Certainty of Terms of Service Contracts and NVOCC Service Arrangements, 13508-13510 [2012-5461]
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13508
Federal Register / Vol. 77, No. 45 / Wednesday, March 7, 2012 / Rules and Regulations
it does not contain a Federal mandate
that may result in expenditures of $100
million or more for State, local, and
tribal governments, in the aggregate, or
for the private sector in any 1 year. In
addition, this action does not
significantly or uniquely affect small
governments or impose a significant
intergovernmental mandate, as
described in UMRA sections 203 and
204. For the same reasons, EPA has
determined that this action does not
have ‘‘federalism implications’’ as
specified in Executive Order 13132,
entitled Federalism (64 FR 43255,
August 10, 1999), because it would not
have substantial direct effects on the
States, on the relationship between the
national government and the States, or
on the distribution of power and
responsibilities among the various
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order. Thus, Executive Order 13132
does not apply to this action. Nor does
it have ‘‘tribal implications’’ as specified
in Executive Order 13175, entitled
Consultation and Coordination with
Indian Tribal Governments (65 FR
22951, November 9, 2000). Thus,
Executive Order 13175 does not apply
to this action.
Since this action is not economically
significant under Executive Order
12866, it is not subject to Executive
Order 13045, entitled Protection of
Children from Environmental Health
Risks and Safety Risks (62 FR 19885,
April 23, 1997) and Executive Order
13211, entitled Actions Concerning
Regulations that Significantly Affect
Energy Supply, Distribution, or Use (66
FR 28355, May 22, 2001). In addition,
EPA interprets Executive Order 13045
as applying only to those regulatory
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risks, which is not the case in this
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consideration of voluntary consensus
standards pursuant to section 12(d) of
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This action does not have an adverse
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does not involve special consideration
of environmental justice related issues
as specified in Executive Order 12898,
entitled Federal Actions to Address
Environmental Justice in Minority
Populations and Low-Income
Populations (59 FR 7629, February 16,
1994).
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V. Congressional Review Act
The Congressional Review Act, 5
U.S.C. 801 et seq., generally provides
that before a rule may take effect, the
Agency promulgating the rule must
submit a rule report to each House of
the Congress and to the Comptroller
General of the United States. EPA will
submit a report containing this rule and
other required information to the U.S.
Senate, the U.S. House of
Representatives, and the Comptroller
General of the United States prior to
publication of this final rule in the
Federal Register. This final rule is not
a ‘‘major rule’’ as defined by 5 U.S.C.
804(2).
List of Subjects in 40 CFR Part 721
Environmental protection, Chemicals,
Hazardous substances, Reporting and
recordkeeping requirements.
Dated: February 24, 2012.
Maria J. Doa,
Director, Chemical Control Division, Office
of Pollution Prevention and Toxics.
[FR Doc. 2012–5392 Filed 3–6–12; 8:45 am]
BILLING CODE 6560–50–P
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
Federal Maritime Commission.
Final rule.
AGENCY:
ACTION:
The Federal Maritime
Commission amends its rules regarding
certainty of terms of service contracts
and non-vessel-operating common
carrier service arrangements. The rule
provides common carriers and shippers
with certainty and flexibility by
facilitating their use of long-term
contracts that adjust based upon an
index reflecting changes in market
conditions.
SUMMARY:
The Final Rule is effective March
7, 2012.
FOR FURTHER INFORMATION CONTACT:
Karen V. Gregory, Secretary, Federal
Maritime Commission, 800 North
Capitol Street NW., Washington, DC
20573–0001, Phone: (202) 523–5725.
SUPPLEMENTARY INFORMATION:
DATES:
Background
By Notice of Proposed Rulemaking
(NPR) published on October 13, 2011,
76 FR 63581, the Federal Maritime
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Commission (FMC or Commission)
proposed to amend its rules for terms of
service contracts and Non-VesselOperating Common Carrier service
arrangements (NSA). The NPR was
intended to remove uncertainty in the
use of freight rate or other indices in
service contracts and NSAs, while also
assisting common carriers and shippers
in pursuing stability and flexibility
through long-term contracts.
The Commission found that an
increasing number of service contracts
filed with the Commission reference
indices. The ocean freight rates in those
service contracts adjust in increments
based upon the changes in the
referenced index levels or their annual
or quarterly averages. The Commission
believes that this trend has started to
appear because 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.
The Commission’s current regulation
with respect to terms of service
contracts and NSAs require 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 requirement. For
example, until August 2011, the
Transpacific Stabilization Agreement
(TSA) index was not available to the
public, even though some service
contracts referenced the TSA index
before its publication. In addition,
although many index publishers’
current index levels are available to the
public mostly without charge, access to
their historical data often requires
payment of subscription fees that can
reach up to several thousand dollars per
year.
While the Commission began to
consider whether the service contracts
referencing indices comport with its
regulation, the Commission also sought
to revise its regulations so that they are
not unnecessarily burdensome and do
not impede innovation and flexibility in
commercial arrangements between
common carriers and shippers.
The final rule would facilitate
references to indices in service contracts
and NSAs so that contracting parties can
pursue long-term contracts with rates
that adjust through an agreed and
ascertainable manner.
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Federal Register / Vol. 77, No. 45 / Wednesday, March 7, 2012 / Rules and Regulations
srobinson on DSK4SPTVN1PROD with RULES
Comments
The Commission received five public
comments responding to the NPR. The
comments were submitted by TSA,
Westbound Transpacific Stabilization
Agreement (WTSA), World Shipping
Counsel (WSC), carrier parties to the
World Liner Data Agreement (WLDA),
and TSC Container Freight (TSC).1 TSA,
WTSA, WSC, and TSC support the
Commission’s proposed change.
Although not explicitly stated, WLDA
does not oppose the proposed change.
TSA and WTSA support ‘‘the
Commission’s effort to expand
flexibility in service contracting and
welcome[s] the Commission’s support of
the option to use rate indices.’’ TSA and
WTSA believe that the ability to
reference a price index in service
contracts will not only enable the
parties to a service contract to allocate
risks, but also relieve the parties of the
administrative burden of preparing and
filing numerous contract amendments
in response to changes in market
conditions. Eliminating contentious
negotiations over numerous contract
amendments may help improve
relations between shippers and carriers.
TSA and WTSA stated that the
Commission’s rule change ‘‘may also
contribute to greater stability and
predictability in ocean freight rates, a
benefit consistently sought by carriers
and shippers alike,’’ and welcome and
applaud the Commission’s clarification
of its regulations for service contracts
and NSAs. Stating that the parties
should be able to refer to the index of
their choosing, TSA and WTSA
indicated that the Commission’s
regulation should promote maximum
flexibility, including by not favoring or
promoting any particular index.
Responding to the Commission’s
request for comments on the means to
ensure that the referenced indices are
readily available to the Commission,
TSA and WTSA recommend that the
Commission require such indices to be
made available to the Commission by
the carrier party to the contract within
thirty (30) days of a written request by
the Commission. TSA and WTSA stated
that such a requirement, which is based
on the Commission’s existing
requirement at 46 CFR 530.15,2 would
provide the Commission with adequate
1 The Commission determined to accept TSC’s
late-filed comment.
2 Section 530.15(c) of the Commission’s
regulation provides that every carrier or agreement
shall, upon written request of the FMC’s Director,
Bureau of Enforcement, any Area Representative or
the Director, Bureau of Economics and Agreements
Analysis [now BTA], submit copies of requested
original service contracts or their associated records
within thirty (30) days of the date of the request.
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assurance that it would have access to
such indices.
Finally, with respect to the
Commission’s concerns about how to
reduce any impediments to small
shippers having the option of indexlinked contracts, TSA and WTSA stated
that they are not aware of any
impediments to a small shipper using
such an index in a service contract with
a carrier, although their experience with
such index-linked contracts is still
relatively limited.
WSC supports the proposed changes.
WSC stated that the change will
facilitate flexibility and freedom of
contract by carriers and shippers.
Regarding the Commission’s question
about how to ensure that the
information referenced in service
contracts is readily available to the
Commission, WSC suggests that the
Commission require in the regulations
that either the carrier or the shipper
provide the rate index information upon
request by the Commission.
WLDA has contracted with Container
Trade Statistics Ltd. (CTS) to aggregate
and publish certain data, and through
CTS publishes a price index for
containerized dry and reefer cargo.
WLDA argues that the Commission’s
NPR created a misperception by
identifying four freight rate indices by
name, but not the CTS index. WLDA
submitted its comments to correct a
possible misperception that it would not
be lawful to use the CTS index in
service contracts, or that the CTS index
or other data published by CTS are
somewhat less reliable or valuable than
the named indices. WLDA asks that the
Commission include in the
supplementary information of the final
rule a statement that the CTS rate index
is compliant with the revised regulation.
TSC supports index linked contracts
because they will ‘‘provide more
contracting options for shippers large
and small.’’
Discussion
Contrary to WLDA’s comments, the
NPR named four indices only as
examples of freight indices referenced
in service contracts that had been
submitted to the Commission at the time
of the publication of the NPR. The
Commission, however, did not intend to
imply that those were the only freight
indices or that it had any concerns
regarding the CTS index. The proposed
change was to facilitate, not to limit or
impede, long-term contracts between
shippers and carriers, while ensuring
their compliance with the Shipping Act.
As long as the referenced terms comply
with the revised regulations, the
shippers and carriers are free to use not
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13509
only any freight indices, but also other
indices such as the Bureau of Labor
Statistics’s Consumer Price Index that
was already referred to in certain service
contracts.
With respect to the question about
possible methods to ensure that the
information referred to in service
contracts is readily available to the
Commission, the Commission adopts
TSA’s and WTSA’s suggestions. As
some index publishers require annual
payment of up to several thousand
dollars for historical data, requiring
small shippers to provide that data to
the Commission may impede their
utilization of long-term contracts.
Further, many small shippers may enter
into a service contract only once a year,
whereas common carriers may enter
into service contracts with numerous
shippers. Requiring those small
shippers to provide the historical data
appears to be not only prohibitive, but
also unfair because the substantial
annual subscription fee may
disproportionately negate the benefit of
long-term contracts with respect to
those small shippers. Therefore, the
Commission adopts TSA’s and WTSA’s
recommendations that associated
records of such indices, including any
historical data used to adjust contract
rates, must be made available to the
Commission by the carrier party to the
contract within thirty (30) days of a
written request by the Commission.
TSA and WTSA stated that they are
not aware of any impediment to a small
shipper using a freight index in a
service contract with a carrier who is
willing to do so. By requiring carrier
parties to service contracts to provide
the ‘‘associated records,’’ the final rule
will further minimize possible
impediments to small shippers in
entering into long-term contracts.
Finally, as already proposed in the
NPR, this final rule also makes 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.
Regulatory Findings
The Regulatory Flexibility Act (RFA)
allows the head of an agency after a
threshold analysis, in lieu of preparing
an analysis required by 5 U.S.C. 603 and
604, to certify that ‘‘the rule will not, if
promulgated, have a significant
economic impact on a substantial
number of small entities.’’ 5 U.S.C.
605(b). Such certification may be
published in the Federal Register either
at the time of publication of notice of
proposed rulemaking or at the time of
publication of the final rule. Id.
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Federal Register / Vol. 77, No. 45 / Wednesday, March 7, 2012 / Rules and Regulations
This Final Rule is intended to
enhance the flexibility of regulated
entities concluding contractual
relationships subject to the Shipping
Act and the Commission’s regulations.
There are two types of regulated entities
that this Final Rule may affect: vesseloperating common carriers (VOCCs) and
non-vessel-operating common carriers
(NVOCCs). The Commission currently
has on file registrations (Form FMC–1)
for 294 VOCCs. VOCCs are generally not
small entities, as defined by North
American Industry Classification
System’s size standards identified by
Small Business Administration. 13 CFR
121.201. While some are large, multinational corporations, most NVOCCs
licensed by the Commission have fewer
than 500 employees and are therefore
small entities. There are currently 4,652
NVOCCs licensed by or registered with
the Commission.
The Commission believes that there
are approximately 46,962 effective
service contracts on file with the
Commission between May 1, 2011
through February 9, 2012. Of those, the
Commission has identified 62 service
contracts referencing indices,
approximately 0.13% of the total, that
would become subject to the Final Rule.
Complying with the Final Rule with
respect to 0.13% of the total service
contracts would not appear to result in
a ‘‘significant economic impact’’ on
VOCCs. Specifically, only VOCCs whose
service contracts refer to indices will be
subject to the requirements of 46 CFR
530.8(c)(3) of the Final Rule, and based
upon the number of contracts currently
on file with the Commission, that
number is very small.
Nor will this Final Rule have a
‘‘significant economic impact’’ on
NVOCCs. The rule simply provides
parties to service contracts and NSAs
more freedom and flexibility in their
commercial arrangements and will not
adversely affect small NVOCCs. Unlike
VOCC service contracts, there are no
NSAs currently on file with the
Commission that reference indices, and,
therefore, no NSAs would be impacted
by the Final Rule.
In view of the above, the Chairman of
the Commission hereby certifies,
pursuant to 46 U.S.C. 605(b) of the
Regulatory Flexibility Act that the rule
will not, if promulgated, have a
significant economic impact on a
substantial number of small entities.
This rule is not a ‘‘major rule’’ under
5 U.S.C. 804(2).
As VOCC parties to service contracts
and NVOCC parties to NSAs are already
required to provide ‘‘associated records’’
to the Commission pursuant to the
Commission’s regulations at 46 CFR
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Jkt 226001
530.15(c) and 531.12(b), this Final Rule
does not impose any new recordkeeping
or reporting requirements on VOCCs or
NVOCCs that would be ‘‘collection of
information’’ requiring approval under
the Paperwork Reduction Act, 44 U.S.C.
3501 et seq.
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 amends 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) to read as follows:
§ 530.8
(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.
(3) Pursuant to § 531.12(b), the carrier
party to the NSA must, upon written
request by the Commission, provide the
Commission with the associated records
of the referenced terms. For the purpose
of paragraph (c)(2) of this section, the
referenced terms will be deemed readily
available to the Commission if the
carrier party to the NSA provides the
Commission with the associated records
of the terms within thirty (30) days of
the Commission’s written request.
*
*
*
*
*
By the Commission.
Karen V. Gregory,
Secretary.
[FR Doc. 2012–5461 Filed 3–6–12; 8:45 am]
BILLING CODE 6730–01–P
Service Contracts.
*
*
*
*
*
(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 service
contract itself unless those terms are
readily available to the parties and the
Commission.
(3) Pursuant to § 530.15(c), the carrier
party to the service contract must, upon
written request by the Commission,
provide the Commission with the
associated records of the referenced
terms. For the purpose of paragraph
(c)(2) of this section, the referenced
terms will be deemed readily available
to the Commission if the carrier party to
the service contract provides the
Commission with the associated records
of the terms within thirty (30) days of
the Commission’s written request.
*
*
*
*
*
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) to read as follows:
§ 531.6
NVOCC Service Arrangements.
*
*
*
*
*
(c) Certainty of terms. The terms
described in paragraph (b) of this
section may not:
(1) Be uncertain, vague or ambiguous;
or
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DEPARTMENT OF COMMERCE
National Oceanic and Atmospheric
Administration
50 CFR Part 679
[Docket No. 101126522–0640–2]
RIN 0648–XB062
Pacific Cod by Catcher Vessels Less
Than 50 Feet (15.2 Meters) Length
Overall Using Hook-and-Line Gear in
the Central Regulatory Area of the Gulf
of Alaska
National Marine Fisheries
Service (NMFS), National Oceanic and
Atmospheric Administration (NOAA),
Commerce.
ACTION: Temporary rule; closure.
AGENCY:
NMFS is prohibiting directed
fishing for Pacific cod by catcher vessels
(CVs) less than 50 feet (15.2 meters (m))
in length overall (LOA) using hook-andline gear in the Central Regulatory Area
of the Gulf of Alaska (GOA). This action
is necessary to prevent exceeding the A
season allowance of the 2012 Pacific
cod total allowable catch apportioned to
CVs less than 50 feet (15.2 m) LOA
using hook-and-line gear in the Central
Regulatory Area of the GOA.
DATES: Effective 1200 hrs, Alaska local
time (A.l.t.), March 4, 2012, through
1200 hrs, A.l.t., September 1, 2012.
FOR FURTHER INFORMATION CONTACT:
Obren Davis, 907–586–7228.
SUPPLEMENTARY INFORMATION: NMFS
manages the groundfish fishery in the
SUMMARY:
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]]>Agencies
[Federal Register Volume 77, Number 45 (Wednesday, March 7, 2012)]
[Rules and Regulations]
[Pages 13508-13510]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-5461]
=======================================================================
-----------------------------------------------------------------------
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: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Federal Maritime Commission amends its rules regarding
certainty of terms of service contracts and non-vessel-operating common
carrier service arrangements. The rule provides common carriers and
shippers with certainty and flexibility by facilitating their use of
long-term contracts that adjust based upon an index reflecting changes
in market conditions.
DATES: The Final Rule is effective March 7, 2012.
FOR FURTHER INFORMATION CONTACT: Karen V. Gregory, Secretary, Federal
Maritime Commission, 800 North Capitol Street NW., Washington, DC
20573-0001, Phone: (202) 523-5725.
SUPPLEMENTARY INFORMATION:
Background
By Notice of Proposed Rulemaking (NPR) published on October 13,
2011, 76 FR 63581, the Federal Maritime Commission (FMC or Commission)
proposed to amend its rules for terms of service contracts and Non-
Vessel-Operating Common Carrier service arrangements (NSA). The NPR was
intended to remove uncertainty in the use of freight rate or other
indices in service contracts and NSAs, while also assisting common
carriers and shippers in pursuing stability and flexibility through
long-term contracts.
The Commission found that an increasing number of service contracts
filed with the Commission reference indices. The ocean freight rates in
those service contracts adjust in increments based upon the changes in
the referenced index levels or their annual or quarterly averages. The
Commission believes that this trend has started to appear because
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.
The Commission's current regulation with respect to terms of
service contracts and NSAs require 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 requirement. For example, until August
2011, the Transpacific Stabilization Agreement (TSA) index was not
available to the public, even though some service contracts referenced
the TSA index before its publication. In addition, although many index
publishers' current index levels are available to the public mostly
without charge, access to their historical data often requires payment
of subscription fees that can reach up to several thousand dollars per
year.
While the Commission began to consider whether the service
contracts referencing indices comport with its regulation, the
Commission also sought to revise its regulations so that they are not
unnecessarily burdensome and do not impede innovation and flexibility
in commercial arrangements between common carriers and shippers.
The final rule would facilitate references to indices in service
contracts and NSAs so that contracting parties can pursue long-term
contracts with rates that adjust through an agreed and ascertainable
manner.
[[Page 13509]]
Comments
The Commission received five public comments responding to the NPR.
The comments were submitted by TSA, Westbound Transpacific
Stabilization Agreement (WTSA), World Shipping Counsel (WSC), carrier
parties to the World Liner Data Agreement (WLDA), and TSC Container
Freight (TSC).\1\ TSA, WTSA, WSC, and TSC support the Commission's
proposed change. Although not explicitly stated, WLDA does not oppose
the proposed change.
---------------------------------------------------------------------------
\1\ The Commission determined to accept TSC's late-filed
comment.
---------------------------------------------------------------------------
TSA and WTSA support ``the Commission's effort to expand
flexibility in service contracting and welcome[s] the Commission's
support of the option to use rate indices.'' TSA and WTSA believe that
the ability to reference a price index in service contracts will not
only enable the parties to a service contract to allocate risks, but
also relieve the parties of the administrative burden of preparing and
filing numerous contract amendments in response to changes in market
conditions. Eliminating contentious negotiations over numerous contract
amendments may help improve relations between shippers and carriers.
TSA and WTSA stated that the Commission's rule change ``may also
contribute to greater stability and predictability in ocean freight
rates, a benefit consistently sought by carriers and shippers alike,''
and welcome and applaud the Commission's clarification of its
regulations for service contracts and NSAs. Stating that the parties
should be able to refer to the index of their choosing, TSA and WTSA
indicated that the Commission's regulation should promote maximum
flexibility, including by not favoring or promoting any particular
index.
Responding to the Commission's request for comments on the means to
ensure that the referenced indices are readily available to the
Commission, TSA and WTSA recommend that the Commission require such
indices to be made available to the Commission by the carrier party to
the contract within thirty (30) days of a written request by the
Commission. TSA and WTSA stated that such a requirement, which is based
on the Commission's existing requirement at 46 CFR 530.15,\2\ would
provide the Commission with adequate assurance that it would have
access to such indices.
---------------------------------------------------------------------------
\2\ Section 530.15(c) of the Commission's regulation provides
that every carrier or agreement shall, upon written request of the
FMC's Director, Bureau of Enforcement, any Area Representative or
the Director, Bureau of Economics and Agreements Analysis [now BTA],
submit copies of requested original service contracts or their
associated records within thirty (30) days of the date of the
request.
---------------------------------------------------------------------------
Finally, with respect to the Commission's concerns about how to
reduce any impediments to small shippers having the option of index-
linked contracts, TSA and WTSA stated that they are not aware of any
impediments to a small shipper using such an index in a service
contract with a carrier, although their experience with such index-
linked contracts is still relatively limited.
WSC supports the proposed changes. WSC stated that the change will
facilitate flexibility and freedom of contract by carriers and
shippers. Regarding the Commission's question about how to ensure that
the information referenced in service contracts is readily available to
the Commission, WSC suggests that the Commission require in the
regulations that either the carrier or the shipper provide the rate
index information upon request by the Commission.
WLDA has contracted with Container Trade Statistics Ltd. (CTS) to
aggregate and publish certain data, and through CTS publishes a price
index for containerized dry and reefer cargo. WLDA argues that the
Commission's NPR created a misperception by identifying four freight
rate indices by name, but not the CTS index. WLDA submitted its
comments to correct a possible misperception that it would not be
lawful to use the CTS index in service contracts, or that the CTS index
or other data published by CTS are somewhat less reliable or valuable
than the named indices. WLDA asks that the Commission include in the
supplementary information of the final rule a statement that the CTS
rate index is compliant with the revised regulation.
TSC supports index linked contracts because they will ``provide
more contracting options for shippers large and small.''
Discussion
Contrary to WLDA's comments, the NPR named four indices only as
examples of freight indices referenced in service contracts that had
been submitted to the Commission at the time of the publication of the
NPR. The Commission, however, did not intend to imply that those were
the only freight indices or that it had any concerns regarding the CTS
index. The proposed change was to facilitate, not to limit or impede,
long-term contracts between shippers and carriers, while ensuring their
compliance with the Shipping Act. As long as the referenced terms
comply with the revised regulations, the shippers and carriers are free
to use not only any freight indices, but also other indices such as the
Bureau of Labor Statistics's Consumer Price Index that was already
referred to in certain service contracts.
With respect to the question about possible methods to ensure that
the information referred to in service contracts is readily available
to the Commission, the Commission adopts TSA's and WTSA's suggestions.
As some index publishers require annual payment of up to several
thousand dollars for historical data, requiring small shippers to
provide that data to the Commission may impede their utilization of
long-term contracts. Further, many small shippers may enter into a
service contract only once a year, whereas common carriers may enter
into service contracts with numerous shippers. Requiring those small
shippers to provide the historical data appears to be not only
prohibitive, but also unfair because the substantial annual
subscription fee may disproportionately negate the benefit of long-term
contracts with respect to those small shippers. Therefore, the
Commission adopts TSA's and WTSA's recommendations that associated
records of such indices, including any historical data used to adjust
contract rates, must be made available to the Commission by the carrier
party to the contract within thirty (30) days of a written request by
the Commission.
TSA and WTSA stated that they are not aware of any impediment to a
small shipper using a freight index in a service contract with a
carrier who is willing to do so. By requiring carrier parties to
service contracts to provide the ``associated records,'' the final rule
will further minimize possible impediments to small shippers in
entering into long-term contracts.
Finally, as already proposed in the NPR, this final rule also makes
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.
Regulatory Findings
The Regulatory Flexibility Act (RFA) allows the head of an agency
after a threshold analysis, in lieu of preparing an analysis required
by 5 U.S.C. 603 and 604, to certify that ``the rule will not, if
promulgated, have a significant economic impact on a substantial number
of small entities.'' 5 U.S.C. 605(b). Such certification may be
published in the Federal Register either at the time of publication of
notice of proposed rulemaking or at the time of publication of the
final rule. Id.
[[Page 13510]]
This Final Rule is intended to enhance the flexibility of regulated
entities concluding contractual relationships subject to the Shipping
Act and the Commission's regulations. There are two types of regulated
entities that this Final Rule may affect: vessel-operating common
carriers (VOCCs) and non-vessel-operating common carriers (NVOCCs). The
Commission currently has on file registrations (Form FMC-1) for 294
VOCCs. VOCCs are generally not small entities, as defined by North
American Industry Classification System's size standards identified by
Small Business Administration. 13 CFR 121.201. While some are large,
multi-national corporations, most NVOCCs licensed by the Commission
have fewer than 500 employees and are therefore small entities. There
are currently 4,652 NVOCCs licensed by or registered with the
Commission.
The Commission believes that there are approximately 46,962
effective service contracts on file with the Commission between May 1,
2011 through February 9, 2012. Of those, the Commission has identified
62 service contracts referencing indices, approximately 0.13% of the
total, that would become subject to the Final Rule. Complying with the
Final Rule with respect to 0.13% of the total service contracts would
not appear to result in a ``significant economic impact'' on VOCCs.
Specifically, only VOCCs whose service contracts refer to indices will
be subject to the requirements of 46 CFR 530.8(c)(3) of the Final Rule,
and based upon the number of contracts currently on file with the
Commission, that number is very small.
Nor will this Final Rule have a ``significant economic impact'' on
NVOCCs. The rule simply provides parties to service contracts and NSAs
more freedom and flexibility in their commercial arrangements and will
not adversely affect small NVOCCs. Unlike VOCC service contracts, there
are no NSAs currently on file with the Commission that reference
indices, and, therefore, no NSAs would be impacted by the Final Rule.
In view of the above, the Chairman of the Commission hereby
certifies, pursuant to 46 U.S.C. 605(b) of the Regulatory Flexibility
Act that the rule will not, if promulgated, have a significant economic
impact on a substantial number of small entities.
This rule is not a ``major rule'' under 5 U.S.C. 804(2).
As VOCC parties to service contracts and NVOCC parties to NSAs are
already required to provide ``associated records'' to the Commission
pursuant to the Commission's regulations at 46 CFR 530.15(c) and
531.12(b), this Final Rule does not impose any new recordkeeping or
reporting requirements on VOCCs or NVOCCs that would be ``collection of
information'' requiring approval under the Paperwork Reduction Act, 44
U.S.C. 3501 et seq.
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 amends 46 CFR parts 530 and 531 as follows.
PART 530--SERVICE CONTRACTS
0
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.
0
2. Revise Sec. 530.8(c) to read as follows:
Sec. 530.8 Service Contracts.
* * * * *
(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 service
contract itself unless those terms are readily available to the parties
and the Commission.
(3) Pursuant to Sec. 530.15(c), the carrier party to the service
contract must, upon written request by the Commission, provide the
Commission with the associated records of the referenced terms. For the
purpose of paragraph (c)(2) of this section, the referenced terms will
be deemed readily available to the Commission if the carrier party to
the service contract provides the Commission with the associated
records of the terms within thirty (30) days of the Commission's
written request.
* * * * *
PART 531--NVOCC SERVICE ARRANGEMENTS
0
3. The authority citation for Part 531 continues to read as follows:
Authority: 46 U.S.C. 40103.
0
4. Revise Sec. 531.6(c) to read as follows:
Sec. 531.6 NVOCC Service Arrangements.
* * * * *
(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 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.
(3) Pursuant to Sec. 531.12(b), the carrier party to the NSA must,
upon written request by the Commission, provide the Commission with the
associated records of the referenced terms. For the purpose of
paragraph (c)(2) of this section, the referenced terms will be deemed
readily available to the Commission if the carrier party to the NSA
provides the Commission with the associated records of the terms within
thirty (30) days of the Commission's written request.
* * * * *
By the Commission.
Karen V. Gregory,
Secretary.
[FR Doc. 2012-5461 Filed 3-6-12; 8:45 am]
BILLING CODE 6730-01-P
