Amendments to Regulations Governing Service Contracts and NVOCC Service Arrangements, 56559-56571 [2016-19843]

Agencies

• Federal Maritime Commission

[Federal Register Volume 81, Number 162 (Monday, August 22, 2016)]
[Proposed Rules]
[Pages 56559-56571]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-19843]


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FEDERAL MARITIME COMMISSION

46 CFR Parts 530 and 531

[Docket No. 16-05]
RIN 3072-AC53


Amendments to Regulations Governing Service Contracts and NVOCC 
Service Arrangements

AGENCY: Federal Maritime Commission.

ACTION: Notice of Proposed Rulemaking.

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SUMMARY: The Federal Maritime Commission (FMC or Commission) proposes 
to amend its rules governing Service Contracts and NVOCC Service 
Arrangements. The proposed rule is intended to update, modernize, and 
reduce the regulatory burden.

DATES: Submit comments on or before September 23, 2016. In compliance 
with the Paperwork Reduction Act, the Commission is also seeking 
comment on revisions to an information collection. See the Paperwork 
Reduction Act section under Regulatory Analyses and Notices below. 
Please submit all comments relating to the revised information 
collection to the Commission and to the Office of Management and Budget 
(OMB) at the address listed in the ADDRESSES section on or before 
October 24, 2016. Comments to OMB are most useful if submitted within 
30 days of publication.

ADDRESSES: You may submit comments by the following methods:
     Email: secretary@fmc.gov. Include in the subject line: 
``Docket 16-05, [Commentor/Company name].'' Comments should be attached 
to the email as a Microsoft Word or text-searchable PDF document. Only 
non-confidential and public versions of confidential comments should be 
submitted by email.
     Mail: Karen V. Gregory, Secretary, Federal Maritime 
Commission, 800 North Capitol Street NW., Washington, DC 20573-0001.
    Docket: For access to the docket to read background documents or 
comments received, go to the Commission's Electronic Reading Room at: 
https://www.fmc.gov/16-05.
    Confidential Information: The Commission will provide confidential 
treatment for identified confidential information to the extent allowed 
by law. If your comments contain confidential information, you must 
submit the following:
     A transmittal letter requesting confidential treatment 
that identifies the specific information in the comments for which 
protection is sought and demonstrates that the information is a trade 
secret or other confidential research, development, or commercial 
information.
     A confidential copy of your comments, consisting of the 
complete filing with a cover page marked ``Confidential-Restricted,'' 
and the confidential material clearly marked on each page. You should 
submit the confidential copy to the Commission by mail.
     A public version of your comments with the confidential 
information excluded. The public version must state ``Public Version--
confidential materials excluded'' on the cover page and on each 
affected page, and must clearly indicate any information withheld. You 
may submit the public version to the Commission by email or mail.

FOR FURTHER INFORMATION CONTACT: For questions regarding submitting 
comments or the treatment of confidential information, contact Karen V. 
Gregory, Secretary. Phone: (202) 523-5725. Email: secretary@fmc.gov. 
For technical questions, contact Florence A. Carr, Director, Bureau of 
Trade Analysis. Phone: (202) 523-5796. Email: tradeanalysis@fmc.gov. 
For legal questions, contact Tyler J. Wood, General Counsel. Phone: 
(202) 523-5740. Email: generalcounsel@fmc.gov.

SUPPLEMENTARY INFORMATION: 

I. Background

    In 1984, Congress passed the Shipping Act of 1984 (the Shipping Act 
or the Act). 46 U.S.C. 40101 et seq., which introduced the concept of 
carriage under service contracts with the Federal Maritime Commission 
(Commission or FMC). The pricing of liner services via negotiated 
contracts, rather than exclusively by public tariffs, was a change that 
had profound effects on the liner industry. FMC regulations require all 
ocean freight rates, surcharges, and accessorial charges in liner 
trades to be published in ocean common carrier tariffs or agreed to in 
service contracts filed with the Commission. Contemporaneous with the 
filing of service contracts, carriers are also required to make 
available to the public a concise statement of essential terms in 
tariff format.
    In 1998, Congress passed the Ocean Shipping Reform Act (OSRA), 
amending the Shipping Act of 1984 relating to service contracts. To 
facilitate compliance and minimize the filing burdens on the oceanborne 
commerce of the United States, service contracts and amendments 
effective after April 30, 1999, are required by FMC regulations to be 
filed with the Commission in

[[Page 56560]]

electronic format. This eliminated the regulatory burden of filing in 
paper format, thereby saving ocean carriers both time and money. In 
addition, OSRA reduced the essential terms that had to be made publicly 
available.\1\ Service contracts and amendments continue to be filed 
into the Commission's electronic filing system, SERVCON.
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    \1\ Prior to OSRA, contract rates were published in the 
essential terms tariff publication, thereby allowing similarly 
situated shippers to request and obtain similar terms. In enacting 
OSRA, Congress limited the essential terms publication to the 
following terms: The origin and destination port ranges, the 
commodities, the minimum volume or portion, and the duration.
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    In 2005, the Commission issued a rule exempting non-vessel-
operating common carriers (NVOCCs) from certain tariff publication 
requirements of the Shipping Act, pursuant to section 16 of the 
Shipping Act, 46 U.S.C. 40103. 69 FR 75850 (Dec. 20, 2004) (final 
rule). Under the exemption, NVOCCs are relieved from certain Shipping 
Act tariff requirements, provided that the carriage in question is 
performed pursuant to an NVOCC Service Arrangement (NSA) filed with the 
Commission and the essential terms are published in the NVOCC's tariff. 
46 CFR 531.1, 531.5, and 531.9.
    On February 29, 2016, the Commission issued an Advance Notice of 
Proposed Rulemaking (ANPR) to elicit public comment regarding its 
regulations in Part 530, Service Contracts, and Part 531, NVOCC Service 
Arrangements. In drafting the ANPR, President Obama's Executive Order 
13563 served as guidance for the Commission in seeking ways in which 
the regulations should be modified, expanded, or streamlined in order 
to make the regulations more effective, reduce the regulatory burden, 
encourage public participation, make use of technology, and consider 
flexible approaches, keeping in mind the FMC's mission, strategic 
goals, and regulatory responsibilities.
    Eleven sets of comments were filed in response to the ANPR, which 
may be found on the Commission's Web site through the link to the FMC's 
Electronic Reading Room, above. Comments were received from Ascend 
Performance Materials; CEVA Freight LLC as agents for and on behalf of 
Pyramid Lines; Crowley Latin American Services, LLC, and Crowley 
Caribbean Service, LLC (Crowley); Global Maritime Transportation 
Services, Inc. (GMTS); Global Shippers Association; the National 
Customs Brokers and Forwarders Association of America, Inc. (NCBFAA); 
Oceaneering International Inc.; Shintech Inc.; UPS Ocean Freight 
Services, Inc., UPS Europe SPRL, UPS Asia Group Pte. Ltd. and UPS 
Supply Chain Solutions, Inc. (collectively, UPS); Unitcargo Container 
Line, Inc., and the World Shipping Council (WSC). Earlier, comments 
submitted in response to the Commission's Plan for Retrospective Review 
of Existing Rules pertaining to the subject rulemaking were filed by 
the NCBFAA and a group of major ocean carriers.\2\ Those comments are 
also posted to the Commission's Web site under Docket No. 16-05. The 
comments received thus far represent a broad swath of industry 
stakeholders, including vessel-operating common carriers (VOCCs), a 
major trade association, a tariff publishing and contract management 
firm, licensed NVOCCs and freight forwarders, registered foreign based 
NVOCCs, beneficial cargo owners (BCOs) and a shippers' association.
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    \2\ The commenting carriers consisted of thirty ocean carriers 
participating in the following agreements active at that time: the 
fourteen members of the Transpacific Stabilization Agreement; ten 
members of the Westbound Transpacific Stabilization Agreement; the 
six members of the Central America Discussion Agreement; the eleven 
members of the West Coast of South America Discussion Agreement; the 
five members of the Venezuela Discussion Agreement; three members of 
the ABC Discussion Agreement; the six members of the United States 
Australasia Discussion Agreement; and the three members of the 
Australia and New Zealand-United States Discussion Agreement.
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II. Discussion

    Below, on a section-by-section basis, is a discussion of issues on 
which the Commission requested public comment regarding the regulations 
governing service contracts and NSAs in 46 CFR parts 530 and 531, 
respectively.

Part 530--Service Contracts

Subpart A--General Provisions

Sec.  530.3 Definitions
Sec.  530.3 Affiliate
    The Commission proposes adding a definition of affiliate in this 
section to provide clarity as well as consistency throughout the 
Commission's rules. FMC regulations currently define the term affiliate 
in the NVOCC Service Arrangements rules at Sec.  531.3(b) as two or 
more entities which are under common ownership or control by reason of 
being parent and subsidiary or entities associated with, under common 
control with, or otherwise related to each other through common stock 
ownership or common directors or officers.\3\
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    \3\ This definition also currently exists in the rules governing 
NVOCC Negotiated Rate Arrangements (NRAs). See Sec.  532.3(e).
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    Comments received from the WSC, and separately from Crowley, as a 
member of the WSC, have no objection to the Commission's proposal to 
adopt with respect to service contracts, the foregoing definition of 
affiliate used in the NSA regulations. The WSC further asks that the 
Commission clarify that the adoption of the definition ``does not 
preclude more specific definitions of that term in service contracts or 
tariffs, so long as those more specific definitions fall within the 
scope of the Commission's definition.'' As one example, the WSC opines 
that it would not foresee the Commission objecting to the inclusion in 
a service contract of a minimum level of common ownership between two 
shipper entities asking to be considered affiliates. The Commission 
does not presently object to an individual carrier narrowing the 
proposed definition of affiliate in its service contracts as described 
in the WSC's example.
    UPS objects to adding the definition of affiliate to this Part and, 
instead, states that ``the opposite course--removing the corporate 
ownership and control restriction for both VOCC Service Contracts and 
NVOCC NSAs--would be far more beneficial to commerce and 
competitiveness in the logistics industries.'' UPS further states that 
``there is no apparent benefit to anyone from restricting shipper 
`affiliates' in NSAs to entities under common ownership and control.'' 
UPS notes that VOCC service contracts are not subject to the same 
corporate ownership restrictions for affiliates as NVOCCs under NSAs, 
which allows VOCCS to include as affiliates in their contracts various 
partners in the supply chain, such as buyers and suppliers, while 
NVOCCs may not. UPS believes that there should be an ``equal playing 
field'' between NVOCCs and VOCCs with respect to affiliates and 
suggests that removing the corporate ownership restriction rather than 
applying it to both NVOCCs and VOCCs would be the better approach.
    GMTS has several concerns regarding the proposed definition of 
affiliate that were not addressed in the ANPR, namely: (1) whether 
existing contracts that do not comply will be grandfathered in, and if 
so, whether there would be limitations on extending those contracts' 
termination dates; (2) whether, if the Commission determines to add the 
proposed definition of affiliate, it would also consider adding the 
definition of shippers' association; and (3) asks how the Commission 
will address currently effective service contracts between a VOCC and 
multiple NVOCCs that are not affiliated under the

[[Page 56561]]

proposed definition and are not part of an association.
    While UPS, an NVOCC and freight forwarder, cites a perceived VOCC 
advantage gained by not having shipper affiliates restricted to common 
ownership or control in service contracts, in contrast, the WSC, which 
is comprised of ocean carriers representing approximately 90% of global 
liner vessel capacity, does not object to adding the proposed 
definition of affiliate to service contract regulations, noting that 
``the proposed definition is consistent with definitions that are often 
included in service contracts (either directly or through incorporation 
of proposed tariff definitions).'' The advantage that VOCCs have over 
NVOCCs as a result of this inconsistent requirement seems unclear, 
given WSC's position and further request for clarification that any 
imposition of a minimum ownership percentage by a VOCC with respect to 
an affiliate in a service contract would not conflict with the proposed 
definition, should it be added.
    Over the years, Commission staff has been contacted regularly by 
VOCCs with issues and questions stemming from a lack of clarity 
regarding appropriate criteria for affiliates participating in service 
contracts. Regulated entities have noted the existence of the 
definition of affiliate in both the NSA rules at Sec.  531.3(b) and the 
NRA rules at Sec.  532.3(e), along with the omission of the identical 
definition in the service contract regulations, and have expressed 
confusion with this disparate treatment. This rulemaking seeks to 
address this dissimilarity, as the consistent application of regulatory 
requirements contributes to a more efficient regulatory process and 
therefore, absent evidence of harm to shippers or an undue regulatory 
burden on carriers, is in the Commission's interest.
    While the Commission believes that the consistent application of 
common ownership or control criteria in determining whether two 
companies are affiliated lends validity to the concept of affiliation 
with respect to a shipper's status under a service contract or NSA, it 
does not propose to include a specific minimum ownership percentage in 
the definition of affiliate. The proposed definition in this section is 
broad enough to allow individual VOCCs the ability to stipulate a 
minimum ownership percentage at the service contract or tariff level, 
and ensures consistency with the definition in the Commission's rules 
governing NSAs in Part 531 and NRAs in Part 532.
    Similarly, another government agency, the Securities and Exchange 
Commission, 17 CFR 230.405, defines an affiliate, of, or person 
affiliated with, a specified person, as a person that directly, or 
indirectly through one or more intermediaries, controls or is 
controlled by, or is under common control with, the person specified.
Sec.  530.3(i) Effective Date
    FMC regulations require that a service contract or amendment cannot 
become effective prior to its filing with the Commission. In the ANPR, 
the Commission sought comment on whether it should amend the definition 
of effective date with respect to service contract amendments to allow 
the effective date of amendments to be prior to the filing date of the 
amendment.
    In its comments, WSC stated that this change would ``remove a 
regulatory obstacle to the timely implementation of commercial terms to 
which the shipper and the carrier have agreed.'' WSC notes that, not 
only are there over 500,000 service contract amendments filed annually, 
but filing activity surges during peak periods, and the current 
requirement delays implementation of agreed upon-terms. The WSC urges 
the Commission to move promptly toward finalizing a rule to implement 
this change. Crowley, which endorses the WSC comments, also states that 
it enthusiastically supports the Commission allowing service contract 
amendments to be filed up to 30 days after the terms of the amendment 
are agreed upon with the shipper.
    Shintech Inc., a beneficial cargo owner (BCO), supports the 
proposed change to allow service contract amendments to be effective 
upon agreement of the parties with the filing occurring up to 30 days 
later. If finalized, Shintech states that this proposed rule change 
``would provide our industry with much needed modifications to a system 
that no longer reflects the practical needs of maritime commerce.'' Two 
other BCOs, Ascend Performance Materials and Oceaneering International 
Inc. also support a 30-day grace period for filing service contract 
amendments, as does Global Shippers Association. CEVA, an agent for 
registered foreign NVOCC Pyramid Lines, supports allowing up to 30 days 
after agreement of the parties for amendments to both service contracts 
and NSAs to be filed with the Commission.
    Unitcargo Container Line, Inc., a licensed NVOCC, ``applauds'' the 
Commission's efforts to review and simplify its regulations relating to 
service contracts and NSAs. Unitcargo believes that the proposed 
changes to the regulations relating to the periods of time within which 
ocean carriers and NVOCCs may file amendments and corrections to 
service contracts and NSAs, would undoubtedly reduce the associated 
regulatory burdens and lauds those changes for ``making it possible for 
ocean carriers and NVOCCs to keep pace with the often turbulent ocean 
shipping marketplace.''
    UPS commended the Commission ``for examining possible approaches to 
increase efficiency in the industry.'' UPS believes that the Commission 
should allow service contracts, NSAs, and amendments to be filed and 
the corresponding essential terms to be published ``within a reasonable 
time after the effective date, rather than in advance.'' UPS explains 
that ``[i]n many instances, shippers approach carriers with potential 
business opportunities that involve complex arrangements, including 
transactions covering multiple levels of a supply chain.'' UPS 
emphasizes that ``[i]t is critical to the shippers and carriers to be 
able to implement these arrangements rapidly, in order to assist the 
U.S. exporter or supply chain manager to meet competitive conditions or 
avoid port congestion.'' UPS states that the requested regulatory 
relief ``will facilitate transactions and encourage compliance, rather 
than incentivizing participants to try to structure transactions to 
avoid regulation.''
    In its comments, the NCBFAA supports the Commission's proposal to 
ease the service contract amendment filing requirements to allow filing 
up to 30 days after agreement and requests that the Commission provide 
that same regulatory relief to NSAs. NCBFAA, however, also believes 
that the relief discussed in the ANPR is not expansive enough to 
provide meaningful relief to NVOCCs and urges the Commission to 
completely eliminate its NSA essential terms publication and filing 
requirements.
    GMTS expressed that the current requirement that a service contract 
amendment must be filed with the Commission on or before its effective 
date ``ensures that the checks and balances of the full compliance of 
the tariffs, contract and amendments are determined prior to their 
submission.'' GMTS further states that ``[s]hould the proposed change 
to amendments be permitted, it could be possible that sizeable 
shipments of cargo are moved prior to the determination of the 
amendment being fully compliant.'' As an example, GMTS highlights the 
VOCC's need to verify that an NVOCC shipper and its affiliates are in 
good standing with Commission requirements, and observes that, should

[[Page 56562]]

the VOCC only verify their status at the time of filing the amendment, 
the delay between implementation and filing could result in a non-
compliant amendment with an NVOCC whose license has been revoked.
    The majority of commenters to the ANPR favored the Commission 
introducing regulatory flexibility by allowing up to 30 days for filing 
after an amendment to a service contract has been agreed to by the 
carrier and shipper. Some commenters also advocated extending that 
relief to original service contract filings and NSA amendments as well. 
The Commission is considering the potential impact of a 30-day delay in 
receiving service contract amendments after their implementation, in 
light of its investigative needs and oversight responsibilities and 
seeks to balance those against any regulatory burden that might be 
imposed by the requirement.
    The existing regulations protect the shipper's interests by 
demonstrating the agreement of the parties prior to the movement of the 
cargo. Shippers have expressed confidence in this process knowing that 
both the shipper and carrier will honor the commitment of their service 
contract filed with the FMC. The Commission notes a distinction between 
an original service contract filing and an amendment to a contract. An 
original service contract is a comprehensive agreement between the 
parties that encompasses the commodities that are to be shipped, the 
origins and destinations between which cargo is to move, the rates for 
the transportation of that cargo, as well as terms and conditions 
governing the transportation of goods for the shipper. Amendments to 
service contracts, on the other hand, are more limited in scope, 
generally adding new commodities and/or rates. Numerous commenters 
support more flexibility in filing service contract amendments, which 
they contend will not diminish the effectiveness of the Commission's 
oversight of service contracts.
    In considering the impact on all parties, the Commission is seeking 
comments on its proposal to allow the filing of sequential service 
contract amendments in the SERVCON system within 30 days of the 
effective date of the agreement reached between the shipper and 
carrier. The Commission is not proposing to allow a 30-day delay for 
filing of original service contracts however, given their nature and 
the Commission's belief that doing so would diminish its oversight 
abilities. Further, the Commission is seeking comment on GMTS' concerns 
regarding the impact of a 30-day delay in filing service contract 
amendments on compliance with Sec.  530.6 and Sec.  515.27. At this 
time, the Commission does not believe that these concerns outweigh the 
benefits of the proposed 30-day filing period. Finally, the Commission 
is proposing to amend certain definitions that require updating to 
reflect the current bureau and office names, more specifically those in 
Sec.  530.3(d) and (o).
Sec.  530.5 Duty To File
    The Commission sought comment in the ANPR on amending its 
regulations to ensure that carriers are aware of the availability of 
the automated ``web services'' process for filing service contracts and 
amendments. In response to an industry request, the Commission 
developed an automated web services process in 2006, which allows 
service contracts, NSAs and their amendments to be filed directly from 
a carrier's contract management system into SERVCON, thereby reducing 
the regulatory burden associated with manual processing. ``Pushing'' 
the unique data already entered in the filer's contract management 
system directly to the SERVCON system eliminates the time, expense and 
opportunity for data entry errors involved in manually logging into 
SERVCON and filing service contracts and NSAs.
    The Commission has encouraged the use of web services by ocean 
carriers throughout the years, and the pace of new carriers 
implementing its use has recently increased. While it was previously 
estimated, based on carrier and tariff publisher projections of web 
services implementation, that the vast majority of service contracts 
and amendments would be filed using web services by April 1, 2016, due 
to delays in software programming and other issues, only 35% are 
presently using this option.
    The Commission received one comment regarding web services. Global 
Maritime Transportation Services, Inc., which files service contracts 
on behalf of multiple carriers, has no objection to the Commission 
making carriers aware of the availability of the automated web services 
process. However, it questions whether amending the regulations is 
necessary given that the percentage of filings by April 2016 through 
this option is anticipated to be over 90%. GMTS also questions whether 
it is the Commission's intent to make filing using web services 
mandatory.
    The Commission does not propose to make the web services option 
mandatory, as it is a technology that is more advantageous to high 
volume filers who use automated contract management systems. Given the 
gradual pace of adoption of web services, highlighting it in the 
Commission's rules would provide a public benefit. Accordingly, the 
Commission proposes to add regulatory language which makes filers aware 
of the option to use web services when filing service contracts, NSAs 
and amendments.
Sec.  530.6 Certification of Shipper Status
    This section sets forth the requirement that shippers entering into 
service contracts certify their status and requires VOCCs to obtain 
proof of an NVOCC's compliance with tariff and financial responsibility 
requirements. Carriers regularly use the FMC Web site, www.fmc.gov, to 
verify whether or not an NVOCC contract holder or affiliate is in good 
standing. Many carriers employ more rigid standards in certifying NVOCC 
status by requiring copies of the NVOCC's bond as well as the title 
pages of its published tariffs. In addition, many VOCCs include the 
NVOCC's 6-digit FMC Organization Number in the service contract, which 
indicates that the VOCC sought to ensure compliance with the 
requirements of Sec.  530.6.
    Commission staff is regularly asked by carriers about the FMC's 
electronic systems' capability to automatically verify compliance with 
Sec.  530.6 by determining the current status of an NVOCC party named 
in a service contract or amendment. While the Commission's SERVCON 
system does not currently have this capability, the Commission may be 
able to add such functionality in the future.
    The Commission asked for comment in the ANPR on whether the 
Commission should move forward in requiring filings to include the 6-
digit FMC Organization Number for NVOCCs who are a contract holder or 
affiliate in a service contract by one of two options, namely:
    (1) Adding a data field in the Commission's electronic filing 
system (SERVCON) in order to enter the 6-digit FMC Organization Number 
when an NVOCC is party to a contract; or
    (2) requiring that service contracts be formatted to contain 
metadata that includes the 6-digit FMC Organization Number for each 
NVOCC that is a contract holder or affiliate in a service contract.
    The Commission pointed out in the ANPR that simply including an 
NVOCC party's FMC Organization Number in the body of a service contract 
would not allow the FMC's SERVCON system to verify NVOCC status. Only 
adding a data field to the SERVCON filing process wherein filers would 
enter the NVOCC party's Organization Number or the approach of adopting 
a standard

[[Page 56563]]

service contract format to include metadata that includes the NVOCC 
party's Organization Number would allow the FMC to perform an automated 
verification of status.
    With respect to the first option, a new data field in SERVCON would 
require a VOCC to enter the NVOCC's 6-digit FMC Organization Number 
when an NVOCC is a contract holder or affiliate. If multiple NVOCCs are 
parties to a service contract, each NVOCC's respective Organization 
Number would be required to be entered into this field. The Commission 
may be able to enhance SERVCON to automatically determine at the time a 
contract or amendment is uploaded for filing, whether the NVOCC is in 
good standing with the Commission. Upon development, a message would be 
transmitted to the filer notifying it if any of the NVOCC parties are 
not in good standing. The development of such an automated process 
could potentially save carriers a substantial amount of time currently 
spent manually verifying an NVOCC's status.
    Under the second option, a standard service contract format would 
have to be adopted by all ocean carriers, allowing ``metadata'' to be 
incorporated into the service contract format to include the 6-digit 
FMC Organization Number of all NVOCC parties.\4\ This option would 
require a substantial amount of Commission information technology 
resources to develop and implement, including resources that would need 
to be allocated to SERVCON system programming. With the required 
programming implemented, however, it is likely that this technology 
could be leveraged to identify during the filing process service 
contracts or amendments not in compliance with Sec.  530.6. If a 
service contract is not compliant, an alert could be sent to the 
carrier filing the contract or amendment.
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    \4\ ``Metadata is structured information that describes, 
explains, locates, or otherwise makes it easier to retrieve, use, or 
manage an information resource. Metadata is often called data about 
data or information about information.'' National Information 
Standards Organization (NIST), Understanding Metadata, NIST Press 
(2004), available at: https://www.niso.org/publications/press/UnderstandingMetadata.pdf (last visited June 17, 2016).
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    The Commission received comments from Crowley, WSC and GMTS on this 
issue. Crowley supports ``modifications to the SERVCON system that 
facilitate verification of a service contract signatory's NVOCC status 
by inputting the signatory's FMC-assigned, six-digit Organization 
Number.'' Crowley opposes, however, ``any requirement to imbed the Org. 
No. in the service contract metadata, or any change to SERVCON that 
would require service contract filers to input an Org. No. but did not 
provide immediate and definitive feedback on the status of the contract 
signatory.'' GMTS supports the options put forth by the Commission in 
the ANPR but asks for clarification regarding how a rejection would be 
handled, whether a multiple NVOCC contract is voided if only one NVOCC 
lacks legal status, and asks if the FMC could provide a daily list of 
non-compliant parties. The WSC requests more detailed information as to 
how the proposed SERVCON changes would work before fully endorsing the 
Commission's proposal on verifying a NVOCC contracting party. WSC is 
concerned that the Commission's proposal might be too cumbersome, 
outweighing any advantage to be gained. They advise for example, ``if a 
VOCC could simply add the Organization Number of an NVOCC service 
contract party into a specified field in SERVCON, and the system would 
then generate either a `green light' or `red light' response, then such 
a system would have the potential to simplify compliance and reduce 
costs.'' WSC would not, on the other hand, support a reconfiguring of 
SERVCON requiring a uniform structuring of service contracts in order 
to pull ``metadata'' to verify NVOCC status.
    It is not the Commission's intent for verification of NVOCC status 
through technological enhancements of the SERVCON system to result in 
rejection of service contracts. If implemented, it is contemplated that 
the new technology would simply provide carriers with timely 
information on which they could act to achieve greater compliance in a 
less burdensome manner. See 46 CFR 530.6(d) (regarding carrier 
reliance). The system could allow filers to receive a message during 
the filing process identifying any NVOCC shipper or affiliate that is 
not in good standing with the Commission's licensing, registration or 
financial responsibility requirements. The Commission notes that 
comments regarding standardization of service contract format to 
include metadata indicate that such an approach would be considered by 
filers to be so cumbersome as to outweigh the potential benefits. The 
Commission, therefore, proposes to add an additional field in its 
SERVCON filing system which requires the input of an NVOCC's six-digit 
Organization Number when they are the contract holder or affiliate. If 
there are multiple NVOCC parties to a service contract, the filer would 
be required to input the six-digit Organization Number of all NVOCCs.
    The Commission contemplates that, upon completion of necessary 
SERVCON programming, this data would be corroborated against FMC's 
database systems and return a message to the filing party if the NVOCC 
is not in good standing. Completing this process would satisfy the due 
diligence requirements in Sec.  530.6.

Subpart B--Filing Requirements

Sec.  530.8 Service Contracts
    In the comments submitted by thirty ocean common carriers in 
response to the Commission's Plan for Retrospective Review of Existing 
Rules, a number of the carriers cite the filing of service contract 
amendments as the largest administrative burden for both carriers and 
their customers. Many ocean carriers believe that the service contract 
effective date requirement is overly burdensome and restrictive given 
current commercial practices, particularly with respect to amendments 
to contracts. The carriers maintain that filing amendments within 30 
days would enable shippers and carriers to apply agreed-upon terms 
immediately and thus do business without disrupting or delaying that 
business. Of note, the proposed change in the definition of effective 
date would only affect the filing date of the amendment, as the parties 
must still agree to the rates and/or contract terms prior to receipt of 
the cargo. Comments regarding whether the Commission should allow 
filing of service contract amendments up to 30 days after agreement by 
the parties have been summarized previously under the discussion of 
Sec.  530.3(i), Effective date.
    This section relates to the implementation in the SERVCON system of 
the method whereby carriers could file service contract amendments up 
to 30 days after agreement, should the Commission take that action. To 
facilitate this discussion, the Commission sought comment in the ANPR 
on whether it should revise its regulations to allow: (1) A service 
contract amendment to be filed individually and sequentially within 30 
days of its effectiveness; or (2) any number of service contract 
amendments to be consolidated into a single document, but filed within 
30 days of the effective date of the earliest of all amendments 
contained in the document.
    A more detailed explanation of the manner in which service contract 
amendments are presently filed into the FMC's SERVCON system may be 
useful to evaluate the two approaches.

[[Page 56564]]

Currently, SERVCON is designed to process the filing of the initial 
service contract as Amendment ``0,'' with subsequent amendments to the 
contract numbered sequentially, beginning with Amendment No. ``1.'' 
Each amendment requires that the filer enter the corresponding 
effective date of that amendment. If the Commission determines to allow 
amendments to be filed up to 30 days after agreement and the existing 
filing process is maintained involving the sequential filing of 
amendments starting with Amendment No. 1, then little, if any, 
programming changes may be required in SERVCON. With that approach, the 
only difference from the present process would be that the effective 
date entered could be up to 30 days prior to the filing date.
    The alternative approach on which the Commission requested comments 
was the possibility of consolidating multiple service contract 
amendments into a single document. This was considered because the 
carriers also proposed aggregating several contract changes in a single 
amendment in what, in effect, could be a monthly filing. In a monthly 
filing of this type, it would still be necessary for carriers to 
specify the effective date of each amendment to the contract. Adding to 
this complexity, we note that the rate may change more than once in a 
monthly period. The SERVCON system is not presently capable of 
processing multiple amendments consolidated into a single document, 
e.g., Amendment Nos. 2 through 10, with multiple effective dates. Thus, 
this approach would require a substantial amount of reprogramming to 
enable the system to capture both the effective dates and amendment 
numbers. Further, based on input from the Commission's Office of 
Information Technology, carriers would still need to manually input the 
effective date of each amendment into SERVCON. Therefore, absent the 
requisite reprogramming, this process could possibly result in more, 
rather than less, of a filing burden. Consolidating several service 
contract amendments may also prevent carriers from using the 
Commission's web services technology in accordance with Sec.  530.5, 
thereby offsetting the advantages of this technology, which does not 
require manual input and is intended to streamline processes and reduce 
the burden of filing.
    In this regard, the WSC commented:
    On the issue of whether the Commission should allow multiple 
service contract amendments to be filed in a single document, such a 
process would provide the greatest relief and would potentially be the 
most efficient. Based on the discussion in the ANPRM, however, it 
appears that there may be substantial SERVCON re-programming 
requirements associated with such functionality. Absent such re-
programming, the Commission has suggested that filing multiple 
amendments in a single document may require substantial manual data 
input by carriers.
    The WSC added that ``the primary focus should be on providing a 30-
day period in which to file service contract amendments.'' WSC 
clarified that, while it would be ``ideal'' to accommodate multiple 
amendments in a single document, ``if creating the ability to file 
multiple amendments in a single document would require a cumbersome 
manual process, then such a process would not be attractive.''
    Crowley commented, ``[w]hen an amendment makes multiple changes 
that were effective on different dates, Crowley envisions that the 
amendment itself would reflect the effective date of each change, 
thereby avoiding any need to alter the Commission's SERVCON filing 
system.'' ``However,'' Crowley adds that it ``would be open to 
alternative filing approaches, provided that any approach eventually 
adopted minimizes the burden on the industry.''
    GMTS suggests ``a more effective administration of the contract 
process'' and encourages a ``rule making by the FMC that would 
specifically allow for electronic acceptance of an amendment, as is the 
case with NRA's.'' GMTS also expresses concern ``that by allowing 
filings to take place after the effective date it undermines the public 
record process and obscures activity.'' GMTS adds that it is ``also 
concerned that relaxing this requirement does not address issues, which 
would come to light especially if the FMC adopts the suggestion of 
including the NVOCC registration number into the filing of contracts.''
    The Commission notes that it would require significant programming 
time and considerable expense to update the SERVCON system to allow for 
multiple amendments to be filed in a single document at one time. 
Another suggestion of noting disparate effective dates within the 
service contract amendment alongside each change does not facilitate 
Commission review of contract amendments and could lead to confusion in 
ascertaining effective dates of changes. Therefore, the Commission 
proposes maintaining its existing requirement requiring sequential 
amendments to service contracts with a single effective date for all 
changes within that amendment, but also proposes allowing for those 
amendments to be filed up to 30 days after they have been concluded by 
the carrier and shipper.
Sec.  530.10 Amendment, Correction, Cancellation, and Electronic 
Transmission Errors
    The carriers' comments discussed in the ANPR noted that the current 
service contract correction procedures are outdated, and they 
maintained that these procedures are ``ill suited'' to the manner in 
which service contracts are employed today. The carriers requested a 
number of revisions to these requirements. The ANPR sought comment 
regarding service contract correction requests, corrected 
transmissions, and a proposed ``conforming amendment.'' An item by item 
discussion follows.
Electronic Transmission Errors
    The carriers' request that the Commission allow a 30-day grace 
period in which a carrier would not be required to file a service 
contract correction request (seeking retroactive effectiveness to 
correct a clerical or administrative error) or a formal amendment to 
the contract (effective upon filing or in the future). Rather, carriers 
would be permitted to submit a new type of filing, designated as a 
``conforming amendment'' or similar special designation in order to 
retroactively correct a ``typographical or clerical error''.
    The Commission questions whether this process would, in effect, 
replace the service contract correction process in Sec.  530.10(c) 
within the first 30 days after filing. That process provides a means 
for carriers to correct a clerical or administrative error within 45 
days of filing by submitting, among other things, an affidavit and 
other documentation used for verification purposes that establishes the 
nature of the error and the parties' intent. The carriers' suggested 
procedure would seem to eliminate the requirement for such 
documentation for a correction filed within 30 days of the contract's 
filing
    In this regard, a service contract or amendment can currently be 
corrected through a Corrected Transmission. Pursuant to Sec.  
530.10(d), Electronic transmission errors, carriers may file a 
``Corrected Transmission'' (CT) within forty-eight (48) hours of filing 
a service contract or amendment into SERVCON, but only to correct a 
purely technical data transmission error or a data conversion error 
that occurred during uploading. A CT may not be used to make changes to 
rates, terms or conditions.

[[Page 56565]]

    While the vast majority of service contracts are uploaded into the 
Commission's electronic filing system, SERVCON, without encountering 
any problems, staff has noted that, when errors do occur, many times 
carriers do not discover the error until after the initial 48-hour 
period has passed. Most of these mistakes are attributable to data 
entry errors on the SERVCON upload screen (e.g., the incorrect 
amendment or service contract number is entered, an incorrect effective 
date is typed, or the wrong contract or amendment is attached for 
uploading). Staff verifies that these are indeed purely clerical data 
errors that do not make changes to rates, terms, or conditions prior to 
accepting the CT filings. While incorporation of web services filing 
would reduce the occurrence of many of the technical and data 
transmission errors leading to a Corrected Transmission, the Commission 
is seeking comments on whether the current 48-hour period in which to 
file a CT after filing the original contract or amendment should be 
extended to thirty (30) days to afford carriers with a more realistic 
time frame to correct purely technical data transmission errors.
    In its comments, GMTS supports extending the time period in which 
to submit a Corrected Transmission for an electronic transmission error 
from 48 hours to 30 days. WSC and Crowley agree that the 30-day period 
for a CT is more realistic, and believe that extending the filing 
period would ``enhance the accuracy of filed service contract 
information without affecting regulatory purposes.''
    As a Corrected Transmission is limited only to correcting a purely 
technical data transmission error or a data conversion error that 
occurred during uploading in SERVCON, and may not be used to make 
changes to rates, terms or conditions, the Commission proposes 
extending the time frame in which to file a Corrected Transmission from 
48 hours to 30 days.
Extend Filing Period for Correction Requests to 180 Days
    The Commission requested comment regarding whether it should extend 
the time period for filing a service contract correction request from 
forty-five (45) to one-hundred eighty (180) days after the contract's 
filing. The Commission is aware that an error in a service contract may 
not be discovered until after cargo has moved, been invoiced on the 
bill of lading, and, the shipper notes that the rate assessed is not 
the agreed upon rate. Given long transit times due to carriers' global 
pendulum services and slow steaming, in many cases this type of error 
is not discovered until well after 45 days has transpired. In other 
cases, shippers engage in audits of bills of lading thtat identify 
errors in the service contract that do not match the rates offered. 
These audits may be well after the 45-day period. To provide needed 
flexibility in this process, the Commission has considered whether a 
longer time period in which to file is appropriate.
    Comments filed by WSC, Crowley and GMTS all support extending the 
time in which to file a service contract correction request from 45 
days to 180 days. WSC noted that ``the nature of some services, in 
conjunction with the time involved in the issuance of an invoice by a 
carrier and the review of that invoice by a shipper (the process 
through which errors are likely to be discovered) makes the existing 
45-day period inadequate in many circumstances.'' WSC also believes 
that the Commission's regulations ``should support the parties' 
interests in having their commercial agreements implemented, and 
allowing additional time to discover and correct mistakes would further 
that purpose and reduce disputes.'' No comments were filed objecting to 
this requested change.
    The Commission recognizes that the discovery of a mistake made in a 
service contract which is contrary to the agreement of the parties may 
not necessarily occur within a short time after the cargo has moved. In 
addition, auditing of freight bills by shippers can be delayed as well. 
Commission staff is occasionally contacted by carriers who wish to 
correct a service contract error which was not discovered until the 
present 45-day time limit for correction requests has expired. In such 
cases, no regulatory remedy exists and the parties must make a 
commercial accommodation in the service contract to address the 
problem. Given the foregoing, including the lack of objections to this 
request, the Commission proposes extending the time period in which to 
file a service contract correction request from 45 days to 180 days.
Extend the Service Contract Correction Procedure To Include Unfiled 
Contracts and Amendments
    The ANPR requested comment on various aspects of the requests posed 
in the ocean carriers' comments. The ocean carriers requested that the 
Commission allow the correction process to also be utilized for unfiled 
service contracts and service contract amendments. The Shipping Act 
requires that service contracts be filed with the Commission. 46 U.S.C. 
40502. Shippers have expressed to the Commission that they believe a 
filed contract provides them with assurance that the rates and terms of 
the service contract will be adhered to by both the shipper and 
carrier.
    GMTS was the only party to comment on this issue. It supports 
extending the service contract correction process to include unfiled 
service contracts and amendments, provided that the affidavit process 
is maintained ``in order to establish a verifiable error was clerical 
or systems but not intentional.''
    The Commission has an interest in granting flexibility in the 
regulatory process where public benefits outweigh the costs. The 
changes proposed regarding the extension of time for electronic 
transmission errors and for filing service contract correction requests 
should provide needed flexibility. However, extension of the service 
contract correction process to address a carrier's failure to file a 
service contract or amendment with the Commission would undermine the 
statutory filing requirement and shippers' reliance on that 
requirement. The Commission, therefore, does not propose extending the 
service contract correction process to include unfiled service 
contracts and amendments.
Eliminate Carrier Affidavit and Significantly Reduce Filing Fee
    The ANPR sought comment on the carriers' request to the Commission 
to eliminate the affidavit requirement for service contract correction 
requests and also significantly reduce the filing fee. The filing fee 
reflects time expended by Commission staff to research and verify 
information provided in the correction request and to conduct its 
analysis.
    The Commission is not proposing any changes to the affidavit 
requirement but is considering reducing the fee as part of its 
rulemaking under FMC Docket No. 16-06, Update of Existing and Addition 
of New User Fees, in which a Notice of Proposed Rulemaking (NPRM) was 
issued on May 27, 2016. 81 FR 33637. The affidavit requirement is a 
critical component in establishing and verifying the facts surrounding 
an error, while streamlining Commission staff's review and analysis of 
the correction request. In the only comment filed concerning this 
matter, GMTS supports reducing the filing fee on the condition that the 
Commission maintain the affidavit requirement.
    The Commission estimated in the User Fee NPRM that it could reduce 
the filing fee from $315 to $95 by streamlining its internal processes, 
provided that the affidavit requirement is not eliminated. If the 
affidavit

[[Page 56566]]

requirement were eliminated, staff time researching and verifying 
information would increase, and thus, the filing fee would need to be 
increased commensurate with the additional time required for processing 
and analysis.

Subpart C--Publication of Essential Terms

Sec.  530.12 Publication
    During discussions with stakeholders held prior to the initiation 
of this rulemaking, several advised the Commission that essential terms 
publications were no longer accessed by the public or useful. However, 
other stakeholders indicated that they do rely on them for various 
purposes, such as during a grievance proceeding.
    GMTS was the only commenter to respond to the ANPR regarding the 
essential terms publication requirement. GMTS does not support any 
changes to the current essential terms requirements. GMTS suggests that 
the essential terms publication provides critical volume and commodity 
information and fills both a commercial and compliance need without 
which there would be a diminution of the public record.
    The Commission does not propose modifying its rules regarding the 
publication of essential terms.

Subpart D--Exceptions and Implementation

Sec.  530.13 Exceptions and Exemptions
Sec.  530.13(a) Statutory Exceptions
    Commission rules in this section identify the commodities that are 
exempt from the tariff publication and service contract filing 
requirements of the Shipping Act. See 46 U.S.C. 40501(a)(1) and 
40502(b)(1). Commodities that are presently exempt pursuant to the Act 
are bulk cargo, forest products, recycled metal scrap, new assembled 
motor vehicles, and waste paper or paper waste.
    In response to the ANPR, WSC reiterated its support of the comments 
submitted previously by the ocean common carriers that recommended the 
FMC expand the list of exempt commodities pursuant to the Commission's 
exemption authority contained in Section 16 of the Act, 46 U.S.C. 
40103. As WSC explains, ``the basis for this proposal is that the 
commodities for which exempt status is requested may be moved in bulk 
or by tramp vessels, and that the exemption would provide flexibility 
that would increase competition for those cargoes.'' WSC supports the 
carriers' proposal to add the following commodities to the list of 
exempt commodities: Grain, soybeans, meal, flour, corn products, 
cotton, resins, coffee, animal feed, seeds, food additives, clay, hay, 
hides and plastic scrap.
    In addition to the commodities identified by the WSC, Crowley 
requests the exemption of fruits, vegetables and other agricultural 
products as well. Crowley asserts that these commodities are, similar 
to the existing exempt commodities, ``subject to transport by bulk or 
reefer operators that, in many cases, are not subject to FMC 
regulation.'' Crowley claims that U.S. importers and exporters would 
benefit should the Commission exempt these agricultural commodities.
    GMTS, a tariff and contract management firm that files service 
contracts in SERVCON for numerous VOCC clients, stated that they are 
``concerned that the introduction of additional commodities to the 
exempt commodity list would make it difficult if not impossible to 
produce a relevant index on these commodities.'' In their experience, 
GMTS asserts, some of the commodities proposed for inclusion in the 
exempt commodities list tend to be seasonal, are contracted on an 
annual basis with limited changes, and therefore, do not involve a 
large number of contract amendments. GMTS stated that they reviewed 
hundreds of VOCC service contracts in their filing system that included 
the new commodities proposed for exemption, and found that contracts 
comprising shipments of a single commodity, such as seed or soybean 
alone, had very few contract amendments. GMTS is concerned with the 
potential ``expansion of the exempted commodity list and its impact on 
reliant analysis should these commodities be removed from the reporting 
process.''
    The Commission has a number of concerns regarding expansion of the 
list of exempt commodities. Of note, two of the highest paying 
commodities in terms of freight rates in the U.S. export trade are 
among those proposed for exemption by WSC and the ocean carriers, 
namely, refrigerated cargoes and cattle hides. Exporters of currently 
exempt commodities have expressed frustration to the Commission 
regarding the ocean carrier practice of offering exempt commodity 
tariff rates with periods of limited duration, in some cases for only 
thirty to sixty days, rather than for the longer periods that are 
customary in service contracts. Further, exempt commodity tariffs are 
not published and do not provide shippers with thirty days' notice 
prior to implementation of rate increases. Whereas service contracts 
allow shippers to negotiate rates and terms with carriers to tailor 
services and terms to the shipper's specific needs, many exporters 
advise that exempt commodities are not afforded this opportunity.
    Given the potential disadvantage to shippers in negotiating with 
ocean carriers for transportation of exempt commodities, and the lack 
of shipper support for exempting additional commodities, the Commission 
does not propose exercising its exemption authority to add new 
commodities to the list of those exempted from the FMC's tariff 
publication and service contract filing requirements.
    The Commission is proposing, however, to amend Sec.  530.13(b)(2), 
to reflect the change in name of the relevant Department of Defense 
entity from Military Transportation Management Command to Surface 
Deployment and Distribution Command.
Sec.  530.14 Implementation
    If the Commission adopts the proposal to allow up to 30 days for 
filing service contract amendments after agreement of the parties, 
corresponding changes would be made to Sec.  530.14. Refer to the 
discussion under Sec.  530.3(i), Effective date.

Part 531--NVOCC Service Arrangements

Subpart A--General Provisions

Sec.  531.1 Purpose
    In response to the ANPR, NCBFAA echoes its earlier comments 
regarding the Commission's Plan for Retrospective Review of Existing 
Rules and its petition for rulemaking in FMC Docket No. P2-15.\5\ 
NCBFAA supports the Commission's consideration of regulatory changes 
focused on reducing unnecessary regulatory burdens and easing 
compliance by potentially allowing more time to process amendments to 
service contracts and NSAs, and to correct technical or substantive 
errors made in filings. NCBFAA believes that the current service 
contract and NSA filing requirements are ill suited to keeping pace 
with the ``dynamic nature of the ocean shipping marketplace in this 
post-OSRA environment'' and requests that any regulatory relief granted 
by the

[[Page 56567]]

Commission to VOCCs with respect to their service contract requirements 
also be extended to the NVOCC NSA requirements.
---------------------------------------------------------------------------

    \5\ NCBFAA filed a petition for rulemaking on April 18, 2015. 
See Docket No. P2-15, Petition of the National Customs Brokers and 
Forwarders Association of America, Inc. for Initiation of Rulemaking 
(NCBFAA Petition). The Commission has accepted the NCBFAA Petition 
and will address the proposals presented therein during a subsequent 
rulemaking proceeding.
---------------------------------------------------------------------------

    NCBFAA argues that justification for relief to NVOCCs is even more 
compelling than that of VOCCs, given the challenges NVOCCs face 
reacting to the daily rate and surcharge changes being made by VOCCs 
that an NVOCC utilizes for transporting its clients' cargo. NCBFAA 
states that NSAs are significantly underutilized by NVOCCs and asserts 
that NSA filing statistics clearly indicate that NSAs have not been 
commercially accepted. However, those NVOCCs using NSAs face similar 
pressures as VOCCs to timely file. Thus, NCBFAA supports Commission 
efforts to ease NSA requirements with respect to the timing of 
amendment filings. The group does not believe, however, that such 
efforts are far reaching enough.
    In fact, NCBFAA reminds the Commission that it has been ``urging 
the Commission to eliminate the NSA publication and filing requirements 
since their inception.'' While recognizing that VOCCs and NVOCCs are 
both common carriers, NCBFAA asserts that the Commission's introduction 
of NSA filing requirements was only to ``maintain the superficial 
parity in the way VOCCs and NVOCCs are regulated'' and claims that such 
parity ``is not warranted because VOCCs and NVOCCs are not similarly 
situated and their activities are quite different. NCBFAA emphasizes 
that NVOCCs do not enjoy antitrust immunity and therefore do not have 
``collectively established boilerplate terms and conditions or 
consider, let alone follow, `voluntary guidelines' relating to pricing 
or service conditions.'' NCBFAA advocates that, inasmuch as there are 
situations where NVOCCs and their customers would like to enter into 
more formal, long-term arrangements, which cannot be accomplished 
through NRAs, the industry would benefit by having the Commission 
reexamine the need for continuing the filing of NSAs and the 
publication of essential terms. NCBFAA further urges the Commission to 
allow NRAs, which unlike NSAs are not filed with the FMC, to include 
``non-rate economic terms, including credit and payment terms, rate 
methodology, minimum quantities, forum selection and arbitration 
clauses.''
    Unitcargo Container Line, Inc., an NVOCC, submitted comments 
paralleling those of NCBFAA inasmuch as they support changes to NSA 
regulations that would allow more time for filing NSA amendments. It 
also urges the Commission to completely eliminate the NSA filing and 
publication requirements and allow for the inclusion of non-economic 
terms in NRAs. Unitcargo states that it and its customers prefer using 
NRAs, noting that many of its shippers find NSAs ``unnecessarily formal 
and burdensome.''
    UPS strongly opposes the position taken by NCBFAA, commenting that 
``NCBFAA appears to suggest that the provisions in the Commission's 
regulations for NSAs filed with the Commission ought to be phased out 
in favor of exclusive use of unfiled NSAs.'' UPS maintains that 
NCBFAA's suggested approach ``would do damage to larger volume NVOCCs 
that have built their core service arrangements around the NSA 
format.'' UPS describes the distinctions between NSAs and NRAs, stating 
``although the numbers of unfiled NRAs now in use are substantially 
larger than the number of NSAs filed annually, the NRAs are typically 
single-rate, single-lane, single-shipper arrangements, whereas NSAs 
often cover hundreds of rates on multiple global routes, as part of a 
multimodal master services arrangement for a shipper affiliate group, 
often covering continuing shipments over a period of time.'' UPS goes 
on to say that ``NVOCCs such as UPS make substantial percentages of 
their ongoing bookings utilizing NSAs, especially for large retailers, 
industrial shippers and government shippers.'' While UPS supports 
Commission initiatives that would introduce flexibility into the 
current NSA regulations, they further advocate that ``NSAs cannot 
simply be scrapped in favor of forcing NVOCCs that have developed 
complex competitive arrangements to revert to the use of NRAs that are 
not always suitable to meet the expectations of large-volume 
sophisticated shipper customers.''
    CEVA Freight LLC, agents for Pyramid Lines, supports flexibility in 
filing amendments ``so that the regulatory process does not delay the 
implementation of commercial agreements.'' However, CEVA sees no reason 
why NSAs need to be filed with the Commission, advocating that the 
Commission can request an NSA from an NVOCC to fulfill FMC regulatory 
review needs. GMTS' comments do not support elimination of the filing 
of NSAs.
    The Commission will be addressing the request to eliminate the NSA 
filing and publication requirements in a future rulemaking addressing 
NCBFAA's petition. Accordingly, the Commission takes no position at 
this time on the comments supporting such a change, and the Commission 
is moving forward with the proposed amendments to Part 531, described 
in detail below, in this rulemaking.
Sec.  531.3 Definitions
Sec.  531.3(k) Effective Date
    The Commission's regulations presently require that an NSA or 
amendment be filed on or before the date it becomes effective. In 
response to filed VOCC comments, the Commission is proposing to allow 
the filing of service contract amendments pursuant to Part 530 to be 
delayed up to 30 days after an amendment is agreed to by the contract 
parties. In order to relieve the filing burden on NVOCCs as well, the 
Commission is proposing to similarly allow amendments to NSAs to be 
filed up to 30 days after an amendment is agreed to by the parties.
    The NCBFAA comments stated, ``[j]ust as it is appropriate for the 
Commission to adopt the proposed changes in the service contract 
regulations, the agency should at least provide the same relief to 
NVOCCs with respect to NSAs.''
    UPS commends the Commission for examining possible approaches to 
increase efficiency in the industry and favors greater flexibility in 
the NSA regulations. UPS supports the concept of allowing contracts and 
amendments to be filed and essential terms publication to be completed 
within a reasonable time after the effective date, rather than in 
advance.
    CEVA Freight, LLC, as agents for Pyramid Lines, supports the 
Commission permitting NVOCCs the ``flexibility in filing amendments so 
that the regulatory process does not delay the implementation of 
commercial agreements.'' In addition, CEVA supports the Commission 
allowing NVOCCs to file multiple NSA amendments signed over a 30-day 
period in a single filing. GMTS does not support the filing of 
amendments to NSAs after the effective date of agreement of the 
parties.
    The Commission invites further comments on these varying positions 
regarding up to the 30-day delay in filing NSA amendments. As discussed 
above, the Commission does not currently believe that GMTS' concerns 
outweigh the proposed 30-day filing period. With respect to CEVA's 
comment to allow multiple amendments to be included in a single filing, 
the Commission is tentatively rejecting this recommendation for the 
same reasons discussed above in the service contract section. It would 
require significant programming time and considerable expense to update 
the SERVCON system

[[Page 56568]]

to allow multiple amendments to be filed in a single document at one 
time, and, therefore, the Commission proposes maintaining its existing 
requirement that sequential amendments for NSAs be filed with a single 
effective date for all changes within that amendment. Those amendments 
could, however, be filed up to 30 days after they have gone into 
effect.
Sec.  531.5 Duty To File
    The Commission proposes to add regulatory language under Sec.  
530.5 which makes service contract filers aware of the option to use 
web services when filing service contracts and their corresponding 
amendments. While no comments were received from NVOCCs regarding this 
matter, larger volume filers of NSAs may find it advantageous. The 
Commission wishes to avail NVOCCs of this option as well, and 
therefore, proposes to add similar regulatory language to this section 
to alert NSA filers of their ability to use web services to file NSAs 
and amendments, should they so choose.

Subpart B--Filing Requirements

Sec.  531.6 NVOCC Service Arrangements
    Presently the Commission's regulations require that an NSA or 
amendment be filed on or before the date it becomes effective. As 
discussed above, the Commission is proposing to allow up to 30 days for 
filing NSA amendments after their effective date, and is proposing 
corresponding changes to Sec.  531.6.
Sec.  531.6(d) Other Requirements
    Pursuant to Sec.  531.6(d)(4), an NVOCC may not knowingly and 
willfully enter into an NSA with another NVOCC that is not in 
compliance with the Commission's tariff and proof of financial 
responsibility requirements. As more fully discussed under Sec.  530.6, 
above, the industry frequently refers to the Commission's Web site, 
www.fmc.gov, to verify whether or not an NVOCC contract holder or 
affiliate is compliant with these requirements.
    The ANPR requested comment on different options that, upon 
development, would allow the FMC's SERVCON system to alert filers at 
the time of uploading service contracts, NSAs and amendments thereto, 
if an NVOCC contract signatory or affiliate is not in good standing. As 
discussed, the alert notifying the filer that an NVOCC is not in good 
standing is intended to leverage technology in order to assist filers 
with compliance and would not result in the rejection of a filing.
    Given the comments discussed in Sec.  530.6 above, the Commission 
proposes to add an additional field in its SERVCON filing system which 
requires the input of an NVOCC's six-digit Organization Number when 
they are the contract holder or affiliate. If there are multiple NVOCC 
parties to a service contract, the filer would be required to input the 
six-digit Organization Number of all NVOCCs.
Sec.  531.6(d)(5) Certification of Shipper Status
    The NSA regulations do not include a requirement that the NSA 
shipper certify its status, which is a requirement for shippers under 
current service contract regulations in Part 530. The Commission sought 
comment on whether to make this requirement consistent and uniform for 
NVOCCs and VOCCs. No comments were filed that addressed certification 
of shipper status in NSAs. The Commission's interest in ensuring that 
all NVOCCs in the supply chain are FMC licensed or registered, and as a 
consequence hold an OTI bond, provides greater assurance that shippers 
will not be harmed by unfair or deceptive practices. Given the 
potential benefits, the Commission proposes to add a requirement that 
all NSA contract shippers and affiliates certify their shipper status.
Sec.  531.8 Amendment, Correction, Cancellation, and Electronic 
Transmission Errors
    Under the Commission's regulations, VOCC service contracts and 
NVOCC service arrangements are agreements between a common carrier and 
a shipper for the carriage of cargo. Given these congruencies, the 
Commission is considering whether changes being proposed by the VOCCs 
to the correction procedures for service contracts should be handled in 
a similar manner for NSAs. A complete discussion of the changes 
requested with respect to service contract amendment, correction, 
cancellation, and electronic transmission errors is included in Sec.  
530.10 above.
    To provide the same flexibility with regard to correcting errors in 
NVOCC NSAs as the Commission proposes for VOCCs service contract 
errors, the Commission proposes: (1) Extending the time period in which 
to file a Corrected Transmission to remedy an NSA electronic 
transmission error under Sec.  531.8(c) from 48 hours to 30 days and; 
(2) extending the time period for filing an NSA correction request 
under Sec.  531.8(b) from 45 to 180 days.

Subpart C--Publication of Essential Terms

Sec.  531.9 Publication
    As noted previously, NCBFAA's comments requested that the 
Commission consider whether the NSA filing and the essential term 
tariff publication requirements are necessary, and requests the 
Commission eliminate those requirements. The other commenter on this 
matter, GMTS, does not support any changes to the current essential 
terms filing requirements.
    The Commission will be addressing the request to eliminate the NSA 
publication requirements in a future rulemaking addressing NCBFAA's 
petition. Accordingly, the Commission takes no position at this time on 
the comments supporting such a change and is not proposing any changes 
to the NSA publication requirements as part of this rulemaking.

Subpart D--Exceptions and Implementation

Sec.  531.10 Excepted and Exempted Commodities
    The Commission sought comment on whether to treat VOCC service 
contracts and NVOCC service arrangements, as well as the tariffs of 
both, in a similar fashion with respect to exempted commodities. No 
specific comments were filed addressing this issue related to NVOCCs. 
As the Commission is not proposing to exercise its exemption authority 
under Section 16 of the Shipping Act to exempt additional commodities 
for VOCCs, it does not propose to do so for NVOCCs under this section.
    The Commission is proposing however, to amend Sec.  531.10(b)(2), 
to reflect the change in name of the relevant Department of Defense 
entity from Military Transportation Management Command to Surface 
Deployment and Distribution Command.
Sec.  531.11 Implementation
    Changes regarding the effective date of service contract amendments 
are being proposed by the Commission under Part 530. The Commission is 
proposing similar requirements for NSA amendments in Part 531 (NVOCC 
Service Arrangements).

III. Regulatory Notices and Analysis

Regulatory Flexibility Act
    The Regulatory Flexibility Act, 5 U.S.C. 601-612, provides that 
whenever an agency is required to publish a notice of proposed 
rulemaking under the Administrative Procedure Act (APA), 5

[[Page 56569]]

U.S.C. 553, the agency must prepare and make available for public 
comment an initial regulatory flexibility analysis describing the 
impact of the proposed rule on small entities, unless the head of the 
agency certifies the rulemaking, 5 U.S.C. 603, 605. Accordingly, the 
Chairman of the Federal Maritime Commission certifies that the proposed 
rule, if promulgated, will not have a significant impact on a 
substantial number of small entities. The regulated business entities 
that would be impacted by the rule are vessel operating common carriers 
(VOCCs) and non-vessel operating common carriers (NVOCCs) that enter 
into service contracts and NVOCC service arrangements (NSAs), 
respectively, with shippers of cargo. The Commission has determined 
that VOCCs generally do not qualify as small under the guidelines of 
the Small Business Administration (SBA), while the majority of NVOCCs 
do qualify as small under the SBA guidelines. The Commission concludes, 
however, that the proposed rule would not have a significant impact on 
NVOCCs. In this regard, the rule pertains to an NSA entered into 
between a NVOCC and a shipper, which is an optional pricing arrangement 
that benefits the shipping public and relieves NVOCCs from the burden 
of the statutory tariff filing requirements in 46 U.S.C. 40501. The 
only proposed change that would increase the burden on NVOCCs is the 
proposed requirement to include the organization number for NVOCC 
shippers. Although this requirement would increase the filing burden 
associated with NSAs, the additional burden would be minimal. 
Specifically, as discussed in more detail below, the Commission 
estimates that only 10% of NSA filings would be affected by this 
proposed requirement and inputting the NVOCC shipper's organization 
number would add less than a minute to the filing time for affected 
submissions. As a result, the total additional burden imposed across 
all NVOCCs would only be 5 hours of additional filing time annually.
Paperwork Reduction Act
    The Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521) (PRA) 
requires an agency to seek and receive approval from the Office of 
Management and Budget (OMB) before collecting information from the 
public. 44 U.S.C. 3507. The agency must submit collections of 
information in proposed rules to OMB in conjunction with the 
publication of the notice of proposed rulemaking. 5 CFR 1320.11.
    The information collection requirements in Part 530, Service 
Contracts, and Part 531, NVOCC Service Arrangements, are currently 
authorized under OMB Control Numbers 3072-0065 and 3072-0070, 
respectively. If approved, this rule would require a VOCC that files a 
service contract or amendment thereto into the FMC's SERVCON system to 
also enter the 6-digit FMC Organization Number of any NVOCC shipper 
party or affiliate. The same requirement is being proposed for NVOCC 
Service Arrangement filings. In compliance with the PRA, the Commission 
has submitted the proposed revised information collections to the 
Office of Management and Budget.
    The Shipping Act prohibits common carriers from accepting cargo 
from, transporting cargo for, or entering into a service contract with 
an ocean transportation intermediary that does not have a tariff and a 
bond. See 46 U.S.C. 41104(11)-(12). While current rules recognize 
several options by which service contract filers verify shipper status, 
46 CFR 530.6(b) and 515.27(a)-(d), common carriers typically obtain the 
NVOCC's Organization Number prior to contract filing, in the course of 
verifying whether an NVOCC maintains a current tariff and bond. Indeed, 
twenty major VOCCs already collect and include this information in 
their filings. Therefore, the Commission estimates that the average 
time needed to input and submit this additional data item when 
transmitting filings to be minimal, i.e., less than one minute per 
filing.
    Public burden for the collection of information associated with 
Part 530, Service Contracts, as revised, would encompass 103 likely 
respondents and an estimated 2,216,097 annual instances,\6\ with an 
overall annual estimated burden of 89,775 total hours. The Commission 
estimates that approximately 45% of service contracts are entered into 
with NVOCC shippers, to which the proposed 6-digit organization number 
reporting requirement would apply. Consequently, of the 89,775 hours 
estimated annually for the Part 530 information collection, 
approximately 4,336 hours would be attributable to the new requirement 
proposed in this rulemaking.
---------------------------------------------------------------------------

    \6\ Annual instances include the filing of new service contracts 
and amendments, essential terms publication, notification/filing 
requirements, Form FMC-83, disclosure/third party, and record 
keeping/audit requirements. Of the total annual instances of 
2,216,097, the number of service contracts and amendments combined 
is 642,309. Forty-five percent of those is 289,039.
---------------------------------------------------------------------------

    Public burden for the collection of information pursuant to Part 
531, NVOCC Service Arrangements, as revised, would comprise 79 likely 
respondents and an estimated 10,371 annual instances,\7\ with an 
overall annual estimated burden of 839 total hours. The Commission 
estimates that approximately 10% of NSAs include NVOCC shippers, to 
which the proposed 6-digit organization number reporting requirement 
would apply. Of the 839 hours estimated annually for the Part 531 
information collection, approximately 5 hours would be attributable to 
the new requirement proposed in this rulemaking.
---------------------------------------------------------------------------

    \7\ Annual instances include the filing of new NSAs and 
amendments, essential terms publication, notification/filing 
requirements, Form FMC-78, disclosure/third party, and record 
keeping/audit requirements. Of the total annual instances of 10,371, 
the number of NSAs and amendments combined is 3,249. Ten percent of 
those is 325.
---------------------------------------------------------------------------

    Comments are invited on:
     Whether the collection of information is necessary for the 
proper performance of the functions of the Commission, including 
whether the information will have practical utility;
     Whether the Commission's estimate for the burden of the 
information collection is accurate;
     Ways to enhance the quality, utility, and clarity of the 
information to be collected;
     Ways to minimize the burden of the collection of 
information on respondents, including the use of automated collection 
techniques or other forms of information technology.
    Please submit any comments, identified by the docket number in the 
heading of this document, by any of the methods described in the 
ADDRESSES section of this document.
Regulation Identifier Number
    The Commission assigns a regulation identifier number (RIN) to each 
regulatory action listed in the Unified Agenda of Federal Regulatory 
and Deregulatory Actions (Unified Agenda). The Regulatory Information 
Service Center publishes the Unified Agenda in April and October of 
each year. You may use the RIN contained in the heading at the 
beginning of this document to find this action in the Unified Agenda, 
available at https://www.reginfo.gov/public/do/eAgendaMain.

List of Subjects

46 CFR Part 530

    Freight, Maritime carriers, Report and recordkeeping requirements.

46 CFR Part 531

    Freight, Maritime carriers, Report and recordkeeping requirements.

[[Page 56570]]

    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

0
1. The authority citation for part 530 continues to read as:

    Authority:  5 U.S.C. 553; 46 U.S.C. 305, 40301-41306, 40501-
40503, 41307.

0
2. Amend Sec.  530.3 by:
0
a. Redesignating paragraph (s) as paragraph (u);
0
b. Redesignating paragraphs (b) through (r) as paragraphs (c) through 
(s), respectively;
0
c. Adding new paragraph (b); and
0
d. Revising newly redesignated paragraphs (e), (j), and (p).
    The addition and revisions read as follows:


Sec.  530.3  Definitions.

* * * * *
    (b) Affiliate means two or more entities which are under common 
ownership or control by reason of being parent and subsidiary or 
entities associated with, under common control with, or otherwise 
related to each other through common stock ownership or common 
directors or officers.
* * * * *
    (e) BTA means the Commission's Bureau of Trade Analysis or its 
successor bureau.
* * * * *
    (j) Effective date means the date upon which a service contract or 
amendment is scheduled to go into effect by the parties to the 
contract. For an original service contract, the effective date cannot 
be prior to the filing date with the Commission. For a service contract 
amendment, the effective date can be no more than thirty (30) calendar 
days prior to the filing date with the Commission. A service contract 
or amendment thereto becomes effective at 12:01 a.m. Eastern Standard 
Time on the beginning of the effective date.
* * * * *
    (p) OIT means the Commission's Office of Information Technology or 
its successor office.
* * * * *
0
3. Amend Sec.  530.5 by revising paragraph (b) to read as follows:


Sec.  530.5  Duty to file.

* * * * *
    (b) Filing may be accomplished by any duly agreed-upon agent, as 
the parties to the service contract may designate, and subject to 
conditions as the parties may agree. The parties, or their duly agreed-
upon agent, may utilize web services to transmit filings into the 
Commission's service contract electronic filing system (SERVCON).
* * * * *
0
4. Amend Sec.  530.6 by revising paragraph (b) to read as follows:


Sec.  530.6  Certification of shipper status.

* * * * *
    (b) Proof of tariff and financial responsibility. If the 
certification completed by the contract party under paragraph (a) of 
this section identifies the contract party or an affiliate or member of 
a shippers' association as an NVOCC, the ocean common carrier, 
conference or agreement shall obtain proof that such NVOCC has a 
published tariff and proof of financial responsibility as required 
under sections 8 (46 U.S.C. 40501-40503) and 19 (46 U.S.C. 40901-40904) 
of the Act before signing the service contract. An ocean common 
carrier, conference or agreement can obtain such proof by the same 
methods prescribed in Sec.  515.27 of this chapter. Alternatively, for 
each NVOCC that is a shipper, an affiliate or a member of a shippers' 
association, its 6-digit FMC Organization Number must be entered at the 
time of filing into the corresponding SERVCON field, which shall serve 
as such proof.
* * * * *
0
5. Amend Sec.  530.8 by revising paragraph (a) and paragraph (d) 
introductory text to read as follows:


Sec.  530.8  Service contracts.

    (a) Authorized persons shall file with BTA, in the manner set forth 
in appendix A of this part, a true and complete copy of:
    (1) Every service contract before any cargo moves pursuant to that 
service contract; and
    (2) Every amendment to a filed service contract no later than 
thirty (30) days after any cargo moves pursuant to that service 
contract amendment.
* * * * *
    (d) Other requirements. Every service contract filed with BTA shall 
include, as set forth in appendix A to this part:
* * * * *
0
6. Amend Sec.  530.10 by revising paragraph (c) introductory text and 
the first sentence of paragraph (d) to read as follows:


Sec.  530.10  Amendment, correction, cancellation, and electronic 
transmission errors.

* * * * *
    (c) Corrections. Requests shall be filed, in duplicate, with the 
Commission's Office of the Secretary within one-hundred eighty (180) 
days of the contract's filing with the Commission, accompanied by 
remittance of a $315 service fee and shall include:
* * * * *
    (d) Electronic transmission errors. An authorized person who 
experiences a purely technical electronic transmission error or a data 
conversion error in transmitting a service contract filing or amendment 
thereto is permitted to file a Corrected Transmission (``CT'') of that 
filing within 30 days of the date and time of receipt recorded in 
SERVCON. * * *
* * * * *
0
7. Amend Sec.  530.13 by revising paragraph (b)(2) to read as follows:


Sec.  530.13  Exceptions and exemptions.

* * * * *
    (b) * * *
    (2) Department of Defense cargo. Transportation of U.S. Department 
of Defense cargo moving in foreign commerce under terms and conditions 
negotiated and approved by the Surface Deployment and Distribution 
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.
* * * * *
0
8. Amend Sec.  530.14 by revising paragraph (a) to read as follows:


Sec.  530.14  Implementation.

    (a) Generally. Performance under an original service contract may 
not begin before the day it is effective and filed with the Commission. 
Performance under a service contract amendment may not begin until the 
day it is effective, provided however that amendments must be filed no 
later than thirty (30) calendar days after effectiveness.
* * * * *


Sec.  530.15   [Amended]

0
9. Amend Sec.  530.15 by removing paragraph (b) and redesignating 
paragraphs (c) and (d) as paragraphs (b) and (c), respectively.

PART 531--NVOCC SERVICE ARRANGEMENTS

0
10. The authority citation for part 531 continues to read as:

    Authority:  46 U.S.C. 40103.

0
11. Amend Sec.  531.3 by revising paragraph (k) to read as follows.


Sec.  531.3  Definitions.

* * * * *

[[Page 56571]]

    (k) Effective date means the date upon which an NSA or amendment is 
scheduled to go into effect by the parties to the contract. For an 
original NSA, the effective date cannot be prior to the filing date 
with the Commission. For an NSA amendment, the effective date can be no 
more than thirty (30) calendar days prior to the filing date with the 
Commission. An NSA or amendment thereto becomes effective at 12:01 a.m. 
Eastern Standard Time on the beginning of the effective date.
* * * * *
0
12. Amend Sec.  531.5 by revising paragraph (c) to read as follows.


Sec.  531.5  Duty to file.

* * * * *
    (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. The parties, or their duly agreed-upon agent, may 
utilize web services to transmit filings into the Commission's 
electronic filing system (SERVCON).
* * * * *
0
13. Amend Sec.  531.6 by
0
a. Revising paragraphs (a) and (b)(9)(ii);
0
b. Redesignating paragraphs (b)(10) and (11) as (b)(11) and (12), 
respectively;
0
c. Adding a new paragraph (b)(10);
0
d. Redesignating paragraphs (d) through (g) as paragraphs (e) through 
(h), respectively;
0
e. Adding a new paragraph (d); and
0
f. Revising newly redesignated paragraphs (e)(1) and (g).
    The additions and revisions to read as follows:


Sec.  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:
    (1) Every NSA before any cargo moves pursuant to that NSA; and
    (2) Every amendment to a filed NSA no later than thirty (30) days 
after any cargo moves pursuant to that NSA amendment.
    (b) * * *
    (9) * * *
    (ii) Certify that this information will be provided to the 
Commission upon request within ten (10) business days of such request. 
However, the requirements of this section do not apply to amendments to 
NSAs that have been filed in accordance with the requirements of this 
section unless the amendment adds new parties or affiliates;
    (10) A certification of shipper status;
* * * * *
    (d) Certification of shipper status. The NSA shipper party shall 
sign and certify on the signature page of the NSA its shipper status 
(e.g., owner of the cargo, shippers' association, NVOCC, or specified 
other designation), and the status of every affiliate of such party or 
member of a shippers' association entitled to receive service under the 
NSA. For each NVOCC that is a shipper, an affiliate or a member of a 
shippers' association, its 6-digit FMC Organization Number must be 
entered at the time of filing into the corresponding SERVCON field.
    (e) * * *
    (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 an effective 
NSA.
* * * * *
    (g) 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 Sec.  
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 (g)(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.
0
14. Amend Sec.  531.8 by revising paragraphs (b)(1) and (c) to read as 
follows:


Sec.  531.8  Amendment, correction, cancellation, and electronic 
transmission errors.

* * * * *
    (b) * * *
    (1) Requests shall be filed, in duplicate, with the Commission's 
Office of the Secretary within one-hundred eighty (180) days of the 
NSAs filing with the Commission, accompanied by remittance of a $276 
service fee.
* * * * *
    (c) Electronic transmission errors. An authorized person who 
experiences a purely technical electronic transmission error or a data 
conversion error in transmitting an NSA or an amendment thereto is 
permitted to file a Corrected Transmission (``CT'') of that filing 
within 30 days of the date and time of receipt recorded in SERVCON. 
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 paragraphs 531.6(b) of 
this section. The CT tab box in SERVCON must be checked at the time of 
resubmitting a previously filed NSA, and a description of the 
correction 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, since documents with duplicate file names or NSA and amendment 
numbers are not accepted by SERVCON.
* * * * *
0
15. Amend Sec.  531.10 by revising paragraph (b)(2) to read as follows.


Sec.  531.10  Excepted and exempted commodities.

* * * * *
    (b) * * *
    (2) Department of Defense cargo. Transportation of U.S. Department 
of Defense cargo moving in foreign commerce under terms and conditions 
approved by the Surface Deployment and Distribution 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.
* * * * *
0
16. Revise Sec.  531.11 to read as follows.


Sec.  531.11  Implementation.

    Generally. Performance under an original NSA may not begin before 
the day it is effective and filed with the Commission. Performance 
under an NSA amendment may not begin until the day it is effective, 
provided however that amendments must be filed no later than thirty 
(30) calendar days after effectiveness.

    By the Commission.
Karen V. Gregory,
Secretary.
[FR Doc. 2016-19843 Filed 8-19-16; 8:45 am]
 BILLING CODE 6730-01-P