Repeal of Marine Terminal Agreement Exemption, 31666-31667 [E9-15605]

Agencies

• Federal Maritime Commission

[Federal Register Volume 74, Number 126 (Thursday, July 2, 2009)]
[Proposed Rules]
[Pages 31666-31667]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-15605]


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FEDERAL MARITIME COMMISSION

46 CFR Part 535

[Docket No. 09-02]
RIN 3072-AC35


Repeal of Marine Terminal Agreement Exemption

AGENCY: Federal Maritime Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Federal Maritime Commission proposes to repeal the 
exemption from the 45-day waiting period requirement applicable to 
certain Marine Terminal Agreements. The Commission also proposes to 
correct a typographical error in its regulations.

DATES: Comments are due by August 17, 2009.

ADDRESSES: Address all comments concerning this proposed rule to: Karen 
V. Gregory, Secretary, Federal Maritime Commission, 800 North Capitol 
Street, NW., Room 1046, Washington, DC 20573-0001, Secretary@fmc.gov, 
(202) 523-5725.

FOR FURTHER INFORMATION CONTACT: Peter J. King, General Counsel, 
Federal Maritime Commission, 800 North Capitol Street, NW., Room 1018, 
Washington, DC 20573-0001, generalcounsel@fmc.gov, (202) 523-5740.

SUPPLEMENTARY INFORMATION:
    Submit Comments: Submit an original and 15 copies of comments in 
paper form, and submit a copy in electronic form (Microsoft Word 2003) 
by e-mail to secretary@fmc.gov. Include in the e-mail subject line: 
``Comments on Repeal of Marine Terminal Agreement Exemption''.
    Under section 16 of the Shipping Act, the Commission may exempt any 
class of agreements from the requirements of the Act if the Commission 
finds that the exemption will not result in substantial reduction in 
competition or be detrimental to commerce. 46 U.S.C. 40103. The 
Commission may attach conditions to any exemption. Id. An exemption 
previously granted may be revoked, by order, after affording interested 
persons an opportunity for a hearing. Id.
    In Docket No. 85-10, the Commission determined that it would exempt 
certain marine terminal agreements from the 45-day waiting period 
requirement, based upon its finding that such exemption would not 
substantially impair effective regulation by the Commission, be 
unjustly discriminatory or detrimental to commerce, nor result in a 
substantial reduction in competition within the meaning of Section 16 
of the Shipping Act. Marine Terminal Agreements, 24 S.R.R. 192, 193-194 
(FMC 1987). Initially adopted as section 572.307, this provision was 
later re-designated as section 535.308.
    In the years since September 11, 2001, agreements filed with the 
Commission by marine terminal operators (MTOs) reveal the greater 
complexity of subject matter and the wider range of operational issues 
that the marine terminal industry seeks to address in MTO agreements. 
See, e.g., testimony of Win Froelich of the National Association of 
Waterfront Employers before the House Transportation and Infrastructure 
Committee, Subcommittee on Coast Guard and Maritime Transportation 
(June 19, 2008) at 8 (citing, inter alia, newly created or imposed 
responsibilities for MTOs in areas of traffic congestion and noise 
issues, pollution abatement, and port security).
    As port agreements have evolved beyond simple landlord-tenant 
issues, such agreements increasingly have the potential to incur the 
anticompetitive consequences that the Commission deemed unlikely when 
it first adopted the exemption. Under current rule 535.308, marine 
terminal agreements become effective upon filing, depriving the 
Commission of pre-effectiveness opportunity to review the agreements 
during the statutory 45-day waiting period and the opportunity to seek 
access to additional information from the agreement parties necessary 
for the Commission to perform its statutory duties under section 6 of 
the Shipping Act, 46 U.S.C. 40304, 41307. The absence of any waiting 
period requirement for marine terminal agreements under section 535.308 
may frustrate the Commission's function of preventing a reduction in 
competition under section 6 of the Shipping Act, whether filed by 
public or private MTO parties. It therefore appears that section 
535.308 may no longer be serving the original intent of the 
Commission's rulemaking.
    In addition, recent review by the Commission of a marine terminal 
agreement filed under Sec.  535.308 demonstrates that the application 
and interpretation of the exemption has proven relatively complex to 
the industry and to counsel:

    In considering the plain text of the cited provision, the 
operative requirements of the foregoing exemption specify 
application of the exemption only to: (1) An agreement, written or 
oral; (2) that applies to future, prospective activities; (3) that 
relates solely to marine terminal facilities and/or services; (4) 
among marine terminal operators and among one or more marine 
terminal operators and one or more ocean common carriers; and (5) 
that completely sets forth the applicable rates, charges, terms and 
conditions agreed to by the parties for the facilities and/or 
services. The burden of establishing the applicability of an 
exemption falls on the person claiming the exemption.

Petition of Certain Marine Terminal Operator Parties to Agreement No. 
201199, Petition No. P2-08, Order at 5-6 (January 16, 2009). Further, 
such exempt agreements must not be a joint venture agreement, marine 
terminal conference agreement, marine terminal discussion agreement or 
marine terminal interconference agreement. 46 CFR 535.308(a). The 
current provisions have underscored the potential for future confusion 
and dispute as to the proper application of the section 535.308 
exemption.

[[Page 31667]]

    Since the adoption of Sec.  535.308 in 1987, relatively few 
agreements have been filed claiming the waiting period exemption. As 
the number of filings claiming the exemption has been negligible, 
repeal of the section will have minimal impact on the shipping 
industry. Moreover, where agreement parties experience exigent 
circumstances justifying early effectiveness, the Shipping Act and the 
Commission regulations allow the parties to seek expedited review. See 
46 U.S.C. 40304(e) and 46 CFR 535.605.
    Even with respect to the three agreements that claimed application 
of the section 535.308 exemption (FMC Agreement Nos. 201176, 201196 and 
201199), it remains subject to some dispute whether those agreements 
were in fact qualified for the exemption. It appears that the 
agreements may be ineligible for the waiting period exemption, or could 
more appropriately be characterized as a marine terminal services 
agreement subject to an existing exemption at Sec.  535.309 or a marine 
terminal facilities agreement subject to an exemption at Sec.  535.310. 
These provisions exempt marine terminal services agreements and marine 
terminal facilities agreements from both the filing and waiting period 
requirements of the Shipping Act. 46 CFR 535.309 and 535.310.
    To be conferred antitrust immunity, the parties may file such 
marine terminal services agreements pursuant to Sec.  535.301(b) as an 
``optional filing.'' Repeal of Sec.  535.308 thus may benefit the 
industry by clarifying and streamlining the application of the 
Commission's regulations and by directing the industry to utilize the 
exemptions available under Sec.  535.309 or Sec.  535.310.

I. The Proposed Rulemaking

    In view of the foregoing reasons, the Commission proposes to make 
the following changes to 46 CFR Part 535.
    First, the Commission proposes to repeal 46 CFR 535.308 by removing 
it from the CFR.
    Second, the Commission proposes to amend 46 CFR 535.309(b)(1) to 
add the definition of marine terminal conference agreement, which is 
currently defined in 46 CFR 535.308.
    Third, the Commission proposes to correct a typographical error in 
46 CFR 535.604(b).

II. Statutory Review and Requests for Comment

    In accordance with the Regulatory Flexibility Act, 5 U.S.C. 601-
612, the Chairman of the Federal Maritime Commission certifies that the 
proposed rule, if promulgated, would not have a significant economic 
impact on a substantial number of small entities. The regulated 
entities that would be affected by the rule are limited to marine 
terminal operators and ocean common carriers. Pursuant to the 
guidelines of the Small Business Administration, the Commission has 
determined that these entities do not qualify as small for the purpose 
of the Small Business Regulatory Enforcement Fairness Act. The rule 
would simply require that agreements between marine terminal operators, 
or between or among marine terminal operators and ocean common 
carriers, be made subject to the requirements of section 6 of the 
Shipping Act of 1984, 46 U.S.C. 40304, and Commission agreement rules, 
46 CFR Part 535.
    This regulatory action is not a ``major rule'' under 5 U.S.C. 
804(2).

List of Subjects in 46 CFR Part 535

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

    For the reasons set forth above, the Federal Maritime Commission 
proposes to amend 46 CFR Part 535 Subpart C as follows:

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

    1. The authority citation for Part 535 continues to read as 
follows:

    Authority:  5 U.S.C. 553; 46 U.S.C. 1701-1707, 1709-1710, 1712 
and 1714-1718; Public Law 105-258, 112 Stat. 1902 (46 U.S.C. 1701 
note); Sec. 424, Public Law 105-383, 112 Stat. 3440.

Subpart C--Exemptions


Sec.  535.308   [Removed]

    2. Remove Sec.  535.308.
    3. Amend Sec.  535.309 by revising paragraph (b)(1) to read as 
follows:


Sec.  535.309   Marine terminal services agreements--exemption.

* * * * *
    (b) * * *
    (1) They do not include rates, charges, rules, and regulations that 
are determined through a marine terminal conference agreement. Marine 
terminal conference agreement means an agreement between or among two 
or more marine terminal operators and/or ocean common carriers for the 
conduct or facilitation of marine terminal operations that provides for 
the fixing of and adherence to uniform maritime terminal rates, 
charges, practices and conditions of service relating to the receipt, 
handling, and/or delivery of passengers or cargo for all members; and
* * * * *


Sec.  535.604   [Amended]

    4. Amend Sec.  535.604 by removing the word ``latter'' and adding 
in its place the word ``later'' in paragraph (b).

    By the Commission.
Karen V. Gregory,
Secretary.
[FR Doc. E9-15605 Filed 7-1-09; 8:45 am]
BILLING CODE 6730-01-P