Id. at 64411-64412. Discussions between parties on matters identified 
in section 535.408(b)(4)(iv) \3\ were included as an exemption. Id. In 
preparing the Final Rule, this exemption was inadvertently omitted from 
the regulations. Therefore, section 535.704(d)(1) has been revised to 
include this exemption. In addition, the singular form of the term 
``exemption'' has been revised to the plural form ``exemptions'' in the 
introductory paragraph in section 535.704(d). The plural form conveys 
the correct use of the term in the context of this section.
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    \3\ Section 535.408(b)(4)(iv) of the Final Rule pertains to the 
express enabling authority of an agreement to establish procedures 
for anticipating the space requirements of the parties.
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3. Appendix A to Part 535--Information Form and Instructions

    Minor revisions have also been made in the format of FMC Form-150, 
INFORMATION FORM FOR AGREEMENTS BETWEEN OR AMONG OCEAN COMMON CARRIERS, 
in appendix A to part 535 of the Final Rule. Specifically, part 2(B) of 
section III in the text of Form-150 has been revised to request that 
parties provide a narrative statement on significant changes in their 
vessel calls. This change was adopted by the Commission in response to 
comments submitted to the Notice of Proposed Rulemaking, and addressed 
in the supplementary information of the Final Rule. Id. at 64407-64408. 
The text in Form-150 for this part was not modified due to an 
oversight. In addition, the term ``Part 1'' in the heading of part 1 of 
section V was inadvertently omitted from the text of FMC Form-150 when 
the Final Rule was prepared. Section V of the text of FMC Form-150 has 
been revised to correct this oversight.

List of Subjects in 46 CFR Part 535

    Freight, Maritime carriers, Reporting and recordkeeping 
requirements.

0
Therefore, for reasons stated in the preamble, part 535 is amended as 
follows:

PART 535--OCEAN COMMON CARRIER AND MARINE TERMINAL OPERATOR 
AGREEMENTS SUBJECT TO THE SHIPPING ACT OF 1984

0
1. Amend section 535.311 to revise paragraphs (a) introductory text and 
(a)(2) to read as follows:


Sec.  535.311  Low market share agreements--exemption.

    (a) Low market share agreement means any agreement among ocean 
common carriers which contains none of the authorities listed in Sec.  
535.502(b) and for which the combined market share, based on cargo 
volume, of the parties in any of the agreement's sub-trades is either:
    (1) * * *
    (2) Less than 35 percent, if at least one party is not a member of 
another agreement in the same trade or sub-trade containing any of the 
authorities listed in Sec.  535.502(b).
* * * * *

0
2. Amend section 535.704 to revise paragraphs (d) introductory text and 
(d)(1) to read as follows:

[[Page 20304]]

Sec.  535.704  Filing of minutes.

* * * * *
    (d) Exemptions. For parties to agreements subject to this section, 
the following exemptions shall apply:
    (1) Minutes of meetings between parties are not required to reflect 
discussions of matters set forth in Sec.  535.408(b)(2), (b)(3), 
(b)(4)(iii), (b)(4)(iv), (b)(4)(v), and (b)(4)(vi);
* * * * *

0
3. In appendix A to part 535, amend FMC Form-150 by revising the 
paragraph in part 2(B) of section III and the heading of section V to 
read as follows:

Appendix A to Part 535--Information Form and Instructions Information 
Form Instructions

* * * * *
FMC Form-150
OMB Control No. 3072-0045

FEDERAL MARITIME COMMISSION

INFORMATION FORM FOR AGREEMENTS BETWEEN OR AMONG OCEAN COMMON CARRIERS

* * * * *

Section III

* * * * *

Part 2 Vessel Calls

    (A) * * *
 (B) Narrative statement on significant changes in vessel calls:-------
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Section V

Part 1 Contact Persons and Certification

* * * * *

Bryant L. VanBrakle,
Secretary.
[FR Doc. 05-7741 Filed 4-18-05; 8:45 am]
BILLING CODE 6730-01-P