Interpretive Rule, Shipping Act of 1984, 45367-45373 [2018-19328]
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• Email: rbailey@oshrc.gov. Include
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FOR FURTHER INFORMATION CONTACT: Ron
Bailey, via telephone at 202–606–5410,
or via email at rbailey@oshrc.gov.
SUPPLEMENTARY INFORMATION: In
accordance with 29 U.S.C. 661(g), the
Occupational Safety and Health Review
Commission last implemented a
comprehensive revision of its rules of
procedure in 2005. Since that time,
technological advances, including
implementation of the E-filing system,
as well as the evolution of practice
before the Commission, have called for
a careful reexamination of the
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forth in 29 CFR part 2200. To assist in
determining what revisions should be
made, the agency is soliciting
recommendations from the public. It is
especially interested in hearing from
those who practice before it on what
rules their experience suggests would
benefit from a revision. While
recommended changes to any rule will
be considered, the Commission is
especially interested in whether: Rules
on the computation of time should be
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should be mandatory and, if so, what
exceptions, if any, should be allowed;
the definition of ‘‘affected employee’’
should be broadened; citing to
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improved practice before the
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Commission, and a reference to
authority where necessary.
Dated: August 15, 2018.
Heather L. MacDougall,
Chairman.
[FR Doc. 2018–18050 Filed 9–6–18; 8:45 am]
BILLING CODE 7600–01–P
FEDERAL MARITIME COMMISSION
46 CFR Part 545
[Docket No. 18–06]
RIN 3072–AC71
Interpretive Rule, Shipping Act of 1984
Federal Maritime Commission.
Notice of proposed rulemaking.
AGENCY:
ACTION:
The Federal Maritime
Commission (FMC or Commission) is
seeking public comment on its
interpretation of the scope of the
Shipping Act prohibition against failing
to establish, observe, and enforce just
and reasonable regulations and practices
relating to or connected with receiving,
handling, storing, or delivering
property. Specifically, the Commission
is clarifying that the proper scope of that
prohibition in the Shipping Act of 1984
and the conduct covered by it is guided
by the Commission’s interpretation and
precedent articulated in several earlier
Commission cases, which require that a
regulated entity engage in a practice or
regulation on a normal, customary, and
continuous basis and that such practice
or regulation is unjust or unreasonable
in order to violate that section of the
Shipping Act.
DATES: Submit comments on or before:
October 10, 2018.
ADDRESSES: You may submit comments,
identified by the Docket No. 18–06 by
the following methods:
• Email: secretary@fmc.gov. Include
in the subject line: ‘‘Docket 18–06,
Interpretive Rule Comments.’’
Comments should be attached to the
email as a Microsoft Word or textsearchable PDF document. Only nonconfidential and public versions of
confidential comments should be
submitted by email.
• Mail: Rachel E. Dickon, Secretary,
Federal Maritime Commission, 800
North Capitol Street NW, Washington,
DC 20573–0001.
• 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
SUMMARY:
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of this document. Note that all
comments received will be posted
without change to the Commission’s
website, 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: https://www.fmc.gov/18-06, or to the
Docket Activity Library at 800 North
Capitol Street NW, Washington, DC
20573, 9:00 a.m. to 5:00 p.m., Monday
through Friday, except Federal holidays.
Telephone: (202) 523–5725.
FOR FURTHER INFORMATION CONTACT:
Rachel E. Dickon, Secretary; Phone:
(202) 523–5725; Email: secretary@
fmc.gov.
SUPPLEMENTARY INFORMATION:
I. Executive Summary
The Federal Maritime Commission is
issuing this notice to obtain public
comments on clarification and guidance
regarding the Commission’s
interpretation of the scope of 46 U.S.C.
41102(c) (section 10(d)(1) of the
Shipping Act of 1984).1 Section
41102(c) provides that regulated entities
‘‘may not fail to establish, observe, and
enforce just and reasonable regulations
and practices relating to or connected
with receiving, handling, storing, or
delivering property.’’ 2
Beginning with the Houben 3 decision
in 2010 and presented in full in the
Commission’s 2013 decision in Kobel v.
Hapag-Lloyd, the Commission has held
in a line of recent cases that discrete
conduct with respect to a particular
shipment, if determined to be unjust or
unreasonable, represents a violation of
§ 41102(c), regardless of whether that
conduct represents a respondent’s
practice or regulation.4 These decisions
diverge from consistent Commission
precedent dating back to 1935 and
reaffirmed as recently as 2001 which
required that a regulated entity must
engage in a practice or regulation on a
normal, customary, and continuous
basis in order to be found to have
violated § 41102(c) of the Shipping Act.
In simple summary, discrete or
1 Some authorities cited herein refer to § 41102(c)
while others refer to section 10(d)(1). For ease of
reading, we will generally refer to § 41102(c) in
analyzing these authorities.
2 46 U.S.C. 41102(c).
3 Houben v. World Moving Services, Inc., 31
S.R.R. 1400 (FMC 2010).
4 Kobel v. Hapag-Lloyd A.G., 32 S.R.R. 1720, 1731
(2013) (‘‘The allegation that a single failure to
‘‘observe or enforce’’ just and reasonable regulations
or practices is not a failure does not comport with
the language of section 10(d)(1), which mandates
regulated entities not to ‘fail to . . . observe and
enforce’ just and reasonable regulations and
practices.’’).
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occasional actions by regulated entities
not reflecting a practice or regulation
would not constitute a violation of
§ 41102(c).
Specifically, the Commission is
considering an interpretive rule
consistent with Commission precedent
articulated in cases including
Intercoastal Investigation,5 Altieri,6
Stockton Elevators,7 European
Trade,8 A.N. Deringer,9 and Kamara 10
that would restore the scope of
§ 41102(c) to prohibiting unjust and
unreasonable practices and regulations.
These decisions require that a regulated
entity engage in a practice or regulation
on a normal, customary, and continuous
basis and a finding that such practice or
regulation is unjust or unreasonable to
violate that section of the Shipping Act.
The Commission believes that this
represents the proper interpretation of
the statutory language of the provision
that, within the full context of the 1916
Act and the 1984 Act, is consistent with
statutory and legislative history, judicial
precedent and Commission case law
embodied in cases such as Stockton
Elevators, and comports with accepted
rules of statutory construction.
This interpretation restores § 41102(c)
to its proper function and purpose
under the Shipping Act of 1984 and will
return the Commission’s focus and
priorities to the activities of maritime
regulated entities that negatively affect
the broader shipping public—all as
intended by Congress in its enactment
of the 1916 Act and the 1984 Act.
Recognizing that this interpretation
would prune and pare back the types of
recent claims that have been be filed
with the Commission to those related to
the purposes of the Shipping Act’s
§ 41102(c), traditional legal venues will
continue to be available to parties
injured by discrete instances of
unreasonable or unjust conduct
consistent with long established
maritime actions and other statutes
specifically enacted by Congress, and
long recognized common law remedies,
all designed to address such
circumstances.
We are seeking comment on this
refocus of § 41102(c), how such an
interpretation would affect regulated
5 Intercoastal Investigation, 1935, 1 U.S.S.B.B.
400 (1935).
6 J.M. Altieri v. Puerto Rico Ports Authority, 7
F.M.C. 416 (ALJ 1962).
7 Investigation of Certain Practices of Stockton
Elevators, 3 S.R.R. 605 (FMC 1964).
8 European Trade Specialists v. Prudential-Grace
Lines, 19 S.R.R. 59, 63 (FMC 1979).
9 A.N. Deringer, Inc. v. Marlin Marine Services,
Inc., 25 S.R.R. 1273 (SO 1990).
10 Kamara v. Honesty Shipping Service, 29 S.R.R.
321 (ALJ 2001).
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entities including ocean carriers, marine
terminal operators (MTOs), and ocean
transportation intermediaries (OTIs), as
well as members of the shipping public,
including cargo shippers and drayage
truckers, and whether claims that would
no longer fall under § 41102(c) under
the contemplated interpretation would
be adequately resolved before the
Commission under other sections of the
Act or in other legal dispute venues.
The interpretation would take the form
of an interpretive rule codified in 46
CFR part 545. The language of the
proposed rule is set forth below.
II. Background
A. Statutory Language and Legislative
History
Congress first used the statutory
language addressing the legal duty of
transportation common carriers to
‘‘establish, observe, and enforce just and
reasonable . . . regulations and
practices . . . affecting [cargo]
classification, rates, or tariffs . . . [and]
the manner and method of presenting,
marking, packing, and delivering
property for transportation . . .’’ in the
1910 Mann-Elkins Act amendment
(Mann-Elkins) 11 to the Interstate
Commerce Act (ICA).12 The MannElkins language clearly focused on the
operating and business practices of
railroads as commonly used and
imposed upon passengers and cargo
shippers. This fundamental common
carrier duty is the foundational
cornerstone of the ICA legislation, its
statutory purpose, and its proper
interpretation.
The provenance of the statutory
language and its inclusion six years later
in the Shipping Act of 1916 (1916
Act) 13 has been recognized by the
courts. In United States Navigation Co.
v. Cunard S.S. Co. Ltd. 284 U.S. 474
(1932), the U.S. Supreme Court tied a
firm knot binding the ICA and the 1916
Act where the court gave a general
review of various sections of the 1916
Act, including section 17 14 and held
that, ‘‘[t]hese and other provisions of the
Shipping Act clearly exhibit the close
parallelism between the act and its
prototype, the ICA, and the applicability
both of the principals of construction
and administration.’’ 15
As the enactment of the 1916 Act
demonstrates, together with the use of
11 Mann-Elkins Act, 61st Congress, 2nd session,
Ch. 309, 36 Stat. 539, enacted June 18, 1910.
12 The Interstate Commerce Act of 1887, Ch. 104,
24 Stat 379 (1887).
13 The Shipping Act of 1916, Sept. 7, 1916, Ch.
451, 39 Stat. 728.
14 Section 17 is the origin of section 10(d)(1), as
discussed infra.
15 Id. at 484.
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identical language in other federal
statutes,16 Congress fully understood
what it was doing in using the phrase
‘‘establish, observe, and enforce just and
reasonable regulations and practices’’—
and what those words meant.17
Section 41102(c) of the 1984 Act
originates from section 17 of the 1916
Act. Section 17 was commonly divided
into two parts and referred to as
‘‘section 17, first paragraph’’ and
‘‘section 17, second paragraph.’’ The
first paragraph addressed unjustly
discriminatory rates charged to shippers
while the second paragraph addressed
just and reasonable practices by carriers
and other persons subject to the Act.
The second paragraph of section 17
reads as follows:
Every such carrier and every other person
subject to this act shall establish, observe,
and enforce just and reasonable regulations
and practices relating to or connected with
the receiving, handling, storing, or delivering
of property. Whenever the Board finds any
such regulation or practice is unjust or
unreasonable it may determine, prescribe,
and order enforced a just and reasonable
regulation or practice.
Public Law 64–260 § 17 (1916)
(emphasis added).18
As a part of the general transportation
deregulatory reform trends in the 1970’s
through 1990’s,19 Congress eliminated
the sentence regarding the
Commission’s authority to prescribe or
order regulations or practices in the
1984 Act. Congress, however, reenacted
the first sentence of section 17’s second
paragraph and placed that provision in
section 10(d)(1), which, following the
2006 recodification of the 1984 Act,
became 46 U.S.C. 41102(c). That
language from section 17, second
16 For example, the Packers and Stockyards Act
of 1921, which was enacted to maintain
competition in the livestock industry. The Act bans
discrimination, manipulation of price, weight,
livestock or carcasses; commercial bribery;
misrepresentation of source, condition, or quality of
livestock; and other unfair or manipulative
practices. Section 208 of the Packers and
Stockyards Act of 1921 provides that, ‘‘[i]t shall be
the duty of every stockyard owner and market
agency to establish, observe, and enforce just,
reasonable and nondiscriminatory regulations and
practices in respect to the furnishing of stockyard
services.’’ 7 U.S.C. 208.
17 For a more detailed discussion of the legislative
history of this statutory language, see GruenbergReisner v. Respondent Overseas Moving Specialist,
34 S.R.R. 613, 638–644 (FMC 2016).
18 The two separate provisions of section 17 of the
Shipping Act are commonly referred to as ‘‘section
17, first paragraph’’ and ‘‘section 17, second
paragraph.’’
19 See the Railroad Revitalization and Regulatory
Reform Act of 1976, Public Law 94–210; Staggers
Act of 1980, Public Law 96–448; Motor Carrier Act
of 1990, Public Law 96–296; Airline Deregulation
Act, Public Law 95–504; and the Interstate
Commerce Commission Termination Act of 1995,
Public Law 104–88.
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paragraph, first sentence, requiring that
no regulated entity may fail to establish,
observe, and enforce just and reasonable
regulations and practices relating to or
connected with the receiving, handling,
storing, or delivery of property—is now
found in § 41102(c) of the 1984 Act.
Having a long legislative provenance,
Congress used the word ‘‘practice’’ and
the full phrase, ‘‘establish, observe, and
enforce just and reasonable regulations
and practices,’’ in both the original 1916
Act and in section 10(d)(1) of the 1984
Act, now § 41102(c), in a particular way
and in a context that was clear to the
drafters, to the Commission, and to the
reviewing courts.
B. Judicial Precedent
In Baltimore & Ohio Railroad
Company v. United States, 277 U.S. 291
(1923), the U.S. Supreme Court
considered the question of what
constituted a ‘‘practice’’ within the
contemplation of Congress in the
Interstate Commerce Act:
The word ‘‘practice’’, considered generally
and without regard to context, is not capable
of useful construction. If broadly used, it
would cover everything carriers are
accustomed to do. Its meaning varies so
widely and depends so much upon the
connection in which it is used that Congress
will be deemed to have intended to confine
its application to acts or things belonging to
the same general class as those meant by the
words associated with it.
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Id. at 299–300 (citation omitted)
(emphasis added).
The Interstate Commerce Commission
(ICC), the United States Shipping Board
(USSB) (the agency created by Congress
in the 1916 Act), its successor agencies,
and the currently constituted
Commission,20 together with state and
federal courts have consistently ruled
that ‘‘practice’’ means; (1) the acts/
omissions of the regulated common
carrier that were positively established
by the regulated common carrier and
imposed on the passenger/cargo
interest, and (2) such act/omission was
the normal,21 customary, often
20 The United States Shipping Board (USSB) was
succeeded in 1933 by the United States Shipping
Board Bureau of the Department of Commerce
(USSBB), Executive Order No. 6166 (1933). The
USSBB was succeeded in 1936 by the United States
Maritime Commission (USMC), 49 Stat. 1985. In
1950, the USMC was succeeded by the Federal
Maritime Board (FMB), 64 Stat.1273. The FMC was
established as an independent regulatory agency by
Reorganization Plan No. 7, effective August 12,
1961. The U.S. Supreme Court treated the FMC and
all predecessor agencies as the ‘‘Commission’’ for
purposes of judicial review. See Volkswagenwerk v.
Federal Maritime Commission, 390 U.S. 261, 269
(1968).
21 See European Trade Specialists v. PrudentialGrace Lines, 19 S.R.R. 59, 63 (FMC 1979). (Unless
its normal practice was not to so notify the shipper,
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repeated,22 systematic,23 uniform,24
habitual,25 and continuous manner 26
(hereinafter ‘‘Normal, Customary &
Continuous’’) in which the regulated
common carrier was conducting
business.
The USSBB, a predecessor to the
Commission, considered the term
‘‘practice’’ as used in the 1916 Act in
Intercoastal Investigation, 1935, 1 FMC
400 (1935), an investigation that covered
sixteen years of steam ship conference
activities. The USSBB held:
The provisions of the Shipping Act, 1916,
also apply to these respondents. It is there
provided . . . that carriers shall establish,
observe, and enforce just and reasonable
rates, charges, (cargo) classifications, and
tariffs and just and reasonable regulations
and practices related thereto . . .The terms
‘‘rates’’, ‘‘charges’’, ‘‘tariffs’’, and ‘‘practices’’
as used in transportation have received
such adverse treatment cannot be found to violate
the section as a matter of law [emphasis in
original].’’
22 See Intercoastal Investigation, 1935, 1
U.S.S.B.B. 400, 432. (‘‘Owing to its wide and
variable connotations, a practice which unless
restricted ordinarily means an often and customary
action, is deemed to acts or things belonging to the
same class as those meant by the words of the law
that are associated with it.’’ [cites omitted]
[emphasis added].
23 See Whitam v. Chicago, R.I. & P. Ry. Co., 66
F. Supp. 1014 (ND TX 1946) (‘‘The word ‘a practice’
as used in the decision, or used anywhere properly,
implies systematic doing of the acts complained of,
and usually as applied to carriers and shippers
generally.’’ (emphasis added).’’
24 See Stockton Elevators, 3 S.R.R. 605, 618 (FMC
1964). (‘‘It cannot be found that the Elevator
engaged in a ‘practice’ within the meaning of
Section 17. The essence of a practice is uniformity.
It is something habitually performed and it implies
continuity . . . the usual course of conduct. It is not
an occasional transaction such as here shown.
Intercoastal Investigation, 1935, 1 U.S.S.B.B. 400,
432; B&O By. Co. v. United States 277 U.S. 291,
300, Francesconi & Co. v. B&O Ry. Co., 274 F. 687,
690; Whitham v. Chicago R.I. & P. Ry. Co., 66 F.
Supp. 1014; Wells Lamont Corp. v. Bowles, 149 F.2d
364 (emphasis added). See also, McClure v.
Blackshere, F. Supp. 678, 682 (D. Md. 1964)
(‘‘ ‘Practice’ ordinarily implied uniformity and
continuity, and does not denote a few isolated acts,
and uniformity and universality, general notoriety
and acquiescence, must characterize the actions on
which a practice is predicated.’’ (citations omitted)
(emphasis added)).
25 See Stockton Elevators, 3 S.R.R. 605, 618 (FMC
1964). (‘‘It cannot be found that the Elevator
engaged in a ‘practice’ within the meaning of
Section 17. . . . It is something habitually
performed and it implies continuity . . . the usual
course of conduct.’’ (citations omitted) (emphasis
added)).
26 See Stockton Elevators, 3 S.R.R. 605, 618 (FMC
1964). (‘‘It cannot be found that the Elevator
engaged in a ‘practice’ within the meaning of
Section 17. . . . It is something habitually
performed and it implies continuity . . . .’’
(citations omitted) (emphasis added)). See also,
McClure v. Blackshere, F. Supp. 678, 682 (D. Md.
1964) (‘‘ ‘Practice’ ordinarily implied uniformity
and continuity, and does not denote a few isolated
acts, and uniformity and universality, general
notoriety and acquiescence, must characterize the
actions on which a practice is predicated.’’
(citations omitted) (emphasis added)).
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judicial interpretation . . . Owing to its wide
and variable connotation, a practice, which
unless restricted ordinarily means an often
repeated and customary action, is deemed to
apply only to acts or things belonging to the
class as those meant by the words of the law
that are associated with it . . . In section 18,
the term ‘‘practices’’ is associated with
various words, including ‘‘rates’’, ‘‘charges’’,
and ‘‘tariffs’’.
Id. at 431–432 (emphasis added).27
Prior to the 1984 Act, Commission
decisions analyzing situations that
involved discrete conduct focused on
the meaning of the word ‘‘practice’’ and
determined that conduct that did not
reflect a practice was outside the scope
of the first sentence of the second
paragraph of section 17. In Altieri,
Stockton Elevators, and European Trade
Specialists, A.N. Deringer, Kamara, and
other cases 28 the Commission used the
term ‘‘practice’’ in a consistent manner
for all the places it appears in the
Shipping Act.
In Stockton Elevators, which was later
adopted by the Commission in its
entirety, the FMC’s Presiding Examiner
found that a violation did not occur
because of the infrequency of the
relevant actions. According to that
decision, a practice is something that,
‘‘is habitually performed and implies
continuity . . . not an occasional
transaction such as here shown.’’ 29 The
Presiding Examiner found the
respondent’s actions to be occasional
transactions and not a ‘‘practice’’
because they were not the ‘‘usual course
of conduct’’ and so not a violation of
section 17.30
Similarly, in European Trade
Specialists, Inc. v. Prudential-Grace
Lines, Inc., the ALJ specifically noted,
‘‘[a] ‘practice’ unless the term is in some
way restricted by decision or statute,
means ‘‘an often repeated and
customary action.’’ 31 There, the ALJ
was considering if an alleged failure to
notify a shipper of a dispute on the
applicable tariff rate violated section 17
of the 1916 Act. The ALJ found that in
examining the record, the respondent’s
normal practice was to notify shippers
27 Intercoastal Investigations cited two ICA
railroad cases as authority. See Baltimore & Ohio
Railroad Company v. United States, 277 U.S. 291
(1923) and Missouri Pacific R. Co. v. Norwood, 283
U.S. 249, 257 (1931).
28 A series of cases alleging section 10(d)(1)
violations has established that a complainant must
demonstrate regulations and practices, as opposed
to identifying what might be an isolated error or
understandable misfortune. See, e.g., Informal
Docket No. 1745(I), Mrs. Susanne Brunner v. OMS
Moving Inc., slip decision served January 27, 1994,
administratively final March 8, 1994.
29 Investigation of Certain Practices of Stockton
Elevators, 8 F.M.C. 187, 200–201 (Examiner 1964).
30 Id.
31 17 S.R.R. 1351, 1361 (ALJ 1977).
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of problems and this case involved the
allegation of a single departure from that
practice which was otherwise just and
reasonable. Regardless of the unjustness
or unreasonableness of the respondent’s
failure to notify the shipper, such action
did not represent a practice and thus
there could be no section 17 violation.
In Kamara v. Honesty Shipping
Service, 29 S.R.R. 321 (ALJ 2001), the
ALJ held that, ‘‘It is not clear that a
carrier’s simple failure to remit payment
to a subcontracting carrier constitutes a
Shipping Act violation, although the
shipper would certainly have a
commercial contractual claim.
These cases addressing Section
10(d)(1) violations correctly hold that a
complainant must demonstrate
regulations and practices and articulates
the correct scope and interpretation of
§ 41102(c). This precedent stands in
stark contrast to recent Commission
decisions that adopted a far more
expansive interpretation of the conduct
covered by § 41102(c) untethered to the
language of the statute, the legislative
history, Commission precedent, or, most
importantly, the purpose of the
Shipping Act to address common carrier
duties.32
In the 2013 Kobel decision, the
Commission charted a different course
by disjoining the statute’s conjunctive
language of ‘‘establish, observe, and
enforce’’ and specifically identified that
§ 41102(c) contains three discrete
prohibitions: (1) A prohibition against
failing to establish just and reasonable
regulations and practices; (2) a
prohibition against failing to observe
just and reasonable regulations and
practices; and (3) a prohibition against
failing to enforce just and reasonable
regulations.33 Since Kobel, the
Commission has interpreted section
§ 41102(c) to mean that a single failure
to fulfill a single legal obligation of any
description itself could constitute a
violation of § 41102(c).’’ 34
The Commission looked to a single
rule of construction, the surplusage
cannon, to support its course change
from prior Commission and court
rulings. That rule provides that, ‘‘If
possible, every word and every
32 See Adair v. Penn-Nordic Lines, Inc., 26 S.R.R.
11 (ALJ 1991); Tractors & Farm Equip. Ltd v.
Cosmos Shipping Co., Inc., 26 S.R.R. 788 (ALJ
1992); Houben v. World Moving Servs., Inc., 31
S.R.R. 1400 (FMC 2010).
33 Kobel, 32 S.R.R. at 1735.
34 See, e.g., Bimsha Int’l v. Chief Cargo Servs., 32
S.R.R. 1861, 1865 (FMC 2013) (‘‘NVOCCs violate
[§ 41102(c)] when they fail to fulfill NVOCC
obligations, through single or multiple actions or
mistakes, and therefore engage in an unjust and
unreasonable practice’’ (emphasis added)).
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provision is to be given effect.’’ 35
However, the commentators offer two
relevant notes of caution.
First, in discussing the Principle of
Interrelating Canons, they advise, ‘‘No
canon of interpretation is absolute. Each
may be overcome by the strength of
differing principles that point in other
directions . . . It is a rare case in which
each side does not appeal to a different
canon to suggest its desired
outcome.’’ 36 Second, in later discussion
of the surplusage canon, they note, ‘‘If
a provision is susceptible of (1) a
meaning that . . . deprives another
provision of all independent effect, and
(2) another meaning that leaves both
provisions with some independent
operation, the later should be preferred
. . . So, like all other canons, this one
must be applied with judgement and
discretion, and with careful regard to
context.’’ 37
The Commission has, in these recent
cases, strained to give independent
application of the elements, ‘‘establish,
observe, or enforce’’ but, in so doing,
has deprived any operation of a
discussion or application of the alleged
unjust or unreasonable practice or
regulation being inflicted upon the
general shipping public. The ‘‘context’’
of § 41102(c) itself within the Shipping
Act and other factors discussed below
demonstrate the flaws in the
Commission’s recent line of section
41102(c) decisions. Moreover, numerous
other canons of construction ‘‘point in
other directions,’’ 38 all as discussed
below.
It is this line of recent cases
determining that a discrete failure to
observe and enforce an established just
and reasonable regulation or practice
that the Commission seeks to reform in
this rulemaking so as to return the scope
of § 41102(c) to its proper role and
purpose within the Shipping Act. In the
future, the Commission intends to
follow the reasoning in Intercoastal
Investigation, Altieri, Stockton
Elevators, European Trade Specialists,
Deringer, and Kamara which offer
precedent as to what properly applies
the full meaning and purpose of
‘‘establish, observe, and enforce just and
reasonable regulations and practices’’
under the Shipping Act and a violation
of § 41102(c).
C. Rules of Statutory Construction
The precedent in Intercoastal
Investigation, Altieri, Stockton
35 Reading Law: The Interpretation of Legal Texts,
Scalia and Garner, 2012, pg. 174.
36 Id. at 59, emphasis in the original.
37 Id. at page 176, emphasis added.
38 Id. at 59.
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Elevators, European Trade Specialists,
Deringer, and Kamara as to what
constitutes ‘‘regulations and practice’’
under the Shipping Act is supported by
and consistent with multiple accepted
rules of statutory construction. Proper
consideration and application of
numerous canons of statutory
construction demonstrates that Congress
has spoken to the issue at hand.39
(1) The Syntactic Canon concerns
grammar. Reviewing § 41102(c), the
regulated entity is the subject of the
sentence. The subject is directed—i.e.
do not fail to—then comes the active
verbs—‘‘establish, observe, and enforce’’
just and reasonable regulations and
practices. The regulated entity is
ordered to, first, initiate the creation,
dissemination, and publication of such
just and reasonable regulations and
practices, and simultaneously, to
observe and enforce those regulations
and practices that were created by that
regulated entity.40
(2) The Ordinary Meaning Canon
requires that the words of a statute are
to be taken in their natural and ordinary
signification and import.41 The judicial
interpretation of the phrase ‘‘practices’’
by multiple courts applying the MannElkins Act, the 1916 Act, and other
statutes, all utilized the Ordinary
Meaning Canon to find the meaning of
the term ‘‘practice’’ as intended by
Congress.42 All came to a reasoned
conclusion that confirms the
Commission’s proposed
interpretation.43
(3) The Prior-Construction Canon
requires that ‘‘[w]hen administrative
and judicial interpretations have settled
the meaning of an existing statutory
provision, repetition of the same
language in a new statute indicates, as
a general matter, the intent to
incorporate its administrative and
39 See Bell Atlantic Telephone Companies v.
Federal Communications Commission, 131 F.3d
1044, 1047 (D.C. Cir. 1997) (‘‘Context serves an
especially important role in textual analysis of a
statute when Congress has not expressed itself as
univocally as might be wished.’’).
40 For a fuller discussion of the Syntactic Canon,
see Gruenberg-Reisner v. Respondent Overseas
Moving Specialist, 34 S.R.R. 613, 641 (FMC 2016).
41 See, e.g., James Kent, Commentaries on
American Law 432 (1826) (‘‘The words of a statute
are to be taken in their natural and ordinary
signification and import; and if technical words are
used, they are to be taken in a technical sense.’’).
42 See Intercoastal Investigation, 1935, 1
U.S.S.B.B. 400 (1935); Whitam v. Chicago, R.I. & P.
Ry. Co., 66 F. Supp. 1014 (N.D. Tex. 1946); McClure
v. Blackshere, 231 F. Supp. 678 (D. Md. 1964);
Stockton Elevators, 8 F.M.C. 187 (1964); and
European Trade Specialists, 19 S.R.R. 59 (FMC
1979).
43 For a fuller discussion of the Ordinary Meaning
Canon, see Gruenberg-Reisner v. Respondent
Overseas Moving Specialist, 34 S.R.R. 613, 641–642
(FMC 2016).
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judicial interpretations as well.’’ 44
Congress used the same 1916 Shipping
Act language in the new 1984 Act. The
Commission’s holdings in Intercoastal
Investigation, 1935, 1 U.S.S.B.B. 400
(1935), the case law, including ICA
federal court cases, cited therein as
supporting precedent,45 Altieri, 46
Stockton Elevators,47 the case law,
including ICA federal court cases, cited
therein as supporting precedent, and
European Trade 48 was incorporated
into the new statute as well.49 Justice
Felix Frankfurter expressed the maxim
as ‘‘if a word is obviously transplanted
from a legal source, whether the
common law or other legislation, it
brings the old soil with it.’’ 50
(4) The Associated Words Canon of
construction requires that associated
words bear on one another’s meaning. In
Intercoastal Investigation, 1935, the
United States Shipping Board
considered the term ‘‘practice’’ as used
in the 1916 Act and determined that,
‘‘[o]wing to its wide and variable
connotation, a practice which unless
restricted ordinarily means an often
repeated and customary action, is
deemed to apply only to acts or things
belonging to the class as those meant by
the words of the law that are associated
with it.’’ 1 U.S.S.B.B. at 431–432
44 Bragdon v. Abbott, 524 U.S. 624, 645 (1998)
(emphasis added).
45 Intercoastal at 432.
46 J.M. Altieri v. Puerto Rico Ports Authority, 7
F.M.C. 416 (ALJ 1962). ‘‘If the action of respondent
were one of a series of such occurrences, a practice
might be spelled out that would invoke the
coverage of section 17. Hecht, Levis and Kahn, Inc.
v. Isbrandtsen, Co., Inc., 3 F.M.B. 798 (1950).
However, the action of the respondent is an isolated
or ‘one shot’ occurrence. Complainant has alleged
and proved only the one instance of such conduct.
It cannot be found to be a ‘practice’ within the
meaning of the last paragraph of section 17.’’ Id. at
420 (emphasis in original).)
47 3 S.R.R. at 618 (‘‘It cannot be found that the
Elevators engaged in a ‘practice’ within the meaning
of section 17. The essence of a practice is
uniformity. It is something habitually performed
and it implies continuity . . . the usual course of
conduct. It is not an occasional transaction such as
here shown. Intercostal Investigation, 1935, 1.
USSBB 400, 432; B&O Ry. Co., 274 F. 687, 690;
Whitham v. Chicago R.I. & P. Ry. Co., 66 F. Supp.
1014; Wells Lamont Corp. v. Bowles, 149 F.2d
364.’’).
48 19 S.R.R. at 63. (‘‘Even assuming, without
deciding, that European was not notified of the
classification and rating problem we cannot say that
such conduct by Hipage amounts to a violation of
Section 17. Unless its normal practice was not to
so notify the shipper, such adverse treatment
cannot be found to violate the section as a matter
of law. Investigation of Certain Practices of
Stockton Elevators, 8 F.M.C. 181, 200 [3 S.R.R. 605]
(1964).’’ (emphasis in original)).
49 For a more detailed discussion of the PriorConstruction Canon, see Gruenberg-Reisner v.
Respondent Overseas Moving Specialist, 34 S.R.R.
613, 647–649 (FMC 2016).
50 Felix Frankfurter, Some Reflections on the
Reading of Statutes, 47 Colum. L. Rev. 527, 537
(1947).
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(emphasis added). The application of
the term ‘‘practices’’ must be confined
within the regulated transportation
world of common carriage, its
specialized lexicon and its association
with various words including ‘‘rates,’’
‘‘charges,’’ and ‘‘tariffs.’’ 51
(5) In Atlantic Cleaners & Dryers, Inc.
v. United States, 286 U.S. 427 (1932),
the U.S. Supreme Court framed the
Presumption of Consistent Usage Canon
as follows, ‘‘[t]here is a natural
presumption that identical words used
in different parts of the same act are
intended to have the same meaning. Id.
at 433 (emphasis added). In the 1984
Act, Congress used the term ‘‘practice’’
or ‘‘practices’’ eight times in three
different sections of the new legislation:
Section 5 (Agreements); section 8
(Tariffs); and section 10 (Prohibited
Acts). These usages of ‘‘practice’’ are in
complete harmony with the original
1910 Mann-Elkins Act and the original
section 17 of the 1916 Act’s usage of
‘‘practices’’ referenced above.52
(6) The Whole-Text Canon requires
that the entire statutory structure,
statutory scheme and analysis must be
considered. In K Mart Corp. v. Cartier,
Inc., 486 U.S. 281 (1988), the U.S.
Supreme Court expressed the WholeText Canon as follows, ‘‘In ascertaining
the plain meaning of the statute, the
court must look to the particular
statutory language at issue, as well as
the language and design of the statute as
a whole.’’ Id. at 291. The Congressional
intent, overall context and statutory
mandate of the 1984 Shipping Act
makes clear that Congress wanted the
Commission to focus its regulatory
authority on ‘‘establish[ing] a
nondiscriminatory regulatory process
for the common carriage of goods by
water . . .’’ 53 and on maritime
activities that: Result in substantial
reduction in competition and are
detrimental to commerce. In the 1998
amendments, Congress injected
additional competitive market-driven
provisions into the Shipping Act of
1984.54
(7) The Gruenberg-Reisner decision,
supra, also discusses the relevant
application of the negative implication
canon and the presumption against
51 For a more detailed discussion of the
Associated Word Canon, see Gruenberg-Reisner v.
Respondent Overseas Moving Specialist, 34 S.R.R.
613, 645 (FMC 2016).
52 For a more detailed discussion of the
Presumption of Consistent Usage Canon, see
Gruenberg-Reisner v. Respondent Overseas Moving
Specialist, 34 S.R.R. 613, 642–643 (FMC 2016).
53 See 46 U.S.C. 40101.
54 For a more detailed discussion of the Whole
Text Canon, see Gruenberg-Reisner v. Respondent
Overseas Moving Specialist, 34 S.R.R. 613, 644
(FMC 2016).
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extraterritorial application canon. Last,
Gruenberg-Reisner also discusses the
duty of federal agencies to observe and
adhere to the doctrine of stare decisis.55
D. Remedies
The Commission is aware that
modifying the application of recent
§ 41102(c) cases may pare back
complainants’ ability in some factual
circumstances to claim a Shipping Act
violation and thus seek redress before
the Commission when they are harmed
by an act or omission of a regulated
entity. However, § 41102(c) was not
designed to be the universal panacea for
each and every problem or grievance
that arises in the maritime realm of
receiving, handling, storing, or
delivering property. To interpret the
Shipping Act as duplicative of every
other statutory and common law
maritime remedy would frustrate
Congressional intent in enacting
different statutory schemes and
undermine the purpose of the Shipping
Act.
In A.N. Deringer, Inc. v. Marlin
Marine Services, Inc., 25 S.R.R. 1273,
1276, 1277 (SO 1990), a post 1984 case
that followed the Altieri, Intercoastal
Investigation, Stockton Elevators,
European Trade Specialists line of
precedent in a case considering what is
now § 41102(c), the Settlement Officer
addressed the effect of an overly broad
interpretation of section 10(d)(1) on
other maritime statutes, such as the
Carriage of Goods by Sea Act
(COGSA).56 COGSA is the United States
enactment of the international
convention commonly referred to as the
Hague Rules. This treaty was intended
55 See Motor Vehicle Mfrs. Ass’n v. State Farm
Insurance, 463 U.S. 29 (1983). ‘‘[A]n agency
changing its course . . . is obligated to supply a
reasoned analysis for the change . . . .’’ Id. at 42.
The Commission’s case law affirmed this obligation
in Harrington & Co. v. Georgia Ports Authority, 23
S.R.R. 753 (ALJ 1986), where the Commission held,
‘‘the decision to depart from precedent is not taken
lightly and requires compelling reasons . . . the
courts are emphatic in requiring agencies to follow
their precedents or explain with good reason why
they choose not to do so.’’ Id. at 766.
56 46 U.S.C. 3070, Public Law 109–304, 6(c), 120
Stat. 1516 (2006).
57 See Gilmore and Black, The Law of Admiralty,
(2d ed. 1975). ‘‘This compromise was so well
thought of that when, between 1921 and 1924,
representatives of the shipping world and of the
maritime nations sought by conference to arrive at
terms suitable for uniform worldwide treatment of
the shipper carrier relation under ocean bills of
lading, the ‘‘Hague Rules’’ which they adopted, first
as a set of clauses for voluntary inclusion in bills
of lading and then as a Convention to which the
adherence of maritime nations was invited,
embodied the Harter Act compromise in the main
outline. In 1936, the United States adhered to the
Convention, and Congress passed in
implementation the Carriage of Goods By Sea Act,
which with minor differences follows verbatim the
Hague Rules.’’ Id. at 144–145.
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to achieve a common set of international
rules for the handling of cargo damage
and loss claims.57 The Commission ALJ
acknowledged the status of COGSA with
the following Commission ruling:
As a last observation concerning the
comity between COGSA and the
Shipping Act, consider section 2 of the
Shipping Act’s Declaration of Policy
where Congress stated:
Commission.’’ 61 The Commission is
seeking public comment on whether
alternative avenues for redress would be
available should the Commission
choose to reinterpret § 41102(c).
It is clear that COGSA was enacted to
clarify the responsibilities as well as the
rights and immunities of carriers and ships
with respect to loss and damage claims.
Consequently, the use of the Shipping Act of
1984 to circumvent COGSA provisions
would constitute a wholly unwarranted
frustration of Congressional intent.
Furthermore, some of the logical conclusions
of such a step would be absurd. For example,
COGSA provides a one-year period for the
filing of suit; after that period, a claim is time
barred. To accept Deringer’s premise, one
would have to conclude that a one-year
period exists during which a claimant may
file suit, but two additional years exist in
which to file with the FMC. Inasmuch as
COGSA stipulates that the carrier and ship,
in the absence of a suit, are discharged from
liability after one year, such a conclusion is
unacceptable.
The purposes of this Act are . . . (2) to
provide an efficient and economic
transportation system in the ocean commerce
of the United States that is, insofar as
possible, in harmony with, and responsive to,
international shipping practices . . .59
IV. Conclusion
Id. at 1277 (footnotes omitted).58
As a further note on the discordant
conflict between COGSA and the
Commission’s current usage of section
10(d)(1) of the Shipping Act, consider
that COGSA provides for a limitation of
liability scheme, including a cargo
valuation cap of $500 per customary
freight unit unless the shipper declares
a higher cargo value. As the A.N.
Deringer decision noted, a claimant
could wait for 366 days and then file its
claim at the Commission under section
10(d)(1) and thereby avoid any COGSA
limitations on the value of its cargo loss.
This proffer of a conflict between
section 10(d)(1) and COGSA is not
speculation or a mere hypothetical. In
the Commission’s Kobel decision, supra,
Respondent Hapag-Lloyd, the ocean
vessel common carrier, was found to
have violated section 10(d)(1) by virtue
of damaging the Claimant’s container
during the loading process and then
subsequently placing that damaged
container on a later Hapag-Lloyd ship.
The Commission then held that HapagLloyd was; however, not liable for
reparations because the damage to the
container was not the proximate cause
of the losses to the cargo. If the damaged
container had allowed for water
inundation with resulting cargo damage,
then all legal elements would have been
presented for an award to Claimants by
virtue of the section 10(d)(1) violation.
58 In addition, with any COGSA litigation, the
parties pay their own legal fees. Under a recent
amendment to the 1984 Act in Title IV of the
Howard Coble Coast Guard and Maritime
Transportation Act of 2014, Public Law 113–281
enacted on December 18, 2014, the prevailing party
in Shipping Act claims wins full reparation and
may be awarded attorney fees.
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As the Commission looks for guidance
on Congressional intent concerning the
scope, applicability, and proper
interpretation of section 10(d)(1) and its
relationship to the COGSA/Hague Rules,
we find here a clear affirmative
Congressional statement that directs the
Commission to harmonize the Shipping
Act with international shipping
practices. The Hague Rules, as adopted
by Congress, provide for a single
internationally accepted set of rules for
the treatment of the shipper-carrier
relation under ocean bills of lading. An
interpretation of the Shipping Act’s
section 10(d)(1) that provides for an
alternative legal remedy for a cargo
claim in the United States would create
diametrical discord to this area of law.
Returning the Commission’s
interpretation to its proper statutory
purpose and scope will not leave
claimants without remedy. Claimants
would have full and adequate remedies
under numerous legal proscriptions
including common law, state statutes,
admiralty law, and other federal
statutes. Such claims should be
presented to proper courts of common
pleas. The Commission notes that other
provisions or regulations of the
Shipping Act could also provide
remedy.60 The Commission also notes
that bringing actions in traditional
venues, such as state and federal courts,
may be appropriate. Matters that may
now be brought under § 41102(c) could
also potentially be adjudicated as
matters of contract law, agency law, or
admiralty law. In cases prior to Kobel,
it has been noted that remedy could
have been sought in other venues. In
Adair v. Penn-Nordic Lines, Inc., 26
S.R.R. 11 (ALJ 1991), the ALJ noted that
the relevant conduct ‘‘would
undoubtedly have contravened other
standards of law under principles of
contract and common carrier law
applicable in courts of law and quite
possibly Mr. Adair could have obtained
relief . . . in a court of law or perhaps
admiralty rather than before this
59 46
U.S.C. 40101(2) (emphasis added).
Total Fitness Equipment, Inc. d/b/a/
Professional Gym v. Worldlink Logistics, Inc., 28
S.R.R. 45 (ID 1997); Brewer v. Maralan, 29 S.R.R.
6 (FMC 2001).
60 See
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The Commission believes that the
interpretation and application of
§ 41102(c) should be properly aligned
with the broader common carriage
foundation and purposes of the Act. The
interpretive rule is consistent with the
purposes of the Shipping Act and
focuses Commission activities on
regulated entities who abuse the
maritime shipping public by imposing
unjust and unreasonable business
methods, and who do so on a normal,
customary, and continuous basis, and
thereby negatively impact maritime
transportation competition or inflict
detrimental effect upon the commerce of
the United States. This interpretation
reflects the clear intent of Congress and
reflects Commission precedent
articulated in Intercoastal Investigation,
Altieri, Stockton Elevators, European
Trade, and Deringer. Though the
Commission is aware that the
interpretive rule may redirect some
claims in certain fact situations from
being brought under the Shipping Act,
the Commission believes that existing
alternative avenues of redress are fully
sufficient to address those cases. The
Commission is therefore seeking
comment on the proposed
interpretation.
V. 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.
61 Adair,
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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
for which protection is sought and
demonstrates that the information is a
trade secret or other confidential
research, development, or commercial
information.
• A confidential copy of your
comments, consisting of the complete
filing with a cover page marked
‘‘Confidential-Restricted,’’ and the
confidential material clearly marked on
each page. You should submit the
confidential copy to the Commission by
mail.
• A public version of your comments
with the confidential information
excluded. The public version must state
‘‘Public Version—confidential materials
excluded’’ on the cover page and on
each affected page, and must clearly
indicate any information withheld. You
may submit the public version to the
Commission by email or mail.
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.
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.
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VI. Rulemaking Analyses
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. 5 U.S.C.
603. An agency is not required to
publish an IRFA, however, for the
following types of rules, which are
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excluded from the APA’s notice-andcomment requirement: Interpretative
rules; general statements of policy; rules
of agency organization, procedure, or
practice; and rules for which the agency
for good cause finds that notice and
comment is impracticable, unnecessary,
or contrary to public interest. See 5
U.S.C. 553(b).
Although the Commission has elected
to seek public comment on this
proposed rule, the rule is an
interpretative rule. Therefore, the APA
does not require publication of a notice
of proposed rulemaking in this instance,
and the Commission is not required to
prepare an IRFA.
Regulation Identifier Number
National Environmental Policy Act
Antitrust, Exports, Freight forwarders,
Maritime carriers, Non-vessel-operating
common carriers, Ocean transportation
intermediaries, Licensing requirements,
Financial responsibility requirements,
Reporting and recordkeeping
requirements.
The Commission’s regulations
categorically exclude certain
rulemakings from any requirement to
prepare an environmental assessment or
an environmental impact statement
because they do not increase or decrease
air, water or noise pollution or the use
of fossil fuels, recyclables, or energy. 46
CFR 504.4. The proposed rule describes
the Commission’s proposed
interpretation of the scope of 46 U.S.C.
41102(c) and the elements necessary for
a successful claim for reparations under
that section. This rulemaking thus falls
within the categorical exclusion for
matters related solely to the issue of
Commission jurisdiction and the
exclusion for investigatory and
adjudicatory proceedings to ascertain
past violations of the Shipping Act. See
46 CFR 504.4(a)(20), (22). Therefore, no
environmental assessment or
environmental impact statement is
required.
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. This
proposed rule does not contain any
collections of information as defined by
44. U.S.C. 3502(3) and 5 CFR 1320.3(c).
Executive Order 12988 (Civil Justice
Reform)
This rule meets the applicable
standards in E.O. 12988 titled, ‘‘Civil
Justice Reform,’’ to minimize litigation,
eliminate ambiguity, and reduce
burden.
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The Commission assigns a regulation
identifier number (RIN) to each
regulatory action listed in the Unified
Agenda of Federal Regulatory and
Deregulatory Actions (Unified Agenda).
The Regulatory Information Service
Center publishes the Unified Agenda in
April and October of each year. You
may use the RIN contained in the
heading at the beginning of this
document to find this action in the
Unified Agenda, available at https://
www.reginfo.gov/public/do/
eAgendaMain.
List of Subjects in 46 CFR Part 545
For the reasons set forth above, the
Federal Maritime Commission proposes
to amend 46 CFR part 545 as follows:
PART 545—INTERPRETATIONS AND
STATEMENTS OF POLICY
1. The authority citation for part 545
continues to read as follows:
■
Authority: 5 U.S.C. 553; 46 U.S.C. 305,
40307, 40501–40503, 41101–41106, and
40901–40904; 46 CFR 515.23.
■
2. Add § 545.4 to read as follows:
§ 545.4 Interpretation of Shipping Act of
1984–Unjust and unreasonable practices.
46 U.S.C. 41102(c) is interpreted to
require the following elements in order
to establish a successful claim for
reparations:
(a) The respondent is an ocean
common carrier, marine terminal
operator, or ocean transportation
intermediary;
(b) The claimed acts or omissions of
the regulated entity are occurring on a
normal, customary, and continuous
basis;
(c) The practice or regulation relates
to or is connected with receiving,
handling, storing, or delivering
property;
(d) The practice or regulation is unjust
or unreasonable; and
(e) The practice or regulation is the
proximate cause of the claimed loss.
By the Commission.
Rachel Dickon,
Secretary.
[FR Doc. 2018–19328 Filed 9–6–18; 8:45 am]
BILLING CODE 6731–AA–P
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[Federal Register Volume 83, Number 174 (Friday, September 7, 2018)]
[Proposed Rules]
[Pages 45367-45373]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-19328]
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FEDERAL MARITIME COMMISSION
46 CFR Part 545
[Docket No. 18-06]
RIN 3072-AC71
Interpretive Rule, Shipping Act of 1984
AGENCY: Federal Maritime Commission.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Federal Maritime Commission (FMC or Commission) is seeking
public comment on its interpretation of the scope of the Shipping Act
prohibition against failing to establish, observe, and enforce just and
reasonable regulations and practices relating to or connected with
receiving, handling, storing, or delivering property. Specifically, the
Commission is clarifying that the proper scope of that prohibition in
the Shipping Act of 1984 and the conduct covered by it is guided by the
Commission's interpretation and precedent articulated in several
earlier Commission cases, which require that a regulated entity engage
in a practice or regulation on a normal, customary, and continuous
basis and that such practice or regulation is unjust or unreasonable in
order to violate that section of the Shipping Act.
DATES: Submit comments on or before: October 10, 2018.
ADDRESSES: You may submit comments, identified by the Docket No. 18-06
by the following methods:
Email: [email protected]. Include in the subject line:
``Docket 18-06, Interpretive Rule Comments.'' Comments should be
attached to the email as a Microsoft Word or text-searchable PDF
document. Only non-confidential and public versions of confidential
comments should be submitted by email.
Mail: Rachel E. Dickon, Secretary, Federal Maritime
Commission, 800 North Capitol Street NW, Washington, DC 20573-0001.
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 website, 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: https://www.fmc.gov/18-06, or to the Docket Activity
Library at 800 North Capitol Street NW, Washington, DC 20573, 9:00 a.m.
to 5:00 p.m., Monday through Friday, except Federal holidays.
Telephone: (202) 523-5725.
FOR FURTHER INFORMATION CONTACT: Rachel E. Dickon, Secretary; Phone:
(202) 523-5725; Email: [email protected].
SUPPLEMENTARY INFORMATION:
I. Executive Summary
The Federal Maritime Commission is issuing this notice to obtain
public comments on clarification and guidance regarding the
Commission's interpretation of the scope of 46 U.S.C. 41102(c) (section
10(d)(1) of the Shipping Act of 1984).\1\ Section 41102(c) provides
that regulated entities ``may not fail to establish, observe, and
enforce just and reasonable regulations and practices relating to or
connected with receiving, handling, storing, or delivering property.''
\2\
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\1\ Some authorities cited herein refer to Sec. 41102(c) while
others refer to section 10(d)(1). For ease of reading, we will
generally refer to Sec. 41102(c) in analyzing these authorities.
\2\ 46 U.S.C. 41102(c).
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Beginning with the Houben \3\ decision in 2010 and presented in
full in the Commission's 2013 decision in Kobel v. Hapag-Lloyd, the
Commission has held in a line of recent cases that discrete conduct
with respect to a particular shipment, if determined to be unjust or
unreasonable, represents a violation of Sec. 41102(c), regardless of
whether that conduct represents a respondent's practice or
regulation.\4\ These decisions diverge from consistent Commission
precedent dating back to 1935 and reaffirmed as recently as 2001 which
required that a regulated entity must engage in a practice or
regulation on a normal, customary, and continuous basis in order to be
found to have violated Sec. 41102(c) of the Shipping Act. In simple
summary, discrete or
[[Page 45368]]
occasional actions by regulated entities not reflecting a practice or
regulation would not constitute a violation of Sec. 41102(c).
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\3\ Houben v. World Moving Services, Inc., 31 S.R.R. 1400 (FMC
2010).
\4\ Kobel v. Hapag-Lloyd A.G., 32 S.R.R. 1720, 1731 (2013)
(``The allegation that a single failure to ``observe or enforce''
just and reasonable regulations or practices is not a failure does
not comport with the language of section 10(d)(1), which mandates
regulated entities not to `fail to . . . observe and enforce' just
and reasonable regulations and practices.'').
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Specifically, the Commission is considering an interpretive rule
consistent with Commission precedent articulated in cases including
Intercoastal Investigation,\5\ Altieri,\6\ Stockton Elevators,\7\
European Trade,\8\ A.N. Deringer,\9\ and Kamara \10\ that would restore
the scope of Sec. 41102(c) to prohibiting unjust and unreasonable
practices and regulations. These decisions require that a regulated
entity engage in a practice or regulation on a normal, customary, and
continuous basis and a finding that such practice or regulation is
unjust or unreasonable to violate that section of the Shipping Act. The
Commission believes that this represents the proper interpretation of
the statutory language of the provision that, within the full context
of the 1916 Act and the 1984 Act, is consistent with statutory and
legislative history, judicial precedent and Commission case law
embodied in cases such as Stockton Elevators, and comports with
accepted rules of statutory construction.
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\5\ Intercoastal Investigation, 1935, 1 U.S.S.B.B. 400 (1935).
\6\ J.M. Altieri v. Puerto Rico Ports Authority, 7 F.M.C. 416
(ALJ 1962).
\7\ Investigation of Certain Practices of Stockton Elevators, 3
S.R.R. 605 (FMC 1964).
\8\ European Trade Specialists v. Prudential-Grace Lines, 19
S.R.R. 59, 63 (FMC 1979).
\9\ A.N. Deringer, Inc. v. Marlin Marine Services, Inc., 25
S.R.R. 1273 (SO 1990).
\10\ Kamara v. Honesty Shipping Service, 29 S.R.R. 321 (ALJ
2001).
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This interpretation restores Sec. 41102(c) to its proper function
and purpose under the Shipping Act of 1984 and will return the
Commission's focus and priorities to the activities of maritime
regulated entities that negatively affect the broader shipping public--
all as intended by Congress in its enactment of the 1916 Act and the
1984 Act. Recognizing that this interpretation would prune and pare
back the types of recent claims that have been be filed with the
Commission to those related to the purposes of the Shipping Act's Sec.
41102(c), traditional legal venues will continue to be available to
parties injured by discrete instances of unreasonable or unjust conduct
consistent with long established maritime actions and other statutes
specifically enacted by Congress, and long recognized common law
remedies, all designed to address such circumstances.
We are seeking comment on this refocus of Sec. 41102(c), how such
an interpretation would affect regulated entities including ocean
carriers, marine terminal operators (MTOs), and ocean transportation
intermediaries (OTIs), as well as members of the shipping public,
including cargo shippers and drayage truckers, and whether claims that
would no longer fall under Sec. 41102(c) under the contemplated
interpretation would be adequately resolved before the Commission under
other sections of the Act or in other legal dispute venues. The
interpretation would take the form of an interpretive rule codified in
46 CFR part 545. The language of the proposed rule is set forth below.
II. Background
A. Statutory Language and Legislative History
Congress first used the statutory language addressing the legal
duty of transportation common carriers to ``establish, observe, and
enforce just and reasonable . . . regulations and practices . . .
affecting [cargo] classification, rates, or tariffs . . . [and] the
manner and method of presenting, marking, packing, and delivering
property for transportation . . .'' in the 1910 Mann-Elkins Act
amendment (Mann-Elkins) \11\ to the Interstate Commerce Act (ICA).\12\
The Mann-Elkins language clearly focused on the operating and business
practices of railroads as commonly used and imposed upon passengers and
cargo shippers. This fundamental common carrier duty is the
foundational cornerstone of the ICA legislation, its statutory purpose,
and its proper interpretation.
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\11\ Mann-Elkins Act, 61st Congress, 2nd session, Ch. 309, 36
Stat. 539, enacted June 18, 1910.
\12\ The Interstate Commerce Act of 1887, Ch. 104, 24 Stat 379
(1887).
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The provenance of the statutory language and its inclusion six
years later in the Shipping Act of 1916 (1916 Act) \13\ has been
recognized by the courts. In United States Navigation Co. v. Cunard
S.S. Co. Ltd. 284 U.S. 474 (1932), the U.S. Supreme Court tied a firm
knot binding the ICA and the 1916 Act where the court gave a general
review of various sections of the 1916 Act, including section 17 \14\
and held that, ``[t]hese and other provisions of the Shipping Act
clearly exhibit the close parallelism between the act and its
prototype, the ICA, and the applicability both of the principals of
construction and administration.'' \15\
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\13\ The Shipping Act of 1916, Sept. 7, 1916, Ch. 451, 39 Stat.
728.
\14\ Section 17 is the origin of section 10(d)(1), as discussed
infra.
\15\ Id. at 484.
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As the enactment of the 1916 Act demonstrates, together with the
use of identical language in other federal statutes,\16\ Congress fully
understood what it was doing in using the phrase ``establish, observe,
and enforce just and reasonable regulations and practices''--and what
those words meant.\17\
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\16\ For example, the Packers and Stockyards Act of 1921, which
was enacted to maintain competition in the livestock industry. The
Act bans discrimination, manipulation of price, weight, livestock or
carcasses; commercial bribery; misrepresentation of source,
condition, or quality of livestock; and other unfair or manipulative
practices. Section 208 of the Packers and Stockyards Act of 1921
provides that, ``[i]t shall be the duty of every stockyard owner and
market agency to establish, observe, and enforce just, reasonable
and nondiscriminatory regulations and practices in respect to the
furnishing of stockyard services.'' 7 U.S.C. 208.
\17\ For a more detailed discussion of the legislative history
of this statutory language, see Gruenberg-Reisner v. Respondent
Overseas Moving Specialist, 34 S.R.R. 613, 638-644 (FMC 2016).
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Section 41102(c) of the 1984 Act originates from section 17 of the
1916 Act. Section 17 was commonly divided into two parts and referred
to as ``section 17, first paragraph'' and ``section 17, second
paragraph.'' The first paragraph addressed unjustly discriminatory
rates charged to shippers while the second paragraph addressed just and
reasonable practices by carriers and other persons subject to the Act.
The second paragraph of section 17 reads as follows:
Every such carrier and every other person subject to this act
shall establish, observe, and enforce just and reasonable
regulations and practices relating to or connected with the
receiving, handling, storing, or delivering of property. Whenever
the Board finds any such regulation or practice is unjust or
unreasonable it may determine, prescribe, and order enforced a just
and reasonable regulation or practice.
Public Law 64-260 Sec. 17 (1916) (emphasis added).\18\
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\18\ The two separate provisions of section 17 of the Shipping
Act are commonly referred to as ``section 17, first paragraph'' and
``section 17, second paragraph.''
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As a part of the general transportation deregulatory reform trends
in the 1970's through 1990's,\19\ Congress eliminated the sentence
regarding the Commission's authority to prescribe or order regulations
or practices in the 1984 Act. Congress, however, reenacted the first
sentence of section 17's second paragraph and placed that provision in
section 10(d)(1), which, following the 2006 recodification of the 1984
Act, became 46 U.S.C. 41102(c). That language from section 17, second
[[Page 45369]]
paragraph, first sentence, requiring that no regulated entity may fail
to establish, observe, and enforce just and reasonable regulations and
practices relating to or connected with the receiving, handling,
storing, or delivery of property--is now found in Sec. 41102(c) of the
1984 Act.
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\19\ See the Railroad Revitalization and Regulatory Reform Act
of 1976, Public Law 94-210; Staggers Act of 1980, Public Law 96-448;
Motor Carrier Act of 1990, Public Law 96-296; Airline Deregulation
Act, Public Law 95-504; and the Interstate Commerce Commission
Termination Act of 1995, Public Law 104-88.
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Having a long legislative provenance, Congress used the word
``practice'' and the full phrase, ``establish, observe, and enforce
just and reasonable regulations and practices,'' in both the original
1916 Act and in section 10(d)(1) of the 1984 Act, now Sec. 41102(c),
in a particular way and in a context that was clear to the drafters, to
the Commission, and to the reviewing courts.
B. Judicial Precedent
In Baltimore & Ohio Railroad Company v. United States, 277 U.S. 291
(1923), the U.S. Supreme Court considered the question of what
constituted a ``practice'' within the contemplation of Congress in the
Interstate Commerce Act:
The word ``practice'', considered generally and without regard
to context, is not capable of useful construction. If broadly used,
it would cover everything carriers are accustomed to do. Its meaning
varies so widely and depends so much upon the connection in which it
is used that Congress will be deemed to have intended to confine its
application to acts or things belonging to the same general class as
those meant by the words associated with it.
Id. at 299-300 (citation omitted) (emphasis added).
The Interstate Commerce Commission (ICC), the United States
Shipping Board (USSB) (the agency created by Congress in the 1916 Act),
its successor agencies, and the currently constituted Commission,\20\
together with state and federal courts have consistently ruled that
``practice'' means; (1) the acts/omissions of the regulated common
carrier that were positively established by the regulated common
carrier and imposed on the passenger/cargo interest, and (2) such act/
omission was the normal,\21\ customary, often repeated,\22\
systematic,\23\ uniform,\24\ habitual,\25\ and continuous manner \26\
(hereinafter ``Normal, Customary & Continuous'') in which the regulated
common carrier was conducting business.
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\20\ The United States Shipping Board (USSB) was succeeded in
1933 by the United States Shipping Board Bureau of the Department of
Commerce (USSBB), Executive Order No. 6166 (1933). The USSBB was
succeeded in 1936 by the United States Maritime Commission (USMC),
49 Stat. 1985. In 1950, the USMC was succeeded by the Federal
Maritime Board (FMB), 64 Stat.1273. The FMC was established as an
independent regulatory agency by Reorganization Plan No. 7,
effective August 12, 1961. The U.S. Supreme Court treated the FMC
and all predecessor agencies as the ``Commission'' for purposes of
judicial review. See Volkswagenwerk v. Federal Maritime Commission,
390 U.S. 261, 269 (1968).
\21\ See European Trade Specialists v. Prudential-Grace Lines,
19 S.R.R. 59, 63 (FMC 1979). (Unless its normal practice was not to
so notify the shipper, such adverse treatment cannot be found to
violate the section as a matter of law [emphasis in original].''
\22\ See Intercoastal Investigation, 1935, 1 U.S.S.B.B. 400,
432. (``Owing to its wide and variable connotations, a practice
which unless restricted ordinarily means an often and customary
action, is deemed to acts or things belonging to the same class as
those meant by the words of the law that are associated with it.''
[cites omitted] [emphasis added].
\23\ See Whitam v. Chicago, R.I. & P. Ry. Co., 66 F. Supp. 1014
(ND TX 1946) (``The word `a practice' as used in the decision, or
used anywhere properly, implies systematic doing of the acts
complained of, and usually as applied to carriers and shippers
generally.'' (emphasis added).''
\24\ See Stockton Elevators, 3 S.R.R. 605, 618 (FMC 1964). (``It
cannot be found that the Elevator engaged in a `practice' within the
meaning of Section 17. The essence of a practice is uniformity. It
is something habitually performed and it implies continuity . . .
the usual course of conduct. It is not an occasional transaction
such as here shown. Intercoastal Investigation, 1935, 1 U.S.S.B.B.
400, 432; B&O By. Co. v. United States 277 U.S. 291, 300,
Francesconi & Co. v. B&O Ry. Co., 274 F. 687, 690; Whitham v.
Chicago R.I. & P. Ry. Co., 66 F. Supp. 1014; Wells Lamont Corp. v.
Bowles, 149 F.2d 364 (emphasis added). See also, McClure v.
Blackshere, F. Supp. 678, 682 (D. Md. 1964) (`` `Practice'
ordinarily implied uniformity and continuity, and does not denote a
few isolated acts, and uniformity and universality, general
notoriety and acquiescence, must characterize the actions on which a
practice is predicated.'' (citations omitted) (emphasis added)).
\25\ See Stockton Elevators, 3 S.R.R. 605, 618 (FMC 1964). (``It
cannot be found that the Elevator engaged in a `practice' within the
meaning of Section 17. . . . It is something habitually performed
and it implies continuity . . . the usual course of conduct.''
(citations omitted) (emphasis added)).
\26\ See Stockton Elevators, 3 S.R.R. 605, 618 (FMC 1964). (``It
cannot be found that the Elevator engaged in a `practice' within the
meaning of Section 17. . . . It is something habitually performed
and it implies continuity . . . .'' (citations omitted) (emphasis
added)). See also, McClure v. Blackshere, F. Supp. 678, 682 (D. Md.
1964) (`` `Practice' ordinarily implied uniformity and continuity,
and does not denote a few isolated acts, and uniformity and
universality, general notoriety and acquiescence, must characterize
the actions on which a practice is predicated.'' (citations omitted)
(emphasis added)).
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The USSBB, a predecessor to the Commission, considered the term
``practice'' as used in the 1916 Act in Intercoastal Investigation,
1935, 1 FMC 400 (1935), an investigation that covered sixteen years of
steam ship conference activities. The USSBB held:
The provisions of the Shipping Act, 1916, also apply to these
respondents. It is there provided . . . that carriers shall
establish, observe, and enforce just and reasonable rates, charges,
(cargo) classifications, and tariffs and just and reasonable
regulations and practices related thereto . . .The terms ``rates'',
``charges'', ``tariffs'', and ``practices'' as used in
transportation have received judicial interpretation . . . Owing to
its wide and variable connotation, a practice, which unless
restricted ordinarily means an often repeated and customary action,
is deemed to apply only to acts or things belonging to the class as
those meant by the words of the law that are associated with it . .
. In section 18, the term ``practices'' is associated with various
words, including ``rates'', ``charges'', and ``tariffs''.
Id. at 431-432 (emphasis added).\27\
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\27\ Intercoastal Investigations cited two ICA railroad cases as
authority. See Baltimore & Ohio Railroad Company v. United States,
277 U.S. 291 (1923) and Missouri Pacific R. Co. v. Norwood, 283 U.S.
249, 257 (1931).
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Prior to the 1984 Act, Commission decisions analyzing situations
that involved discrete conduct focused on the meaning of the word
``practice'' and determined that conduct that did not reflect a
practice was outside the scope of the first sentence of the second
paragraph of section 17. In Altieri, Stockton Elevators, and European
Trade Specialists, A.N. Deringer, Kamara, and other cases \28\ the
Commission used the term ``practice'' in a consistent manner for all
the places it appears in the Shipping Act.
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\28\ A series of cases alleging section 10(d)(1) violations has
established that a complainant must demonstrate regulations and
practices, as opposed to identifying what might be an isolated error
or understandable misfortune. See, e.g., Informal Docket No.
1745(I), Mrs. Susanne Brunner v. OMS Moving Inc., slip decision
served January 27, 1994, administratively final March 8, 1994.
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In Stockton Elevators, which was later adopted by the Commission in
its entirety, the FMC's Presiding Examiner found that a violation did
not occur because of the infrequency of the relevant actions. According
to that decision, a practice is something that, ``is habitually
performed and implies continuity . . . not an occasional transaction
such as here shown.'' \29\ The Presiding Examiner found the
respondent's actions to be occasional transactions and not a
``practice'' because they were not the ``usual course of conduct'' and
so not a violation of section 17.\30\
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\29\ Investigation of Certain Practices of Stockton Elevators, 8
F.M.C. 187, 200-201 (Examiner 1964).
\30\ Id.
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Similarly, in European Trade Specialists, Inc. v. Prudential-Grace
Lines, Inc., the ALJ specifically noted, ``[a] `practice' unless the
term is in some way restricted by decision or statute, means ``an often
repeated and customary action.'' \31\ There, the ALJ was considering if
an alleged failure to notify a shipper of a dispute on the applicable
tariff rate violated section 17 of the 1916 Act. The ALJ found that in
examining the record, the respondent's normal practice was to notify
shippers
[[Page 45370]]
of problems and this case involved the allegation of a single departure
from that practice which was otherwise just and reasonable. Regardless
of the unjustness or unreasonableness of the respondent's failure to
notify the shipper, such action did not represent a practice and thus
there could be no section 17 violation.
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\31\ 17 S.R.R. 1351, 1361 (ALJ 1977).
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In Kamara v. Honesty Shipping Service, 29 S.R.R. 321 (ALJ 2001),
the ALJ held that, ``It is not clear that a carrier's simple failure to
remit payment to a subcontracting carrier constitutes a Shipping Act
violation, although the shipper would certainly have a commercial
contractual claim.
These cases addressing Section 10(d)(1) violations correctly hold
that a complainant must demonstrate regulations and practices and
articulates the correct scope and interpretation of Sec. 41102(c).
This precedent stands in stark contrast to recent Commission decisions
that adopted a far more expansive interpretation of the conduct covered
by Sec. 41102(c) untethered to the language of the statute, the
legislative history, Commission precedent, or, most importantly, the
purpose of the Shipping Act to address common carrier duties.\32\
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\32\ See Adair v. Penn-Nordic Lines, Inc., 26 S.R.R. 11 (ALJ
1991); Tractors & Farm Equip. Ltd v. Cosmos Shipping Co., Inc., 26
S.R.R. 788 (ALJ 1992); Houben v. World Moving Servs., Inc., 31
S.R.R. 1400 (FMC 2010).
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In the 2013 Kobel decision, the Commission charted a different
course by disjoining the statute's conjunctive language of ``establish,
observe, and enforce'' and specifically identified that Sec. 41102(c)
contains three discrete prohibitions: (1) A prohibition against failing
to establish just and reasonable regulations and practices; (2) a
prohibition against failing to observe just and reasonable regulations
and practices; and (3) a prohibition against failing to enforce just
and reasonable regulations.\33\ Since Kobel, the Commission has
interpreted section Sec. 41102(c) to mean that a single failure to
fulfill a single legal obligation of any description itself could
constitute a violation of Sec. 41102(c).'' \34\
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\33\ Kobel, 32 S.R.R. at 1735.
\34\ See, e.g., Bimsha Int'l v. Chief Cargo Servs., 32 S.R.R.
1861, 1865 (FMC 2013) (``NVOCCs violate [Sec. 41102(c)] when they
fail to fulfill NVOCC obligations, through single or multiple
actions or mistakes, and therefore engage in an unjust and
unreasonable practice'' (emphasis added)).
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The Commission looked to a single rule of construction, the
surplusage cannon, to support its course change from prior Commission
and court rulings. That rule provides that, ``If possible, every word
and every provision is to be given effect.'' \35\ However, the
commentators offer two relevant notes of caution.
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\35\ Reading Law: The Interpretation of Legal Texts, Scalia and
Garner, 2012, pg. 174.
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First, in discussing the Principle of Interrelating Canons, they
advise, ``No canon of interpretation is absolute. Each may be overcome
by the strength of differing principles that point in other directions
. . . It is a rare case in which each side does not appeal to a
different canon to suggest its desired outcome.'' \36\ Second, in later
discussion of the surplusage canon, they note, ``If a provision is
susceptible of (1) a meaning that . . . deprives another provision of
all independent effect, and (2) another meaning that leaves both
provisions with some independent operation, the later should be
preferred . . . So, like all other canons, this one must be applied
with judgement and discretion, and with careful regard to context.''
\37\
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\36\ Id. at 59, emphasis in the original.
\37\ Id. at page 176, emphasis added.
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The Commission has, in these recent cases, strained to give
independent application of the elements, ``establish, observe, or
enforce'' but, in so doing, has deprived any operation of a discussion
or application of the alleged unjust or unreasonable practice or
regulation being inflicted upon the general shipping public. The
``context'' of Sec. 41102(c) itself within the Shipping Act and other
factors discussed below demonstrate the flaws in the Commission's
recent line of section 41102(c) decisions. Moreover, numerous other
canons of construction ``point in other directions,'' \38\ all as
discussed below.
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\38\ Id. at 59.
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It is this line of recent cases determining that a discrete failure
to observe and enforce an established just and reasonable regulation or
practice that the Commission seeks to reform in this rulemaking so as
to return the scope of Sec. 41102(c) to its proper role and purpose
within the Shipping Act. In the future, the Commission intends to
follow the reasoning in Intercoastal Investigation, Altieri, Stockton
Elevators, European Trade Specialists, Deringer, and Kamara which offer
precedent as to what properly applies the full meaning and purpose of
``establish, observe, and enforce just and reasonable regulations and
practices'' under the Shipping Act and a violation of Sec. 41102(c).
C. Rules of Statutory Construction
The precedent in Intercoastal Investigation, Altieri, Stockton
Elevators, European Trade Specialists, Deringer, and Kamara as to what
constitutes ``regulations and practice'' under the Shipping Act is
supported by and consistent with multiple accepted rules of statutory
construction. Proper consideration and application of numerous canons
of statutory construction demonstrates that Congress has spoken to the
issue at hand.\39\
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\39\ See Bell Atlantic Telephone Companies v. Federal
Communications Commission, 131 F.3d 1044, 1047 (D.C. Cir. 1997)
(``Context serves an especially important role in textual analysis
of a statute when Congress has not expressed itself as univocally as
might be wished.'').
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(1) The Syntactic Canon concerns grammar. Reviewing Sec. 41102(c),
the regulated entity is the subject of the sentence. The subject is
directed--i.e. do not fail to--then comes the active verbs--
``establish, observe, and enforce'' just and reasonable regulations and
practices. The regulated entity is ordered to, first, initiate the
creation, dissemination, and publication of such just and reasonable
regulations and practices, and simultaneously, to observe and enforce
those regulations and practices that were created by that regulated
entity.\40\
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\40\ For a fuller discussion of the Syntactic Canon, see
Gruenberg-Reisner v. Respondent Overseas Moving Specialist, 34
S.R.R. 613, 641 (FMC 2016).
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(2) The Ordinary Meaning Canon requires that the words of a statute
are to be taken in their natural and ordinary signification and
import.\41\ The judicial interpretation of the phrase ``practices'' by
multiple courts applying the Mann-Elkins Act, the 1916 Act, and other
statutes, all utilized the Ordinary Meaning Canon to find the meaning
of the term ``practice'' as intended by Congress.\42\ All came to a
reasoned conclusion that confirms the Commission's proposed
interpretation.\43\
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\41\ See, e.g., James Kent, Commentaries on American Law 432
(1826) (``The words of a statute are to be taken in their natural
and ordinary signification and import; and if technical words are
used, they are to be taken in a technical sense.'').
\42\ See Intercoastal Investigation, 1935, 1 U.S.S.B.B. 400
(1935); Whitam v. Chicago, R.I. & P. Ry. Co., 66 F. Supp. 1014 (N.D.
Tex. 1946); McClure v. Blackshere, 231 F. Supp. 678 (D. Md. 1964);
Stockton Elevators, 8 F.M.C. 187 (1964); and European Trade
Specialists, 19 S.R.R. 59 (FMC 1979).
\43\ For a fuller discussion of the Ordinary Meaning Canon, see
Gruenberg-Reisner v. Respondent Overseas Moving Specialist, 34
S.R.R. 613, 641-642 (FMC 2016).
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(3) The Prior-Construction Canon requires that ``[w]hen
administrative and judicial interpretations have settled the meaning of
an existing statutory provision, repetition of the same language in a
new statute indicates, as a general matter, the intent to incorporate
its administrative and
[[Page 45371]]
judicial interpretations as well.'' \44\ Congress used the same 1916
Shipping Act language in the new 1984 Act. The Commission's holdings in
Intercoastal Investigation, 1935, 1 U.S.S.B.B. 400 (1935), the case
law, including ICA federal court cases, cited therein as supporting
precedent,\45\ Altieri, \46\ Stockton Elevators,\47\ the case law,
including ICA federal court cases, cited therein as supporting
precedent, and European Trade \48\ was incorporated into the new
statute as well.\49\ Justice Felix Frankfurter expressed the maxim as
``if a word is obviously transplanted from a legal source, whether the
common law or other legislation, it brings the old soil with it.'' \50\
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\44\ Bragdon v. Abbott, 524 U.S. 624, 645 (1998) (emphasis
added).
\45\ Intercoastal at 432.
\46\ J.M. Altieri v. Puerto Rico Ports Authority, 7 F.M.C. 416
(ALJ 1962). ``If the action of respondent were one of a series of
such occurrences, a practice might be spelled out that would invoke
the coverage of section 17. Hecht, Levis and Kahn, Inc. v.
Isbrandtsen, Co., Inc., 3 F.M.B. 798 (1950). However, the action of
the respondent is an isolated or `one shot' occurrence. Complainant
has alleged and proved only the one instance of such conduct. It
cannot be found to be a `practice' within the meaning of the last
paragraph of section 17.'' Id. at 420 (emphasis in original).)
\47\ 3 S.R.R. at 618 (``It cannot be found that the Elevators
engaged in a `practice' within the meaning of section 17. The
essence of a practice is uniformity. It is something habitually
performed and it implies continuity . . . the usual course of
conduct. It is not an occasional transaction such as here shown.
Intercostal Investigation, 1935, 1. USSBB 400, 432; B&O Ry. Co., 274
F. 687, 690; Whitham v. Chicago R.I. & P. Ry. Co., 66 F. Supp. 1014;
Wells Lamont Corp. v. Bowles, 149 F.2d 364.'').
\48\ 19 S.R.R. at 63. (``Even assuming, without deciding, that
European was not notified of the classification and rating problem
we cannot say that such conduct by Hipage amounts to a violation of
Section 17. Unless its normal practice was not to so notify the
shipper, such adverse treatment cannot be found to violate the
section as a matter of law. Investigation of Certain Practices of
Stockton Elevators, 8 F.M.C. 181, 200 [3 S.R.R. 605] (1964).''
(emphasis in original)).
\49\ For a more detailed discussion of the Prior-Construction
Canon, see Gruenberg-Reisner v. Respondent Overseas Moving
Specialist, 34 S.R.R. 613, 647-649 (FMC 2016).
\50\ Felix Frankfurter, Some Reflections on the Reading of
Statutes, 47 Colum. L. Rev. 527, 537 (1947).
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(4) The Associated Words Canon of construction requires that
associated words bear on one another's meaning. In Intercoastal
Investigation, 1935, the United States Shipping Board considered the
term ``practice'' as used in the 1916 Act and determined that,
``[o]wing to its wide and variable connotation, a practice which unless
restricted ordinarily means an often repeated and customary action, is
deemed to apply only to acts or things belonging to the class as those
meant by the words of the law that are associated with it.'' 1
U.S.S.B.B. at 431-432 (emphasis added). The application of the term
``practices'' must be confined within the regulated transportation
world of common carriage, its specialized lexicon and its association
with various words including ``rates,'' ``charges,'' and ``tariffs.''
\51\
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\51\ For a more detailed discussion of the Associated Word
Canon, see Gruenberg-Reisner v. Respondent Overseas Moving
Specialist, 34 S.R.R. 613, 645 (FMC 2016).
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(5) In Atlantic Cleaners & Dryers, Inc. v. United States, 286 U.S.
427 (1932), the U.S. Supreme Court framed the Presumption of Consistent
Usage Canon as follows, ``[t]here is a natural presumption that
identical words used in different parts of the same act are intended to
have the same meaning. Id. at 433 (emphasis added). In the 1984 Act,
Congress used the term ``practice'' or ``practices'' eight times in
three different sections of the new legislation: Section 5
(Agreements); section 8 (Tariffs); and section 10 (Prohibited Acts).
These usages of ``practice'' are in complete harmony with the original
1910 Mann-Elkins Act and the original section 17 of the 1916 Act's
usage of ``practices'' referenced above.\52\
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\52\ For a more detailed discussion of the Presumption of
Consistent Usage Canon, see Gruenberg-Reisner v. Respondent Overseas
Moving Specialist, 34 S.R.R. 613, 642-643 (FMC 2016).
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(6) The Whole-Text Canon requires that the entire statutory
structure, statutory scheme and analysis must be considered. In K Mart
Corp. v. Cartier, Inc., 486 U.S. 281 (1988), the U.S. Supreme Court
expressed the Whole-Text Canon as follows, ``In ascertaining the plain
meaning of the statute, the court must look to the particular statutory
language at issue, as well as the language and design of the statute as
a whole.'' Id. at 291. The Congressional intent, overall context and
statutory mandate of the 1984 Shipping Act makes clear that Congress
wanted the Commission to focus its regulatory authority on
``establish[ing] a nondiscriminatory regulatory process for the common
carriage of goods by water . . .'' \53\ and on maritime activities
that: Result in substantial reduction in competition and are
detrimental to commerce. In the 1998 amendments, Congress injected
additional competitive market-driven provisions into the Shipping Act
of 1984.\54\
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\53\ See 46 U.S.C. 40101.
\54\ For a more detailed discussion of the Whole Text Canon, see
Gruenberg-Reisner v. Respondent Overseas Moving Specialist, 34
S.R.R. 613, 644 (FMC 2016).
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(7) The Gruenberg-Reisner decision, supra, also discusses the
relevant application of the negative implication canon and the
presumption against extraterritorial application canon. Last,
Gruenberg-Reisner also discusses the duty of federal agencies to
observe and adhere to the doctrine of stare decisis.\55\
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\55\ See Motor Vehicle Mfrs. Ass'n v. State Farm Insurance, 463
U.S. 29 (1983). ``[A]n agency changing its course . . . is obligated
to supply a reasoned analysis for the change . . . .'' Id. at 42.
The Commission's case law affirmed this obligation in Harrington &
Co. v. Georgia Ports Authority, 23 S.R.R. 753 (ALJ 1986), where the
Commission held, ``the decision to depart from precedent is not
taken lightly and requires compelling reasons . . . the courts are
emphatic in requiring agencies to follow their precedents or explain
with good reason why they choose not to do so.'' Id. at 766.
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D. Remedies
The Commission is aware that modifying the application of recent
Sec. 41102(c) cases may pare back complainants' ability in some
factual circumstances to claim a Shipping Act violation and thus seek
redress before the Commission when they are harmed by an act or
omission of a regulated entity. However, Sec. 41102(c) was not
designed to be the universal panacea for each and every problem or
grievance that arises in the maritime realm of receiving, handling,
storing, or delivering property. To interpret the Shipping Act as
duplicative of every other statutory and common law maritime remedy
would frustrate Congressional intent in enacting different statutory
schemes and undermine the purpose of the Shipping Act.
In A.N. Deringer, Inc. v. Marlin Marine Services, Inc., 25 S.R.R.
1273, 1276, 1277 (SO 1990), a post 1984 case that followed the Altieri,
Intercoastal Investigation, Stockton Elevators, European Trade
Specialists line of precedent in a case considering what is now Sec.
41102(c), the Settlement Officer addressed the effect of an overly
broad interpretation of section 10(d)(1) on other maritime statutes,
such as the Carriage of Goods by Sea Act (COGSA).\56\ COGSA is the
United States enactment of the international convention commonly
referred to as the Hague Rules. This treaty was intended
[[Page 45372]]
to achieve a common set of international rules for the handling of
cargo damage and loss claims.\57\ The Commission ALJ acknowledged the
status of COGSA with the following Commission ruling:
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\56\ 46 U.S.C. 3070, Public Law 109-304, 6(c), 120 Stat. 1516
(2006).
\57\ See Gilmore and Black, The Law of Admiralty, (2d ed. 1975).
``This compromise was so well thought of that when, between 1921 and
1924, representatives of the shipping world and of the maritime
nations sought by conference to arrive at terms suitable for uniform
worldwide treatment of the shipper carrier relation under ocean
bills of lading, the ``Hague Rules'' which they adopted, first as a
set of clauses for voluntary inclusion in bills of lading and then
as a Convention to which the adherence of maritime nations was
invited, embodied the Harter Act compromise in the main outline. In
1936, the United States adhered to the Convention, and Congress
passed in implementation the Carriage of Goods By Sea Act, which
with minor differences follows verbatim the Hague Rules.'' Id. at
144-145.
It is clear that COGSA was enacted to clarify the
responsibilities as well as the rights and immunities of carriers
and ships with respect to loss and damage claims. Consequently, the
use of the Shipping Act of 1984 to circumvent COGSA provisions would
constitute a wholly unwarranted frustration of Congressional intent.
Furthermore, some of the logical conclusions of such a step would be
absurd. For example, COGSA provides a one-year period for the filing
of suit; after that period, a claim is time barred. To accept
Deringer's premise, one would have to conclude that a one-year
period exists during which a claimant may file suit, but two
additional years exist in which to file with the FMC. Inasmuch as
COGSA stipulates that the carrier and ship, in the absence of a
suit, are discharged from liability after one year, such a
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conclusion is unacceptable.
Id. at 1277 (footnotes omitted).\58\
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\58\ In addition, with any COGSA litigation, the parties pay
their own legal fees. Under a recent amendment to the 1984 Act in
Title IV of the Howard Coble Coast Guard and Maritime Transportation
Act of 2014, Public Law 113-281 enacted on December 18, 2014, the
prevailing party in Shipping Act claims wins full reparation and may
be awarded attorney fees.
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As a further note on the discordant conflict between COGSA and the
Commission's current usage of section 10(d)(1) of the Shipping Act,
consider that COGSA provides for a limitation of liability scheme,
including a cargo valuation cap of $500 per customary freight unit
unless the shipper declares a higher cargo value. As the A.N. Deringer
decision noted, a claimant could wait for 366 days and then file its
claim at the Commission under section 10(d)(1) and thereby avoid any
COGSA limitations on the value of its cargo loss.
This proffer of a conflict between section 10(d)(1) and COGSA is
not speculation or a mere hypothetical. In the Commission's Kobel
decision, supra, Respondent Hapag-Lloyd, the ocean vessel common
carrier, was found to have violated section 10(d)(1) by virtue of
damaging the Claimant's container during the loading process and then
subsequently placing that damaged container on a later Hapag-Lloyd
ship. The Commission then held that Hapag-Lloyd was; however, not
liable for reparations because the damage to the container was not the
proximate cause of the losses to the cargo. If the damaged container
had allowed for water inundation with resulting cargo damage, then all
legal elements would have been presented for an award to Claimants by
virtue of the section 10(d)(1) violation.
As a last observation concerning the comity between COGSA and the
Shipping Act, consider section 2 of the Shipping Act's Declaration of
Policy where Congress stated:
The purposes of this Act are . . . (2) to provide an efficient
and economic transportation system in the ocean commerce of the
United States that is, insofar as possible, in harmony with, and
responsive to, international shipping practices . . .\59\
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\59\ 46 U.S.C. 40101(2) (emphasis added).
As the Commission looks for guidance on Congressional intent concerning
the scope, applicability, and proper interpretation of section 10(d)(1)
and its relationship to the COGSA/Hague Rules, we find here a clear
affirmative Congressional statement that directs the Commission to
harmonize the Shipping Act with international shipping practices. The
Hague Rules, as adopted by Congress, provide for a single
internationally accepted set of rules for the treatment of the shipper-
carrier relation under ocean bills of lading. An interpretation of the
Shipping Act's section 10(d)(1) that provides for an alternative legal
remedy for a cargo claim in the United States would create diametrical
discord to this area of law.
Returning the Commission's interpretation to its proper statutory
purpose and scope will not leave claimants without remedy. Claimants
would have full and adequate remedies under numerous legal
proscriptions including common law, state statutes, admiralty law, and
other federal statutes. Such claims should be presented to proper
courts of common pleas. The Commission notes that other provisions or
regulations of the Shipping Act could also provide remedy.\60\ The
Commission also notes that bringing actions in traditional venues, such
as state and federal courts, may be appropriate. Matters that may now
be brought under Sec. 41102(c) could also potentially be adjudicated
as matters of contract law, agency law, or admiralty law. In cases
prior to Kobel, it has been noted that remedy could have been sought in
other venues. In Adair v. Penn-Nordic Lines, Inc., 26 S.R.R. 11 (ALJ
1991), the ALJ noted that the relevant conduct ``would undoubtedly have
contravened other standards of law under principles of contract and
common carrier law applicable in courts of law and quite possibly Mr.
Adair could have obtained relief . . . in a court of law or perhaps
admiralty rather than before this Commission.'' \61\ The Commission is
seeking public comment on whether alternative avenues for redress would
be available should the Commission choose to reinterpret Sec.
41102(c).
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\60\ See Total Fitness Equipment, Inc. d/b/a/Professional Gym v.
Worldlink Logistics, Inc., 28 S.R.R. 45 (ID 1997); Brewer v.
Maralan, 29 S.R.R. 6 (FMC 2001).
\61\ Adair, 26 S.R.R. at 20-21.
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IV. Conclusion
The Commission believes that the interpretation and application of
Sec. 41102(c) should be properly aligned with the broader common
carriage foundation and purposes of the Act. The interpretive rule is
consistent with the purposes of the Shipping Act and focuses Commission
activities on regulated entities who abuse the maritime shipping public
by imposing unjust and unreasonable business methods, and who do so on
a normal, customary, and continuous basis, and thereby negatively
impact maritime transportation competition or inflict detrimental
effect upon the commerce of the United States. This interpretation
reflects the clear intent of Congress and reflects Commission precedent
articulated in Intercoastal Investigation, Altieri, Stockton Elevators,
European Trade, and Deringer. Though the Commission is aware that the
interpretive rule may redirect some claims in certain fact situations
from being brought under the Shipping Act, the Commission believes that
existing alternative avenues of redress are fully sufficient to address
those cases. The Commission is therefore seeking comment on the
proposed interpretation.
V. 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.
[[Page 45373]]
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 for which
protection is sought and demonstrates that the information is a trade
secret or other confidential research, development, or commercial
information.
A confidential copy of your comments, consisting of the
complete filing with a cover page marked ``Confidential-Restricted,''
and the confidential material clearly marked on each page. You should
submit the confidential copy to the Commission by mail.
A public version of your comments with the confidential
information excluded. The public version must state ``Public Version--
confidential materials excluded'' on the cover page and on each
affected page, and must clearly indicate any information withheld. You
may submit the public version to the Commission by email or mail.
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.
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.
VI. Rulemaking Analyses
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. 5 U.S.C.
603. An agency is not required to publish an IRFA, however, for the
following types of rules, which are excluded from the APA's notice-and-
comment requirement: Interpretative rules; general statements of
policy; rules of agency organization, procedure, or practice; and rules
for which the agency for good cause finds that notice and comment is
impracticable, unnecessary, or contrary to public interest. See 5
U.S.C. 553(b).
Although the Commission has elected to seek public comment on this
proposed rule, the rule is an interpretative rule. Therefore, the APA
does not require publication of a notice of proposed rulemaking in this
instance, and the Commission is not required to prepare an IRFA.
National Environmental Policy Act
The Commission's regulations categorically exclude certain
rulemakings from any requirement to prepare an environmental assessment
or an environmental impact statement because they do not increase or
decrease air, water or noise pollution or the use of fossil fuels,
recyclables, or energy. 46 CFR 504.4. The proposed rule describes the
Commission's proposed interpretation of the scope of 46 U.S.C. 41102(c)
and the elements necessary for a successful claim for reparations under
that section. This rulemaking thus falls within the categorical
exclusion for matters related solely to the issue of Commission
jurisdiction and the exclusion for investigatory and adjudicatory
proceedings to ascertain past violations of the Shipping Act. See 46
CFR 504.4(a)(20), (22). Therefore, no environmental assessment or
environmental impact statement is required.
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. This
proposed rule does not contain any collections of information as
defined by 44. U.S.C. 3502(3) and 5 CFR 1320.3(c).
Executive Order 12988 (Civil Justice Reform)
This rule meets the 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 https://www.reginfo.gov/public/do/eAgendaMain.
List of Subjects in 46 CFR Part 545
Antitrust, Exports, Freight forwarders, Maritime carriers, Non-
vessel-operating common carriers, Ocean transportation intermediaries,
Licensing requirements, Financial responsibility requirements,
Reporting and recordkeeping requirements.
For the reasons set forth above, the Federal Maritime Commission
proposes to amend 46 CFR part 545 as follows:
PART 545--INTERPRETATIONS AND STATEMENTS OF POLICY
0
1. The authority citation for part 545 continues to read as follows:
Authority: 5 U.S.C. 553; 46 U.S.C. 305, 40307, 40501-40503,
41101-41106, and 40901-40904; 46 CFR 515.23.
0
2. Add Sec. 545.4 to read as follows:
Sec. 545.4 Interpretation of Shipping Act of 1984-Unjust and
unreasonable practices.
46 U.S.C. 41102(c) is interpreted to require the following elements
in order to establish a successful claim for reparations:
(a) The respondent is an ocean common carrier, marine terminal
operator, or ocean transportation intermediary;
(b) The claimed acts or omissions of the regulated entity are
occurring on a normal, customary, and continuous basis;
(c) The practice or regulation relates to or is connected with
receiving, handling, storing, or delivering property;
(d) The practice or regulation is unjust or unreasonable; and
(e) The practice or regulation is the proximate cause of the
claimed loss.
By the Commission.
Rachel Dickon,
Secretary.
[FR Doc. 2018-19328 Filed 9-6-18; 8:45 am]
BILLING CODE 6731-AA-P
