Temporary Exemption from Certain Service Contract Requirements, 63274-63275 [2020-22106]

Agencies

• Federal Maritime Commission

[Federal Register Volume 85, Number 195 (Wednesday, October 7, 2020)]
[Notices]
[Pages 63274-63275]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-22106]


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FEDERAL MARITIME COMMISSION

[Docket No. 20-06]


Temporary Exemption from Certain Service Contract Requirements

Served: October 1, 2020.

By the Commission: Michael A. KHOURI, Chairman, Rebecca F. DYE, Daniel 
B. MAFFEI, Louis E. SOLA, Carl W. BENTZEL, Commissioners.

Order Granting Extension of Exemption

    Under 46 CFR 530.8(a)(1) carriers must file original service 
contracts (as opposed to an amendment) with the Commission ``before any 
cargo moves pursuant to that service contract.'' In addition, Sec.  
530.8(b) requires that each original contract include, among other 
terms, an effective date that is no earlier than the filing date. See 
Sec. Sec.  530.3(i) (defining ``effective date'' for original service 
contracts and amendments); 530.8(b)(8)(i) (requiring every service 
contract to include its effective date). Similarly, Sec.  530.14(a) 
provides that ``[p]erformance under an original

[[Page 63275]]

service contract may not begin before the day it is effective and filed 
with the Commission.'' \1\
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    \1\ In contrast, the Commission's regulations provide more 
flexibility to service contract amendments, which can be filed 
within 30 days after the amendment's effective date. See Sec. Sec.  
530.3(i); 530.8(a)(2); 530.8(b)(8)(i); 530.14(a).
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    On April 27, 2020, the Federal Maritime Commission published an 
Order to temporarily allow parties to file service contracts up to 30 
days after they take effect. The Order made the relief effective 
immediately and lasting through December 31, 2020. The Commission noted 
in its Order that it might consider extending this exemption, as 
necessary, to address the continuing effects of the COVID-19 pandemic. 
In the interest of providing certainty and stability to supply chain 
stakeholders, the Commission believes it is necessary to extend this 
exemption until June 1, 2021.
    The temporary exemption was designed to help relieve coronavirus 
disease 2019 (COVID-19) impacts to the supply chain. COVID-19 has 
placed increased stresses and burdens on carriers and their customers. 
As noted in the Order of April 27, 2020, an increasing number of 
businesses have been working remotely as a result of social distancing 
guidance and stay-at-home orders. The Commission understands that for 
some entities, this situation, combined with other COVID-19-related 
disruptions to commercial operations, has made complying with service 
contract filing requirements difficult. This situation continues to 
exist and may continue to affect business operations.
    The benefits of relief from service contract filing requirements 
were identified by the Fact Finding 29 Supply Chain Innovation Teams 
working under the direction of the Fact Finding Officer.\2\ A unifying 
theme in the initial meetings of the Supply Chain Innovation Teams was 
that service contract negotiations are being disrupted for a variety of 
COVID-19 related causes. Teleworking arrangements complicate 
negotiations between carriers and shippers and that will continue to be 
true into the 2021 contract negotiation season. Additionally, some 
businesses continue to be technologically challenged to file service 
contracts from locations other than their offices. Individual shippers 
identified the importance for supply chain efficiency of relief from 
service contract filing and regulatory certainty upon which to make 
operational changes.
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    \2\ The Commission initiated Fact Finding No. 29, International 
Ocean Transportation Supply Chain Engagement, to identify 
operational solutions to cargo delivery system challenges related to 
Coronavirus-19.
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    Based on Fact Finding 29's findings and recommendations, 
stakeholder interest, and in light of ongoing challenges presented by 
the pandemic and necessary changes to business operations, the 
Commission continues to believe that flexibility in service contract 
filing requirements provided by extension of the exemption will allow 
industry to continue adapting to market conditions, while still 
providing the Commission information necessary to assure competition 
and integrity for America's ocean supply chain.
    This extension is also temporary and will remain in effect only 
until June 1, 2021.
    Exemptions from the requirements of Part 530 are governed by 46 CFR 
530.13(b). Under this authority, the Commission may exempt any 
specified activity of persons subject to the Shipping Act from the 
requirements of Part 530 if the Commission finds that the exemption 
will not result in substantial reduction in competition or be 
detrimental to commerce. Sec.  530.13(b) (incorporating 46 U.S.C. 
40103(a) and 46 CFR 502.10, 502.92).
    The Commission has previously allowed for exemptions from the 
service contract regulations in exigent circumstances where the 
exemption meets the criteria in 46 U.S.C. 40103(a). See Pet. of Maersk 
Line A/S for an Exemption from 46 CFR 530.8, Pet. No. P1-17 (FMC July 
19, 2017); Petition of COSCO Container Lines Company Ltd., 34 S.R.R. 97 
(FMC 2016); Petition of Crowley Caribbean Servs., LLC, 33 S.R.R. 1461 
(FMC 2016); Petition of Compa[ntilde][iacute]a Sud Americana de Vapores 
S.A., 33 S.R.R. 934 (FMC 2015); Petition of Hanjin Shipping Co., Ltd., 
31 S.R.R. 1080 (FMC 2009).
    Based on experience with the temporary exemption currently in 
place, the Commission concludes that extending the temporary exemption 
from certain requirements for original service contracts in Sec. Sec.  
530.3, 530.8, and Sec.  530.14 until June 1, 2021, subject to certain 
conditions, will continue to reduce the filing burdens on the industry 
and will not result in a substantial reduction in competition or be 
detrimental to commerce. This exemption extension remains subject to 
the condition that original service contracts continue to be filed with 
the Commission. As is the case for service contract amendments, 
however, that filing may now be delayed up to 30 days after the 
effective date. The Commission has determined that these conditions 
will minimize any potential negative effects on competition or 
commerce.
    Although the Commission's Rules of Practice and Procedure normally 
require notice and an opportunity for a hearing be afforded to 
interested parties (including publication in the Federal Register of a 
notice of the proposed exemption and request for comments), see 46 CFR 
502.92(c)-(d); 530.13(b) (cross-referencing Sec.  502.92), the 
Commission may waive these requirements for regulatory exemptions to 
prevent undue hardship, manifest injustice, or if the expeditious 
conduct of business so requires. See 46 CFR 502.10; 530.13(b) (cross-
referencing Sec.  502.10). Given the immediate need for regulatory 
relief in light of the COVID-19 pandemic and its effects on commercial 
operations, the Commission has determined that waiving the notice and 
hearing requirements in Sec.  502.92 is necessary to prevent undue 
hardship and is required for the expeditious conduct of Commission 
business.
    Therefore it is ordered, that an extension of the temporary 
exemption from the requirements of 46 CFR 530.3(i); 530.8(a)(1), 
(b)(8)(i); and 530.14(a) for original service contracts is GRANTED, 
provided that:
    1. Authorized persons must file with the Commission, in the manner 
set forth in appendix A of 46 CFR part 530, a true and complete copy of 
every original service contract no later than thirty (30) days after 
any cargo moves pursuant to that service contract;
    2. Every original service contract filed with the Commission must 
include the effective date, which may be no more than thirty (30) 
calendar days prior to the filing date with the Commission; and
    3. Performance under an original service contract may not begin 
until the day it is effective, provided that the service contract is 
filed with the Commission no later than thirty (30) calendar days after 
the effective date.
    It is further ordered, that this temporary exemption will remain in 
effect until June 1, 2021.

    By the Commission.
Rachel Dickon,
Secretary.
[FR Doc. 2020-22106 Filed 10-6-20; 8:45 am]
BILLING CODE 6730-02-P