Amendments to Regulations Governing NVOCC Negotiated Rate Arrangements and NVOCC Service Arrangements, 56781-56789 [2017-25718]

Download as PDF Federal Register / Vol. 82, No. 229 / Thursday, November 30, 2017 / Proposed Rules correction published on February 22, 2011 at 76 FR 9714 are withdrawn as of November 30, 2017. ADDRESSES: You may submit comments, identified by Docket No. FEMA–B–1170 to Rick Sacbibit, Chief, Engineering Services Branch, Federal Insurance and Mitigation Administration, FEMA, 400 C Street SW., Washington, DC 20472, (202) 646–7659, or (email) patrick. sacbibit@fema.dhs.gov. FOR FURTHER INFORMATION CONTACT: Rick Sacbibit, Chief, Engineering Services Branch, Federal Insurance and Mitigation Administration, FEMA, 400 C Street SW., Washington, DC 20472, (202) 646–7659, or (email) patrick.sacbibit@fema.dhs.gov. SUPPLEMENTARY INFORMATION: On January 7, 2011, FEMA published a proposed rule at 76 FR 1125 and 1126, and a correction on February 22, 2011 at 76 FR 9714, proposing flood elevation determinations along one or more flooding sources in Snohomish County, Washington and Incorporated Areas. FEMA is withdrawing the proposed rule because FEMA has issued a Revised Preliminary Flood Insurance Rate Map featuring updated flood hazard information. A Notice of Proposed Flood Hazard Determinations will be published in the Federal Register and in the affected community’s local newspaper following issuance of the Revised Preliminary Flood Insurance Rate Map. Authority: 42 U.S.C. 4104; 44 CFR 67.4. Dated: November 2, 2017. Roy E. Wright, Deputy Associate Administrator for Insurance and Mitigation, Department of Homeland Security, Federal Emergency Management Agency. [FR Doc. 2017–25620 Filed 11–29–17; 8:45 am] BILLING CODE 9110–12–P FEDERAL MARITIME COMMISSION 46 CFR Parts 531 and 532 [Docket No. 17–10] nshattuck on DSK9F9SC42PROD with PROPOSALS RIN 3072–AC68 Amendments to Regulations Governing NVOCC Negotiated Rate Arrangements and NVOCC Service Arrangements Federal Maritime Commission. Notice of proposed rulemaking; notice of availability of finding of no significant impact. AGENCY: ACTION: The Federal Maritime Commission (FMC or Commission) proposes to amend its rules governing SUMMARY: VerDate Sep<11>2014 15:27 Nov 29, 2017 Jkt 244001 Non-Vessel-Operating Common Carrier (NVOCC) Negotiated Rate Arrangements and NVOCC Service Arrangements. The proposed rule is intended to modernize, update, and reduce regulatory burdens. DATES: Submit comments on or before January 29, 2018. In compliance with the Paperwork Reduction Act (PRA), the Commission is also seeking comment on revisions to two information collections. See the Paperwork Reduction Act section under Rulemaking Analyses and Notices below. Please submit all comments relating to the revised information collection requirements to the FMC and to the Office of Management and Budget (OMB) at the address listed below under ADDRESSES on or before January 29, 2018. Comments to OMB are most useful if submitted within 30 days of publication. Petitions for review of the Commission’s finding of no significant impact (FONSI) under NEPA must be submitted on or before December 11, 2017. You may submit comments and petitions for review of the FONSI, identified by the Docket No. 17–10 by the following methods: • Email: secretary@fmc.gov. For comments, include in the subject line: ‘‘Docket 17–10, Comments on Proposed NSA/NRA Regulations.’’ For petitions for review of the FONSI, include in the subject line: ‘‘Docket 17–10, Petition for Review of FONSI.’’ Comments and petitions for review should be attached to the email as a Microsoft Word or textsearchable PDF document. Only nonconfidential and public versions of confidential comments and petitions should be submitted by email. • Mail: Rachel E. Dickon, Assistant Secretary, Federal Maritime Commission, 800 North Capitol Street NW., Washington, DC 20573–0001. Comments regarding the proposed revisions to the relevant information collections should be submitted to the FMC through one of the preceding methods and a copy should also be sent to the Office of Information and Regulatory Affairs, Office of Management and Budget, Attention: Desk Officer for Federal Maritime Commission, 725 17th Street NW., Washington, DC 20503; by Fax: (202) 395–5167; or by email: OIRA_ Submission@OMB.EOP.GOV. Instructions: For detailed instructions on submitting comments, including requesting confidential treatment of comments, and additional information on the rulemaking process, see the Public Participation heading of the Supplementary Information section of ADDRESSES: PO 00000 Frm 00033 Fmt 4702 Sfmt 4702 56781 this document. Note that all comments received will be posted without change to the Commission’s Web site, unless the commenter has requested confidential treatment. Docket: For access to the docket to read background documents or comments received, go to the Commission’s Electronic Reading Room at: http://www.fmc.gov/17-10, or to the Docket Activity Library at 800 North Capitol Street NW., Washington, DC 20573, between 9:00 a.m. to 5:00 p.m., Monday through Friday, except Federal holidays. Telephone: (202) 523–5725. FOR FURTHER INFORMATION CONTACT: For questions regarding submitting comments or petitions for review of the FONSI, or the treatment of confidential information, contact Rachel E. Dickon, Assistant 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: Table of Contents I. Executive Summary II. Background A. NVOCC Service Arrangements (NSAs) B. NVOCC Negotiated Rate Arrangements (NRAs) C. NCBFAA Petition for Rulemaking and Overview of Comments III. The Commission’s Proposed Rule A. Overview B. Remove the NSA Filing and Publication Requirements C. Authorize Amendments of NRAs and Shipper Acceptance Upon Booking IV. Public Participation V. Rulemaking Analyses and Notices I. Executive Summary The Commission proposes to amend its rules at 46 CFR part 531 governing NVOCC Service Arrangements to remove the NSA filing and publication requirements. The Commission also proposes to amend its rules at 46 CFR part 532 to permit NRAs to be modified at any time. In addition, an NVOCC may provide for the shipper’s acceptance of the NRA by booking a shipment thereunder, subject to the NVOCC incorporating a prominent written notice to such effect in each NRA or amendment. II. Background The Shipping Act of 1984 (the Shipping Act or the Act) expanded the options for pricing liner services by introducing the concept of carriage under service contracts filed with the E:\FR\FM\30NOP1.SGM 30NOP1 56782 Federal Register / Vol. 82, No. 229 / Thursday, November 30, 2017 / Proposed Rules nshattuck on DSK9F9SC42PROD with PROPOSALS Commission. Public Law No. 98–237, § 8(c). Liner services could be priced via negotiated contracts between ocean common carriers and their shipper customers, rather than solely by public tariffs. Per the Shipping Act and FMC regulations, ocean freight rates, surcharges, and accessorial charges had to be published in tariffs or agreed to via a service contract filed with the Commission. Contemporaneous with the filing of service contracts, ocean carriers were required to make publicly available a statement of essential terms in tariff format. The Ocean Shipping Reform Act of 1998 (OSRA) amended the Shipping Act of 1984 as it related to service contracts. Public Law No. 105–258, § 106. No longer did contract rates need to be published in the tariff publication, and the essential terms publication was limited to: Origin and destination port ranges, commodities, minimum volume or portion, and duration. Nevertheless, though the Shipping Act and its amendments provided for more efficiency and flexibility for ocean common carriers through the use of service contracts, similar relief was not extended to NVOCCs, which were still required to publish tariffs and adhere to those tariffs when transporting cargo. A. NVOCC Service Arrangements (NSAs) In 2003, NCBFAA filed a petition to seek exemption from some of the tariff requirements of the Shipping Act of 1984. See Docket No. P5–03, Petition of the National Customs Brokers and Forwarders Association of America. Inc. for Limited Exemption of Certain Tariff Requirements of the Shipping Act of 1984. In response, the Commission issued a notice of proposed rulemaking (NPRM) in which it determined that it had the statutory authority to exempt NVOCCs from the provisions of the Shipping Act, subject to certain conditions. 69 FR 63981, 63985. (Nov. 3, 2004). The Commission distinguished itself from other agencies who, pursuant to the findings in Maislin Industries, U.S. Inc. v. Primary Steel, Inc., 497 U.S. 116, 126 (1990) and MCI Telecommunications Corp. v. American Tel. & Tel. Co., 512 U.S. 218 (1994) had lacked exemption authority. 69 FR at 63985. The Commission determined that in order to ensure there was no substantial reduction in competition among NVOCCs, the exemption had to be available to all NVOCCs compliant with both section 19 of the Shipping Act and the conditions of the exemption. Id. The Commission proposed that ‘‘the exemption be conditioned on the same statutory and regulatory requirements VerDate Sep<11>2014 15:27 Nov 29, 2017 Jkt 244001 and protections applicable to VOCCs’ service contracts: Namely, filing of executed agreements; publication of essential terms of those agreements; and confidential treatment, similar to that set forth in 46 CFR part 530.’’ 69 FR at 63986. The Commission also proposed the required publication of the essential terms of all NSAs in automated systems and the confidential filing of the text of those NSAs with the Commission. 69 FR at 63987. The Commission further proposed ‘‘making applicable to carriage under an NSA, those provisions of the Shipping Act that would be applicable to service contracts.’’ Id. The Commission’s final rule provided a limited exemption, Non-Vessel Operating Service Arrangements (‘‘NSAs’’), similar to service contracts, with required filing and publication requirements. (46 CFR part 531) NonVessel Operating Service Arrangements, 69 FR 75850 (Dec. 20, 2004). To ‘‘ensure that the exemption as proposed [would] not result in a substantial reduction in competition,’’ the Commission limited the exemption to individual NVOCCs acting in their capacity as carriers. 69 FR at 75851. The Commission also decided to allow affiliated NVOCCs to jointly offer NSAs. 69 FR at 75852. B. NVOCC Negotiated Rate Arrangements (NRAs) In 2008, the NCBFAA filed another petition with the Commission. This petition sought an exemption from mandatory rate tariff publication. See Docket No. P1–08, Petition of the National Customs Brokers and Forwarders Association of America. Inc. for Exemption from Mandatory Rate Tariff Publication (filed July 31, 2008). The proposal sought to exempt from the provisions of the Shipping Act of 1984 the requirement for NVOCCs to publish and/or adhere to rate tariffs ‘‘in those instances where they have individually negotiated rates with their shipping customers and memorialized those rates in writing.’’ NCBFAA Petition in Docket No. P1–08, at 10. By Notice of Proposed Rulemaking (‘‘NPRM’’) issued May 7, 2010, the Commission proposed that the use of NRAs would be allowed, subject to conditions, including (1) a requirement for NVOCCs to continue publishing standard rules tariffs with contractual terms and conditions governing shipments, including any accessorial charges and surcharges, (2) a requirement to make available NVOCC rules tariffs to shippers free of charge; (3) a requirement that NRA rates must be mutually agreed to and memorialized in writing by the date the cargo is received for shipment; and (4) a PO 00000 Frm 00034 Fmt 4702 Sfmt 4702 requirement that NVOCCs who use NRAs must retain, and make available upon request to the Commission, documentation confirming the terms, and agreed rate, for each shipment for a period of five years. NVOCC Negotiated Rate Arrangements, 75 FR 25150, 25154. (May 7, 2010). In the NPRM, the Commission also determined that under Section 16 of the Shipping Act the exemption could be granted as doing so ‘‘would not result in substantial reduction in competition or be detrimental to commerce.’’ 75 FR at 25153. The Commission subsequently granted the exemption, relieving NVOCCs from the burden and costs of tariff rate publication when using this new class of carrier rate arrangements. NVOCC Negotiated Rate Arrangements, 76 FR 11351 (Mar.2, 2011) (2011 NRA Final Rule). In determining whether to grant the exemption the Commission considered: Competition among NVOCCs; competition between NVOCCs and VOCCs; among VOCCs; as well as competition among shippers. 76 FR at 11352. The Commission determined that granting the exemption would not result in a substantial reduction in competition in any of the above categories. 76 FR at 11352–11353. Analyzing whether granting the exemption would be detrimental to commerce, the Commission determined that such NRAs would be beneficial to commerce because the exemption would ‘‘reduce NVOCC operating costs and increase competition in the U.S. trades.’’ 76 FR at 11353. The Commission also determined that ‘‘NVOCCs entering into NRAs continue to be subject to the applicable requirements and strictures of the Shipping Act, including oversight by the Commission.’’ 76 FR at 11354. As a condition to offering NRAs, NVOCCs were required to provide their rules tariffs to the public free of charge. 76 FR at 11358. The Commission also determined not to allow for amendment of an NRA after receipt of the cargo by the carrier or its agent. Id. Consistent with the Petition’s focus upon negotiated rates only, the Commission determined not to permit NRAs to include non-rate economic terms, such as rate methodology, credit and payment terms, forum selection or arbitration clauses, or minimum quantities. 76 FR at 11355. C. NCBFAA Petition for Rulemaking and Overview of Comments NCBFAA petitioned the FMC on April 16, 2015, to initiate a rulemaking to eliminate the NSA provisions in 46 CFR part 531 in their entirety, or E:\FR\FM\30NOP1.SGM 30NOP1 nshattuck on DSK9F9SC42PROD with PROPOSALS Federal Register / Vol. 82, No. 229 / Thursday, November 30, 2017 / Proposed Rules alternatively, eliminate the filing and essential terms publication requirements for NSAs. Consolidated with that request, NCBFAA also asked the Commission to expand the NRA exemption in 46 CFR part 532 to include economic terms beyond rates, and to delete 46 CFR 532.5(e) that precludes any amendment or modification of an NRA. On April 28, 2015, the Commission published a Notice of Filing and Request for Comments. 80 FR 23549 (Apr. 28. 2015). Comments were received from Mainfreight, Inc. (Mainfreight); ABS Consulting (ABS); Mohawk Global Statistics (Mohawk); Global Logistics Solutions (GLS); World Shipping Council (WSC); DJR Logistics, Inc. (DJR); Crowley Latin America Services, LLC and Crowley Caribbean Services, LLC (Crowley); New York New Jersey Foreign Freight Forwarders and Brokers Association, Inc. (NYNJFFF&BA); National Industrial Transportation League (NITL); CaroTrans International, Inc., (CaroTrans); Vanguard Logistics Services (USA), Inc., (Vanguard); Serra International, Inc., (Serra); C. H. Powell Company (Powell); BDG International, Inc., dba Seagull Express Lines, (BDG); John S. James Co. (James); and UPS Ocean Freight Services, Inc., UPS Europe SPRL, and UPS Asia Group Pte., Ltd. collectively submitting one comment (UPS). The comments represent a broad cross-section of industry stakeholders, including licensed NVOCCs and freight forwarders, a major trade association representing beneficial cargo owners, and vessel-operating common carriers (VOCCs). However, the Commission did not receive comments directly from beneficial owners of cargo shipped by NVOCCs under either NRAs or NSAs. A majority of the OTI comments expressed general support for the petition. Commenters supported either the elimination of 46 CFR part 531 in its entirety, or eliminating the filing and essential terms publication requirements for NSAs. Many supported allowing economic terms beyond rates in NRAs, as well as the modification of NRAs at any time, upon mutual agreement. The World Shipping Counsel, while not opposing the Petition, urged evenhanded regulatory relief with respect to VOCCs as well. WSC cites prior requests that VOCCs have made for changes to the Commission’s regulations governing service contract amendment filings. WSC’s comments were supported by Crowley. NITL, while supporting the negotiation of economic terms between VerDate Sep<11>2014 15:27 Nov 29, 2017 Jkt 244001 NVOCCs and shippers, as well as the elimination of the filing and essential terms publication requirement of NSAs, did not support the elimination of part 531 in its entirety. UPS also opposed any restrictions upon, or the elimination of, part 531, expressing support for the continued use of NSAs. On August 2, 2016, the Commission granted NCBFAA’s petition to ‘‘initiate a rulemaking with respect to the revisions discussed in the petition.’’ However, because the Commission was in the process of a separate rulemaking to amend portions of part 531 related to NSAs (Docket No. 16–05, Service Contracts and NVOCC Service Arrangements), the Commission delayed initiating the requested rulemaking until after the rulemaking in Docket No. 16–05 was concluded. III. The Commission’s Proposed Rule A. Overview NCBFAA has proposed deleting in its entirety the NSA exemption in 46 CFR part 531, or alternatively, eliminate the filing and essential terms publication requirements for NSAs. NCBFAA also sought to expand the NRA exemption in 46 CFR part 532 to allow inclusion of economic terms beyond rates into NRAs. NCBFAA Petition at 14. NCBFAA argues that, whereas the NSA exemption currently benefits few NVOCCs, NVOCCs and shippers often seek to negotiate one-on-one on a broad range of service terms including: Rate or service amendments; liability; minimum volumes or time/volume rates; liquidated damages; credit terms; service guarantees and/or service benchmarks; measurements and penalties; surcharges; GRIs or other pass-through charges from the carriers or ports; rate amendment processes; EDI services; and dispute resolution. Id. at 8. NCBFAA urges that ‘‘each of these terms are relevant to some extent to every rate and service negotiation between an NVOCC and an existing or prospective customer. Yet, none of the items on this list can properly be included in an NRA.’’ Id. at 9. NCBFAA contends that ‘‘the FMC should now look to meld the features of NSAs and NRAs into a single arrangement.’’ Id. at 13. Mainfreight, ABS, Powell, Mohawk, and John S. James support the elimination of 46 CFR part 531. Mainfreight states that granting the petition ‘‘would eliminate a regulatory burden that, over time, has come to represent a significant hurdle to the profitability and sustainability of the NVOCC business model.’’ Mainfreight at PO 00000 Frm 00035 Fmt 4702 Sfmt 4702 56783 1.1 ABS states that the petition ‘‘clearly reflects how shippers negotiate and contract with NVOCC’s today and it will greatly simplify the process and make it easier for NVOCC’s [sic] and shippers to cooperate and eliminate burdensome and not needed requirements and associated costs.’’ ABS at 1. Powell believes that NRAs and NSAs are ‘‘two imperfect methods for memorializing NVOCC rates,’’ and supports the petition’s argument to eliminate the NSA exemption. Powell at 1. John S. James Co. likewise supports the petition from the NCBFAA to eliminate NSAs and expand the use of NRAs. James at 1. Mohawk commented that given the current limitations on NRAs, which allow no provisions ‘‘that cover free time, demurrage, per diem and other similar components related to the transport of goods,’’ both Mohawk and its clients had a desire for NRAs to include more terms and provisions. Mohawk at 2. BDG asserts that since BDG is ‘‘able to privately negotiate rates with our customers without publishing them in a tariff; it is difficult to understand why other economic terms that we also negotiate have to be treated differently and filed as NSAs.’’ BDG at 2. Global and NYNJFFF&BA support either eliminating the filing of essential terms publication requirements of NSAs or eliminating part 531 in its entirety. Global at 2; NYNJFFF&BA at 3. Global states that it has not used NRAs or NSAs and finds the provisions confusing. Global believes that combining NRAs and NSAs as one exemption would be more efficient and beneficial to ‘‘allow negotiated agreements to be fully comprehensive and cover rates and service arrangements.’’ Id. at 1. NYNJFF&BA insists that if existing restrictions on NRAs were removed, there would no longer be a commercial need for NSAs. NYNJFF&BA at 3. NITL does not support eliminating part 531. While advocating generally for greater flexibility for NVOCCs in the commercial marketplace, NITL ‘‘believes that NSAs should remain as an option for any shippers and NVOCCs that desire the increased formality of the NSA requirements.’’ NITL at 6. UPS urges that NSAs be preserved regardless of any changes to the NRA regulations to improve flexibility of the latter. UPS at 4. UPS states that ‘‘NSAs 1 Mainfreight asserts that regulatory relief also is needed to stem a decline in the NVOCC share of the ocean freight business. Id. FMC review of current PIERS data for January 2014 through July 2017 indicates that NVOCC cargo as a share of U.S. ocean trades continues to increase overall, exceeding 50% for all U.S. import trades. E:\FR\FM\30NOP1.SGM 30NOP1 nshattuck on DSK9F9SC42PROD with PROPOSALS 56784 Federal Register / Vol. 82, No. 229 / Thursday, November 30, 2017 / Proposed Rules are the only method by which largervolume NVOCCs can maintain an equal playing field with the Vessel Operating Common Carriers (VOCCs),’’ id. at 3, pointing out that ‘‘many NSAs are longer term, multi-year large volume contracts between NVOCCs and their shipper customers, often including multiple affiliated companies as additional shippers or consignees, [and] often covering global trade lanes.’’ Id. at 2. Whereas NRAs ‘‘may not be the most suitable format for certain types of transactions.’’ id., UPS believes that preservation of NSAs allows pricing and service benefits ‘‘for shippers of all sizes, bringing the benefits of the Commission’s [NSA] exemption to the marketplace.’’ Id. UPS urges the Commission to allow the continued use of NSAs for ‘‘those NVOCCs that are now successfully using them, and for the benefit of their shippers.’’ Id. at 2. The World Shipping Council urges that the issues raised by the NCBFAA Petition ‘‘are most logically and equitably considered alongside requests that vessel operating common carriers have made for changes to the Commission’s regulations governing service contract amendment filing.’’ WSC, at 1. WSC thus proposes that service contract amendments be permitted to be filed within 90 days of the filing of the underlying commercial agreement. Id. at 9. WSC asserts that the NCBFAA Petition provides an opportunity for the Commission to address changes to its NRA and NSA regulations at the same time that it considers changes to its VOCC service contract amendment filing regulations. Id. at 8. Crowley supports WSC’s comments, and states that the Commission should ‘‘initiate a rulemaking proceeding which would amend the FMC’s regulations to permit amendments to service contracts and NSAs to be filed within a specified period of time after the parties agree on the amendment.’’ Crowley, at 5. Some commenters claim that the NSA exemption benefits few NVOCCs, citing the low volume of filed NSAs and higher costs and filing formalities attendant to NSAs. However, UPS’ description of NSAs as comprising ‘‘multi-year large-volume contracts’’ with its shipper customers, containing ‘‘hundreds or even a thousand or more individual rates’’ establishes a compelling factual parallel between the content of NSA and service contracts first anticipated by the Commission in creating an exemption for NSAs. Indeed, the exemption was expressly ‘‘conditioned on the same statutory and regulatory requirements and protections applicable to VOCCs’ service contracts: VerDate Sep<11>2014 15:27 Nov 29, 2017 Jkt 244001 Namely, filing of executed agreements; publication of essential terms of those agreements; and confidential treatment, similar to that set forth in 46 CFR part 530.’’ 69 FR at 63986. Like service contracts, NSAs can contain non-rate economic terms, such as rate methodology, credit and payment terms, forum selection or arbitration clauses, or minimum quantities, which delineate the contractual terms and conditions binding both the carrier and shipper signatories. These latter provisions were excluded from application in NRAs. 76 FR at 11355. Indeed, in the Commission’s 2011 Final Rule as to NRAs, a number of commenters therein insisted upon the need for a rate-based NRA exemption notwithstanding the ability of NVOCCs to contractually enter into NSAs. These concerns were premised largely upon the perspectives of their customers, shippers who ‘‘do not want or need to engage in a formal contract process.’’ 76 FR at 11353.2 This outlook continues to hold sway today. See, e.g. DJR comments, at 1 (‘‘We will limit our comments to the NRA filing as we have never been able to secure a NSA from one of our clients. They rejected the idea stating that they did not want to be committed to a long term contract should our service levels fail to meet their requirements.’’) Other commenters likewise have shared the view that the contractual formalities of NSAs are deemed too time consuming and burdensome, Serra at 1; Vanguard at 2; Powell at 1; and that ‘‘[c]hasing down signatures on amendments’’ had proven problematic. Mohawk at 2. UPS insists that elimination of NSAs would create competitive conditions unfair to those larger NVOCCs who have invested heavily in building up procedures and business methods for this type of contracting. UPS points to the success of its own efforts and focus upon marketing NSAs, where more than one-third of their container volume in a 2 See also supporting attachments to NCBFAA’s seminal Petition in Docket No. P1–08, including Verified Supporting Statement of Anthony Kozlowski, at 2; Verified Support Statement of Edward M. Piza, at 2; Verified Supporting Statement of Cas Pouderoyen, at 2. As summarized by Ms. Paulette Kolba of Panalpina: We realize and appreciate the ruling allowing NVOCCs to issue NSAs (NVOCC Service Arrangements) to our customers. NSAs, however, have proven to have limited value, especially to the small and medium sized companies who do not want to get involved in signing a legal contract. They are perfectly happy with the written quotation and rarely understand the need for the NSA. The main benefit of NSAs that we see is in being able to customize rates and services to the unique conditions of some customers. Verified Supporting Statement of Panalpina, Inc. at 4. PO 00000 Frm 00036 Fmt 4702 Sfmt 4702 major US trade lane is now shipped under NSAs. NITL likewise echoes the commercial importance of these contractual distinctions between NRAs and NSAs, and urges that ‘‘NSAs should remain as an option for any shippers and NVOCCs that desire the increased formality of the NSA requirements.’’ Id. at 6. Consistent with recent Executive Orders,3 the Commission’s mission is best fulfilled by recognizing and facilitating the further development of emerging business models, including the more contractually complex and service-oriented NSAs. Whereas NSA contracts bear service provisions and terms more equivalent to VOCC service contracts, that differentiation (from NRAs) was at the heart of creating an exemption for a rate-based vehicle for NVOCC shippers, whom the Petitioner previously described as ‘‘most of whom are LCL shippers,’’ 4 ‘‘who do not want to sign formal written contracts,’’ id. at 9, or just do not like the formality of NSAs, id. The Commission perceives little value, therefore, in mandating a narrowing of NVOCCs’ choices for contracting with their customers, when it appears that substantial volumes of cargo are now moving successfully under the NSA contract model. UPS, at 2. Rather, where those contracting models may be substantially improved without compromising carrier duties or conditions intended for the protection of the shipper, the Commission has been unafraid to consider further loosening of the restrictions or limitations previously established upon an exemption. The Commission is persuaded that it can do so here by removing unnecessary or burdensome regulatory impediments upon the further development of NSAs, without eliminating the NSA provisions in part 531 in their entirety. In doing so, the Commission also reaffirms its intention, first stated in Docket No. 10–03, that NRAs should facilitate a new business model conducive to those NVOCCs who could not then, and cannot now, utilize NSAs. While some NVOCCs may wish to issue a NSA to obtain a volume commitment from their shipper customer, many small and medium enterprises continue to work on a quotation basis, without need to engage in a formal contract process. 76 FR at 11353. See also DJR at 1; NYNJFF&BA at 3 (NSAs are not ‘‘practical particularly for our smaller members when moving lower or less 3 See e.g. Executive Order 13771, Reducing Regulation and Controlling Regulatory Costs (Jan. 30, 2017 and Executive Order 13777, Enforcing the Regulatory Reform Agenda (Feb. 24, 2017). 4 NCBFAA Petition in Docket No. P1–08, at 6. E:\FR\FM\30NOP1.SGM 30NOP1 Federal Register / Vol. 82, No. 229 / Thursday, November 30, 2017 / Proposed Rules nshattuck on DSK9F9SC42PROD with PROPOSALS frequent freight volumes.’’) For such NVOCCs, and their customers, NRAs continue to provide a lower cost, competitive niche in today’s commercial marketplace, made possible by a Commission-issued exemption from the otherwise-applicable requirements of the Shipping Act. The Commission invites further public comment, particularly from shippers currently using NRAs, on how expanding the NRA exemption to allow inclusion in NRAs of non-rate economic terms may impact their commercial business operations. Non-rate economic terms could include but are not limited to such terms as: Service amendments; per-package liability limits; provision of free time, detention or demurrage charges; provisions for arbitration, dispute resolution or forum selection; minimum volumes or time/volume rates; liquidated damages; credit terms and late payment interest; service guarantees and/or service benchmarks, measurements and penalties; surcharges, GRIs or other pass-through charges from the carriers or ports; rate amendment processes; and EDI services, etc. B. Remove the NSA Filing and Publication Requirements NCBFAA argues that the NSA exemption benefits few NVOCCs. As NSAs must be filed with the Commission, and essential terms of NSAs also need to be published in tariffs, NCBFAA opines that NSAs are more burdensome than regular rate tariffs. NCBFAA Petition at 7–8. NCBFAA also argues that continuing the filing requirement for NSAs does not appear to provide any regulatory benefit. Id. at 12–13. A substantial majority of the NVOCC commenters support the NCBFAA position. Commenting on NSAs, Mohawk states ‘‘the filing burden and rules of use run parallel to tariff filing. NSAs by their nature are more restrictive than the NRA we have opted to use. They require 30 days advanced filing to increase rates, and must be maintained electronically,’’ Mohawk at 2. Serra asserts that NSAs, due to the filing requirements, are ‘‘far too time consuming and costly both for ourselves and our customers.’’ Serra, at 2. Carotrans and Vanguard insist that ‘‘NSAs are often of little utility to most NVOCCs due to the formality, burden, and cost of its publication and filing requirements.’’ Carotrans, at 2; Vanguard, at 2. NYNJFF&BA summarizes the current requirements surrounding NSAs as ‘‘more formal, more costly, and more time-consuming to put in place.’’ NYNJFF&BA, at 3. VerDate Sep<11>2014 15:27 Nov 29, 2017 Jkt 244001 NITL supports ‘‘the elimination of the filing and essential terms publication requirement of NSAs,’’ NITL at 5, but recommends continuation of provisions that would require ‘‘NVOCCs to provide NSA contract terms to the Commission upon its request.’’ Id. The OTI commenters have made a substantial case that continuing the filing requirement for NSAs does not appear to offer any regulatory benefit. NCBFAA suggests that these filing requirements may be impeding broader commercial acceptance of NSAs by shippers and NVOCCs, noting that approximately 2,300 NVOCCs have instead taken advantage of the NRA exemption. Petition at 7. UPS takes no issue with removing the filing and essential terms publication requirements so long as NSAs are not eliminated nor any material additional restrictions imposed upon NSAs. UPS, at 4. NITL also supports elimination of these requirements, asserting that the Commission ‘‘does not (and need not) rely on these submissions to fulfill its enforcement duties.’’ NITL, at 5. WSC cites the need for ‘‘even-handed regulatory relief’’ with respect to VOCCs as well. WSC, at 9. While the WSC does not oppose most issues in the petition, WSC does oppose eliminating the filing requirement for NVOCCs because it would create a disparity between NVOCCs and VOCCs. WSC asserts that the NCBFAA Petition provides an opportunity to consider changes to the VOCC service contract amendment filing regulations at the same time the Commission addresses Petitioner’s request for changes to the NRA and NSA regulations. Id. at 8. Specifically, WSC cites prior requests that VOCCs have made for changes to the Commission’s regulations permitting contract amendments to be filed subsequent to the execution of such contract amendments. WSC’s comments were supported by Crowley. As noted, the Commission previously approved initiating a separate rulemaking to amend portions of parts 530 and 531 related to service contracts and NSAs, Docket No. 16–05, Service Contracts and NVOCC Service Arrangements. In granting the NCBFAA Petition, the Commission delayed initiating the requested rulemaking until after the rulemaking in Docket No. 16– 05 was concluded. A final rule in Docket 16–05 was published on April 4, 2017. 82 FR 16288. The relief granted by the Commission in Docket 16–05 allows amendments to service contracts, including multiple service contract amendments, to become effective during a 30-day period prior to being filed with the Commission. The Commission PO 00000 Frm 00037 Fmt 4702 Sfmt 4702 56785 therefore has substantially met WSC’s specific request for regulatory relief for VOCCs. Any further relief to VOCCs for service contracts may be undertaken by the Commission after it has had an opportunity to analyze the impact of the 30-day filing period on VOCC operations and shipper feedback.5 The Commission proposes to exempt NSAs from both the SERVCON filing requirement and also the requirement that the NVOCC publish, in tariff format, the essential terms of any NSA. See 46 CFR 531.9. The essential terms requirement for NSAs currently mirrors those provisions set forth for VOCC service contracts, 46 CFR 530.12, while recognizing that the VOCCs’ statutory obligation of disclosure to labor organizations for work covered by a collective bargaining agreement extended solely to service contracts, not NSAs. See 46 U.S.C. 40502 and 46 CFR 530.7. Inasmuch as most NVOCCs are not subject to collective bargaining agreements with shoreside labor unions, the Commission solicits public comments why the essential terms publication requirement should not now be removed as an unnecessary burden upon the use of NSAs. Shippers, who were identified by the Commission as the beneficiaries of essential terms in the original 2003 NSA rulemaking, have not since commented on the continuing utility of essential terms publications, and thus maintaining the essential terms publication requirement appears to provide little regulatory benefit.6 In removing the NSA filing and essential terms publication requirements, the Commission seeks to preserve the NVOCC’s current range of pricing and contracting choices, while eliminating the filing and publication costs currently associated with NSAs. According to the commenters, this regulatory relief is likely to make NSAs a more attractive pricing and contracting tool and thereby encourage increased use of NSAs. The Commission is mindful that NSAs, comprising both 5 While the VOCC commenters to the subject Petition did not expressly request relief from the current service contract filing requirements as to essential terms, the Commission would invite the VOCC community to submit an appropriate request for relief. 6 As noted in the Commission’s earlier rulemaking, the most critical elements of both VOCC service contracts and NVOCC NSAs are the important statutory protections provided to shippers that ensure against detriment to commerce. See 69 FR 53969. To ensure consistency with VOCC treatment, the Commission will continue applying to carriage under an NSA, those provisions of the Shipping Act that would be applicable to service contracts which relate to protecting shippers. These include the prohibited acts contained in sections 10(b)(1), (2), (5) and (9), 46 U.S.C. 41104(1), (2), (5) and (9). E:\FR\FM\30NOP1.SGM 30NOP1 56786 Federal Register / Vol. 82, No. 229 / Thursday, November 30, 2017 / Proposed Rules nshattuck on DSK9F9SC42PROD with PROPOSALS rate and service provisions, may remain impractical for smaller NVOCCs or shippers moving lower or less frequent freight volumes. It has been shown, however, that substantial volumes of cargo are already moving under this contract model, and that the NVOCC members of Petitioner NCBFAA would prefer the flexibility of including both service and rate-related items in their contract offerings if relieved of the filing and publication burdens of same. Appropriate regulatory relief thus will allow parties to increase the use and reliance upon NSAs as a means to more efficiently engage in the movement of U.S. import and export cargo, while continuing to protect NSA shippers from potential financial harm for nonperformance. C. Authorize Amendments of NRAs and Shipper Acceptance Upon Booking NCBFAA has proposed deleting 46 CFR 532.5(e) and expanding the NRA exemption in 46 CFR part 532 to allow modification of NRAs at any time upon mutual agreement between NVOCCs and their customers. NCBFAA Petition at 14. Mainfreight, ABS, Mohawk, GLS, DJR, NYNJFFF&BA, NITL, CaroTrans, Vanguard, Serra, Powell, and BDG support the NCBFAA petitioner’s request to allow modification of NRAs, at any time, upon mutual agreement. DJR states that, under current NRA requirements, either ‘‘the NVOCC faces the serious loss of revenue and potentially being put out of business by issuing long period NRAs, or the NVOCC issues 1 day or 1 week NRAs which increases the NVOCCs’ operational expense and floods the shipper with constantly changing pricing.’’ DJR at 2–3. NYNJFFF&BA also supports the NCBFAA recommendation that NRAs be allowed to be amended at any time after the receipt of cargo. NYNJFFF&BA states ‘‘if NRAs can be amended in conjunction with the shipper’s agreement the NRA will become more directly responsive to competitive market conditions and business practices prevalent in the current marketplace.’’ NYNJFF&BA, at 3. CaroTrans supports allowing modification of NRAs, as it believes it will improve efficiency and prevent the current ‘‘nonsensical’’ and ‘‘inefficient’’ approach to modification, which entails terminating the current NRA and entering into a new one. CaroTrans at 3. Serra and Powell also support allowing amendment of NRAs after the cargo is received if the shipper and the NVOCC both agree in writing. Serra at 2; Powell at 1–2. NITL supports ‘‘allowing a VerDate Sep<11>2014 15:27 Nov 29, 2017 Jkt 244001 shipper and NVOCC the power to modify an NRA at any time but only to the extent that the modification is based on a mutual written agreement between the parties and, such agreement should not be in the form of the NVOCC’s tariff, bill of lading, or other shipping document that is not subject to mutual negotiation.’’ NITL, at 5. Due to their smaller cargo volume, recent history has shown, and the commenters’ statements support that NRAs tend to be transactional in nature and are generally short term. With their singular focus upon rates, NRAs are more aligned with the ‘‘spot market.’’ 7 This relationship heightens, rather than diminishes, the need for NRAs to respond to an ever-changing marketplace. It appears appropriate, and in keeping with the Commission’s commitment to reduce regulatory burden where feasible, to therefore permit NRAs to be extended or amended upon acceptance or agreement by the shipper customer. In initially creating NRAs, the accelerating need for parties to have greater flexibility to more quickly respond to fast-paced market rate fluctuations does not appear to have been fully anticipated. The NVOCC and its customer should not be compelled to create a new NRA in every instance simply because the rules do not currently provide for amendment. While not expressly included in the NCBFAA Petition, the Commission proposes a further change to enhance the use and competitiveness of NRAs. As noted in the comments of DGR Logistics, the requirement at 46 CFR 532.5(c) that an NRA ‘‘be agreed to’’ by the shipper prior to receipt of cargo by the common carrier or its agent may itself pose logistical and regulatory challenges to the NVOCC. See DGR, at 2. Rather than continuing a persistent practice requiring that shipper acceptance in all cases be memorialized through a formal writing or email, the Commission proposes also to allow NRAs to be more flexibly created, or be amended, upon the shipper’s acceptance in the form of a request for booking pursuant to the NRA.8 This practice more closely corresponds to the manner in which an NVOCC encounters shipper acceptance when responding to a written rate quote under standard 7 UPS has described NRAs as ‘‘flexible and confidential rate offerings designed to react quickly to a very fluid marketplace’’. Comments of UPS in Docket No. 10–03, NVOCC Negotiated Rate Arrangements, at 4. 8 Towards this same result, NCBFAA recently submitted comments in Docket No. 17–04, Regulatory Reform Initiative, requesting changes to the NRA rules to ‘‘make it clear that a shipper’s tendering or booking of cargo constitutes acceptance of an NRA,’’ NCBFAA Comments at 12. PO 00000 Frm 00038 Fmt 4702 Sfmt 4702 tariff rates and rules, i.e. by communicating its agreement solely in terms of instructing the NVOCC to book the cargo for shipment thereunder. To ensure continued protection of the shipper and avoid confusion or potential disputes as to this new means to conclude an NRA, the Commission proposes that each NVOCC that seeks to recognize shipper acceptance of an NRA through the act of booking must incorporate a prominent written notice to that effect on each such NRA or amendment. As this additional NRA methodology is intended to be optional to the NVOCC and its shipper customers, the Commission will not eliminate the requirement that a shipper’s agreement to an NRA should otherwise be in writing or by email. The Commission invites public comment on the desirability of permitting NRA acceptance by booking, and whether the Commission should require particular wording in order to more prominently give notice as to the NVOCC’s practice with respect to booking. IV. Public Participation How do I prepare and submit comments? Your comments must be written and in English. To ensure that your comments are correctly filed in the docket, please include the docket number of this document in your comments. You may submit your comments via email to the email address listed above under ADDRESSES. Please include the docket number associated with this notice and the subject matter in the subject line of the email. 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. You may also submit comments by mail to the address listed above under ADDRESSES. How do I submit confidential business 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 by mail to the address listed above under ADDRESSES: • A transmittal letter requesting confidential treatment that identifies the specific information in the comments or which protection is sought and demonstrates that the information is a E:\FR\FM\30NOP1.SGM 30NOP1 Federal Register / Vol. 82, No. 229 / Thursday, November 30, 2017 / Proposed Rules 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. Will the Commission consider late comments? The Commission will consider all comments received before the close of business on the comment closing date indicated above under DATES. To the extent possible, we will also consider comments received after that date. If the Commission receives a comment too late to consider in developing a final rule (assuming that one is issued), the Commission will consider that comment as an informal suggestion for future rulemaking action. How can I read comments submitted by other people? You may read the comments received by the Commission at the Commission’s Electronic Reading Room or the Docket Activity Library at the addresses listed above under ADDRESSES. Please note that even after the comment closing date, we may continue to file relevant information in the docket as it becomes available. Further, some commenters may submit late comments. Accordingly, we recommend that you periodically check the docket for new material. V. Rulemaking Analyses and Notices nshattuck on DSK9F9SC42PROD with PROPOSALS Regulatory Flexibility Act The Regulatory Flexibility Act (codified as amended at 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 U.S.C. 553), the agency must prepare and make available for public comment an initial regulatory flexibility analysis (IRFA) describing the impact of the proposed rule on small entities, unless the head of the agency certifies that the rulemaking will not have a significant economic impact on a substantial VerDate Sep<11>2014 15:27 Nov 29, 2017 Jkt 244001 number of small entities. 5 U.S.C. 603, 605. The Commission recognizes that the majority of businesses affected by these rules qualify as small entities under the guidelines of the Small Business Administration. The rule as to Part 531 (NSAs) poses no economic detriment to small business. 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. In that the proposed rule would eliminate the requirements that NVOCCs file NSAs with the Commission and publish essential terms of such NSAs, the regulatory burden on NVOCCs utilizing NSAs would be reduced. The rule as to part 532 (NRAs) would establish an optional method for NVOCCs to amend an NRA, and to garner shipper agreement to an NRA or amendment thereto, to be used at the NVOCC’s discretion. In that the proposed rule would eliminate the prohibition on amendments to NRAs after an initial shipment is received by the carrier and would permit NVOCCs to more flexibly create and amend such NRAs, the regulatory burden on NVOCCs utilizing NRAs would be reduced. 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 for part 531, NVOCC Service Arrangements, and part 532 NVOCC Negotiated Rate Arrangements are currently authorized under OMB Control Numbers 3072–0070: 46 CFR part 531, NVOCC Service Arrangements, and 3072–0071: 46 CFR 532—NVOCC Negotiated Rate Arrangements, respectively. In compliance with the PRA, the Commission has submitted the proposed revised information collections to the Office of Management and Budget. The proposed rule would eliminate the requirement that NVOCCs file NSAs with the Commission and the requirement that NVOCCs publish the essential terms of NSAs. Public burden for the collection of information pursuant to part 531, NVOCC Service PO 00000 Frm 00039 Fmt 4702 Sfmt 4702 56787 Arrangements, as revised, would comprise 79 likely respondents and an estimated 3,328 annual instances. Given that the proposed rule eliminates the NSA filing requirement as well as the essential terms publication requirement, the burden estimate has been significantly reduced from 831 hours (2016 estimate) to 127 hours, a difference of 704 hours. The proposed rule would also permit NRAs to be modified after the receipt of the initial shipment by the carrier, and permit shippers’ acceptance of the NRA by booking a shipment thereunder, subject to the NVOCC incorporating a prominent written notice to such effect in each NRA or amendment. No new information collection or reporting requirements are proposed with respect to part 532, NVOCC Negotiated Rate Arrangements, as revised. 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. National Environmental Policy Act Upon completion of an environmental assessment, the Commission has determined that the proposed rule will not constitute a major Federal action significantly affecting the quality of the human environment within the meaning of the National Environmental Policy Act of 1969, 42 U.S.C. 4321 et seq., and that preparation of an environmental impact statement is not required. This FONSI will become final within 10 days of publication of this notice in the Federal Register unless a petition for review is filed by any of the methods described in the ADDRESSES section of the document. The FONSI and environmental assessment are available for inspection at the Commission’s Electronic Reading Room at: http:// www.fmc.gov/17–10, and at the Docket Activity Library at 800 North Capitol Street NW., Washington, DC 20573, between 9:00 a.m. to 5:00 p.m., Monday E:\FR\FM\30NOP1.SGM 30NOP1 56788 Federal Register / Vol. 82, No. 229 / Thursday, November 30, 2017 / Proposed Rules through Friday, except Federal holidays. Telephone: (202) 523–5725. Executive Order 12988 (Civil Justice Reform) This proposed rule meets applicable standards in E.O. 12988 titled, ‘‘Civil Justice Reform,’’ to minimize litigation, eliminate ambiguity, and reduce burden. 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 http:// www.reginfo.gov/public/do/ eAgendaMain. List of Subjects in 46 CFR Part 531 Freight, Maritime carriers, Report and recordkeeping requirements. For the reasons stated in the supplementary information, the Federal Maritime Commission proposes to amend 46 CFR part 531 as follows: PART 531—NVOCC SERVICE ARRANGEMENTS 2. Revise § 531.1 to read as follows: nshattuck on DSK9F9SC42PROD with PROPOSALS Purpose The purpose of this part is to facilitate NVOCC Service Arrangements (‘‘NSAs’’) as they are exempt from the otherwise applicable provisions of the Shipping Act of 1984 (‘‘the Act’’). ■ 3. Amend § 531.3 by: ■ a. Revising paragraph (c); ■ b. Removing paragraphs (d) through (g), (m), and (n); ■ c. Redesignating paragraphs (h) and (i) as paragraphs (d) and (e), respectively; ■ d. Redesignating paragraphs (k) and (l) as paragraphs (f) and (g), respectively; ■ e. Redesignating paragraphs (o) and (p) as paragraphs (h) and (i), respectively; ■ f. Revising newly redesignated paragraphs (f) and (j). The revisions to read as follows: § 531.3 Definitions. * * * * * (c) Amendment means any change to a NSA which has prospective effect and VerDate Sep<11>2014 15:27 Nov 29, 2017 Jkt 244001 § 531.5 [Removed and reserved] 5. Remove and reserve § 531.5 6. Revise the Subpart B heading to read as follows: ■ ■ NVOCC Service Arrangements. (a) Every NSA shall include the complete terms of the NSA including, but not limited to, the following: * * * * * (c) Other requirements. (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 a NSA. * * * * * (5) Except for the carrier party’s rules tariff, the requirement in 46 U.S.C. PO 00000 Frm 00040 Fmt 4702 Sfmt 4702 § 531.7 ■ ■ [Removed and reserved] 8. Remove and reserve § 531.7 9. Revise § 531.8 to read as follows: Amendment. (a) NSAs may be amended by mutual agreement of the parties. (b) Where feasible, NSAs should be amended by amending only the affected specific term(s) or subterms. (c) Each time any part of an NSA is amended, a consecutive amendment number (up to three digits), beginning with the number ‘‘1’’ shall be assigned. (d) Each time any part of a NSA is amended, the ‘‘Effective Date’’ will be the date of the amendment. § 531.9 ■ 7. Amend § 531.6 by: a. Removing paragraphs (a), (f), and (g): ■ b. Redesignating paragraphs (b) through (e) as paragraphs (a) through (d), respectively; ■ c. Revising the introductory text of newly redesignated paragraph (a); ■ d. Revising the newly redesignated paragraph (c)(1) paragraph and adding paragraph (c)(5); ■ e. Revising newly redesignated paragraph (d) to read as follows: § 531.6 40501(a)–(c) that the NVOCC include its rates in a tariff open to public inspection in an automated tariff system and the Commission’s corresponding regulations at 46 CFR part 520 shall not apply. (d) Format requirements. Every NSA shall include: (1) A unique NSA number of more than one (1) but less than ten (10) alphanumeric characters in length (‘‘NSA Number’’); and (2) A consecutively numbered amendment number no more than three digits in length, with initial NSAs using ‘‘0’’ (‘‘Amendment number’’). * * * * * § 531.8 NVOCC rules tariff. (a) Before entering into NSAs under this Part, an NVOCC must provide electronic access to its rules tariffs to the public free of charge. (b) An NVOCC wishing to invoke an exemption pursuant to this part must indicate that intention to the Commission and the public by a prominent notice in its rules tariff. ■ ■ Authority: 46 U.S.C. 40103. § 531.1 § 531.4 Subpart B—Requirements 1. The authority citation for part 531 continues to read as: ■ ■ which is mutually agreed upon by all parties to the NSA. * * * * * (f) Effective date means the date upon which an NSA or amendment is scheduled to go into effect by the parties to the NSA. An NSA or amendment becomes effective at 12:01 a.m. Eastern Standard Time on the beginning of the effective date. The effective date cannot be prior to the date of the NSA or amendment. * * * * * (j) Rules tariff means a tariff or the portion of a tariff, as defined by 46 CFR 520.2, containing the terms and conditions governing the charges, classifications, rules, regulations and practices of an NVOCC, but does not include a rate. ■ 4. Revise § 531.4 to read as follows: [Removed and Reserved] 10. Remove and Reserve § 531.9. § 531.10 [Amended]. 11. Amend § 531.10 by removing paragraphs (c) and (d). ■ 12. Revise § 531.11 to read as follows: ■ § 531.11 Implementation. Generally. Performance under an NSA or amendment thereto may not begin before the day it is effective. ■ 13. Revise § 531.99 to read as follows § 531.99 OMB control numbers assigned pursuant to the Paperwork Reduction Act. The Commission has received OMB approval for this collection of information pursuant to the Paperwork Reduction Act of 1995, as amended. In accordance with that Act, agencies are required to display a currently valid control number. The valid control number for this collection of information is 3072–0070. Appendix A to Part 531 [Removed] ■ 14. Remove Appendix A to part 531. PART 532—NVOCC NEGOTIATED RATE ARRANGEMENTS 15. The authority citation for part 532 continues to read as: ■ E:\FR\FM\30NOP1.SGM 30NOP1 Federal Register / Vol. 82, No. 229 / Thursday, November 30, 2017 / Proposed Rules Authority: 46 U.S.C. 40103. 16. Amend § 532.5 by revising paragraphs (c) and (e) to read as follows: ■ § 532.5 Requirements for NVOCC negotiated rate arrangements. * * * * (c) Be agreed to by both NRA shipper and NVOCC, prior to receipt of cargo by the common carrier or its agent (including originating carriers in the case of through transportation). Shipper acceptance of the NRA may be demonstrated through a signed agreement or written communication, including email, from the shipper. nshattuck on DSK9F9SC42PROD with PROPOSALS * VerDate Sep<11>2014 15:27 Nov 29, 2017 Jkt 244001 Shipper acceptance of an NRA may also be demonstrated by booking a shipment after receiving the NRA terms from the NVOCC if the NVOCC incorporates a prominent written notice that booking constitutes acceptance of the NRA terms in each NRA or amendment. (1) To comply with paragraph (c), the NVOCC shall incorporate the following text in bold font or by use of all uppercase letters: ‘‘SHIPPER MAY ACCEPT THIS NRA OR NRA AMENDMENT BY BOOKING A SHIPMENT AFTER RECEIVING THE TERMS HEREOF.’’ PO 00000 Frm 00041 Fmt 4702 Sfmt 9990 56789 (2) Reserved. * * * * (e) May be amended after the time the initial shipment is received by the carrier or its agent (including originating carriers in the case of through transportation), but such changes may only apply prospectively to shipments not yet received by the carrier or its agent. * By the Commission. Rachel E. Dickon, Assistant Secretary. [FR Doc. 2017–25718 Filed 11–29–17; 8:45 am] BILLING CODE 6731–AA–P E:\FR\FM\30NOP1.SGM 30NOP1

Agencies

[Federal Register Volume 82, Number 229 (Thursday, November 30, 2017)]
[Proposed Rules]
[Pages 56781-56789]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-25718]


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FEDERAL MARITIME COMMISSION

46 CFR Parts 531 and 532

[Docket No. 17-10]
RIN 3072-AC68


Amendments to Regulations Governing NVOCC Negotiated Rate 
Arrangements and NVOCC Service Arrangements

AGENCY: Federal Maritime Commission.

ACTION: Notice of proposed rulemaking; notice of availability of 
finding of no significant impact.

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SUMMARY: The Federal Maritime Commission (FMC or Commission) proposes 
to amend its rules governing Non-Vessel-Operating Common Carrier 
(NVOCC) Negotiated Rate Arrangements and NVOCC Service Arrangements. 
The proposed rule is intended to modernize, update, and reduce 
regulatory burdens.

DATES: Submit comments on or before January 29, 2018.
    In compliance with the Paperwork Reduction Act (PRA), the 
Commission is also seeking comment on revisions to two information 
collections. See the Paperwork Reduction Act section under Rulemaking 
Analyses and Notices below. Please submit all comments relating to the 
revised information collection requirements to the FMC and to the 
Office of Management and Budget (OMB) at the address listed below under 
ADDRESSES on or before January 29, 2018. Comments to OMB are most 
useful if submitted within 30 days of publication.
    Petitions for review of the Commission's finding of no significant 
impact (FONSI) under NEPA must be submitted on or before December 11, 
2017.

ADDRESSES: You may submit comments and petitions for review of the 
FONSI, identified by the Docket No. 17-10 by the following methods:
     Email: secretary@fmc.gov. For comments, include in the 
subject line: ``Docket 17-10, Comments on Proposed NSA/NRA 
Regulations.'' For petitions for review of the FONSI, include in the 
subject line: ``Docket 17-10, Petition for Review of FONSI.'' Comments 
and petitions for review should be attached to the email as a Microsoft 
Word or text-searchable PDF document. Only non-confidential and public 
versions of confidential comments and petitions should be submitted by 
email.
     Mail: Rachel E. Dickon, Assistant Secretary, Federal 
Maritime Commission, 800 North Capitol Street NW., Washington, DC 
20573-0001.
    Comments regarding the proposed revisions to the relevant 
information collections should be submitted to the FMC through one of 
the preceding methods and a copy should also be sent to the Office of 
Information and Regulatory Affairs, Office of Management and Budget, 
Attention: Desk Officer for Federal Maritime Commission, 725 17th 
Street NW., Washington, DC 20503; by Fax: (202) 395-5167; or by email: 
OIRA_Submission@OMB.EOP.GOV.
    Instructions: For detailed instructions on submitting comments, 
including requesting confidential treatment of comments, and additional 
information on the rulemaking process, see the Public Participation 
heading of the Supplementary Information section of this document. Note 
that all comments received will be posted without change to the 
Commission's Web site, unless the commenter has requested confidential 
treatment.
    Docket: For access to the docket to read background documents or 
comments received, go to the Commission's Electronic Reading Room at: 
http://www.fmc.gov/17-10, or to the Docket Activity Library at 800 
North Capitol Street NW., Washington, DC 20573, between 9:00 a.m. to 
5:00 p.m., Monday through Friday, except Federal holidays. Telephone: 
(202) 523-5725.

FOR FURTHER INFORMATION CONTACT: For questions regarding submitting 
comments or petitions for review of the FONSI, or the treatment of 
confidential information, contact Rachel E. Dickon, Assistant 
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:

Table of Contents

I. Executive Summary
II. Background
    A. NVOCC Service Arrangements (NSAs)
    B. NVOCC Negotiated Rate Arrangements (NRAs)
    C. NCBFAA Petition for Rulemaking and Overview of Comments
III. The Commission's Proposed Rule
    A. Overview
    B. Remove the NSA Filing and Publication Requirements
    C. Authorize Amendments of NRAs and Shipper Acceptance Upon 
Booking
IV. Public Participation
V. Rulemaking Analyses and Notices

I. Executive Summary

    The Commission proposes to amend its rules at 46 CFR part 531 
governing NVOCC Service Arrangements to remove the NSA filing and 
publication requirements. The Commission also proposes to amend its 
rules at 46 CFR part 532 to permit NRAs to be modified at any time. In 
addition, an NVOCC may provide for the shipper's acceptance of the NRA 
by booking a shipment thereunder, subject to the NVOCC incorporating a 
prominent written notice to such effect in each NRA or amendment.

II. Background

    The Shipping Act of 1984 (the Shipping Act or the Act) expanded the 
options for pricing liner services by introducing the concept of 
carriage under service contracts filed with the

[[Page 56782]]

Commission. Public Law No. 98-237, Sec.  8(c). Liner services could be 
priced via negotiated contracts between ocean common carriers and their 
shipper customers, rather than solely by public tariffs. Per the 
Shipping Act and FMC regulations, ocean freight rates, surcharges, and 
accessorial charges had to be published in tariffs or agreed to via a 
service contract filed with the Commission. Contemporaneous with the 
filing of service contracts, ocean carriers were required to make 
publicly available a statement of essential terms in tariff format.
    The Ocean Shipping Reform Act of 1998 (OSRA) amended the Shipping 
Act of 1984 as it related to service contracts. Public Law No. 105-258, 
Sec.  106. No longer did contract rates need to be published in the 
tariff publication, and the essential terms publication was limited to: 
Origin and destination port ranges, commodities, minimum volume or 
portion, and duration. Nevertheless, though the Shipping Act and its 
amendments provided for more efficiency and flexibility for ocean 
common carriers through the use of service contracts, similar relief 
was not extended to NVOCCs, which were still required to publish 
tariffs and adhere to those tariffs when transporting cargo.

A. NVOCC Service Arrangements (NSAs)

    In 2003, NCBFAA filed a petition to seek exemption from some of the 
tariff requirements of the Shipping Act of 1984. See Docket No. P5-03, 
Petition of the National Customs Brokers and Forwarders Association of 
America. Inc. for Limited Exemption of Certain Tariff Requirements of 
the Shipping Act of 1984. In response, the Commission issued a notice 
of proposed rulemaking (NPRM) in which it determined that it had the 
statutory authority to exempt NVOCCs from the provisions of the 
Shipping Act, subject to certain conditions. 69 FR 63981, 63985. (Nov. 
3, 2004). The Commission distinguished itself from other agencies who, 
pursuant to the findings in Maislin Industries, U.S. Inc. v. Primary 
Steel, Inc., 497 U.S. 116, 126 (1990) and MCI Telecommunications Corp. 
v. American Tel. & Tel. Co., 512 U.S. 218 (1994) had lacked exemption 
authority. 69 FR at 63985. The Commission determined that in order to 
ensure there was no substantial reduction in competition among NVOCCs, 
the exemption had to be available to all NVOCCs compliant with both 
section 19 of the Shipping Act and the conditions of the exemption. Id. 
The Commission proposed that ``the exemption be conditioned on the same 
statutory and regulatory requirements and protections applicable to 
VOCCs' service contracts: Namely, filing of executed agreements; 
publication of essential terms of those agreements; and confidential 
treatment, similar to that set forth in 46 CFR part 530.'' 69 FR at 
63986. The Commission also proposed the required publication of the 
essential terms of all NSAs in automated systems and the confidential 
filing of the text of those NSAs with the Commission. 69 FR at 63987. 
The Commission further proposed ``making applicable to carriage under 
an NSA, those provisions of the Shipping Act that would be applicable 
to service contracts.'' Id. The Commission's final rule provided a 
limited exemption, Non-Vessel Operating Service Arrangements 
(``NSAs''), similar to service contracts, with required filing and 
publication requirements. (46 CFR part 531) Non-Vessel Operating 
Service Arrangements, 69 FR 75850 (Dec. 20, 2004). To ``ensure that the 
exemption as proposed [would] not result in a substantial reduction in 
competition,'' the Commission limited the exemption to individual 
NVOCCs acting in their capacity as carriers. 69 FR at 75851. The 
Commission also decided to allow affiliated NVOCCs to jointly offer 
NSAs. 69 FR at 75852.

B. NVOCC Negotiated Rate Arrangements (NRAs)

    In 2008, the NCBFAA filed another petition with the Commission. 
This petition sought an exemption from mandatory rate tariff 
publication. See Docket No. P1-08, Petition of the National Customs 
Brokers and Forwarders Association of America. Inc. for Exemption from 
Mandatory Rate Tariff Publication (filed July 31, 2008). The proposal 
sought to exempt from the provisions of the Shipping Act of 1984 the 
requirement for NVOCCs to publish and/or adhere to rate tariffs ``in 
those instances where they have individually negotiated rates with 
their shipping customers and memorialized those rates in writing.'' 
NCBFAA Petition in Docket No. P1-08, at 10.
    By Notice of Proposed Rulemaking (``NPRM'') issued May 7, 2010, the 
Commission proposed that the use of NRAs would be allowed, subject to 
conditions, including (1) a requirement for NVOCCs to continue 
publishing standard rules tariffs with contractual terms and conditions 
governing shipments, including any accessorial charges and surcharges, 
(2) a requirement to make available NVOCC rules tariffs to shippers 
free of charge; (3) a requirement that NRA rates must be mutually 
agreed to and memorialized in writing by the date the cargo is received 
for shipment; and (4) a requirement that NVOCCs who use NRAs must 
retain, and make available upon request to the Commission, 
documentation confirming the terms, and agreed rate, for each shipment 
for a period of five years. NVOCC Negotiated Rate Arrangements, 75 FR 
25150, 25154. (May 7, 2010). In the NPRM, the Commission also 
determined that under Section 16 of the Shipping Act the exemption 
could be granted as doing so ``would not result in substantial 
reduction in competition or be detrimental to commerce.'' 75 FR at 
25153.
    The Commission subsequently granted the exemption, relieving NVOCCs 
from the burden and costs of tariff rate publication when using this 
new class of carrier rate arrangements. NVOCC Negotiated Rate 
Arrangements, 76 FR 11351 (Mar.2, 2011) (2011 NRA Final Rule). In 
determining whether to grant the exemption the Commission considered: 
Competition among NVOCCs; competition between NVOCCs and VOCCs; among 
VOCCs; as well as competition among shippers. 76 FR at 11352. The 
Commission determined that granting the exemption would not result in a 
substantial reduction in competition in any of the above categories. 76 
FR at 11352-11353. Analyzing whether granting the exemption would be 
detrimental to commerce, the Commission determined that such NRAs would 
be beneficial to commerce because the exemption would ``reduce NVOCC 
operating costs and increase competition in the U.S. trades.'' 76 FR at 
11353. The Commission also determined that ``NVOCCs entering into NRAs 
continue to be subject to the applicable requirements and strictures of 
the Shipping Act, including oversight by the Commission.'' 76 FR at 
11354.
    As a condition to offering NRAs, NVOCCs were required to provide 
their rules tariffs to the public free of charge. 76 FR at 11358. The 
Commission also determined not to allow for amendment of an NRA after 
receipt of the cargo by the carrier or its agent. Id. Consistent with 
the Petition's focus upon negotiated rates only, the Commission 
determined not to permit NRAs to include non-rate economic terms, such 
as rate methodology, credit and payment terms, forum selection or 
arbitration clauses, or minimum quantities. 76 FR at 11355.

C. NCBFAA Petition for Rulemaking and Overview of Comments

    NCBFAA petitioned the FMC on April 16, 2015, to initiate a 
rulemaking to eliminate the NSA provisions in 46 CFR part 531 in their 
entirety, or

[[Page 56783]]

alternatively, eliminate the filing and essential terms publication 
requirements for NSAs. Consolidated with that request, NCBFAA also 
asked the Commission to expand the NRA exemption in 46 CFR part 532 to 
include economic terms beyond rates, and to delete 46 CFR 532.5(e) that 
precludes any amendment or modification of an NRA.
    On April 28, 2015, the Commission published a Notice of Filing and 
Request for Comments. 80 FR 23549 (Apr. 28. 2015). Comments were 
received from Mainfreight, Inc. (Mainfreight); ABS Consulting (ABS); 
Mohawk Global Statistics (Mohawk); Global Logistics Solutions (GLS); 
World Shipping Council (WSC); DJR Logistics, Inc. (DJR); Crowley Latin 
America Services, LLC and Crowley Caribbean Services, LLC (Crowley); 
New York New Jersey Foreign Freight Forwarders and Brokers Association, 
Inc. (NYNJFFF&BA); National Industrial Transportation League (NITL); 
CaroTrans International, Inc., (CaroTrans); Vanguard Logistics Services 
(USA), Inc., (Vanguard); Serra International, Inc., (Serra); C. H. 
Powell Company (Powell); BDG International, Inc., dba Seagull Express 
Lines, (BDG); John S. James Co. (James); and UPS Ocean Freight 
Services, Inc., UPS Europe SPRL, and UPS Asia Group Pte., Ltd. 
collectively submitting one comment (UPS). The comments represent a 
broad cross-section of industry stakeholders, including licensed NVOCCs 
and freight forwarders, a major trade association representing 
beneficial cargo owners, and vessel-operating common carriers (VOCCs). 
However, the Commission did not receive comments directly from 
beneficial owners of cargo shipped by NVOCCs under either NRAs or NSAs.
    A majority of the OTI comments expressed general support for the 
petition. Commenters supported either the elimination of 46 CFR part 
531 in its entirety, or eliminating the filing and essential terms 
publication requirements for NSAs. Many supported allowing economic 
terms beyond rates in NRAs, as well as the modification of NRAs at any 
time, upon mutual agreement.
    The World Shipping Counsel, while not opposing the Petition, urged 
even-handed regulatory relief with respect to VOCCs as well. WSC cites 
prior requests that VOCCs have made for changes to the Commission's 
regulations governing service contract amendment filings. WSC's 
comments were supported by Crowley.
    NITL, while supporting the negotiation of economic terms between 
NVOCCs and shippers, as well as the elimination of the filing and 
essential terms publication requirement of NSAs, did not support the 
elimination of part 531 in its entirety. UPS also opposed any 
restrictions upon, or the elimination of, part 531, expressing support 
for the continued use of NSAs.
    On August 2, 2016, the Commission granted NCBFAA's petition to 
``initiate a rulemaking with respect to the revisions discussed in the 
petition.'' However, because the Commission was in the process of a 
separate rulemaking to amend portions of part 531 related to NSAs 
(Docket No. 16-05, Service Contracts and NVOCC Service Arrangements), 
the Commission delayed initiating the requested rulemaking until after 
the rulemaking in Docket No. 16-05 was concluded.

III. The Commission's Proposed Rule

A. Overview

    NCBFAA has proposed deleting in its entirety the NSA exemption in 
46 CFR part 531, or alternatively, eliminate the filing and essential 
terms publication requirements for NSAs. NCBFAA also sought to expand 
the NRA exemption in 46 CFR part 532 to allow inclusion of economic 
terms beyond rates into NRAs. NCBFAA Petition at 14. NCBFAA argues 
that, whereas the NSA exemption currently benefits few NVOCCs, NVOCCs 
and shippers often seek to negotiate one-on-one on a broad range of 
service terms including: Rate or service amendments; liability; minimum 
volumes or time/volume rates; liquidated damages; credit terms; service 
guarantees and/or service benchmarks; measurements and penalties; 
surcharges; GRIs or other pass-through charges from the carriers or 
ports; rate amendment processes; EDI services; and dispute resolution. 
Id. at 8. NCBFAA urges that ``each of these terms are relevant to some 
extent to every rate and service negotiation between an NVOCC and an 
existing or prospective customer. Yet, none of the items on this list 
can properly be included in an NRA.'' Id. at 9. NCBFAA contends that 
``the FMC should now look to meld the features of NSAs and NRAs into a 
single arrangement.'' Id. at 13.
    Mainfreight, ABS, Powell, Mohawk, and John S. James support the 
elimination of 46 CFR part 531. Mainfreight states that granting the 
petition ``would eliminate a regulatory burden that, over time, has 
come to represent a significant hurdle to the profitability and 
sustainability of the NVOCC business model.'' Mainfreight at 1.\1\ ABS 
states that the petition ``clearly reflects how shippers negotiate and 
contract with NVOCC's today and it will greatly simplify the process 
and make it easier for NVOCC's [sic] and shippers to cooperate and 
eliminate burdensome and not needed requirements and associated 
costs.'' ABS at 1. Powell believes that NRAs and NSAs are ``two 
imperfect methods for memorializing NVOCC rates,'' and supports the 
petition's argument to eliminate the NSA exemption. Powell at 1. John 
S. James Co. likewise supports the petition from the NCBFAA to 
eliminate NSAs and expand the use of NRAs. James at 1.
---------------------------------------------------------------------------

    \1\ Mainfreight asserts that regulatory relief also is needed to 
stem a decline in the NVOCC share of the ocean freight business. Id. 
FMC review of current PIERS data for January 2014 through July 2017 
indicates that NVOCC cargo as a share of U.S. ocean trades continues 
to increase overall, exceeding 50% for all U.S. import trades.
---------------------------------------------------------------------------

    Mohawk commented that given the current limitations on NRAs, which 
allow no provisions ``that cover free time, demurrage, per diem and 
other similar components related to the transport of goods,'' both 
Mohawk and its clients had a desire for NRAs to include more terms and 
provisions. Mohawk at 2. BDG asserts that since BDG is ``able to 
privately negotiate rates with our customers without publishing them in 
a tariff; it is difficult to understand why other economic terms that 
we also negotiate have to be treated differently and filed as NSAs.'' 
BDG at 2.
    Global and NYNJFFF&BA support either eliminating the filing of 
essential terms publication requirements of NSAs or eliminating part 
531 in its entirety. Global at 2; NYNJFFF&BA at 3. Global states that 
it has not used NRAs or NSAs and finds the provisions confusing. Global 
believes that combining NRAs and NSAs as one exemption would be more 
efficient and beneficial to ``allow negotiated agreements to be fully 
comprehensive and cover rates and service arrangements.'' Id. at 1. 
NYNJFF&BA insists that if existing restrictions on NRAs were removed, 
there would no longer be a commercial need for NSAs. NYNJFF&BA at 3.
    NITL does not support eliminating part 531. While advocating 
generally for greater flexibility for NVOCCs in the commercial 
marketplace, NITL ``believes that NSAs should remain as an option for 
any shippers and NVOCCs that desire the increased formality of the NSA 
requirements.'' NITL at 6.
    UPS urges that NSAs be preserved regardless of any changes to the 
NRA regulations to improve flexibility of the latter. UPS at 4. UPS 
states that ``NSAs

[[Page 56784]]

are the only method by which larger-volume NVOCCs can maintain an equal 
playing field with the Vessel Operating Common Carriers (VOCCs),'' id. 
at 3, pointing out that ``many NSAs are longer term, multi-year large 
volume contracts between NVOCCs and their shipper customers, often 
including multiple affiliated companies as additional shippers or 
consignees, [and] often covering global trade lanes.'' Id. at 2. 
Whereas NRAs ``may not be the most suitable format for certain types of 
transactions.'' id., UPS believes that preservation of NSAs allows 
pricing and service benefits ``for shippers of all sizes, bringing the 
benefits of the Commission's [NSA] exemption to the marketplace.'' Id. 
UPS urges the Commission to allow the continued use of NSAs for ``those 
NVOCCs that are now successfully using them, and for the benefit of 
their shippers.'' Id. at 2.
    The World Shipping Council urges that the issues raised by the 
NCBFAA Petition ``are most logically and equitably considered alongside 
requests that vessel operating common carriers have made for changes to 
the Commission's regulations governing service contract amendment 
filing.'' WSC, at 1. WSC thus proposes that service contract amendments 
be permitted to be filed within 90 days of the filing of the underlying 
commercial agreement. Id. at 9. WSC asserts that the NCBFAA Petition 
provides an opportunity for the Commission to address changes to its 
NRA and NSA regulations at the same time that it considers changes to 
its VOCC service contract amendment filing regulations. Id. at 8. 
Crowley supports WSC's comments, and states that the Commission should 
``initiate a rulemaking proceeding which would amend the FMC's 
regulations to permit amendments to service contracts and NSAs to be 
filed within a specified period of time after the parties agree on the 
amendment.'' Crowley, at 5.
    Some commenters claim that the NSA exemption benefits few NVOCCs, 
citing the low volume of filed NSAs and higher costs and filing 
formalities attendant to NSAs. However, UPS' description of NSAs as 
comprising ``multi-year large-volume contracts'' with its shipper 
customers, containing ``hundreds or even a thousand or more individual 
rates'' establishes a compelling factual parallel between the content 
of NSA and service contracts first anticipated by the Commission in 
creating an exemption for NSAs. Indeed, the exemption was expressly 
``conditioned on the same statutory and regulatory requirements and 
protections applicable to VOCCs' service contracts: Namely, filing of 
executed agreements; publication of essential terms of those 
agreements; and confidential treatment, similar to that set forth in 46 
CFR part 530.'' 69 FR at 63986.
    Like service contracts, NSAs can contain non-rate economic terms, 
such as rate methodology, credit and payment terms, forum selection or 
arbitration clauses, or minimum quantities, which delineate the 
contractual terms and conditions binding both the carrier and shipper 
signatories. These latter provisions were excluded from application in 
NRAs. 76 FR at 11355. Indeed, in the Commission's 2011 Final Rule as to 
NRAs, a number of commenters therein insisted upon the need for a rate-
based NRA exemption notwithstanding the ability of NVOCCs to 
contractually enter into NSAs. These concerns were premised largely 
upon the perspectives of their customers, shippers who ``do not want or 
need to engage in a formal contract process.'' 76 FR at 11353.\2\ This 
outlook continues to hold sway today. See, e.g. DJR comments, at 1 
(``We will limit our comments to the NRA filing as we have never been 
able to secure a NSA from one of our clients. They rejected the idea 
stating that they did not want to be committed to a long term contract 
should our service levels fail to meet their requirements.'') Other 
commenters likewise have shared the view that the contractual 
formalities of NSAs are deemed too time consuming and burdensome, Serra 
at 1; Vanguard at 2; Powell at 1; and that ``[c]hasing down signatures 
on amendments'' had proven problematic. Mohawk at 2.
---------------------------------------------------------------------------

    \2\ See also supporting attachments to NCBFAA's seminal Petition 
in Docket No. P1-08, including Verified Supporting Statement of 
Anthony Kozlowski, at 2; Verified Support Statement of Edward M. 
Piza, at 2; Verified Supporting Statement of Cas Pouderoyen, at 2. 
As summarized by Ms. Paulette Kolba of Panalpina: We realize and 
appreciate the ruling allowing NVOCCs to issue NSAs (NVOCC Service 
Arrangements) to our customers. NSAs, however, have proven to have 
limited value, especially to the small and medium sized companies 
who do not want to get involved in signing a legal contract. They 
are perfectly happy with the written quotation and rarely understand 
the need for the NSA. The main benefit of NSAs that we see is in 
being able to customize rates and services to the unique conditions 
of some customers.
    Verified Supporting Statement of Panalpina, Inc. at 4.
---------------------------------------------------------------------------

    UPS insists that elimination of NSAs would create competitive 
conditions unfair to those larger NVOCCs who have invested heavily in 
building up procedures and business methods for this type of 
contracting. UPS points to the success of its own efforts and focus 
upon marketing NSAs, where more than one-third of their container 
volume in a major US trade lane is now shipped under NSAs. NITL 
likewise echoes the commercial importance of these contractual 
distinctions between NRAs and NSAs, and urges that ``NSAs should remain 
as an option for any shippers and NVOCCs that desire the increased 
formality of the NSA requirements.'' Id. at 6.
    Consistent with recent Executive Orders,\3\ the Commission's 
mission is best fulfilled by recognizing and facilitating the further 
development of emerging business models, including the more 
contractually complex and service-oriented NSAs. Whereas NSA contracts 
bear service provisions and terms more equivalent to VOCC service 
contracts, that differentiation (from NRAs) was at the heart of 
creating an exemption for a rate-based vehicle for NVOCC shippers, whom 
the Petitioner previously described as ``most of whom are LCL 
shippers,'' \4\ ``who do not want to sign formal written contracts,'' 
id. at 9, or just do not like the formality of NSAs, id. The Commission 
perceives little value, therefore, in mandating a narrowing of NVOCCs' 
choices for contracting with their customers, when it appears that 
substantial volumes of cargo are now moving successfully under the NSA 
contract model. UPS, at 2. Rather, where those contracting models may 
be substantially improved without compromising carrier duties or 
conditions intended for the protection of the shipper, the Commission 
has been unafraid to consider further loosening of the restrictions or 
limitations previously established upon an exemption. The Commission is 
persuaded that it can do so here by removing unnecessary or burdensome 
regulatory impediments upon the further development of NSAs, without 
eliminating the NSA provisions in part 531 in their entirety.
---------------------------------------------------------------------------

    \3\ See e.g. Executive Order 13771, Reducing Regulation and 
Controlling Regulatory Costs (Jan. 30, 2017 and Executive Order 
13777, Enforcing the Regulatory Reform Agenda (Feb. 24, 2017).
    \4\ NCBFAA Petition in Docket No. P1-08, at 6.
---------------------------------------------------------------------------

    In doing so, the Commission also re-affirms its intention, first 
stated in Docket No. 10-03, that NRAs should facilitate a new business 
model conducive to those NVOCCs who could not then, and cannot now, 
utilize NSAs. While some NVOCCs may wish to issue a NSA to obtain a 
volume commitment from their shipper customer, many small and medium 
enterprises continue to work on a quotation basis, without need to 
engage in a formal contract process. 76 FR at 11353. See also DJR at 1; 
NYNJFF&BA at 3 (NSAs are not ``practical particularly for our smaller 
members when moving lower or less

[[Page 56785]]

frequent freight volumes.'') For such NVOCCs, and their customers, NRAs 
continue to provide a lower cost, competitive niche in today's 
commercial marketplace, made possible by a Commission-issued exemption 
from the otherwise-applicable requirements of the Shipping Act.
    The Commission invites further public comment, particularly from 
shippers currently using NRAs, on how expanding the NRA exemption to 
allow inclusion in NRAs of non-rate economic terms may impact their 
commercial business operations. Non-rate economic terms could include 
but are not limited to such terms as: Service amendments; per-package 
liability limits; provision of free time, detention or demurrage 
charges; provisions for arbitration, dispute resolution or forum 
selection; minimum volumes or time/volume rates; liquidated damages; 
credit terms and late payment interest; service guarantees and/or 
service benchmarks, measurements and penalties; surcharges, GRIs or 
other pass-through charges from the carriers or ports; rate amendment 
processes; and EDI services, etc.

B. Remove the NSA Filing and Publication Requirements

    NCBFAA argues that the NSA exemption benefits few NVOCCs. As NSAs 
must be filed with the Commission, and essential terms of NSAs also 
need to be published in tariffs, NCBFAA opines that NSAs are more 
burdensome than regular rate tariffs. NCBFAA Petition at 7-8. NCBFAA 
also argues that continuing the filing requirement for NSAs does not 
appear to provide any regulatory benefit. Id. at 12-13.
    A substantial majority of the NVOCC commenters support the NCBFAA 
position. Commenting on NSAs, Mohawk states ``the filing burden and 
rules of use run parallel to tariff filing. NSAs by their nature are 
more restrictive than the NRA we have opted to use. They require 30 
days advanced filing to increase rates, and must be maintained 
electronically,'' Mohawk at 2. Serra asserts that NSAs, due to the 
filing requirements, are ``far too time consuming and costly both for 
ourselves and our customers.'' Serra, at 2. Carotrans and Vanguard 
insist that ``NSAs are often of little utility to most NVOCCs due to 
the formality, burden, and cost of its publication and filing 
requirements.'' Carotrans, at 2; Vanguard, at 2. NYNJFF&BA summarizes 
the current requirements surrounding NSAs as ``more formal, more 
costly, and more time-consuming to put in place.'' NYNJFF&BA, at 3. 
NITL supports ``the elimination of the filing and essential terms 
publication requirement of NSAs,'' NITL at 5, but recommends 
continuation of provisions that would require ``NVOCCs to provide NSA 
contract terms to the Commission upon its request.'' Id.
    The OTI commenters have made a substantial case that continuing the 
filing requirement for NSAs does not appear to offer any regulatory 
benefit. NCBFAA suggests that these filing requirements may be impeding 
broader commercial acceptance of NSAs by shippers and NVOCCs, noting 
that approximately 2,300 NVOCCs have instead taken advantage of the NRA 
exemption. Petition at 7. UPS takes no issue with removing the filing 
and essential terms publication requirements so long as NSAs are not 
eliminated nor any material additional restrictions imposed upon NSAs. 
UPS, at 4. NITL also supports elimination of these requirements, 
asserting that the Commission ``does not (and need not) rely on these 
submissions to fulfill its enforcement duties.'' NITL, at 5.
    WSC cites the need for ``even-handed regulatory relief'' with 
respect to VOCCs as well. WSC, at 9. While the WSC does not oppose most 
issues in the petition, WSC does oppose eliminating the filing 
requirement for NVOCCs because it would create a disparity between 
NVOCCs and VOCCs. WSC asserts that the NCBFAA Petition provides an 
opportunity to consider changes to the VOCC service contract amendment 
filing regulations at the same time the Commission addresses 
Petitioner's request for changes to the NRA and NSA regulations. Id. at 
8. Specifically, WSC cites prior requests that VOCCs have made for 
changes to the Commission's regulations permitting contract amendments 
to be filed subsequent to the execution of such contract amendments. 
WSC's comments were supported by Crowley.
    As noted, the Commission previously approved initiating a separate 
rulemaking to amend portions of parts 530 and 531 related to service 
contracts and NSAs, Docket No. 16-05, Service Contracts and NVOCC 
Service Arrangements. In granting the NCBFAA Petition, the Commission 
delayed initiating the requested rulemaking until after the rulemaking 
in Docket No. 16-05 was concluded. A final rule in Docket 16-05 was 
published on April 4, 2017. 82 FR 16288. The relief granted by the 
Commission in Docket 16-05 allows amendments to service contracts, 
including multiple service contract amendments, to become effective 
during a 30-day period prior to being filed with the Commission. The 
Commission therefore has substantially met WSC's specific request for 
regulatory relief for VOCCs. Any further relief to VOCCs for service 
contracts may be undertaken by the Commission after it has had an 
opportunity to analyze the impact of the 30-day filing period on VOCC 
operations and shipper feedback.\5\
---------------------------------------------------------------------------

    \5\ While the VOCC commenters to the subject Petition did not 
expressly request relief from the current service contract filing 
requirements as to essential terms, the Commission would invite the 
VOCC community to submit an appropriate request for relief.
---------------------------------------------------------------------------

    The Commission proposes to exempt NSAs from both the SERVCON filing 
requirement and also the requirement that the NVOCC publish, in tariff 
format, the essential terms of any NSA. See 46 CFR 531.9. The essential 
terms requirement for NSAs currently mirrors those provisions set forth 
for VOCC service contracts, 46 CFR 530.12, while recognizing that the 
VOCCs' statutory obligation of disclosure to labor organizations for 
work covered by a collective bargaining agreement extended solely to 
service contracts, not NSAs. See 46 U.S.C. 40502 and 46 CFR 530.7. 
Inasmuch as most NVOCCs are not subject to collective bargaining 
agreements with shoreside labor unions, the Commission solicits public 
comments why the essential terms publication requirement should not now 
be removed as an unnecessary burden upon the use of NSAs. Shippers, who 
were identified by the Commission as the beneficiaries of essential 
terms in the original 2003 NSA rulemaking, have not since commented on 
the continuing utility of essential terms publications, and thus 
maintaining the essential terms publication requirement appears to 
provide little regulatory benefit.\6\
---------------------------------------------------------------------------

    \6\ As noted in the Commission's earlier rulemaking, the most 
critical elements of both VOCC service contracts and NVOCC NSAs are 
the important statutory protections provided to shippers that ensure 
against detriment to commerce. See 69 FR 53969. To ensure 
consistency with VOCC treatment, the Commission will continue 
applying to carriage under an NSA, those provisions of the Shipping 
Act that would be applicable to service contracts which relate to 
protecting shippers. These include the prohibited acts contained in 
sections 10(b)(1), (2), (5) and (9), 46 U.S.C. 41104(1), (2), (5) 
and (9).
---------------------------------------------------------------------------

    In removing the NSA filing and essential terms publication 
requirements, the Commission seeks to preserve the NVOCC's current 
range of pricing and contracting choices, while eliminating the filing 
and publication costs currently associated with NSAs. According to the 
commenters, this regulatory relief is likely to make NSAs a more 
attractive pricing and contracting tool and thereby encourage increased 
use of NSAs. The Commission is mindful that NSAs, comprising both

[[Page 56786]]

rate and service provisions, may remain impractical for smaller NVOCCs 
or shippers moving lower or less frequent freight volumes. It has been 
shown, however, that substantial volumes of cargo are already moving 
under this contract model, and that the NVOCC members of Petitioner 
NCBFAA would prefer the flexibility of including both service and rate-
related items in their contract offerings if relieved of the filing and 
publication burdens of same. Appropriate regulatory relief thus will 
allow parties to increase the use and reliance upon NSAs as a means to 
more efficiently engage in the movement of U.S. import and export 
cargo, while continuing to protect NSA shippers from potential 
financial harm for non-performance.

C. Authorize Amendments of NRAs and Shipper Acceptance Upon Booking

    NCBFAA has proposed deleting 46 CFR 532.5(e) and expanding the NRA 
exemption in 46 CFR part 532 to allow modification of NRAs at any time 
upon mutual agreement between NVOCCs and their customers. NCBFAA 
Petition at 14.
    Mainfreight, ABS, Mohawk, GLS, DJR, NYNJFFF&BA, NITL, CaroTrans, 
Vanguard, Serra, Powell, and BDG support the NCBFAA petitioner's 
request to allow modification of NRAs, at any time, upon mutual 
agreement. DJR states that, under current NRA requirements, either 
``the NVOCC faces the serious loss of revenue and potentially being put 
out of business by issuing long period NRAs, or the NVOCC issues 1 day 
or 1 week NRAs which increases the NVOCCs' operational expense and 
floods the shipper with constantly changing pricing.'' DJR at 2-3. 
NYNJFFF&BA also supports the NCBFAA recommendation that NRAs be allowed 
to be amended at any time after the receipt of cargo. NYNJFFF&BA states 
``if NRAs can be amended in conjunction with the shipper's agreement 
the NRA will become more directly responsive to competitive market 
conditions and business practices prevalent in the current 
marketplace.'' NYNJFF&BA, at 3.
    CaroTrans supports allowing modification of NRAs, as it believes it 
will improve efficiency and prevent the current ``nonsensical'' and 
``inefficient'' approach to modification, which entails terminating the 
current NRA and entering into a new one. CaroTrans at 3. Serra and 
Powell also support allowing amendment of NRAs after the cargo is 
received if the shipper and the NVOCC both agree in writing. Serra at 
2; Powell at 1-2. NITL supports ``allowing a shipper and NVOCC the 
power to modify an NRA at any time but only to the extent that the 
modification is based on a mutual written agreement between the parties 
and, such agreement should not be in the form of the NVOCC's tariff, 
bill of lading, or other shipping document that is not subject to 
mutual negotiation.'' NITL, at 5.
    Due to their smaller cargo volume, recent history has shown, and 
the commenters' statements support that NRAs tend to be transactional 
in nature and are generally short term. With their singular focus upon 
rates, NRAs are more aligned with the ``spot market.'' \7\ This 
relationship heightens, rather than diminishes, the need for NRAs to 
respond to an ever-changing marketplace. It appears appropriate, and in 
keeping with the Commission's commitment to reduce regulatory burden 
where feasible, to therefore permit NRAs to be extended or amended upon 
acceptance or agreement by the shipper customer. In initially creating 
NRAs, the accelerating need for parties to have greater flexibility to 
more quickly respond to fast-paced market rate fluctuations does not 
appear to have been fully anticipated. The NVOCC and its customer 
should not be compelled to create a new NRA in every instance simply 
because the rules do not currently provide for amendment.
---------------------------------------------------------------------------

    \7\ UPS has described NRAs as ``flexible and confidential rate 
offerings designed to react quickly to a very fluid marketplace''. 
Comments of UPS in Docket No. 10-03, NVOCC Negotiated Rate 
Arrangements, at 4.
---------------------------------------------------------------------------

    While not expressly included in the NCBFAA Petition, the Commission 
proposes a further change to enhance the use and competitiveness of 
NRAs. As noted in the comments of DGR Logistics, the requirement at 46 
CFR 532.5(c) that an NRA ``be agreed to'' by the shipper prior to 
receipt of cargo by the common carrier or its agent may itself pose 
logistical and regulatory challenges to the NVOCC. See DGR, at 2. 
Rather than continuing a persistent practice requiring that shipper 
acceptance in all cases be memorialized through a formal writing or 
email, the Commission proposes also to allow NRAs to be more flexibly 
created, or be amended, upon the shipper's acceptance in the form of a 
request for booking pursuant to the NRA.\8\ This practice more closely 
corresponds to the manner in which an NVOCC encounters shipper 
acceptance when responding to a written rate quote under standard 
tariff rates and rules, i.e. by communicating its agreement solely in 
terms of instructing the NVOCC to book the cargo for shipment 
thereunder. To ensure continued protection of the shipper and avoid 
confusion or potential disputes as to this new means to conclude an 
NRA, the Commission proposes that each NVOCC that seeks to recognize 
shipper acceptance of an NRA through the act of booking must 
incorporate a prominent written notice to that effect on each such NRA 
or amendment. As this additional NRA methodology is intended to be 
optional to the NVOCC and its shipper customers, the Commission will 
not eliminate the requirement that a shipper's agreement to an NRA 
should otherwise be in writing or by email. The Commission invites 
public comment on the desirability of permitting NRA acceptance by 
booking, and whether the Commission should require particular wording 
in order to more prominently give notice as to the NVOCC's practice 
with respect to booking.
---------------------------------------------------------------------------

    \8\ Towards this same result, NCBFAA recently submitted comments 
in Docket No. 17-04, Regulatory Reform Initiative, requesting 
changes to the NRA rules to ``make it clear that a shipper's 
tendering or booking of cargo constitutes acceptance of an NRA,'' 
NCBFAA Comments at 12.
---------------------------------------------------------------------------

IV. Public Participation

How do I prepare and submit comments?

    Your comments must be written and in English. To ensure that your 
comments are correctly filed in the docket, please include the docket 
number of this document in your comments.
    You may submit your comments via email to the email address listed 
above under ADDRESSES. Please include the docket number associated with 
this notice and the subject matter in the subject line of the email. 
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.
    You may also submit comments by mail to the address listed above 
under ADDRESSES.

How do I submit confidential business 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 by mail 
to the address listed above under ADDRESSES:
     A transmittal letter requesting confidential treatment 
that identifies the specific information in the comments or which 
protection is sought and demonstrates that the information is a

[[Page 56787]]

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.

Will the Commission consider late comments?

    The Commission will consider all comments received before the close 
of business on the comment closing date indicated above under DATES. To 
the extent possible, we will also consider comments received after that 
date. If the Commission receives a comment too late to consider in 
developing a final rule (assuming that one is issued), the Commission 
will consider that comment as an informal suggestion for future 
rulemaking action.

How can I read comments submitted by other people?

    You may read the comments received by the Commission at the 
Commission's Electronic Reading Room or the Docket Activity Library at 
the addresses listed above under ADDRESSES.
    Please note that even after the comment closing date, we may 
continue to file relevant information in the docket as it becomes 
available. Further, some commenters may submit late comments. 
Accordingly, we recommend that you periodically check the docket for 
new material.

V. Rulemaking Analyses and Notices

Regulatory Flexibility Act

    The Regulatory Flexibility Act (codified as amended at 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 U.S.C. 553), the agency must prepare and make available for 
public comment an initial regulatory flexibility analysis (IRFA) 
describing the impact of the proposed rule on small entities, unless 
the head of the agency certifies that the rulemaking will not have a 
significant economic impact on a substantial number of small entities. 
5 U.S.C. 603, 605.
    The Commission recognizes that the majority of businesses affected 
by these rules qualify as small entities under the guidelines of the 
Small Business Administration. The rule as to Part 531 (NSAs) poses no 
economic detriment to small business. 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. In that the proposed rule would 
eliminate the requirements that NVOCCs file NSAs with the Commission 
and publish essential terms of such NSAs, the regulatory burden on 
NVOCCs utilizing NSAs would be reduced. The rule as to part 532 (NRAs) 
would establish an optional method for NVOCCs to amend an NRA, and to 
garner shipper agreement to an NRA or amendment thereto, to be used at 
the NVOCC's discretion. In that the proposed rule would eliminate the 
prohibition on amendments to NRAs after an initial shipment is received 
by the carrier and would permit NVOCCs to more flexibly create and 
amend such NRAs, the regulatory burden on NVOCCs utilizing NRAs would 
be reduced.

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 for part 531, NVOCC Service 
Arrangements, and part 532 NVOCC Negotiated Rate Arrangements are 
currently authorized under OMB Control Numbers 3072-0070: 46 CFR part 
531, NVOCC Service Arrangements, and 3072-0071: 46 CFR 532--NVOCC 
Negotiated Rate Arrangements, respectively. In compliance with the PRA, 
the Commission has submitted the proposed revised information 
collections to the Office of Management and Budget.
    The proposed rule would eliminate the requirement that NVOCCs file 
NSAs with the Commission and the requirement that NVOCCs publish the 
essential terms of NSAs. Public burden for the collection of 
information pursuant to part 531, NVOCC Service Arrangements, as 
revised, would comprise 79 likely respondents and an estimated 3,328 
annual instances. Given that the proposed rule eliminates the NSA 
filing requirement as well as the essential terms publication 
requirement, the burden estimate has been significantly reduced from 
831 hours (2016 estimate) to 127 hours, a difference of 704 hours.
    The proposed rule would also permit NRAs to be modified after the 
receipt of the initial shipment by the carrier, and permit shippers' 
acceptance of the NRA by booking a shipment thereunder, subject to the 
NVOCC incorporating a prominent written notice to such effect in each 
NRA or amendment. No new information collection or reporting 
requirements are proposed with respect to part 532, NVOCC Negotiated 
Rate Arrangements, as revised.
    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.

National Environmental Policy Act

    Upon completion of an environmental assessment, the Commission has 
determined that the proposed rule will not constitute a major Federal 
action significantly affecting the quality of the human environment 
within the meaning of the National Environmental Policy Act of 1969, 42 
U.S.C. 4321 et seq., and that preparation of an environmental impact 
statement is not required. This FONSI will become final within 10 days 
of publication of this notice in the Federal Register unless a petition 
for review is filed by any of the methods described in the ADDRESSES 
section of the document. The FONSI and environmental assessment are 
available for inspection at the Commission's Electronic Reading Room 
at: http://www.fmc.gov/17-10, and at the Docket Activity Library at 800 
North Capitol Street NW., Washington, DC 20573, between 9:00 a.m. to 
5:00 p.m., Monday

[[Page 56788]]

through Friday, except Federal holidays. Telephone: (202) 523-5725.

Executive Order 12988 (Civil Justice Reform)

    This proposed rule meets applicable standards in E.O. 12988 titled, 
``Civil Justice Reform,'' to minimize litigation, eliminate ambiguity, 
and reduce burden.

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 http://www.reginfo.gov/public/do/eAgendaMain.

List of Subjects in 46 CFR Part 531

    Freight, Maritime carriers, Report and recordkeeping requirements.

    For the reasons stated in the supplementary information, the 
Federal Maritime Commission proposes to amend 46 CFR part 531 as 
follows:

PART 531--NVOCC SERVICE ARRANGEMENTS

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

    Authority:  46 U.S.C. 40103.

0
2. Revise Sec.  531.1 to read as follows:


Sec.  531.1   Purpose

    The purpose of this part is to facilitate NVOCC Service 
Arrangements (``NSAs'') as they are exempt from the otherwise 
applicable provisions of the Shipping Act of 1984 (``the Act'').
0
3. Amend Sec.  531.3 by:
0
a. Revising paragraph (c);
0
b. Removing paragraphs (d) through (g), (m), and (n);
0
c. Redesignating paragraphs (h) and (i) as paragraphs (d) and (e), 
respectively;
0
d. Redesignating paragraphs (k) and (l) as paragraphs (f) and (g), 
respectively;
0
e. Redesignating paragraphs (o) and (p) as paragraphs (h) and (i), 
respectively;
0
f. Revising newly redesignated paragraphs (f) and (j).
    The revisions to read as follows:


Sec.  531.3   Definitions.

* * * * *
    (c) Amendment means any change to a NSA which has prospective 
effect and which is mutually agreed upon by all parties to the NSA.
* * * * *
    (f) Effective date means the date upon which an NSA or amendment is 
scheduled to go into effect by the parties to the NSA. An NSA or 
amendment becomes effective at 12:01 a.m. Eastern Standard Time on the 
beginning of the effective date. The effective date cannot be prior to 
the date of the NSA or amendment.
* * * * *
    (j) Rules tariff means a tariff or the portion of a tariff, as 
defined by 46 CFR 520.2, containing the terms and conditions governing 
the charges, classifications, rules, regulations and practices of an 
NVOCC, but does not include a rate.
0
4. Revise Sec.  531.4 to read as follows:


Sec.  531.4   NVOCC rules tariff.

    (a) Before entering into NSAs under this Part, an NVOCC must 
provide electronic access to its rules tariffs to the public free of 
charge.
    (b) An NVOCC wishing to invoke an exemption pursuant to this part 
must indicate that intention to the Commission and the public by a 
prominent notice in its rules tariff.


Sec.  531.5  [Removed and reserved]

0
 5. Remove and reserve Sec.  531.5
0
6. Revise the Subpart B heading to read as follows:

Subpart B--Requirements

0
7. Amend Sec.  531.6 by:
0
a. Removing paragraphs (a), (f), and (g):
0
b. Redesignating paragraphs (b) through (e) as paragraphs (a) through 
(d), respectively;
0
 c. Revising the introductory text of newly redesignated paragraph (a);
0
d. Revising the newly redesignated paragraph (c)(1) paragraph and 
adding paragraph (c)(5);
0
 e. Revising newly redesignated paragraph (d) to read as follows:


Sec.  531.6   NVOCC Service Arrangements.

    (a) Every NSA shall include the complete terms of the NSA 
including, but not limited to, the following:
* * * * *
    (c) Other requirements. (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 a NSA.
* * * * *
    (5) Except for the carrier party's rules tariff, the requirement in 
46 U.S.C. 40501(a)-(c) that the NVOCC include its rates in a tariff 
open to public inspection in an automated tariff system and the 
Commission's corresponding regulations at 46 CFR part 520 shall not 
apply.
    (d) Format requirements. Every NSA shall include:
    (1) A unique NSA number of more than one (1) but less than ten (10) 
alphanumeric characters in length (``NSA Number''); and
    (2) A consecutively numbered amendment number no more than three 
digits in length, with initial NSAs using ``0'' (``Amendment number'').
* * * * *


Sec.  531.7  [Removed and reserved]

0
 8. Remove and reserve Sec.  531.7
0
9. Revise Sec.  531.8 to read as follows:


Sec.  531.8   Amendment.

    (a) NSAs may be amended by mutual agreement of the parties.
    (b) Where feasible, NSAs should be amended by amending only the 
affected specific term(s) or subterms.
    (c) Each time any part of an NSA is amended, a consecutive 
amendment number (up to three digits), beginning with the number ``1'' 
shall be assigned.
    (d) Each time any part of a NSA is amended, the ``Effective Date'' 
will be the date of the amendment.


Sec.  531.9  [Removed and Reserved]

0
10. Remove and Reserve Sec.  531.9.


Sec.  531.10   [Amended].

0
11. Amend Sec.  531.10 by removing paragraphs (c) and (d).
0
12. Revise Sec.  531.11 to read as follows:


Sec.  531.11   Implementation.

    Generally. Performance under an NSA or amendment thereto may not 
begin before the day it is effective.
0
13. Revise Sec.  531.99 to read as follows


Sec.  531.99   OMB control numbers assigned pursuant to the Paperwork 
Reduction Act.

    The Commission has received OMB approval for this collection of 
information pursuant to the Paperwork Reduction Act of 1995, as 
amended. In accordance with that Act, agencies are required to display 
a currently valid control number. The valid control number for this 
collection of information is 3072-0070.

Appendix A to Part 531 [Removed]

0
14. Remove Appendix A to part 531.

PART 532--NVOCC NEGOTIATED RATE ARRANGEMENTS

0
15. The authority citation for part 532 continues to read as:


[[Page 56789]]


    Authority: 46 U.S.C. 40103.

0
16. Amend Sec.  532.5 by revising paragraphs (c) and (e) to read as 
follows:


Sec.  532.5  Requirements for NVOCC negotiated rate arrangements.

* * * * *
    (c) Be agreed to by both NRA shipper and NVOCC, prior to receipt of 
cargo by the common carrier or its agent (including originating 
carriers in the case of through transportation). Shipper acceptance of 
the NRA may be demonstrated through a signed agreement or written 
communication, including email, from the shipper. Shipper acceptance of 
an NRA may also be demonstrated by booking a shipment after receiving 
the NRA terms from the NVOCC if the NVOCC incorporates a prominent 
written notice that booking constitutes acceptance of the NRA terms in 
each NRA or amendment.
    (1) To comply with paragraph (c), the NVOCC shall incorporate the 
following text in bold font or by use of all uppercase letters: 
``SHIPPER MAY ACCEPT THIS NRA OR NRA AMENDMENT BY BOOKING A SHIPMENT 
AFTER RECEIVING THE TERMS HEREOF.''
    (2) Reserved.
* * * * *
    (e) May be amended after the time the initial shipment is received 
by the carrier or its agent (including originating carriers in the case 
of through transportation), but such changes may only apply 
prospectively to shipments not yet received by the carrier or its 
agent.

    By the Commission.
 Rachel E. Dickon,
 Assistant Secretary.
[FR Doc. 2017-25718 Filed 11-29-17; 8:45 am]
BILLING CODE 6731-AA-P