Certainty of Terms of Service Contracts and NVOCC Service Arrangements, 63581-63582 [2011-26418]

Download as PDF Federal Register / Vol. 76, No. 198 / Thursday, October 13, 2011 / Proposed Rules sampling procedures, and business practices) that are developed or adopted by voluntary consensus standards bodies. The NTTAA directs EPA to provide Congress, through OMB, explanations when the Agency decides not to use available and applicable voluntary consensus standards. This proposal does not involve technical standards. Therefore, EPA is not considering the use of any voluntary consensus standards. FEDERAL MARITIME COMMISSION J. Executive Order 12898: Federal Actions To Address Environmental Justice in Minority Populations and Low-Income Populations SUMMARY: Executive Order 12898 (59 FR 7629 (Feb. 16, 1994)) establishes federal executive policy on environmental justice. Its main provision directs federal agencies, to the greatest extent practicable and permitted by law, to make environmental justice part of their mission by identifying and addressing, as appropriate, disproportionately high and adverse human health or environmental effects of their programs, policies, and activities on minority populations and low-income populations in the United States. EPA has determined that this action would not have disproportionately high and adverse human health or environmental effects on minority or low-income populations. The proposed rule involves a minor revision that provides administrative relief but does not change the conformity rule’s underlying requirements for regional conformity analyses. List of Subjects in 40 CFR Part 93 Administrative practice and procedure, Air pollution control, Carbon monoxide, Clean Air Act, Environmental protection, Highways and roads, Intergovernmental relations, Mass transportation, Nitrogen dioxide, Ozone, Particulate matter, Transportation, Volatile organic compounds. Dated: October 4, 2011. Lisa P. Jackson, Administrator. erowe on DSK2VPTVN1PROD with PROPOSALS-1 [FR Doc. 2011–26346 Filed 10–12–11; 8:45 am] BILLING CODE 6560–50–P VerDate Mar<15>2010 14:59 Oct 12, 2011 Jkt 226001 46 CFR Parts 530 and 531 [Docket No. 11–17] RIN 3072–AC47 Certainty of Terms of Service Contracts and NVOCC Service Arrangements Federal Maritime Commission. Notice of proposed rulemaking. AGENCY: ACTION: The Federal Maritime Commission proposes to amend its rules regarding certainty of terms of service contracts and non-vessel-operating common carrier service arrangements. The proposed rule is intended to provide common carriers and their customers with certainty and flexibility if they decide to use long-term contracts that adjust based on a freight rate index that reflects changes in market conditions. DATES: Comments or suggestions due on or before November 28, 2011. ADDRESSES: Address all comments concerning this proposed rule to: Karen V. Gregory, Secretary, Federal Maritime Commission, 800 North Capitol Street, NW., Washington, DC 20573–0001, Phone: (202) 523–5725. SUPPLEMENTARY INFORMATION: Submit Comments: Submit an original and five (5) copies in paper form, and if possible, send a PDF of the document by e-mail to secretary@fmc.gov. Include in the subject line: Docket No. 11–17, Comments on Certainty of Terms of Service Contracts and NSAs. Background The Federal Maritime Commission (FMC or Commission) has found that an increasing number of service contracts filed with the Commission reference freight rate indices. These indices include, for example, the China Containerized Freight Index (CCFI), the Shanghai Containerized Freight Index (SCFI), the Drewry Freight Insight Index, and the Transpacific Stabilization Agreement (TSA) Index. The ocean freight rates in these negotiated service contracts adjust in increments based upon the changes in the referenced index levels or their annual or quarterly averages. It appears that some carriers and shippers in the ocean transportation industry are seeking stability through long-term contracts, while trying to preserve flexibility to adjust contract rates reflecting changes in market conditions. Questions have arisen, however, whether references to these indices in service contracts are consistent with the PO 00000 Frm 00017 Fmt 4702 Sfmt 4702 63581 Commission’s current regulations. The Commission’s regulations with respect to terms of service contracts and NonVessel-Operating Common Carrier (NVOCC) service arrangements (NSAs) state that the terms, if they are not explicitly contained in the contracts, must be ‘‘contained in a publication widely available to the public and well known within the industry.’’ 46 CFR 530.8(c)(2), 531.6(c)(2). The Commission has received inquiries from the industry as to whether certain freight rate indices meet the Commission’s standard, particularly its ‘‘widely available to the public’’ requirement. For example, until August 2011, the TSA index was not available to the public, even though some service contracts referenced TSA index before its publication. In addition, CCFI, SCFI, and Drewry indices make their current index levels available to the public without charge, but access to their historical data requires payment of subscription fees that can reach several thousand dollars per year. As the Commission began to consider whether these service contracts referencing freight indices comport with its regulation, it decided to do a more fundamental assessment of whether the regulation in its current form is more restrictive than is necessary to protect the shipping public and carry out the purposes of the Shipping Act. When adopting the rules for ‘‘[c]ertainty of terms’’ of service contracts, the Commission recognized that through the Ocean Shipping Reform Act of 1998, Congress intended, by lifting the requirements that tariffs be filed with the Commission, to allow parties to service contracts more freedom and flexibility in their commercial arrangements. See 63 FR 71062, 71066 (Dec. 23, 1998). More recently, the President has directed federal agencies to review their regulations and to reduce burdens and promote flexibility where appropriate. See Exec. Order 13563, 76 FR 3821 (Jan. 21, 2011); Exec. Order 13579, 76 FR 41587 (Jul. 14, 2011). Proposed Change Consistent with Congressional intent and the President’s directives in Executive Orders 13563 and 13579, the Commission seeks to revise its regulations so that they are not unnecessarily burdensome and do not impede innovation and flexibility in commercial arrangements, while ensuring continued compliance with the Shipping Act’s requirements. The proposed change would facilitate references to indices in service contracts and NSAs so that contracting parties can E:\FR\FM\13OCP1.SGM 13OCP1 63582 Federal Register / Vol. 76, No. 198 / Thursday, October 13, 2011 / Proposed Rules pursue long-term contracts with rates that adjust through an agreed and ascertainable manner. The change will also ensure compliance with two important Shipping Act requirements. First, the Shipping Act requires that a service contract be a ‘‘written contract,’’ in which the ocean carrier ‘‘commits to a certain rate or rate schedule.’’ 46 U.S.C. 40102(20). In order for a rate or rate schedule to be ‘‘certain’’ in a valid contract that is the product of a meeting of the minds, the rate should be known or easily ascertainable to the contracting parties. Second, the Shipping Act requires service contracts to be ‘‘filed’’ with the Commission. 46 U.S.C. 40502(b). The Commission believes that both the language and purpose of the Shipping Act’s filing requirement would be undermined if contracting parties were permitted to include in service contracts references to unfiled terms, in this case important rate terms, which are not readily available to the Commission. The Commission is especially interested in public comments on the possible methods by which contracting parties could ensure that the information referred to in service contracts is readily available to the Commission. The Commission is also interested in public comments on ways to reduce any impediments to small shippers having the option of index-linked service contracts. The Commission also proposes the same change to the rule for NSAs, which are NVOCCs’ contracts with their shippers and analogous to ocean common carriers’ service contracts with their shippers. erowe on DSK2VPTVN1PROD with PROPOSALS-1 Certifications The Chairman of the Commission certifies, pursuant to section 605(b) of the Regulatory Flexibility Act, 5 U.S.C. 601 et seq., that the rule will not, if promulgated, have a significant economic impact on a substantial number of small entities. The proposed rule simply provides parties to service contracts and NVOCC service arrangements more freedom and flexibility in their commercial arrangements and will not adversely affect contracting parties. This rule is not a ‘‘major rule’’ under 5 U.S.C. 804(2). List of Subjects in 46 CFR Parts 530 and 531 Freight, Maritime carriers, Reporting and recordkeeping requirements. For the reasons stated in the supplementary information, the Federal Maritime Commission proposes to VerDate Mar<15>2010 14:59 Oct 12, 2011 Jkt 226001 amend 46 CFR parts 530 and 531 as follows. PART 530—SERVICE CONTRACTS 1. The authority citation for part 530 continues to read as follows: Authority: 5 U.S.C. 553; 46 U.S.C. 305, 40301–40306, 40501–40503, 41307. 2. Revise § 530.8(c)(2) to read as follows: § 530.8 Service contracts. * * * * * (c) * * * (2) Make reference to terms not explicitly contained in the service contract itself unless those terms are readily available to the parties and the Commission. * * * * * PART 531—NVOCC SERVICE ARRANGEMENTS 3. The authority citation for Part 531 continues to read as follows: Authority: 46 U.S.C. 40103. 4. Revise § 531.6(c)(2) to read as follows: § 531.6 NVOCC Service Arrangements. * * * * * (c) * * * (2) Make reference to terms not explicitly contained in the NSA itself unless those terms are readily available to the parties and the Commission. Reference may not be made to a tariff of a common carrier other than the NVOCC acting as carrier party to the NSA. * * * * * By the Commission. Karen V. Gregory, Secretary. [FR Doc. 2011–26418 Filed 10–12–11; 8:45 am] BILLING CODE 6730–01–P DEPARTMENT OF TRANSPORTATION Surface Transportation Board 49 CFR Part 1241 [Docket No. EP 706] Reporting Requirements for Positive Train Control Expenses and Investments AGENCY: Surface Transportation Board, DOT. ACTION: Notice of proposed rulemaking. The Board proposes to amend its rules to require rail carriers that submit to the Board ‘‘R–1’’ reports that identify information on capital and SUMMARY: PO 00000 Frm 00018 Fmt 4702 Sfmt 4702 operating expenditures for Positive Train Control (PTC) to break out those expenses so that they can be viewed both as component parts of and separately from other capital investments and expenses. PTC is an automated system designed to prevent train-to-train collisions and other accidents. Rail carriers with traffic routes that carry passengers and/or hazardous toxic-by-inhalation (TIH) or poisonous-by-inhalation (PIH) materials, as so designated under federal law, must implement PTC pursuant to federal legislation. We propose to adopt supplemental schedules to the R–1 to require financial disclosure with respect to PTC to help inform the Board and the public about the specific costs attributable to PTC implementation. DATES: Comments on this proposal are due by December 12, 2011. Replies are due by January 11, 2012. ADDRESSES: Comments may be submitted either via the Board’s e-filing format or in the traditional paper format. Any person using e-filing should attach a document and otherwise comply with the instructions at the EFILING link on the Board’s Web site, at https://www.stb.dot.gov. Any person submitting a filing in the traditional paper format should send an original and 10 copies to: Surface Transportation Board, Attn: Docket No. EP 706, 395 E Street, SW., Washington, DC 20423– 0001. Copies of written comments received by the Board will be posted to the Board’s Web site at https:// www.stb.dot.gov and will be available for viewing and self-copying in the Board’s Public Docket Room, Suite 131, 395 E Street, SW., Washington, DC. Copies of the comments will also be available by contacting the Board’s Chief Records Officer at (202) 245–0236 or 395 E Street, SW., Washington, DC. 20423–0001. FOR FURTHER INFORMATION CONTACT: Paul Aguiar, (202) 245–0323. Assistance for the hearing impaired is available through Federal Information Relay Service (FIRS) at 1–800–877–8339. SUPPLEMENTARY INFORMATION: As authorized by 49 U.S.C. 11145, the Board requires large (Class I) 1 rail carriers to submit annual reports, 1 The Board designates 3 classes of freight railroads based upon their operating revenues, for 3 consecutive years, in 1991 dollars, using the following scale: Class I—$250 million or more; Class II—less than $250 million but more than $20 million; and Class III—$20 million or less. These operating revenue thresholds are adjusted annually for inflation. 49 CFR pt. 1201, 1–1. Adjusted for inflation, the revenue threshold for a Class I rail carrier using 2009 data is $378,774,016. Today, there are 7 Class I carriers. E:\FR\FM\13OCP1.SGM 13OCP1

Agencies

[Federal Register Volume 76, Number 198 (Thursday, October 13, 2011)]
[Proposed Rules]
[Pages 63581-63582]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-26418]


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FEDERAL MARITIME COMMISSION

46 CFR Parts 530 and 531

[Docket No. 11-17]
RIN 3072-AC47


Certainty of Terms of Service Contracts and NVOCC Service 
Arrangements

AGENCY: Federal Maritime Commission.

ACTION: Notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: The Federal Maritime Commission proposes to amend its rules 
regarding certainty of terms of service contracts and non-vessel-
operating common carrier service arrangements. The proposed rule is 
intended to provide common carriers and their customers with certainty 
and flexibility if they decide to use long-term contracts that adjust 
based on a freight rate index that reflects changes in market 
conditions.

DATES: Comments or suggestions due on or before November 28, 2011.

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

SUPPLEMENTARY INFORMATION: Submit Comments: Submit an original and five 
(5) copies in paper form, and if possible, send a PDF of the document 
by e-mail to secretary@fmc.gov. Include in the subject line: Docket No. 
11-17, Comments on Certainty of Terms of Service Contracts and NSAs.

Background

    The Federal Maritime Commission (FMC or Commission) has found that 
an increasing number of service contracts filed with the Commission 
reference freight rate indices. These indices include, for example, the 
China Containerized Freight Index (CCFI), the Shanghai Containerized 
Freight Index (SCFI), the Drewry Freight Insight Index, and the 
Transpacific Stabilization Agreement (TSA) Index. The ocean freight 
rates in these negotiated service contracts adjust in increments based 
upon the changes in the referenced index levels or their annual or 
quarterly averages. It appears that some carriers and shippers in the 
ocean transportation industry are seeking stability through long-term 
contracts, while trying to preserve flexibility to adjust contract 
rates reflecting changes in market conditions.
    Questions have arisen, however, whether references to these indices 
in service contracts are consistent with the Commission's current 
regulations. The Commission's regulations with respect to terms of 
service contracts and Non-Vessel-Operating Common Carrier (NVOCC) 
service arrangements (NSAs) state that the terms, if they are not 
explicitly contained in the contracts, must be ``contained in a 
publication widely available to the public and well known within the 
industry.'' 46 CFR 530.8(c)(2), 531.6(c)(2).
    The Commission has received inquiries from the industry as to 
whether certain freight rate indices meet the Commission's standard, 
particularly its ``widely available to the public'' requirement. For 
example, until August 2011, the TSA index was not available to the 
public, even though some service contracts referenced TSA index before 
its publication. In addition, CCFI, SCFI, and Drewry indices make their 
current index levels available to the public without charge, but access 
to their historical data requires payment of subscription fees that can 
reach several thousand dollars per year.
    As the Commission began to consider whether these service contracts 
referencing freight indices comport with its regulation, it decided to 
do a more fundamental assessment of whether the regulation in its 
current form is more restrictive than is necessary to protect the 
shipping public and carry out the purposes of the Shipping Act.
    When adopting the rules for ``[c]ertainty of terms'' of service 
contracts, the Commission recognized that through the Ocean Shipping 
Reform Act of 1998, Congress intended, by lifting the requirements that 
tariffs be filed with the Commission, to allow parties to service 
contracts more freedom and flexibility in their commercial 
arrangements. See 63 FR 71062, 71066 (Dec. 23, 1998). More recently, 
the President has directed federal agencies to review their regulations 
and to reduce burdens and promote flexibility where appropriate. See 
Exec. Order 13563, 76 FR 3821 (Jan. 21, 2011); Exec. Order 13579, 76 FR 
41587 (Jul. 14, 2011).

Proposed Change

    Consistent with Congressional intent and the President's directives 
in Executive Orders 13563 and 13579, the Commission seeks to revise its 
regulations so that they are not unnecessarily burdensome and do not 
impede innovation and flexibility in commercial arrangements, while 
ensuring continued compliance with the Shipping Act's requirements.
    The proposed change would facilitate references to indices in 
service contracts and NSAs so that contracting parties can

[[Page 63582]]

pursue long-term contracts with rates that adjust through an agreed and 
ascertainable manner. The change will also ensure compliance with two 
important Shipping Act requirements. First, the Shipping Act requires 
that a service contract be a ``written contract,'' in which the ocean 
carrier ``commits to a certain rate or rate schedule.'' 46 U.S.C. 
40102(20). In order for a rate or rate schedule to be ``certain'' in a 
valid contract that is the product of a meeting of the minds, the rate 
should be known or easily ascertainable to the contracting parties.
    Second, the Shipping Act requires service contracts to be ``filed'' 
with the Commission. 46 U.S.C. 40502(b). The Commission believes that 
both the language and purpose of the Shipping Act's filing requirement 
would be undermined if contracting parties were permitted to include in 
service contracts references to unfiled terms, in this case important 
rate terms, which are not readily available to the Commission. The 
Commission is especially interested in public comments on the possible 
methods by which contracting parties could ensure that the information 
referred to in service contracts is readily available to the 
Commission. The Commission is also interested in public comments on 
ways to reduce any impediments to small shippers having the option of 
index-linked service contracts.
    The Commission also proposes the same change to the rule for NSAs, 
which are NVOCCs' contracts with their shippers and analogous to ocean 
common carriers' service contracts with their shippers.

Certifications

    The Chairman of the Commission certifies, pursuant to section 
605(b) of the Regulatory Flexibility Act, 5 U.S.C. 601 et seq., that 
the rule will not, if promulgated, have a significant economic impact 
on a substantial number of small entities. The proposed rule simply 
provides parties to service contracts and NVOCC service arrangements 
more freedom and flexibility in their commercial arrangements and will 
not adversely affect contracting parties.
    This rule is not a ``major rule'' under 5 U.S.C. 804(2).

List of Subjects in 46 CFR Parts 530 and 531

    Freight, Maritime carriers, Reporting and recordkeeping 
requirements.

    For the reasons stated in the supplementary information, the 
Federal Maritime Commission proposes to amend 46 CFR parts 530 and 531 
as follows.

PART 530--SERVICE CONTRACTS

    1. The authority citation for part 530 continues to read as 
follows:

    Authority: 5 U.S.C. 553; 46 U.S.C. 305, 40301-40306, 40501-
40503, 41307.

    2. Revise Sec.  530.8(c)(2) to read as follows:


Sec.  530.8  Service contracts.

* * * * *
    (c) * * *
    (2) Make reference to terms not explicitly contained in the service 
contract itself unless those terms are readily available to the parties 
and the Commission.
* * * * *

PART 531--NVOCC SERVICE ARRANGEMENTS

    3. The authority citation for Part 531 continues to read as 
follows:

    Authority: 46 U.S.C. 40103.

    4. Revise Sec.  531.6(c)(2) to read as follows:


Sec.  531.6  NVOCC Service Arrangements.

* * * * *
    (c) * * *
    (2) Make reference to terms not explicitly contained in the NSA 
itself unless those terms are readily available to the parties and the 
Commission. Reference may not be made to a tariff of a common carrier 
other than the NVOCC acting as carrier party to the NSA.
* * * * *

    By the Commission.
Karen V. Gregory,
Secretary.
[FR Doc. 2011-26418 Filed 10-12-11; 8:45 am]
BILLING CODE 6730-01-P
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