Definition of Unreasonable Refusal To Deal or Negotiate With Respect to Vessel Space Accommodations Provided by an Ocean Common Carrier, 38789-38808 [2023-12744]

Agencies

• Federal Maritime Commission

[Federal Register Volume 88, Number 114 (Wednesday, June 14, 2023)]
[Proposed Rules]
[Pages 38789-38808]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-12744]


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FEDERAL MARITIME COMMISSION

46 CFR Part 542

[Docket No. FMC-2023-0010]
RIN 3072-AC92


Definition of Unreasonable Refusal To Deal or Negotiate With 
Respect to Vessel Space Accommodations Provided by an Ocean Common 
Carrier

AGENCY: Federal Maritime Commission.

ACTION: Supplemental notice of proposed rulemaking.

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SUMMARY: The Federal Maritime Commission (Commission) issues this 
supplemental notice of proposed rulemaking (SNPRM) to address a 
statutory requirement arising from the Ocean Shipping Reform Act of 
2022 that prohibits ocean common carriers from unreasonably refusing to 
deal or negotiate with respect to vessel space accommodations and a 
related prohibition against unreasonably refusing cargo space 
accommodations. This proposal revises certain aspects of the proposed 
rule issued on September 21, 2022, by modifying defined terms and 
discussing the relationship between the United States Code and the 
elements required to establish violations of those provisions. This 
SNPRM is issued in response to comments to the original proposal and to 
more directly provide a potential standard for unreasonable conduct by 
ocean common carriers that prevents shippers from obtaining space 
aboard vessels for their cargo. In this SNPRM, the Commission proposes 
to:

[[Page 38790]]

define unreasonable by stating a general principle and a non-exhaustive 
list of examples of unreasonable conduct; establish the elements for a 
refusal of cargo space accommodations; revise the definition of 
transportation factors to focus on vessel operation considerations; 
clarify that vessel space services were already included in the 
definition of vessel space accommodations and add a definition for 
cargo space accommodations; define documented export policy and add 
mandatory document export policy requirements; and remove the voluntary 
certification provision. The Commission seeks comments on these 
changes.

DATES: Submit comments before 11:59 p.m. EDT on July 31, 2023.

ADDRESSES: Since the publication of the NPRM, the Commission has 
transitioned from accepting comments via email and using its Electronic 
Reading Room for rulemaking activities to accepting rulemaking comments 
exclusively through the Federal eRulemaking Portal at 
www.regulations.gov. The docket of this SNPRM can be found at https://www.regulations.gov/ under Docket No. FMC-2023-0010. The NPRM and 
related comments can be found in this new docket. Also, comments to 
this SNPRM may be submitted and viewed there. Please refer to the 
``Public Participation'' heading under the SUPPLEMENTARY INFORMATION 
section of this notice for detailed instructions on how to submit 
comments, including instructions on how to request confidential 
treatment and additional information on the rulemaking process.

FOR FURTHER INFORMATION CONTACT: William Cody, Secretary; Phone: (202) 
523-5725; Email: [email protected].

SUPPLEMENTARY INFORMATION: 

I. Background

A. Legislative Authority and Regulatory History

    On September 21, 2022, the Commission proposed adding a new part 
542 under title 46 of the Code of Federal Regulations (CFR) that would 
address prohibited acts by ocean common carriers under 46 U.S.C. 
41104(a)(10). 87 FR 57674. The proposal was issued in response to 
certain obligations imposed on the Commission as a result of 
legislation signed by the President on June 16, 2022. That legislation, 
the Ocean Shipping Reform Act of 2022 (OSRA 2022), amended various 
statutory provisions contained in Part A of Subtitle IV of Title 46, 
United States Code, which collectively comprise the Shipping Act. Among 
these changes were amendments to 46 U.S.C. 41104(a)(3) and (a)(10) 
along with accompanying requirements for the Commission to initiate and 
complete specific rulemakings related to each amendment.
    Although OSRA 2022's focus on export cargo is new, the Commission 
and the courts have considered similar Shipping Act prohibitions 
against unreasonable conduct and refusals to deal or negotiate in the 
past.
    Section 7(d) of OSRA 2022 requires the Commission, in consultation 
with the United States Coast Guard, to initiate and complete a 
rulemaking to define the phrase ``unreasonable refusal to deal or 
negotiate with respect to vessel space accommodations'' and this 
rulemaking implements that requirement. This rulemaking now also 
addresses OSRA 2022's amendment to part of section 41104(a)(3), which 
prohibits a common carrier from unreasonably refusing cargo space 
accommodations when available. At a different time, the Commission will 
address the statutory requirement in section 7(c) of OSRA 2022 to 
complete a rulemaking defining unfair or unjustly discriminatory 
methods in a separate rulemaking.

B. Need for SNPRM

    After receiving comments on its proposal and examining the feedback 
received in response, the Commission has decided to issue this SNPRM to 
further explore certain issues and to modify other aspects of the 
initial September 2022 proposal. The Commission proposes to make the 
following changes: (1) revise the definition of transportation factors 
to focus on vessel operation considerations; (2) revise the definition 
of the term unreasonable to include a general definition and a non-
exhaustive list of unreasonable conduct scenarios; (3) clarify that 
vessel space services are already included in the definition of vessel 
space accommodations; (4) remove the voluntary export strategy 
documentation language; (5) propose a definition of documented export 
policy and that ocean common carriers submit a documented export policy 
to the Commission once per year; and (6) remove the voluntary 
certification provision. These modifications, along with the reasoning 
behind these changes, are discussed in the sections that follow.
    In its September 2022 proposal, the Commission explained that OSRA 
2022 amended 46 U.S.C. 41104(a) as a whole by replacing ``may not'' 
with ``shall not'' to highlight the mandatory nature of that section's 
list of common carrier prohibitions and sought comment on the treatment 
of these terms. See 87 FR 57674. The Commission sought comment on its 
initial proposal to apply the amended prohibitions under section 
41104(a)(10) to ocean common carriers and its proposed definition of 
the phrase ``unreasonable refusal to deal or negotiate with respect to 
vessel space accommodations'' contained in that provision. The 
Commission also noted other key terms and phrases remained undefined, 
such as ``unreasonably,'' ``refuse to deal or negotiate,'' and ``vessel 
space accommodations,'' and sought comment regarding the meaning of 
these terms. See 87 FR 57676-57677.
    In applying the common carrier prohibitions in 46 U.S.C. 41104, the 
Commission stresses that the statute does not distinguish between U.S. 
exports or imports and this supplemental proposal also applies to both. 
The Commission explained its basis for this view as part of its initial 
proposal, noting the challenges faced by U.S. exporters to obtain 
vessel space and observing that the purpose of the Commission's 
authority under the Shipping Act contains an export focus while also 
noting reports of restricted access to equipment and vessel space for 
U.S. importers, particularly in the Trans-Pacific market. 87 FR 57674-
57675. Further background and discussion on market conditions can be 
found in the notice of proposed rulemaking. 87 FR 57674-57675.
    The Commission also notes that nothing in the previous proposed 
rule or in this SNPRM is meant to restrict the ability of ocean common 
carriers to reposition empty containers. The repositioning of empty 
containers can include the use of sweeper vessels. Vessels cannot be 
arbitrarily designated as sweeper vessels to avoid accepting exports. 
After the fact or ad hoc reclassifications of a vessel as a sweeper 
vessel may be closely scrutinized by the Commission. A shipper or the 
Commission's Bureau of Enforcement, Investigations, and Compliance 
(BEIC) can also allege that a reclassification was a subterfuge to 
avoid providing vessel space for exports. As the Commission previously 
explained, staff review of ocean common carrier documents indicates 
that ocean common carriers typically maintain documented procedures and 
policies related to their operations. The Commission stated further 
that effective export policies should be tailored to specific 
categories of cargoes and include documented policies on export 
business practices. Because every ocean common carrier operating in the 
U.S. market is presumed by the Commission--barring the submission of

[[Page 38791]]

further information to the contrary--to be able to transport both 
exports and imports, an ocean carrier may not categorically exclude 
U.S. exports from its service without showing how this action is 
reasonable. 87 FR 57675. This presumption continues to apply in this 
SNPRM.
    The Commission also took note of common carrier assertions that 
they have seen delays in the movement of export cargo due to a lack of 
mutual commitment between shippers and common carriers leading to 
cancellations of vessel space accommodation by either party, sometimes 
as late as the day of sailing. These actions contribute to uncertainty 
for both the common carriers and shippers. See 87 FR 57675. Bookings 
canceled by common carriers lead to rolled freight and other negative 
consequences for shippers. See American Chemistry Council (ACC) at 4.
    Finally, as stated in the initial proposed rule and elsewhere, 
ocean common carriers and those with whom they contract to operate and 
load/unload their vessels have the best information on the ability of 
any particular vessel to accept cargo for import or export--information 
that shippers generally do not have. See 87 FR 57675-57676; see also 
Fact Finding Investigation 29 Final Report (F.M.C.), 2022 WL 2063347 at 
11, 21-23, 26, 34-35 (noting difficulties experienced by non-carrier 
entities to obtain information such as earliest return dates and vessel 
scheduling information held by ocean common carriers). As a result, the 
Commission proposed a mechanism by which, upon a prima facie case of a 
violation of section 41104(a)(10) being made, the burden would shift 
from the shipper (or the BEIC) to the ocean common carrier. At this 
step, the ocean common carrier would need to satisfy its burden of 
showing that the refusal to deal or negotiate was reasonable. The 
Commission stressed that its proposal concerned the negotiations or 
discussions that lead up to a decision about whether an import or 
export load is accepted for transportation. It added that while there 
will be situations where an ocean common carrier and a shipper engage 
in good faith negotiations or discussions that do not result in the 
provision of transportation, cases where an ocean common carrier 
categorically excludes U.S. exports from its service will create a 
presumption of an unreasonable refusal to deal. See 87 FR 57675-57676.
    The specific provisions of OSRA 2022 that are the subject of this 
SNPRM are new, and accordingly there is a lack of prior Commission 
precedent to aid in interpretation of this newly-enacted amendment. In 
the Commission's history, many cases found the essence of the 
prohibition on unreasonable refusals to deal or negotiate in 
contravention of the amended section 41104(a)(10) and its predecessors 
to be the imposition by a common carrier of an unreasonable impediment 
to a shipper's access to common carriage. Such impediments can take 
many forms, and no legislation or regulatory process can predict or 
attempt to encompass every possible scenario in which an unreasonable 
refusal to deal or negotiate might occur. Thus, the caselaw is 
instructive when considering the new legislation. Commission 
determinations will be factually driven and determined on a case-by-
case basis.
    This SNPRM describes how the Commission will consider private party 
adjudications and agency-initiated enforcement cases in which 
violations of 46 U.S.C. 41104(a)(3) and (a)(10) are alleged relating to 
unreasonable refusal to provide cargo space accommodations and/or 
refusals to deal by ocean common carriers. It also considers the common 
carriage roots in the Shipping Act, as well as the overall competition 
basis of the Commission's authority,\1\ and lays out the framework for 
considering violations of section 41104(a)(10). In this SNPRM, the 
Commission continues to note that future cases that allege violations 
of section 41104(a)(3) and (a)(10) will be factually driven and 
determined on a case-by-case basis. The framework for this supplemental 
proposal is taken from Commission precedent on refusal to deal cases 
generally and on suggestions offered by commenters.
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    \1\ See Orolugbagbe v. A.T.I.,U.S.A., Inc., Informal Docket No. 
1943(I) at *31-38.
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C. Inclusion of Claims of Unreasonable Refusals of Cargo Space 
Accommodations Subject to 46 U.S.C. 41104(a)(3)

    Although this rulemaking was initiated under OSRA 2022 section 7(d) 
to define terms and elements required for a cause of action under 46 
U.S.C. 41104(a)(10), shippers and exporters in particular commented on 
conduct that occurs outside the scope of that provision. Section 
41104(a)(10) prohibits unreasonable refusals during the negotiation 
stage, when the parties do not have an existing relationship and/or are 
initiating negotiations over terms and conditions of service. That is 
different from conduct prohibited under 46 U.S.C. 41104(a)(3). The 
latter would apply to situations where the parties have an existing 
relationship and/or already mutually agreed on terms and conditions via 
a booking confirmation, but the ocean common carrier then unreasonably 
refuses cargo space accommodations when available, or in other words, 
refuses to execute on the deal negotiated on the previously agreed-upon 
terms.
    The restrictions that 46 U.S.C. 41104(a)(3) and (a)(10) impose on 
ocean common carriers are distinct but closely related. Both provisions 
address refusals by ocean common carriers to accommodate shippers' 
attempts to secure overseas transportation for their cargo. The 
distinction between the conduct covered by these two provisions is 
timing, more specifically whether the refusal occurred while the 
parties were still negotiating and attempting to reach a deal on 
service terms and conditions (negotiation stage) or after a deal was 
reached (execution stage). If the refusal occurred at the negotiation 
stage, 46 U.S.C. 41104(a)(10) would apply. If the refusal occurred at 
the execution stage, after the parties reached a deal or mutually 
agreed on service terms and conditions, then 46 U.S.C. 41104(a)(3) 
would apply. When a shipper acting in good faith follows the export 
policy of the ocean common carrier with which it has been negotiating, 
either 46 U.S.C. 41103(a)(3) or (a)(10) would still apply if the 
shipper was unreasonably denied space.
    Comments to the NPRM show that shippers and exporters in particular 
consistently cited blank sailings, no-notice or delayed notice of 
schedule changes, inadequate loading times, and similar actions as 
primary drivers that prevented them from getting their cargo to 
overseas markets. These impediments occur during the execution stage 
over shippers' interactions with ocean common carriers, taking them 
outside the scope of 46 U.S.C. 41104(a)(10) and beyond the confines of 
the initial proposal. In order to fully address the comments received, 
the Commission has decided to issue an SNPRM and expand the scope of 
the rulemaking. Rather than defer addressing these concerns in a 
separate rulemaking, the Commission proposes broadening the scope of 
this rulemaking. The Commission is also currently working on addressing 
section 7(c) of OSRA 2022 and will separately complete a rulemaking 
defining different terms than those defined in this SNPRM from section 
41104(a)(3), i.e., ``unfair or unjustly discriminatory methods.''
    Protecting shippers from unreasonable refusals to deal or negotiate 
only partially addresses the obstacles that shippers and trade 
associations have identified in the

[[Page 38792]]

comments as major impediments to their ability to get their cargo to 
overseas markets. As commenters have pointed out, there are far-
reaching consequences that cannot easily or quickly be reversed if they 
cannot meet their contractual obligations to their overseas buyers. 
U.S. exporters' ability to rely on ocean common carriers meeting their 
obligations by providing cargo space accommodations negotiated for or 
as advertised is a critical component of that equation. U.S. exporters 
are in an untenable position if they cannot rely on vessels calling at 
U.S. ports to load and transport their cargo to overseas destinations 
as scheduled or agreed to by the ocean common carrier. Missed or late 
deliveries to overseas buyers are likely to cause them to lose 
confidence in the reliability of their U.S. suppliers and prompt them 
to look to alternative suppliers from other countries able to commit to 
a more reliable delivery system. Overseas buyers would not continue 
dealing with U.S. suppliers who repeatedly miss delivery dates and 
cannot promise on-schedule deliveries because they are at the mercy of 
ocean common carriers who unpredictably change scheduled sailings, 
blank scheduled sailings, or otherwise unreasonably refuse to execute 
on their commitments. Business that U.S. exporters lose to competitors 
from other countries will be difficult to recapture over the short term 
and perhaps over the long term as well. The longer reliability issues 
persist, the more harm U.S. exporters will suffer and the more 
difficult it will be to restore lost confidence in ocean transportation 
for U.S. exports.
    Restricting this rulemaking to refusals to deal or negotiate under 
46 U.S.C. 41104(a)(10) will not address the reliability issues that 
commenters identified as a critical and a driving factor impeding their 
ability to ship cargo overseas. Shippers impacted by unlawful refusals 
to accommodate their requests for vessel space accommodations have been 
able to bring a cause of action against ocean common carriers since the 
OSRA 2022 amendments took effect immediately in June 2022. They may 
find it more difficult, however, to plead, and prevail on those claims 
without implementing regulations from the Commission defining the 
elements and statutory terms. Parties may also find it more difficult 
to identify and litigate claims for unreasonable refusals under 46 
U.S.C. 41104(a)(3) without a clearer indication from the Commission of 
conduct covered by that provision as distinguished from 46 U.S.C. 
41104(a)(10). Absent further guidance now from the Commission, shippers 
and BEIC are likely to devote considerable resources to litigating how 
an ``unreasonable refusal'' under 46 U.S.C. 41104(a)(3) should be 
defined and the elements required to prove a violation of that 
provision. That may make litigating 46 U.S.C. 41104(a)(3) claims a 
time-consuming and resource-intense process as parties litigate not 
just the facts of their particular case but also advocate for their 
proposed interpretation of key terms like ``unreasonable refusal'' and 
the factors relevant in determining whether an ocean common carrier 
acted unreasonably. Parties would also expend time litigating the 
difference between ``unreasonable refusals to deal or negotiate'' and 
``unreasonable refusals to provide vessel space accommodations.''
    Clearly delineating these distinctions as part of the current 
rulemaking will lessen the time and resources that shippers, carriers 
and the Commission will otherwise need to devote to defining these 
concepts in individual cases. Defining the elements and terms used in 
46 U.S.C. 41104(a)(3) requirements as part of this rulemaking is also 
important because in practice it may be difficult to discern whether a 
carrier's refusal was at the negotiation or execution stage and 
additional guidance now from the Commission may help avoid needless 
disputes over that issue. Shippers' and carriers' interactions about 
service terms and conditions and securing vessel space may not always 
march consistently forward from the initial offer through booking and 
loading cargo on the vessel bound for the destination point. It is 
important for ocean common carriers to have sufficient guidance to 
conform their conduct and practices to fall within the bounds of 
reasonable or unreasonable within the meaning of 46 U.S.C. 41104(a). 
Also, this rule would ensure that shippers can readily discern when a 
carrier has acted outside the bounds of reasonableness and know what 
type of claim to bring before the Commission.
    Interpreting these related provisions in tandem in a single 
rulemaking will allow the Commission to delineate the types of refusal 
conduct covered by 46 U.S.C. 41104(a)(3) and (a)(10) and highlight 
where the differences are between them.

D. Differences in Cases Involving Section 41104(a)(10) and Section 
41104(a)(3)

    Generally, the distinction between those acts covered under section 
41104(a)(3) and those falling under section 41104(a)(10) is temporal-
based. Although it is possible for claims to arise later in the 
process, ``refusal to deal or negotiate'' (section 41104(a)(10)) will 
frequently involve those actions occurring prior to a carrier providing 
a shipper with a booking confirmation to carry that shipper's cargo. If 
negotiations to reach an agreement have ceased (or if efforts to engage 
in negotiations were ignored), then a claim of unreasonable refusal to 
deal or negotiate under section 41104(a)(10) could arise. When read in 
conjunction with this provision, to ``unreasonably refuse cargo space 
accommodations'' or ``resort to other unfair or unjustly discriminatory 
methods'' under section 41104(a)(3) would necessarily involve a set of 
acts that occur after a booking has been confirmed. As a result, this 
SNPRM adds to the scope of the original NPRM by proposing to address 
those refusals that occur at the execution stage, after the parties 
reached a deal or mutually agreed on service terms and conditions via a 
booking confirmation subject to section 41104(a)(3). In a future 
rulemaking, the Commission will define ``unfair and unjustly 
discriminatory methods'' within the meaning of section 41104(a)(3). The 
Commission seeks comment on its approach with respect to the difference 
between potential violations of 46 U.S.C. 41104(a)(3) and 46 U.S.C. 
41104(a)(10).

II. Comments to the NPRM and Responses by the Commission

    In developing this SNPRM, the Commission carefully considered the 
comments it received regarding its previous proposed rule. These 
comments, along with issues relevant to those comments, are addressed 
in greater detail in the discussion that follows.

A. Commenters

    The Commission received responses from shippers, shipping industry 
trade associations, common carriers, and governmental entities. These 
commenters consisted of the following entities:

[[Page 38793]]



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               Commenters                          Entity type
------------------------------------------------------------------------
Agriculture Transportation Coalition     Shippers Trade Association.
 (AgTC).
American Chemistry Council (ACC).......  Shippers Trade Association.
American Cotton Shippers Association     Shippers Trade Association.
 (ACSA).
BassTech International (BassTech)......  Shipper.
Consumer Brands Association (CBA)......  Shippers Trade Association.
CMA CGM (America) LLC..................  Carrier.
Dole Ocean Cargo Express, LLC (DOCE)...  Carrier.
International Federation of Freight      Freight Forwarding Trade
 Forwarders Association (FIATA).          Association.
International Dairy Foods Association    Shippers Trade Association.
 (IDFA).
International Fresh Produce Association  Shippers Trade Association.
 (IFPA).
Lanca Sales, Inc.......................  Shipper/Beneficiary Cargo
                                          Owner.
Meat Import Council of America and       Shippers Trade Association.
 North American Meat Institute (MICA/
 NAMI).
National Association of Chemical         Shippers Trade Association.
 Distributors (NACD).
National Association of Manufacturers    Shippers Trade Association.
 (NAM).
National Customs Brokers & Forwarders    Freight Forwarder, Custom
 Association of America, Inc. (NCBFAA).   Broker, and Ocean
                                          Transportation (incl'g
                                          Carriers) Trade Association.
National Fisheries Institute (NFI).....  Shippers Trade Association.
Northwest Horticultural Council (NHC)..  Shippers Trade Association.
National Industrial Transportation       Shippers Trade Association.
 League and Institute for Scrap
 Recycling Industries, Inc. (NITL/ISRI).
Pacific Merchant Shipping Association    Carrier Trade Association.
 (PMSA).
Retail Industry Leaders Association      Shippers Trade Association.
 (RILA).
Tyson Foods (Tyson)....................  Shipper.
U.S. Dairy Exporters Council (USDEC)...  Shipper Trade Association.
World Shipping Council (WSC)...........  Carrier Trade Association.
Members of the House of Representatives  Legislative Branch (Federal)--
 (Congress).                              multiple comments.
United States Department of Justice      Executive Branch (Federal).
 (DOJ).
United States Department of Agriculture  Executive Branch (Federal).
 (USDA).
------------------------------------------------------------------------

    Except as noted, each relevant comment is addressed within the 
context of the specific topics raised. These topics are discussed in 
detail in the sections that follow.
1. General Comments From Federal Government Commenters
    The Commission notes that it received four separate submissions 
from Federal commenters. One set of comments was submitted by a group 
of seven Members of the House of Representatives--Representative John 
Garamendi, Representative Dusty Johnson, Representative Jim Costa, 
Representative Adrian Smith, Representative Mike Thompson, 
Representative David G. Valadao, and Representative Jimmy Panetta. The 
Members made the specific point that ``[o]cean carriers refusing to 
accommodate American exports is an unreasonable business practice and, 
following passage of the Ocean Shipping Reform Act of 2022, also is now 
illegal.'' Congress at 1. It also received one comment jointly 
submitted by Senator John Thune, Senator Amy Klobuchar, Senator John 
Hoeven, and Senator Tammy Baldwin. The Senators state they have 
received reports of ocean carriers refusing certain export cargo, 
particularly agricultural cargo, even when vessel space was readily 
available, and often opting to carry empty containers instead. Senate 
at 1. Also, the Senators urge the Commission to consider whether 
additional clarifying language about the magnitude of the 
``transportation factors'' might provide useful industry guidance. Id.
    The Commission greatly appreciates the comments offered by the 
Members and Senators. As the Commission agrees and explained in its 
proposal, the categorical refusal to accommodate U.S. exports, without 
demonstrating that the refusal is reasonable, would violate 46 U.S.C. 
41104(a)(10). 87 FR 57675. Under section 41104(a)(10), an ocean common 
carrier's refusal to deal or refusal to negotiate must be unreasonable 
to constitute a violation. See 46 U.S.C. 41104(a)(10). By definition, 
not all refusals will necessarily violate this provision. Whether a 
refusal to deal or a refusal to negotiate falls within the scope of 
section 41104(a)(10) depends upon the particular circumstances in a 
given case.
    In response to various public comments, including those from 
Senators Thune, Klobuchar, Hoeven, and Baldwin, the Commission is 
proposing new language that relies on both 46 U.S.C. 41104(a)(3) and 
(a)(10) to address more comprehensively potential violations related to 
refusal to deal or negotiate. The new proposed approach covers a 
broader set of conduct, explicitly including those instances where an 
ocean common carrier refuses export cargo even when vessel space was 
readily available. This SNPRM also revises the definition of 
transportation factors and proposes to remove the language initially 
referring to scheduling considerations.
    The Antitrust Division of the United States Department of Justice 
(DOJ) also submitted comments and agreed that reasonableness is 
necessarily a case-by-case determination. However, DOJ expressed 
concern that the Commission's proposed criteria to prove the statutory 
elements of ``refusal to deal'' and ``unreasonable'' would be too 
difficult to establish. DOJ also suggested including additional 
considerations, such as the parties' prior course of dealings or 
whether a carrier, after issuing a refusal, offered the affected 
shipper any remedies or assistance. DOJ suggested that information may 
be relevant in deciding whether the carrier's refusal was unreasonable. 
The Commission adopted DOJ's proposed language on further remedies or 
assistance offered to the shipper and added it to the proposed rule in 
Sec.  542.1(d)(1). DOJ also believes that it would be critical to 
evaluate past business actions in the context of allegations to refuse 
the provision of service.
    As to DOJ's concern that the proposed standard for establishing the 
second and third elements of a prima facie case may set the bar too 
high by suggesting that complainants must show an actual refusal to 
even entertain their proposal, this SNPRM clarifies that is not a 
required showing and emphasizes that

[[Page 38794]]

claims will be evaluated on a case-by-case basis.
    As to the elements that the Commission would rely on to make a 
determination of reasonableness, the Commission believes that the new 
proposed elements form an appropriate basis for determining whether an 
ocean common carrier has acted reasonably in refusing to deal with a 
particular shipper. Those elements are: (1) whether the ocean common 
carrier follows a documented export policy enabling the efficient 
movement of export cargo; (2) whether the ocean common carrier engaged 
in good-faith negotiations; (3) the existence of legitimate 
transportation factors; and (4) any other factors the Commission deems 
relevant. These elements, when coupled with the opportunity for the 
ocean common carrier to establish that conduct was reasonable, are both 
workable and fair by allowing potential claimants to bring complaints 
of violations under section 41104(a)(10) and shifting the burden of 
production of information to the carrier to justify its actions. And in 
evaluating a given case, the Commission's proposed approach in this 
SNPRM would provide the information it would need and also enable it to 
consider other relevant factors such as prior dealings and mitigation 
measures in determining whether a refusal was unreasonable.
    Finally, DOJ noted that the terms ``deal'' and ``negotiate'' have 
different meanings under the antitrust laws and encouraged the 
Commission to define those terms in the Commission's rule. DOJ at 4-5. 
It states that the term ``negotiate'' refers to the discussion about a 
particular transaction, while ``deal'' typically refers to the 
transaction itself--whether it be the provision of goods or services. 
DOJ at 5. The goal of prohibiting unreasonable refusal to deal or 
negotiate by ocean common carriers with respect to vessel space will be 
achieved better by giving the terms their ordinary meanings. That way, 
the Commission will be able to address unreasonable refusal to deal or 
negotiate with respect to vessel space with more flexibility. That is 
consistent with our case-by-case approach which DOJ endorses.
    The Secretary of the United States Department of Agriculture (USDA) 
submitted a comment and asked the Commission to broaden the definition 
of an unreasonable refusal to deal or negotiate, narrow the proposal's 
guidance on reasonableness, and encourage specific actions by carriers 
to guard against engaging in an unreasonable refusal. USDA suggested 
the Commission specify certain actions, such as cancellations without 
sufficient notice, perpetual re-bookings, and failure to provide 
necessary equipment, in the definition of refusal to deal or negotiate. 
USDA at 2. The points that USDA focuses on as potentially unfair or 
unjustly discriminatory conduct may be refined at a later date through 
another rulemaking or on a case-by-case basis.
    USDA also suggested that in considering reasonableness of refusal 
to deal or negotiate, ``[t]he Commission should excuse only a few 
exceptional circumstances.'' USDA at 2. It urged the Commission to 
narrow the language on reasonableness and clarify that the existence of 
multiple factors (such as profitability, business development strategy, 
or transportation factors) will not absolve problematic practices. USDA 
also encouraged ``clearer, more affirmative duties for carriers, 
greater specificity with respect to the requirements they need to meet, 
and that non-confidential portions of these documents be made available 
for shippers and the public to review.'' USDA at 2-3. This SNPRM 
includes greater specificity and strives to better delineate each 
party's duties when communicating with each other about vessel space 
accommodations. The Commission's NPRM included some of the factors USDA 
discussed, and it does not absolve problematic practices based upon 
just a few factors or certain affirmative actions. Rather, each case 
will be considered under the totality of the circumstances to prohibit 
all possible unreasonable refusals to deal or negotiate by ocean common 
carriers with respect to vessel space accommodations.
2. Inability To Obtain Vessel Space for Export Cargo Despite Having 
Previously Negotiated Terms and Conditions
    Comments from the Retail Industry Leaders Association (RILA) assert 
that an unreasonable refusal to deal or negotiate is not confined to 
the negotiation stage under 46 U.S.C 41104(a)(10) but can arise at any 
point in the parties' dealings short of the point at which the 
shippers' cargo is actually loaded aboard the vessel. As RILA explains:

    The ``lived experience'' of U.S. importers during the COVID-19 
pandemic has demonstrated that unreasonable refusals to deal or 
negotiate can arise not only in the context of negotiating (or 
refusing to negotiate) the terms of a service contract before it is 
entered into, or of booking (or seeking to book) carriage pursuant 
to the common carrier's published tariff before cargo is tendered, 
but also during the term of a service contract and even after the 
provision of (or failure to provide) the services contemplated.

RILA Comments at 3. RILA urged the Commission to address this issue by 
expansively defining unreasonable refusals to deal or negotiate within 
the meaning of section 41104(a)(10) to include actions or 
communications that ``can arise at any point in parties' dealings with 
each other.'' Id.
    The Commission understands and concurs with the concern underlying 
this suggestion but does not agree that expanding the definition of 
unreasonable refusal to deal or negotiate within the meaning of section 
41104(a)(10) is the solution. As discussed elsewhere in this proposal, 
the Commission proposes defining section 41104(a)(3) and (a)(10) in 
tandem as the better solution. Further, as also mentioned in this 
discussion, expanding the definition of conduct governed by 46 U.S.C. 
41104(a)(10) to include the same conduct prohibited by section 
41104(a)(3) would render meaningless (at least in part) the section 
41104(a)(3) language prohibiting unreasonable refusals to accept cargo. 
That interpretation would violate the canon of statutory construction 
against construing the statute in a manner that renders language 
superfluous or meaningless.\2\
---------------------------------------------------------------------------

    \2\ ``It is `a cardinal principle of statutory construction'' 
that ``a statute ought, upon the whole, to be so construed that, if 
it can be prevented, no clause, sentence, or word shall be 
superfluous, void, or insignificant.' '' TRW Inc. v. Andrews, 534 
U.S. 19, 31 (2001) quoting Duncan v. Walker, 533 U.S. 167 (2001); 
United States v. Menasche, 348 U.S. 528, 538-539, (1955) (``It is 
our duty `to give effect, if possible, to every clause and word of a 
statute.' '' (quoting Montclair v. Ramsdell, 107 U.S. 147, 152, 
(1883)).
---------------------------------------------------------------------------

    RILA further explains that in its experience,\3\ unless shippers 
have enforceable service contracts, they ``are unable to protect 
themselves from volatile shipping rates and ocean carriers have few 
forecasting tools to provide the shipping capacity necessary to serve 
their customers.'' Id. at 3. RILA suggests as a partial remedy that the 
Commission explicitly announce that the existence of a service contract 
does not insulate a common carrier from a claim that it violated 46 
U.S.C. 41104(a). This SNPRM should clarify that carriers

[[Page 38795]]

are not immune from 46 U.S.C. 41104(a)'s restrictions because they have 
a service contract with the shipper. Although the Commission does have 
jurisdiction over 46 U.S.C. 41104(a) violations, breach of contract 
claims are not within the Commission's jurisdiction.
---------------------------------------------------------------------------

    \3\ RILA also points to concerns identified in the Commission's 
Final Report on Fact Finding Investigation 29 in which Commissioner 
Rebecca F. Dye emphasized that ``[f]or some time, [she] has been 
concerned that the contracts negotiated by many U.S. importers and 
exporters lack . . . mutuality of understanding and obligation and 
are not enforceable. Without enforceable contracts, shippers are 
unable to protect themselves from volatile shipping rates and ocean 
carriers have few forecasting tools to provide the shipping capacity 
necessary to serve their customers.'' RILA Comments at 3.
---------------------------------------------------------------------------

    Other shippers and trade associations expressed similar misgivings 
about the proposed scope of 46 U.S.C. 41104(a)(10) and the urgent need 
for a solution to refusals that arise past the negotiation stage, i.e., 
after the parties have (or ostensibly have) a contract to transport the 
cargo. The U.S. Dairy Export Council (USDEC) termed these concerns 
``anti-backsliding considerations'' and explained why these post-
negotiation issues urgently need to be addressed and how these concerns 
relate to 46 U.S.C. 41104(a)(10) restrictions on unreasonable refusals 
to deal or negotiate. USDEC Comments at 3-4. As it explained:

    Negotiations between shippers and carriers are functionally 
intended to facilitate the international carriage of goods on an 
ocean vessel. The rule should not permit carriers to negotiate for 
vessel accommodations, only to have those bookings get rolled, 
delayed or cancelled. Disruptions to vessel schedules are 
understandable, but should a pattern emerge where negotiated vessel 
space accommodations are regularly unreliable, that should raise 
questions at the FMC about the intent and purpose of the 
negotiations. Compliance on negotiating for vessel space should be 
done in good faith and not solely as a means of achieving compliance 
without affording the service.

Id. at 4.
    The International Dairy Foods Association (IDFA) raised the same 
concerns and termed them ``de facto'' unreasonable refusals to deal. 
IDFA Comments at 2. IDFA listed multiple examples of de facto 
unreasonable refusals to deal, such as:

skipping or cancelling services to certain ports; changing the port 
of loading; calling on such ports but not alerting exporters to 
their presence; poorly communicating when vessel schedules change; 
providing windows for loading that are impractical due to their 
short length; blank sailings without providing sufficient notice to 
exporters; not pre-positioning containers inland close to export 
customers; providing inaccurate and unreliable vessel, shipment and 
tracking information; and continually rolling export bookings, which 
amounts to an effective denial of service.

Id. at 2-3. IDFA also emphasized the untenable consequence of these de 
facto refusals--``a shipping environment where there is no schedule 
reliability which harms the competitiveness of U.S. export in oversea 
markets.'' Id. IDFA also stated that its members have reported that as 
frequently as 90-100% of the time, their bookings have been rolled or 
canceled. Id.
    IDFA proposed that the Commission address these problems by 
declaring the following actions presumptively unreasonable under 
section 41104(a)(10): (1) a blank sailing with less than six weeks' 
notice; (2) not providing at least 72 hours' notice to load a vessel; 
(3) skipping, suspending, or discontinuing services to ports or 
changing the port of loading despite export demand at such ports; (4) 
not clearly communicating or providing consistent, accurate information 
directly to cargo owners when ships come into port or vessel schedules 
change; (5) rolling a valid export booking; and (6) refusing a booking 
for perishable cargo. Id. at 4 and 7. Most of these actions could not 
logically be considered part of the negotiation stage since in most 
cases, they would occur after shipper and carrier have negotiated a 
deal.
    IDFA criticized the proposed rule as inappropriately ``preoccupied 
with solving unreasonable refusals to deal in specific negotiation and 
discussion contexts,'' which it contends ``is not the heart of the 
problem.'' Id. IDFA states that ``[i]n order to address the bulk of the 
unreasonable refusal to deal issue, a Commission rule must target the 
VOCC [vessel-operating common carriers] policies and procedures that 
systematize and operationalize the de facto unreasonable refusal to 
deal or negotiate with cargo owners.'' Id. at 7-8. The Commission 
acknowledges that these concerns are legitimate and proposes broadening 
the scope of this rulemaking to encompass section 41104(a)(3) as the 
best solution. The revised rulemaking will globally address 
unreasonable refusals prohibited under Section 41104(a) that hamstring 
shippers' attempts to transport their cargo to their overseas buyers.
    The American Chemistry Council (ACC) raised the same concerns and 
pointed out that if the NPRM only covers contract negotiations and 
discussions between carriers and shippers, it will ``leave[ ] a gaping 
hole that will continue to allow unreasonable conduct by'' ocean common 
carriers. ACC Comments at 2. To emphasize that point, it lists numerous 
practices ``that amount to an effective refusal to deal that the NPRM 
does not appear to address.'' Id. The examples ACC recited include 
providing insufficient vessel space allocations; calling on ports but 
not alerting exporters to their presence; poorly communicating when 
vessel schedules change; providing insufficient windows for loading a 
vessel; blank sailings without providing sufficient notice to 
exporters; and repeated rolling of export bookings. Id. at 3-4.
    The American Cotton Shippers Association (ACSA) highlighted the 
same concerns about carriers not loading their containerized export 
cargo. ACSA Comment at 6-7. ACSA submitted numbers showing their 
calculations and comparisons on warehouse pickup performance in terms 
of cotton bales shipped and bales not picked up between August 2019 and 
June 2021. Id. at 7. The Commission has not independently verified 
ACSA's statistics but notes that they reflect the same general concern 
raised by others, namely that unreasonable refusals to deal or 
negotiate is only a part of the export problem that OSRA 2022 was meant 
to address. See also, Comments from Bass Tech International at 1-2 
(noting other ways, besides outright refusal to deal or negotiate, that 
common carriers use to avoid providing service and stating that it ``is 
critical that the NPRM addresses these types of conduct as well''); 
Comments from Members of Congress at 1 (identifying service 
cancellations at ports that agricultural exports rely on, like the Port 
of Oakland, as concerns to be addressed).

B. Distinguishing Between Negotiation Refusals Under 46 U.S.C. 
41104(a)(10) and Execution Refusals Under 46 U.S.C. 41104(a)(3)

    Comments from the USDEC highlight the fallacy of presuming that as 
a practical matter, it will always be feasible to draw a discernible 
line between unreasonable refusals covered by section 41104(a)(10) as 
distinguished from those covered by section 41104(a)(3). See USDEC at 
2-4. USDEC explained how communications between shippers and carriers 
typically flow in the real world. As it explained, shippers' and 
carriers' negotiations are not always neatly confined to rates and 
general terms of service. Id. Rather, negotiations may cover all

matters related to the shipment, such as the cost of the shipment, 
the volume of the shipment (both in terms of total TEU containers as 
well as weight), the timing of vessel accommodations, origin and 
location of shipments, whether the shipment involves any intermodal 
carriage, the inclusion of equipment (containers, reefers, chassis), 
among other details.

Id. at 2-3.

    What these concerns mean as a practical matter is that discerning 
whether a common carrier has unreasonably refused cargo or vessel space 
accommodations is not a simple binary question of determining what 
prevented the shippers' cargo from

[[Page 38796]]

actually being loaded aboard an outbound vessel. That question may be 
bound up with an unbroken series of interactions and communications 
that cannot always be neatly separated into the negotiation stage 
(covered by 46 U.S.C. 41104(a)(10)) and the execution stage (covered by 
46 U.S.C. 41104(a)(3)) of the parties' interactions. Id. at 3-4. USDEC 
suggests the Commission address this concern by defining ``whether 
negotiation can occur on only limited aspects of this scope, or if it 
must encompass all the aspects of a vessel accommodation.'' Id. Instead 
of broadening the scope of section 41104(a)(10) as USDEC suggests, the 
Commission proposes defining unreasonable refusals covered by section 
41104(a)(3) in the same rulemaking. For reasons already discussed, this 
proposed approach is superior to a bifurcated rulemaking that defines 
the two provisions separately. Further, the Commission proposes to 
define what constitute unfair or unjustly discriminatory methods within 
the meaning of section 41104(a)(3) in a separate rulemaking pursuant to 
section 7(c) of OSRA 2022.
3. Reasonableness Factors
    Most commenters addressed the proposed reasonableness factors with 
mixed support for the existence of a documented export strategy or 
policy and the scope of legitimate transportation factors.
a. Documented Export Policy
    The concept of having a documented export policy as stated in Sec.  
542.1(b)(2)(i) of the NPRM was generally supported by ACSA, ACC, CBA, 
IDFA, USDEC, and DOJ. Nearly all commenters in support provided 
additional context for how export strategies should be structured. ACC 
commented that the Commission should make it clear that export 
strategies should include provisions that facilitate exports, not just 
maintain the status quo. ACC at 4-5. ACC also asserted that carriers 
should report every year. ACC at 5.
    Multiple commenters suggested that a more specific definition of 
export strategy should be provided. See CBA at 2, DOJ at 5. IDFA 
further recommends mandatory standards for an export strategy and 
regulations concerning failure to adhere to such standards. IDFA at 9-
11. USDEC recommended that carrier export strategies be made public. 
See USDEC at 3.
    PMSA and WSC opposed the proposed export strategy component for a 
variety of reasons. WSC stated that including an export strategy is 
equivalent to requiring such a strategy and the Commission lacks the 
authority to do so. WSC at 3. They further asserted that the Commission 
failed to explain how such a document would be relevant and to consider 
that they are sensitive business documents. WSC provided additional 
information it believed supports its assertion that the Commission 
lacks the authority to require such a document. WSC at 4. WSC also 
asserted that this proposed requirement will result in the lack of a 
document being interpreted as a per se indicator of unreasonableness, 
resulting in a disadvantage to the carrier. It further asserted that 
the lack of a required ``import strategy'' means that the proposed rule 
would not equally apply to both imports and exports, contradicting an 
assertion included by the Commission in the preamble. It added that 
this criticism should not be interpreted as suggesting that an ``import 
strategy'' document should be required. WSC at 7. Finally, it asserted 
that the lack of specifics on how the export strategy will be used 
further supports WSC's view that such a document should be stricken 
from the list of factors and that any information in such a document 
would not be able to be made public.
    Similarly, PMSA contended that the NPRM ignores imports, and as the 
Commission has no authority to require an import or export strategy 
from ocean common carriers, it cannot use the existence, or not, of 
such a strategy as a factor in the reasonableness analysis. PMSA at 1. 
It further contended that only shippers regard cargo as imports or 
exports and ocean carriers simply regard freight as cargo, regardless 
of the direction of trade.
    The Commission notes the concerns of WSC that export strategies are 
constantly evolving as the nature of international trade changes and 
for this reason does not define an exhaustive list of items that must 
be included in an export policy but instead identifies certain elements 
that would be helpful in determining reasonableness. If an ocean common 
carrier also wanted to provide an import policy to help establish how a 
refusal to deal is reasonable, the Commission would consider that 
information. And while the Commission will not adopt the IDFA 
recommendation that the Commission directly compare a carrier's export 
strategy to key performance indicators, the Commission notes that there 
are many sources of data on the amount and type of freight that 
carriers transport for both imports and exports which provide insight 
into whether the carrier's behavior aligns with its purported policy or 
strategy.
    While WSC is concerned that the lack of an export strategy might be 
considered a per se indicator of unreasonableness, that is not the 
intent behind the inclusion of this provision. The intent is to provide 
carriers with the opportunity to document that their actions align with 
a documented export policy. And while both WSC and PMSA comment that no 
similar documentation was requested for imports, the Commission notes 
that there are few carriers who would need to rely on such a document 
to provide evidence that they intend to serve the U.S. markets when 
their ships are already visiting U.S. ports. On the other hand, a 
cursory glance at the continued decline in containerized exports 
carried by some ocean common carriers raises the question about the 
carriers' operations concerning export trades. Further, while PMSA 
asserts that carriers do not consider exports and imports as separate 
types of cargo, there is ample evidence in comments from the public, 
including WSC, that they do. See, e.g., CMA CGM at 2; AgTC at 2; RILA 
at 2-3. In addition, PMSA's assertion in this regard ignores the 
existence of exporters, such as USDEC and NHC. In this SNPRM, the 
Commission has newly proposed revisions on the use of export policy to 
show what type of information from an existing export policy may be 
useful in establishing that a refusal to deal was reasonable. In Sec.  
542.1(b)(1), the Commission is proposing a definition of ``documented 
export policy.'' Also, the Commission is proposing extensive revisions 
to Sec.  542.2(d) by revising the burden shifting framework found in 
the NPRM (this framework applies even if it is not included in the 
regulatory text) and adding a proposed requirement to have ocean common 
carriers follow and submit to the Commission on a yearly basis a 
documented export policy. It is noted that it is possible that an 
export policy will have different applications in different situations. 
An export policy is a long-term document, but it can shed light on what 
an individual ocean common carrier's best business practice would 
generally be and whether it was adhered to in an individual case. An 
export policy can also address import concerns given that the two are 
interconnected. Proposing a requirement to submit a documented export 
policy to the Commission pursuant to its authority under 46 U.S.C. 
40104 is an important part of monitoring the industry for unreasonable 
behavior vis-[agrave]-vis exports in an effort to address those 
concerns. Also, in Sec.  542.1(d)(1), the Commission identifies what 
type of information

[[Page 38797]]

would be required to be included in a documented export policy that 
would help the Commission determine whether an ocean common carrier's 
conduct in a specific matter aligns with their general policies and 
thus acted reasonably.
b. Legitimate Transportation Factors
    The proposed inclusion of legitimate business factors as one of the 
reasonableness factors was opposed by the majority of commenters. Two 
commenters expressed concerns that legitimate business factors would be 
used to justify rejecting entire classes of cargo, such as hazardous 
materials. NACD at 3 and NITL/ISRI at 9-10. While WSC favored the use 
of legitimate business factors, it objected to a reference to the 
``character of the cargo'' as vague (87 FR 57677) and suggested 
removing it from the final rule (WSC at 11). The Commission clarifies 
that this reference is not intended to allow ocean common carriers to 
wholesale refuse to deal or negotiate with respect to carriage of 
certain categories of cargo, such as hazardous materials. The 
Commission further notes that the definition proposed in the regulatory 
text does not include ``character of the cargo.'' This SNPRM does 
revise the definition of transportation factors to focus the scope more 
squarely on vessel operation considerations.
    Multiple commenters worried about including profit or revenue as a 
legitimate business factor. AgTC cited including revenue factors as 
part of transportation factors will create a ``loophole'' for carriers. 
AgTC at 4-5. Likewise, several commenters suggested dropping profit and 
business decisions or strategies from the list of legitimate factors. 
See BassTech at 3; IDFA at 9-11; IFPA at 1; NITL/ISRI at 10. CMA CGM 
stated that profitability and legitimate business decisions must be 
factors. CMA CGM at 2. WSC suggested adding business decisions to the 
regulatory text. In its view, the scope of business decisions would 
include past poor performance from the shippers, changing port calls 
due to blank sailings or other factors, and balancing import and export 
customer needs. WSC at 9-11. Given the thoughtful and varied comments 
received on the concept of reasonable business decision-making, this 
SNPRM removes the general concept from the definition of 
unreasonableness. Information on business decisions relevant to 
establishing a reasonable refusal to deal, however, would still be 
relevant in the Commission's analysis. The SNPRM does not preclude 
considerations that an ocean common carrier can present when 
articulating its justification for refusing to deal.
    The Commission notes that in its proposed regulatory text at Sec.  
542.1(b)(1) of the NPRM, the term ``transportation factors'' would 
encompass ``the genuine operational considerations underlying an ocean 
common carrier's practical ability to accommodate laden cargo for 
import or export, which can include, but are not limited to, vessel 
safety and stability, scheduling considerations, and the effect of 
blank sailings.'' The Commission notes the disconnect between this 
language and language in the preamble that, ``[a]n ocean common carrier 
may be viewed as having acted reasonably in exercising its business 
discretion to proceed with a certain arrangement over another by taking 
into account such factors as profitability and compatibility with its 
business development strategy.'' In this SNPRM, at Sec.  542.1(b)(2), 
the transportation factors have been changed and the Commission now 
proposes to focus those factors on considerations related to vessel 
operations. Some relevant business decisions do need to be explained as 
part of an export policy. Business decisions that should be explained 
as part of an export policy include providing a justification for why a 
refusal to deal by an ocean common carrier is reasonable when there was 
a blank sailing that affected the ocean common carrier's ability to 
take on a shipment to the detriment of the shipper. Also relevant are 
business decisions that show that the ocean common carrier offered 
alternative remedies or assistance to the shipper after refusing to 
deal or negotiate for vessel space accommodations.
    The Commission further notes, however, profit and business factors 
may be present when engaging in negotiations, but these factors would 
have to be considered alongside other factors presented when the 
Commission is determining what the true driving factor is for refusing 
to deal in a given case and whether that driving factor is reasonable.
    FIATA noted a concern with the characterization of ocean common 
carriers' operational decisions, particularly with request to canceled 
sailings and capacity decisions; namely, that the final rule needed to 
provide clarity around when an ocean common carrier's operational 
decisions, particularly with respect to canceled sailings and capacity 
decisions, will result in a finding of an unreasonable refusal to deal 
or negotiate. FIATA at 1. WSC explained that its list of business 
decisions includes schedule changes, including canceled sailings. WSC 
at 11. The Commission notes the concern from FIATA that since carriers 
control capacity, they might strategically alter capacity to refuse to 
deal or negotiate. Canceled sailings or schedule changes are typically 
driven by decreased demand, port congestion, or changes in service by a 
vessel sharing partner. The Commission notes that evidence that an 
ocean common carrier changes schedules for other purposes would result 
in those changes not being considered a legitimate transportation 
factor under Sec.  542.1(b)(2)(iii) of the NPRM. This SNPRM proposes 
changes to the transportation factors definition at Sec.  542.1(b)(2) 
that addresses these concerns.
    ACC and IDFA suggested that shippers' lost sales be considered a 
reasonableness factor. ACC at 4; IDFA at 8. As noted elsewhere, the 
rule allows the Commission to consider any relevant factor in 
determining whether a refusal to deal or negotiate was unreasonable. 
The focus of the definition of reasonableness, however, is on the ocean 
common carrier's conduct rather than the impact on the shipper. 
Generally, however, transportation factors relate to the 
characteristics of the vessel, not the status of the shipper.\4\
---------------------------------------------------------------------------

    \4\ See, e.g., Credit Practices of Sea-land Serv., Inc., & 
Nedlloyd Lijnen, B.V., No. 90-07, 1990 WL 427463 (F.M.C. Dec. 20, 
1990); Dep't of Def. v. Matson Navigation Co., 19 F.M.C. 503 (1977).
---------------------------------------------------------------------------

    Finally, commenters addressed the key role of contract carriage in 
ocean transportation and expressed concerns that the rule will 
interfere with contract carriage. DOCE at 5-6, WSC at 14. The 
Commission notes that service contracts are key to ocean carriage and 
the intent of the rule is not to dictate a return to carriage under 
tariff, nor is it intended to interfere with the substance of service 
contracts reached between parties. Presumably, an enforceable service 
contract would not allow for the type of conduct that the Commission 
would be likely to consider an unreasonable refusal to deal or 
negotiate, and if a service contract is materially breached, the 
parties have remedies that are beyond the Commission's purview. The 
Commission also recognizes that, as stated in the preamble, its ``role 
is not to ensure all interested parties get the same deal,'' and 
understands that ``me too'' contracts were abolished in the Ocean 
Shipping Reform Act of 1998. Fully cognizant of the privilege that 
private parties may enter into their own service contracts, the 
Commission means to clarify here that, regardless of contract status, 
an ocean common carrier may not effectively bar a shipper,

[[Page 38798]]

including one without a service contract, from having direct access to 
ocean common carriage by failing or refusing unreasonably to deal or 
negotiate the terms of such carriage. This can include an ocean common 
carrier's failure or refusal to timely provide a rate quotation upon 
request or to refuse to provide required ancillary intermodal services, 
if available.
3. Elements
    Pursuant to OSRA 2022 and Commission precedent, the Commission 
proposed that complainants would be required to meet three elements to 
establish a violation for unreasonable refusal to deal or negotiate. As 
indicated in the NPRM, the elements would apply in cases where the 
allegation relates to vessel space accommodations by an ocean common 
carrier. As proposed, the elements were derived directly from the 
statutory text established in OSRA 1998 and are: (1) the respondent is 
an ocean common carrier under the Commission's jurisdiction; (2) the 
respondent refuses to deal or negotiate with respect to vessel space 
accommodations; and (3) that the refusal is unreasonable. See 87 FR 
57679.
    Commenters were generally supportive of the proposed elements, see, 
e.g., BassTech at 1; MICA/NAMI at 2; NFI at 2, although some specific 
comments expressed concerns regarding the impact of the rule in general 
and meeting the required elements. As noted earlier, DOJ worried that 
satisfying the ``refusal to deal'' and ``unreasonable'' elements would 
be difficult. DOJ at 4-5. While NHC viewed the proposal as falling 
short of the objective of ensuring the carriage of export containers, 
see NHC at 1, most other comments regarding the proposed elements 
sought a lengthier or stronger definition of ``refusal'' and 
``unreasonable,'' but did not criticize the elements as a whole. See 
MICA/NAMI at 3-4; NITL/ISRI at 6-7, 13-14; RILA at 1, 5 (suggesting 
additional clarifying language for the proposed regulatory text for 46 
CFR 542.1(c)(2)); Tyson at 1. This SNPRM includes changes to the 
definition of unreasonable to include a non-exhaustive list of 
scenarios of unreasonable conduct and to propose the removal of 
business decisions from the definition. Regarding PMSA's concerns that 
the elements of the proposed rule may impact individual contract 
negotiations addressing price, volume, timing, payment, delivery, prior 
experiences, dual commitment contracts and all other factors that are 
addressed, see PMSA at 1, the Commission notes that this rule does not 
dictate the contractual terms that may be reached between an ocean 
common carrier and a shipper.
4. Definitions
    As the Commission noted in its preamble discussion for its 
proposal, neither the Shipping Act, as amended, nor OSRA 2022 define 
the phrase ``vessel space accommodations,'' and this phrase has not 
been interpreted in prior Commission matters. Therefore, the Commission 
proposed to define ``vessel space accommodations'' generally as space 
provided aboard a vessel of an ocean common carrier for laden 
containers being imported to, or exported from, the United States. In 
this SNPRM, the Commission also clarifies that ``vessel space 
services''--i.e., the services necessary to access or book vessel space 
accommodations--are included in the definition of ``vessel space 
accommodations.'' This definition continues to be based on the common 
meaning of the words in the phrase as applied in ocean shipping.
    Because the phrase ``refusal to deal or negotiate'' does not lend 
itself to a general definition, the Commission proposed using a case-
by-case evaluation. This SNPRM proposes a revised definition of 
unreasonableness after further consideration of the comments received. 
Additionally, the proposed definition now includes a non-exhaustive 
list of examples of unreasonable conduct.
a. Vessel Accommodations
    The Commission received several comments regarding its proposed 
``vessel space accommodations'' definition. Comments were generally 
supportive, with a few suggestions and critiques. In broad summary, the 
comments urged the Commission to broaden its definition of ``vessel 
space accommodations'' to include access to vessel space 
accommodations, meaning the services to book vessel space, the 
equipment to obtain vessel space, and other ancillary services that 
would impact exporters' ability to obtain vessel space. While some 
comments supported the proposed definition but urged expansion, others 
withheld support due to the definition's perceived narrow 
interpretation.
    First, the National Industrial Transportation League (NITL) and 
Institute for Scrap Recycling Industries (ISRI) asked that the 
Commission broaden its definition of vessel space accommodation to 
include ``vessel services.'' NITL/ISRI at 7. Without the expansion, the 
NITL and ISRI contended that the proposed rule ``fails to adhere to the 
intent of Congress.'' Id. Similarly, the Agriculture Transportation 
Coalition (AgTC) says the rulemaking and the above definition is unable 
to ``recognize the various means the carriers decline to carry export 
cargo.'' AgTC at 1. While AgTC did not critique the ``vessel space 
accommodations'' definition specifically, it deliberately used the 
phrase ``export cargo'' instead of ``vessel space accommodations'' when 
discussing unreasonable refusals to deal or negotiate. Vessel space 
accommodation and export cargo hold different meanings. The Commission 
interprets this deliberate use of ``export cargo'' as a suggestion to 
revise the vessel space accommodation definition to refer specifically 
to ``export cargo.'' As explained elsewhere, this proposed rule applies 
to both import and exports. The differences between the ``vessel space 
accommodations'' definition and ``cargo space accommodations'' will be 
addressed below.
    Second, the International Federation of Freight Forwarders 
Associations (FIATA) asked the Commission to clearly define vessel 
space accommodations to give context to ``operational decisions'' by 
ocean common carriers that result in a refusal to deal or negotiate. 
FIATA at 1. It listed ``operational decisions'' as common carrier 
actions to ``carry out blank sailings, withdraw or reposition capacity, 
and impose peak season surcharges.'' Id. BassTech also asked the 
Commission to revise the proposed definition of ``vessel space 
accommodation.'' BassTech at 1. Although it agreed with the 
Commission's proposed definition, it asked the Commission to consider 
the processes and practices that would obstruct a shipper from 
obtaining vessel space. Id. at 2.
    Third, related to the Commission's proposed definition of vessel 
space accommodations, the National Customs Brokers & Forwarders 
Association of America, Inc. (NCBFAA) suggested that non-vessel-
operating common carriers (NVOCCs) be excluded from the rule because 
they do not control vessel space accommodations. NCBFAA at 2-3. It 
cited the inability of these entities ``to control vessel space 
accommodations.'' Id. at 2. The Commission recognizes the role NVOCCs 
play and concur that their exclusion is appropriate as they do not 
control vessel space accommodations. Thus, like the proposed rule, this 
SNPRM only applies to ocean common carriers.
    The Commission notes the potential hardships a narrow reading of 
``vessel space accommodations'' would impose on certain industry 
members. In the

[[Page 38799]]

Commission's view, services that would impact the actual acquisition of 
a ``vessel space'' could also be used by ocean common carriers to 
frustrate shippers and amount to an ``unreasonable refusal to deal or 
negotiate.'' Therefore, the definition of ``vessel space 
accommodations'' necessarily implies that ``vessel space services,'' 
i.e., the services necessary to access or book vessel space 
accommodations, are included. Thus, this SNPRM adds a sentence to the 
definition to acknowledge that vessel space services are included.
5. Shifting Burden From Complainant to Ocean Common Carrier
    The Commission's initial proposal also set forth a framework for an 
ocean common carrier to establish that its efforts to consider an 
entity's proposal or efforts at negotiation were done in good faith 
based on the criteria above. Once a complainant (or the BEIC) has 
established a prima facie case for each of the three elements above, 
the ocean common carrier will have the burden of production to show or 
justify why its refusal was reasonable. However, the ultimate burden of 
persuasion remains with the complainant to show that the refusal to 
deal or negotiate was unreasonable. Further, the proposed rule included 
a rebuttable presumption of unreasonableness for those situations where 
an ocean common carrier categorically excludes U.S. exports shipments.
a. Burden-Shifting
    The Commission received various comments with regard to the 
proposed burden-shifting regime in the NPRM. Three entities (ACSA, 
NACD, NFI) supported the burden-shifting regime laid out in the NPRM 
without further comment. ACSA at 10; NACD at 4; NFI at 2. Three 
entities (AgTC, CBA, IDFA) commented that the ultimate burden should be 
on the ocean common carriers, not the shippers, due to the ocean common 
carriers' superior access to real-time data on space availability. AgTC 
at 5-6; CBA at 2; IDFA at 3-4. CMA CGM commented that Congress did not 
expressly direct the Commission to incorporate a burden-shifting regime 
as part of the proposal, as it did with regard to charge complaints. 
CMA CGM at 2-3.
    Other entities supported the burden-shifting regime, but with 
caveats. AgTC and WSC supported the approach but pointed out that the 
burden-shifting explanation in the preamble is not in the proposed 
regulatory text. AgTC at 5; WSC at 15. BassTech supported the proposal 
so long as the carrier's evidence can be challenged (which, as noted 
below, would occur in Step 3). BassTech at 3-4. MICA/NAMI suggested 
that the Commission should also consider whether the carrier has 
actually engaged in good-faith communications and negotiation. MICA/
NAMI at 3. NITL/ISRI strongly supported burden-shifting but did not 
want a carrier's self-certification to be given dispositive or outsized 
weight (this SNPRM proposes the deletion of the self-certification 
provision). NITL/ISRI at 14-15. RILA broadly supported burden-shifting 
but asked it to be more closely aligned with the charge complaints 
procedure found in 46 U.S.C. 41310(a) and (b). RILA at 1, 4. Several 
entities (ACSA, CBA, IDFA) sought the addition of time limits on 
carrier responses, especially in cases dealing with refusals of 
perishable goods. ACSA at 10-11; CBA at 3; IDFA at 4.
    The Commission has given careful consideration to the comments 
received on its proposed burden-shifting approach. As a preliminary 
matter, the Commission notes that this SNPRM proposes to continue using 
the process followed in cases arising under the Administrative 
Procedure Act (APA). The initial burden of production is with the 
complainant (Step 1). If the complainant can satisfy its initial burden 
of producing evidence sufficient to make out a prima facie case of a 
violation, the burden then shifts to the respondent to produce evidence 
sufficient to rebut the complainant's prima facie case (Step 2). But 
the ultimate burden of persuading the Commission always remains with 
the complainant (Step 3). See 46 CFR 502.203; 5 U.S.C. 551-559. 
Although a given practice could be treated as per se unreasonable, the 
occurrence of which would suffice to create a prima facie case of an 
unreasonable refusal to deal and trigger the ocean common carrier's 
burden to produce evidence that the refusal was not unreasonable and 
thus move the case directly to Step 2, the complainant or BEIC would 
still have to persuade the Commission in Step 3 that the refusal was 
unreasonable.
    Congress tasked the Commission with defining whether a particular 
action is an unreasonable refusal to deal or negotiate with respect to 
vessel space under 46 U.S.C. 41104(a)(10). It did not prescribe a 
particular method for the Commission to follow in developing this 
definition and it did not proscribe the Commission from using any 
particular approach. Thus, the Commission adopts the existing process 
for APA cases and notes in proposed Sec.  541.2(k) that the standard is 
based ``in accordance with applicable laws'' such as the APA. The 
Commission also proposes to include Step 3 so that the full standard is 
available in the regulatory text.
    As to the additional suggested modifications of the proposed 
burden-shifting approach, the Commission does not adopt them at this 
time. The Commission believes that the approach laid out in this SNPRM 
sufficiently expresses its expectations as to what is required and 
provides a reasonable approach that will effectively produce the 
information needed to allow the Commission to decide whether a given 
matter involves an unreasonable refusal to deal or negotiate.
    Regarding the inclusion of specific aspects such as the application 
of time limitations in the context of cases involving perishable goods, 
the Commission may consider the inclusion of such conditions within a 
given case as appropriate but has opted not to mandate such limits 
consistent with our case-by-case approach. Regarding suggestions that 
the procedure be modified to more closely align with that which 
Congress detailed for charge complaints under 46 U.S.C. 40310, the 
Commission also does not adopt such an approach because section 40310 
on charge complaints does not apply to refusal to deal cases. 
Similarly, the evidence produced by the ocean common carrier in making 
its case that refusal to deal or negotiate was not unreasonable is 
subject to challenge by the opposing party, and all evidence, as in any 
contested case, will be subject to scrutiny by the Commission. 5 U.S.C. 
556(d).
b. Rebuttable Presumption
    A number of commenters responded to the Commission's proposed 
rebuttable presumption approach. For the most part, commenters 
generally favored the Commission's proposal, with some strongly 
favoring it, see ACSA at 5; MICA/NAMI at 2; Tyson at 1, others offering 
general support, see NCBFAA at 2; NFI at 2; RILA at 1; and others 
offering suggestions along with their support. See NITL/ISRI at 14; 
PMSA at 3; WSC at 16. One commenter opposed the approach (and the 
proposal as a whole) as being insufficient in protecting exporters from 
being denied service whenever there is available cargo space on a 
vessel and urged that the proposal be revised to limit exceptions and 
clearly define when it is unreasonable for carriers to deny service. 
NHC at 1-2.
    With respect to those commenters who offered specific suggestions 
for the Commission to consider, NITL/ISRI

[[Page 38800]]

suggested that the regulatory text should include language specifying 
that a rebuttable presumption of unreasonableness applies in those 
cases where an ocean common carrier categorically excludes U.S. exports 
from its backhaul trips from the United States. NITL/ISRA at 14. PMSA 
offered a number of specific factors for the Commission to use in 
establishing a rebuttable presumption of reasonableness: (1) the 
presence of Federal, state or local/port policies that advocate the 
prioritization of the export of empty containers either through stowage 
plans or through the use of sweeper vessels; (2) prior experience with 
individual cargo owners who have engaged in unlawful or improper 
behavior (e.g., misdeclaration of cargo or shipment of hazardous cargo 
that has caused or threatened the safety of a vessel and/or that has 
given rise to adverse governmental action, penalties, fines or other 
liability); (3) a history of late or nonpayment of services; (4) 
whether viable alternatives exist, whether through other VOCCs or via 
NVOCCs, Ocean Freight Forwarders or through Shippers' Associations; (5) 
the failure to provide contracted amount of cargo or to meet minimum 
quantity commitments or a history of falling down (i.e., cancellation 
by either party) or making ghost bookings; (6) changes in vessel 
rotations due to inland congestion or other factors beyond the 
carrier's control; (7) whether the export customer is prepared to pay 
prevailing market freight rates for shipments together with all 
reasonable charges associated with the destination; and (8) whether the 
export destination is one with sufficient infrastructure to handle the 
return of equipment (containers, chassis) such that a return shipment 
and/or repositioning can be accomplished at a reasonable time and cost. 
PMSA at 3.
    The WSC suggested that the Commission modify the proposed 
regulatory text for the shifting of the burden of production to 
emphasize that the burden of persuasion ultimately remains with the 
complainant or BEIC:

    A complainant (or the BEIC) may seek to establish a violation of 
46 U.S.C. 41104(a)(10) by producing sufficient evidence to establish 
a prima facie case of a violation. If a complain[ant] (or the BEIC) 
establishes a prima facie case of a violation, the burden of 
production shifts to the ocean common carrier to rebut the 
complainant's [or the BEIC's] evidence and justify that its actions 
were reasonable. Once the ocean common carrier has fulfilled its 
burden of production, the burden of persuasion rests with the 
complainant (or BEIC) to prove its case.

WSC at 16. The Commission is proposing to include similar language in 
Sec.  541.2(k)(3).

    Regarding the specific suggestion offered by the NITL/ISRA, the 
Commission notes that the regulatory text proposed in this SNPRM is 
sufficient to cover those situations where an unreasonable refusal to 
carry U.S. exports occurs. The inclusion of the specific example of a 
carrier's exclusion of U.S. exports from a backhaul trip is unnecessary 
given the criteria for evaluating whether an ocean common carrier's 
action is unreasonable. While PMSA's specific examples are illustrative 
of the types of factors that the Commission may consider when 
evaluating a specific claim, including these examples within the 
regulatory text is also unnecessary for similar reasons. However, the 
Commission notes that this rulemaking does not restrict the ability of 
ocean common carriers to reposition empty containers, including through 
use of sweeper vessels. As for the WSC's suggested rewriting of the 
proposed regulatory text for the shifting of the burden of production, 
the Commission is proposing language that shows that the burden of 
persuasion lies with the complainant within the regulatory text.
6. Certification
    The proposed rule also sought to include a mechanism for an ocean 
common carrier to justify its actions through means of a certification. 
Although the proposal did not require a certification for this purpose, 
the Commission indicated that it was considering whether to make 
certification by a U.S.-based compliance officer mandatory. The 
Commission also noted that any justification must be directly relevant 
and specific to the case at hand and further noted that information or 
data supporting generalized propositions would not be helpful in 
determinations of reasonableness for a specific case. Instead, a 
certification should document the ocean common carrier's decision in a 
specific matter, the good faith consideration of an entity's proposal 
or request to negotiate, and the specific criteria considered by the 
ocean common carrier to reach its decision. The Commission explained 
that certification in this context meant that an appropriate U.S.-based 
representative of the ocean common carrier attests that the decision 
and supporting evidence is correct and complete. An appropriate 
representative can include the ocean common carrier's U.S.-based 
compliance officer. As explained above, however, certification by a 
compliance officer that a refusal to deal was not unreasonable, and the 
evidence underlying the certification, are elements that the Commission 
will consider in the context of deciding the case. The Commission will 
receive evidence that is relevant and will give it the appropriate 
weight. Certification by a compliance officer would be but one factor; 
it does not automatically end the case in favor of the ocean common 
carrier.
    Some commenters supported the proposed certification. See BassTech 
at 3-4 (supported so long as the certification can still be disputed), 
DOJ at 5; MICA/NAMI at 2; NCBFAA at 2; NFI at 2; Tyson at 1 (supporting 
MICA/NAMI comments). Others raised concerns. See NACD at 4 (indicating 
that while it did not oppose the use of an optional certification by 
carriers it harbored concern over that certification being given undue 
weight in determining reasonableness); NITL/ISRI at 15 (expressing 
concern over undue weight being afforded to carrier decisions when 
evaluating reasonableness under the proposed certification approach); 
WSC at 15-16 (suggesting that (1) the proposed certification method be 
only one of a variety of permissible ways for an ocean common carrier 
to demonstrate reasonableness, (2) ocean common carriers who do not 
certify not be prejudiced, (3) the Commission explain the probative 
value of certifying, and (4) the Commission explain why it is 
considering making certification by a U.S.-based compliance officer 
necessary). Still other commenters expressly opposed allowing any self-
certification by carriers. See IDFA at 10-11 (opposing carrier self-
certification and suggesting that certification be continuous and 
overseen by an independent third party), NHC at 1-2 (generally critical 
of the proposal in its entirety).
    After carefully considering these comments, the Commission has 
decided not to adopt a mandatory requirement that the certification be 
made by a U.S.-based compliance officer. Although self-certification 
could have provided some useful information, a robust and mandatory 
self-certification approach would require a more holistic and costly 
approach and the Commission finds it is not necessary at this time.
7. Other Issues
    Finally, the Commission received a number of comments that did not 
fall within the categories already discussed. These comments covered a 
broad range of topics ranging from simply offering

[[Page 38801]]

the commenter's expertise through further individualized discussions to 
help better understand the Commission's proposal (e.g., Lanca at 1) to 
more in-depth suggestions falling outside the immediate scope of the 
proposal (e.g., Tyson at 1-2 (suggesting that the Commission require 
carriers to provide accurate forecasting and updated information to 
ensure that shippers can position their shipments at port terminals 
within agreed-upon time windows, supporting greater transparency with 
respect to vessel capacity, loading timeframes, and vessel schedule 
changes that would impact contracted delivery times, and urging the 
Commission consider how it plans to address forthcoming changes to 
import rotation and the impact of these changes on port congestion)). 
Some of these issues are under consideration in the Maritime 
Transportation Data System project. See https://www.fmc.gov/fmc-maritime-transportation-data-initiative/.
    AgTC and IDFA both commented that the proposal failed to deal with 
``de facto unreasonable refusals to deal'' that are not the product of 
negotiations, but rather are dropped on the shipper by the carrier at 
the last minute. AgTC at 3; IDFA at 2-3. FIATA suggested that the 
Commission should address whether the rule applies to shipments of 
foreign cargo as long as there are some U.S. shipments involved in the 
same service contract. FIATA at 2. BassTech appreciated that the status 
of the shipper is not a legitimate transportation factor sufficient to 
refuse a booking but expressed concern that a shipper's status could 
nevertheless be grounds for a refusal based on a reasonable business 
decision (i.e., especially with regard to hazardous cargo). BassTech at 
3. ACC believed that the proposed rule failed to consider the negative 
effect on the exporter of a refused booking. ACC at 2. CBA argued that 
there should be a national data portal or similar information 
technology infrastructure to allow all parties to have access to all 
the relevant booking and space-availability data. CBA at 3. CMA CGM 
commented that ``me too'' contracts were abolished in 1998 and parties 
must continue to be free to contract as they wish. CMA CGM at 2.
    MICA/NAMI noted that difficulties in getting perishable cargo 
shipped has led to the loss of business for U.S. suppliers and enabled 
in-roads by competitors in Europe and Australia. MICA/NAMI at 2. They 
cited to export data showing blank sailings rose as chilled beef and 
pork exports to high-value markets declined. MICA/NAMI at 2. MICA/NAMI 
also pointed to insufficient information shared by ocean common 
carriers regarding vessel schedules and space availability as factors 
complicating the ability of shippers to identify alternate routes or 
means of transportation for their products. MICA/NAMI at 3. MICA/NAMI 
further noted that ocean common carriers often cancel meat and poultry 
export bookings up to the sailing date with no warning to shippers and 
that its member experiences with ``failures to deal or negotiate'' on 
detention and demurrage fees posed a major problem. MICA/NAMI at 3. 
They also urged that ``[i]n cases where a carrier may be holding cargo 
until an invoice is paid regardless of its validity, the lack of a 
clear channel of communication to challenge the billing statement is 
unconscionable and should be addressed by the FMC'' as part of this 
(and other) rulemakings. MICA/NAMI at 3.
    As indicated elsewhere, this supplemental proposal addresses the 
criteria that the Commission will consider in evaluating whether there 
has been a refusal to deal or negotiate, which will occur on an 
individualized basis. The Commission appreciates the additional 
feedback provided regarding the field experiences shared by MICA/NAMI 
members. These experiences will be considered as appropriate within the 
context of a given case. Also, some proposals may be outside the scope 
of this rule and/or better addressed by other Commission initiatives 
such as the Demurrage and Detention Billing Requirement rule, 
Commission's Docket No. 22-04, other future rulemakings or the Maritime 
Transportation Data System project.
    NAM observed that ocean common carriers own and operate the ships 
(and often, the containers) used in ocean transit and noted that any 
enforcement measures should be directed towards those parties 
responsible for schedules and operational disruption. NAM at 2. NAM 
also generally noted that disruptions to the supply chain have a ripple 
effect and indicated that ``[e]stablishing minimum notification 
thresholds for ocean common carriers as they plan strategic equipment 
movement and port calls would ease burdens for all shipping partners 
and enhance system-wide transportation supply chain reliability.'' NAM 
at 2. NAM also noted that the prominence of blank sailings and a rising 
propensity/apparent partiality of ocean common carriers to accept empty 
containers for profitability goals are linked to economic viability and 
competitiveness for U.S. manufacturers and encouraged the Commission to 
consider these factors in this rulemaking. NAM at 2-3.
    The Commission acknowledges the disruptions noted by NAM and 
appreciates the concerns it raised with respect to the impacts these 
disruptions have on the overall supply chain. With respect to the 
factors noted by NAM regarding the evaluation of blank sailings, the 
Commission notes that the causes of blank sailings may vary, ranging 
from inclement weather, force majeure events, port congestion, vessel 
mechanical failure and a steep decline in demand. As a result, an 
individual ocean common carrier may not necessarily have control over 
the causes leading to blank sailings. While the impacts of these 
actions often lead to cascading negative impacts, the Commission's 
focus in the context of this rule is to address instances where ocean 
common carriers fail to mitigate the impacts flowing from blank 
sailings and other similar actions instead of actively working with the 
shipper to get alternative accommodations for the freight. In its 
evaluations, the Commission anticipates that it will consider the 
relevant facts present in an individual situation to determine whether 
those actions by an ocean common carrier fall within the scope of the 
definition being set out as part of this SNPRM.
    NCBFAA suggested that NVOCCs be excluded from the scope of the rule 
and described the supportive role that NVOCCs play in helping their 
customers navigate the complex ocean shipping industry by securing 
competitive pricing and favorable transportation routes by using the 
unique industry experience and relationships NVOCC have developed with 
ocean common carriers. NCBFAA at 2. NCBFAA emphasized that NVOCCs, 
unlike ocean common carriers, do not control vessel space 
accommodations. NCBFAA at 2-3. This SNPRM continues to restrict its 
application to VOCCs and does not include NVOCCs at this time. The 
Commission agrees that NVOCCs, unlike ocean common carriers, do not 
control vessel space accommodations.
    NFI noted its members continue to face carrier-related shipping 
issues, including unpredictable dwell times; exponential increases in 
demurrage and other port-related costs; unfair and discriminatory 
commercial practices against shippers by oceangoing carriers and 
NVOCCs; shortages of containers, chassis, and labor; dramatically 
higher tariff/contract rates for oceangoing freight; and limited cold 
storage availability. NFI at 2.
    The Commission acknowledges the presence of the issues noted by NFI 
but also notes that issues centering on

[[Page 38802]]

container, chassis, and labor shortages are, in many cases, not 
carrier-related in origin. This SNPRM may not necessarily directly 
resolve each of these issues, but the Commission acknowledges that 
shippers face significant stresses stemming from supply chain 
congestion and also notes that these factors fall outside the scope of 
the Commission's task in defining what constitutes an unreasonable 
refusal to deal or refusal to negotiate.
    NITL/ISRI asserted that blank sailing decisions must be reasonable 
to justify refusals to deal or negotiate, such as being based on a 
legitimate need to right-size supply based on demand rather than an 
action to reduce capacity to artificially inflate prices. NITL/ISRI at 
11.
    As noted previously, blank sailings may be attributed to a variety 
of causes that may fall outside of an ocean common carrier's control. 
The Commission notes that an ocean common carrier's refusal to deal or 
negotiate within a blank sailing context must also be weighed against 
an ocean common carrier's efforts to mitigate the impacts on its 
customers when a blank sailing (or other similarly adverse outcome due 
to vessel schedule changes, including timing and port calls) occurs. 
Through this SNPRM, the Commission is setting forth the criteria that 
will be applied to determine whether a given refusal to deal or 
negotiate satisfies the condition of being unreasonable. Such a 
determination will necessarily include a consideration of the 
mitigating steps taken by an ocean common carrier to work with its 
shipper customers. The Commission will monitor these activities and act 
accordingly. Any future refinements to the Commission's regulations may 
be considered, if appropriate.
    PMSA asserted that the proposal ignored imports even though imports 
are part of the overall network. PMSA at 1. It added that the proposal 
also did not mention the roles of shipper associations, NVOCCs, and 
ocean freight forwarders. PMSA asserted that these entities can 
collectively combine their bargaining power and provide export-related 
support to individual shippers and their respective roles should factor 
into any export policy or inquiry. PMSA at 2.
    The September 2022 proposal specifically noted that the current 
statutory framework does not distinguish between U.S. exports or 
imports and that it would apply to both. See 87 FR 57674. The 
Commission recognizes that imports are an inherent component of the 
overall shipping network and the application of this rule to both 
imports and exports reflects that recognition. As to the roles of those 
entities who are not VOCCs, the Commission notes that while this SNPRM 
would apply only to VOCCs, the roles of other entities who play a role 
in potential Shipping Act violations would be addressed in the context 
of the appropriate statutory provisions applicable to those violations, 
such as those provided under 46 U.S.C. 41102 and 41104, and the 
Commission will evaluate those violations as appropriate.
    RILA urged the Commission to strengthen the language of its 
proposal, particularly with respect to its applicability to conduct 
occurring in the context of an existing service contract relationship 
to help ensure that the rule addresses the concerns and real-world 
experiences of U.S. importers and exporters. RILA at 1. RILA also 
emphasized that the Commission should account for the circumstances and 
criteria relevant to U.S. importers in addition to exporters. RILA at 
2. It noted that many U.S. importer plans were disrupted when VOCC 
contract partners abruptly stopped providing cargo space for which 
importers had contracted, thereby forcing them onto the spot market and 
its accompanying higher rates. RILA at 2.
    The Commission assumes that in those instances where a service 
contract already exists between an ocean common carrier and a shipper, 
a refusal to deal or negotiate would be addressed within the context of 
the provisions of the agreement made between those parties and the 
remedies afforded when there is a breach of contract. However, it is 
possible that there are circumstances in which a contract is silent on 
what to do if there is a refusal to deal or negotiate within the bounds 
of the contractual relationship. The Commission is interested in 
comments identifying those situations where a contract does not address 
how a refusal to deal with respect to vessel accommodations would be 
remedied.
    In addition to the issues noted earlier, Tyson stated that the 
proposed rule would enable the Commission to ensure carriers are 
``providing a sound business rationale for either failing to accept a 
booking request or failing to fulfill an existing booking agreement.'' 
Tyson at 2. It added that changes are needed ``to ensure the flow of 
information is balanced and allows each party, both carriers and 
shippers, to have fair and informed discussions regarding vessel 
space.'' Tyson at 2.
    The Commission acknowledges the importance of ensuring that a 
sufficient information flow exists between ocean common carriers and 
shippers regarding vessel space, but this particular issue falls 
outside the scope of this rulemaking.
    USDEC indicated that the regulations that the Commission adopts 
must emphasize consistency and to this end, suggested that the 
Commission establish a ``consistency test'' to help it assess whether a 
carrier is deviating from its past practices with respect to 
negotiating for vessel accommodations. USDEC at 3. It also suggested 
that the Commission consider what information a shipper should retain 
to substantiate a violation under whatever regulation is adopted. USDEC 
at 3. In its view, the adopted regulations should result in increasing 
a shipper's ability ``to effectively seek and secure vessel space 
accommodations in a competitive marketplace.'' USDEC at 3. With respect 
to the scope of negotiation, USDEC suggested that the Commission 
outline ``whether negotiation can occur on only limited aspects'' or 
all aspects of vessel accommodation such as the shipment's cost, 
volume, origin or location, and the involvement of intermodal carriage. 
USDEC at 3-4. USDEC suggested that the Commission consider adopting 
``anti-backsliding'' provisions as part of its rule to ensure that 
carriers negotiate in good faith and to prevent carriers from engaging 
in a pattern of rolling, delaying, or cancelling shipper bookings. 
USDEC at 4. Additionally, USDEC asserted that the Commission should 
consider the impacts to shippers from a failure to negotiate on vessel 
accommodations within the context of potential enforcement actions and 
penalties for violations, impacts such as those on potential lost 
sales, diminished product values, additional shipping costs, and 
increased administrative costs. USDEC at 4-5. USDEC added that 
penalties imposed by the Commission should operate as a deterrent to 
willful or negligent violations of the regulations and be sizable 
enough to encourage corrective action by the carrier. USDEC at 5.
    The Commission agrees that its rules should be applied consistently 
after a careful consideration of the facts presented in a given case. 
Regarding the types of information that a shipper should retain to 
substantiate a potential violation, each shipper should retain those 
materials that it believes clearly demonstrates that the violation 
being alleged has occurred. This information may differ based on the 
specific circumstances involved and may involve items such as (but not 
limited to) the documenting of attempts to reach an ocean common 
carrier and, if available, written communications indicating a refusal 
by an ocean

[[Page 38803]]

common carrier. The scope of any negotiation will depend on the 
individual circumstances that present themselves and the Commission 
will evaluate those circumstances as they appear in a given case as 
appropriate. Consideration of an anti-backsliding provision to ensure 
that ocean common carriers negotiate in good faith and do not engage in 
a pattern of disrupting shipper bookings, along with the setting of 
appropriate penalties for violations, are issues falling outside the 
scope of this specific rulemaking but may be considered in the context 
of other rulemakings as well as enforcement actions taken by the 
Commission.

III. Proposed Changes to the NPRM

    The Commission is modifying aspects of the NPRM in this SNPRM after 
evaluating the proposed rule in light of the comments received. The 
SNPRM proposes to modify the definition of transportation factors to 
focus on vessel operation considerations. The SNPRM proposes a revision 
of the definition of the term unreasonable as well as includes a non-
exhaustive list of examples of unreasonable conduct. This change is 
intended to provide a better idea of what types of conduct that 
Commission believes would generally be considered unreasonable. The 
Commission proposes to clarify that vessel space services were already 
included in the definition of vessel space accommodations and add a 
definition for cargo space accommodations as well. It also includes new 
text discussing the relationship between 46 U.S.C. 41104(a)(3) and 
(a)(10) and the elements required to establish violations of those 
provisions. Also, many comments expressed concerns about how business 
decisions would affect the overall analysis and thus this SNPRM changes 
how business decisions will be considered. This SNPRM then revises the 
voluntary export policy documentation language and proposes that ocean 
common carriers submit a documented export policy to the Commission 
once per year. It also revises the burden shifting framework to clarify 
that it applies even if it was not included in the rule and notes that 
the ultimate burden of persuasion lies with the complainant or BEIC. 
Finally, this SNPRM proposes to remove the voluntary certification 
provision as it is not necessary.

A. Section 542.1(b)--Definitions

    In Sec.  542.1(b), this SNPRM proposes a new definition of ``cargo 
space accommodations,'' ``documented export policy,'' and ``sweeper 
vessel.'' It also proposes to modify the definitions for 
``transportation factors'' and ``unreasonable,'' and ``vessel space 
accommodations.'' After careful consideration of the comments, these 
proposed definitions now provide more clarification and specificity to 
allow parties to identify unreasonable refusal to deal more easily.
    The proposed definition of ``cargo space accommodations,'' like the 
definition of ``vessel space accommodations'' has not been interpreted 
in prior Commission matters. The two definitions are similar because 
both terms are part of concepts aimed at preventing similar conduct at 
different points of a shipping transaction. Because the term ``cargo 
space accommodations'' concerns situations where the parties have an 
existing relationship and/or already mutually agreed on terms and 
conditions via a booking confirmation, it is presumed that there is 
some evidence that negotiation for space aboard the vessel has already 
occurred. The Commission is interested in comments addressing if, in 
fact, that space has been agreed to at the time of a booking 
confirmation.
    The new proposed definition of ``vessel space accommodations'' 
means space that is available aboard a vessel. Since 46 U.S.C. 
41104(a)(10) prohibits unreasonable refusals during the negotiation 
stage--when the parties do not have an existing relationship and/or are 
initiating negotiations over terms and conditions of service, it is 
presumed that space has not yet been provided but that it may be 
available.
    Both definitions, ``cargo space accommodations'' and ``vessel space 
accommodations'' should also include the concept of vessel space 
services. The Commission proposes to include in these definitions a 
reference to the services necessary to access or book vessel space 
accommodations. As some comments pointed out and is discussed above, 
services that would impact the actual acquisition of a ``vessel space'' 
could also be used by ocean common carriers to frustrate shippers and 
amount to an ``unreasonable refusal to deal or negotiate.'' Thus, an 
unreasonable refusal to deal over the related services should also be 
included in the definition. These services could include for example, a 
shipper's access to a representative or a booking portal for vessel 
space, in summary any service impacting a shipper's ability to confirm 
its booking. It could also include services involving operational 
decisions that would impact a shipper's already-confirmed booking for 
purposes of the definition of ``cargo space accommodations.''
    The Commission is also proposing a new definition of ``documented 
export policy.'' This proposed definition uses the term ``policy'' 
instead of ``strategy'' to better describe the type of information the 
Commission seeks. The proposal is intended to identify that the export 
policy must be in the form of a report and it must detail practices and 
procedures for U.S. outbound services. Pursuant to its authority in 46 
U.S.C. 40104, the Commission seeks to require ocean common carriers to 
provide this information to the Commission on a yearly basis. It will 
use this information to monitor the industry for any unreasonable 
behavior with respect to refusals to deal or negotiate.
    This SNPRM newly proposes a definition for ``sweeper vessel.'' 
After reviewing the public comments, the Commission wanted to note that 
the use of sweeper vessels is a legitimate practice that is critical to 
the efficiency of our transportation system. This new definition, 
however, does specify that a sweeper vessel must be one exclusively 
designated for that purpose, i.e., a carrier that does not want to take 
exports cannot designate a vessel as a sweeper vessel in order to avoid 
certain shipments.
    In the ``transportation factors'' definition, this SNPRM proposes 
to focus the definition on ``vessel operation considerations'' rather 
than the broader ``genuine operational considerations'' phrase that 
included factors other than those related to the safe operation of the 
vessel. For that reason, this SNPRM also proposes to remove the phrase 
``the effect of blank sailings'' since this factor is not directly 
related to vessel safety or operational needs. Given the focus on 
operational considerations, the proposed definition now also includes 
``weather-related scheduling considerations'' to ensure that scheduling 
within the control of the ocean common carrier is not used as a factor. 
The Commission also seeks to clarify with this SNPRM that 
transportation factors are not a way for a carrier to refuse to carry 
entire classes of cargo such as properly tendered hazardous cargo, 
heavier products or inland shipments. Instead, legitimate 
transportation factors must exist, be outside the vessel operators' 
control and relate to the facts of a specific transaction or vessel.
    The Commission also seeks to revise the definition of the term 
``unreasonable'' by proposing an overarching definition that applies in 
both 46 U.S.C. 41104(a)(3) and 41104(a)(10) claims. In later sections 
of

[[Page 38804]]

the rule, the SNPRM proposes revised factors and examples of 
unreasonable conduct that are non-binding and illustrate the type of 
conduct that Commission will consider unreasonable. The new proposed 
definition of the term ``unreasonable'' is ocean common carrier conduct 
that unduly restricts the ability of shippers to access ocean carriage 
services. The Commission believes this definition better aligns with 
the purpose of OSRA 2022 and the Shipping Act, as amended, as a whole.

B. Section 542.1(c) Through (e)--Claims Under 46 U.S.C. 41104(a)(3)

    The Commission proposes adding new Sec.  542.1(c) through (e) to 
define how a shipper can address unreasonable conduct by ocean common 
carriers that prevents shippers from obtaining space aboard vessels, 
when available, for their cargo pursuant to 46 U.S.C. 41104(a)(3). 
Section 542.1(c) proposes the elements of a claim. These elements are 
similar to those for a 46 U.S.C. 41104(a)(10) claim under Sec.  
542.1(f) given that both claims aim to prevent similar conduct at 
different points of a shipping transaction. As previously stated above, 
46 U.S.C. 41104(a)(3) claims focus on those refusals that occur at the 
execution stage, after the parties reached a deal or mutually agreed on 
service terms and conditions via a booking confirmation subject to 
section 41104(a)(3).
    Section 542.1(d) proposes a list of factors that the Commission may 
choose to consider in evaluating whether a particular ocean common 
carrier's conduct was unreasonable. Like in a claim under 46 U.S.C. 
41104(a)(10), the factors mentioned would help establish an ocean 
common carrier's bona fide attempts and interest in fulfilling its 
previously made commitment to a shipper to take its cargo. Provision of 
a documented export policy includes a good faith effort in mitigating 
the impact of the refusal as well as evidence that the refusal was 
based on legitimate transportation factors. These are all 
considerations the Commission could rely on to make a reasonableness 
finding.
    In Sec.  542.1(e), the Commission proposes a non-binding and non-
exhaustive list of examples to show the type of conduct it could 
consider unreasonable pursuant to 46 U.S.C. 41104(a)(3). The examples 
listed are the types of situations that could signal that an ocean 
common carrier was not sincere in attempting to fulfill the previously 
agreed-to service terms and conditions.
    The example in Sec.  542.1(e)(4) identifies an issue raised in the 
comments. See, e.g., Bass Tech at 1; IDFA at 2. The imposition by ocean 
common carriers of time restrictions on when a vessel can be loaded 
that are impracticably short thereby denies a shipper actual access to 
cargo space accommodations that have ostensibly been provided. As 
discussed, the focus of the rule is on eliminating impediments to 
access. The Commission may view carrier-imposed time constraints as 
unreasonable if they unduly deprive a shipper acting in good faith of 
access to cargo space.
    Finally, the Commission believes it should keep open the 
opportunity to consider any other interactions or communications with 
the shipper as well as other conduct that the Commission finds 
unreasonable in any given case. Thus, the proposed list is considered 
non-exhaustive and only provides examples of conduct that could be 
considered unreasonable. The decision will be made on a case-by-case 
basis.

C. Section 542.1(f) Through (h)--Claims Under 46 U.S.C 41104(a)(10)

    The Commission proposes adding new Sec.  542.1(f) through (h) to 
define how a shipper can address unreasonable conduct by ocean common 
carriers that refuses to deal or negotiate with shippers regarding 
vessel space accommodations pursuant to 46 U.S.C. 41104(a)(10). Section 
542.1(f) contains the elements of a claim. These elements are the same 
as those proposed in the NPRM.
    Section 542.1(g) proposes a list of factors that the Commission may 
choose to consider in evaluating whether a particular ocean common 
carrier's conduct was unreasonable. The factors in this section are 
those that were proposed in Sec.  542.1(b)(2)(i) through (iv) of the 
NPRM except that business decisions are no longer a factor to be 
explicitly considered. The Commission decided with the help of the 
public comments that there is the potential for business decisions to 
overwhelm the rest of the factors and thus it decided to remove that 
language from the proposed rule. In this SNPRM, the provision of a 
documented export policy, good faith effort showing an interest and 
ability in mitigating the impact of the refusal and evidence that the 
refusal was based on legitimate transportation factors are all 
considerations the Commission could rely on to make a reasonableness 
finding. The list is not exhaustive as other facts the Commission finds 
relevant could be considered. The factors in Sec.  542.1(g) are the 
same as those proposed in Sec.  542.1(d).
    In 46 CFR 542.1(h), the Commission proposes a non-binding and non-
exhaustive list of examples to show the type of conduct it could 
consider unreasonable pursuant to 46 U.S.C. 41104(a)(10). The examples 
listed are the types of situations that could signal that an ocean 
common carrier was not sincere in attempting to fulfill the previously 
agreed-to service terms and conditions.
    The various proposed scenarios the Commission finds involve 
unreasonable conduct by ocean common carriers. These include: (1) 
quoting rates that are so far above market as to render the quote not a 
serious negotiation; (2) categorically or systematically excluding 
exports in providing vessel space accommodations, and (3) any other 
interactions or communications with the shipper or other conduct the 
Commission finds unreasonable.
    The SNPRM rule proposes that quoting rates that are so far above 
market as to render the quote not a serious negotiation is unreasonable 
conduct. An ocean common carrier would be required to consider in good 
faith a shipper's effort at negotiation. Consideration in good faith 
includes, among other things, quotes that are within reasonable market 
rates. See, e.g., NITL/ISRI at 13-14. If in response to a shipper's 
request for vessel space accommodations the carrier quotes rates far 
above market (or insists on other terms, such as unrealistic quantity 
demands), it will likely be regarded under the SNPRM as an unreasonable 
refusal to deal or negotiate under 46 U.S.C. 41104(a)(10).
    Finally, the Commission believes it should keep open the 
opportunity to consider any other interactions or communications with 
the shipper as well as other conduct generally the Commission finds 
unreasonable in any given case. Thus, the proposed list is considered 
non-exhaustive and just provides examples of conduct that could be 
considered unreasonable. The decision will be made on a case-by-case 
basis.
1. Section 542.1(i)--Use of Sweeper Vessels
    In Sec.  542.1(i), the Commission is proposing that the use of 
sweeper vessels is a legitimate practice that is critical to the 
efficiency of our transportation system. Along with the proposed 
definition, this paragraph serves as a reminder that a sweeper vessel 
must be one designated for that purpose. This provision is proposed to 
prevent ocean common carriers from using ad hoc designations of vessels 
as

[[Page 38805]]

sweeper vessels to avoid having to take certain export shipments.
2. Section 542.1(j)--Documented Export Policy
    This SNPRM modifies the voluntary documented export policy found in 
the NPRM and now proposes a requirement that ocean common carriers 
follow and submit to the Commission on a yearly basis a documented 
export policy. Proposing a requirement to submit a documented export 
policy to the Commission pursuant to its authority under 46 U.S.C. 
40104 is an important part of monitoring the industry for unreasonable 
behavior vis-[agrave]-vis exports in an effort to address those 
concerns. Also, in Sec.  542.1(j)(1), the Commission identifies what 
type of information it seeks to have included in a documented export 
policy that would help the Commission determine whether an ocean common 
carrier's conduct in a specific matter aligns with their general 
policies and that the ocean common carrier thus acted reasonably. The 
yearly requirement would provide an appropriate but not overly 
burdensome time frame on which to report updates to the policy relative 
to changes in the industry. The proposed report documenting an ocean 
common carrier's export policy would remain confidential. Aggregate 
data may be provided in annual reports submitted to Congress or 
compiled for other purposes but will not reveal confidential 
information provided by or about individual carriers.
    Although the Commission is not proposing in this SNPRM a voluntary 
export policy, it is interested in receiving comments on this 
alternative. The Commission believes the new proposed requirement to 
submit the export policy to the Commission on a yearly basis will 
enhance its ability to monitor the industry for prohibited actions but 
would also consider a voluntary approach. Maintenance of a voluntary 
documented export policy would allow ocean common carriers to maintain 
and provide a documented export policy showing how it developed and 
applied business decisions in a fair and consistent manner in the 
instance of a claim before the Commission. The documented export policy 
could also address situations, such as schedule disruptions (due to 
blank sailings or other conditions) on the ability to take on 
shipments. Carriers may also address the alternative remedies or 
assistance it will make available to a shipper who is refused vessel 
space accommodations. Developing this type of detailed information and 
providing it during the burden shifting process could assist the 
Commission's analysis when deciding whether the ocean common carrier's 
conduct was reasonable. The Commission seeks comments on these two 
approaches.
3. Proposed language in the NPRM Removed in This SNPRM
    The Commission is proposing revisions to Sec.  542.1(d) of the NPRM 
by moving the burden shifting framework to Sec.  542.1(k) and 
clarifying certain issues raised in the comments. Various commenters 
pointed out that this is the existing process under the APA. The new 
proposed section emphasizes that the burden shifting framework is not 
unique to this proposed rule and remains a legal requirement whether it 
appears in the SNPRM or not. Also, this SNPRM proposes including in 
Sec.  542.1(k)(3) that the ultimate burden of persuading the Commission 
remains with the complainant (or BEIC). This language is responsive to 
comments received recommending this language be included.
    The Commission also proposes to remove the self-certification by 
ocean common carrier provision in Sec.  542.1(d) of the original 
proposed rule. Numerous commenters raised concerns about this voluntary 
provision and that they would be given undue weight in the Commission's 
analysis. Some commenters supported the provision if it was part of a 
more robust process including an independent evaluation of the 
information forming the basis of the certification. Although self-
certification could have provided some useful information, a robust and 
mandatory self-certification approach addressing some of these concerns 
would require a more holistic and costly approach and the Commission 
finds it is not necessary at this time.
    The Commission seeks comment and supporting information regarding 
all the proposed changes in this SNPRM.

IV. Public Participation

How do I prepare and submit comments?

    Your comments must be written and in English. You may submit your 
comments electronically through the Federal Rulemaking Portal at 
www.regulations.gov. To submit comments on that site, search Docket No. 
FMC-2023-0010 and follow the instructions provided.

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.

How can I read comments submitted by other people?

    You may read the comments received on this SNPRM at 
www.regulations.gov by searching Docket No. FMC-2023-0010, Definition 
of Unreasonable Refusal to Deal or Negotiate with Respect to Vessel 
Space Accommodations Provided by an Ocean Common Carrier.

V. Rulemaking Analyses

A. Regulatory Flexibility Act

    The Regulatory Flexibility Act, 5 U.S.C. 601-612, provides that 
whenever an agency publishes 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 a regulatory flexibility 
analysis describing the impact of the rule on small entities, unless 
the head of the agency certifies that the rulemaking will not have a 
significant economic impact on a substantial number of small entities. 
5 U.S.C. 603-605. As the head of the agency, the Chairman, by voting to 
approve this SNPRM, is certifying that it will not have a significant 
economic impact on a substantial number of small entities.

B. National Environmental Policy Act

    The Commission's regulations categorically exclude certain 
rulemakings from any requirement to

[[Page 38806]]

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. This SNPRM describes the Commission's criteria to determine 
whether an ocean common carrier has engaged in an unreasonable refusal 
to deal with respect to vessel space accommodations under 46 U.S.C. 
41104(a)(10), and the elements necessary for a successful claim 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.

C. 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.\5\ The agency must submit collections of information in 
proposed rules to OMB in conjunction with the publication of the notice 
of proposed rulemaking.\6\ As defined in 5 CFR 1320.3(c), ``collection 
of information'' comprises reporting, recordkeeping, monitoring, 
posting, labeling, and other similar actions. An agency may not collect 
or sponsor the collection of information, nor may it impose an 
information collection requirement, unless it displays a currently 
valid OMB control number.
---------------------------------------------------------------------------

    \5\ 44 U.S.C. 3507.
    \6\ 5 CFR 1320.11.
---------------------------------------------------------------------------

    This action contains new information collection requirements. The 
title and description of the information collection, a description of 
those who must collect the information, and an estimate of the total 
annual burden follow. The estimates cover the time for reviewing 
instructions, searching existing sources of information, gathering and 
maintaining the information needed, and completing and reviewing the 
collection.
    Title: Documented Export Policy.
    OMB Control Number: None assigned yet.
    Summary of the Collection of Information: This SNPRM proposes a 
requirement that ocean common carriers create and maintain a documented 
export policy they submit to the Commission on a yearly basis.
    Need and Proposed Use of Information: Proposing a requirement to 
submit a report documenting an ocean common carrier's export policy to 
the Commission pursuant to its authority under 46 U.S.C. 40104 is an 
important part of monitoring the industry for unreasonable behavior 
vis-[agrave]-vis exports. Also, in proposed Sec.  542.1(j)(1), the 
Commission identifies what type of information it seeks to have 
included in a documented export policy that would help the Commission 
determine whether an ocean common carrier's conduct in a specific 
matter aligns with their general policies and that the ocean common 
carrier thus acted reasonably. The yearly requirement would provide an 
appropriate but not overly burdensome time frame on which to report 
updates to the policy relative to changes in the industry. An ocean 
common carrier can update their policy more frequently than once per 
year if it chooses to do so. The proposed reporting by individual ocean 
common carriers would remain confidential but, in practice, the 
Commission would provide aggregate descriptions and potentially best 
practices that do not contain individual carrier-level information but 
do provide information to the public and Congress (via annual report or 
other documents available to the public).
    Frequency: This SNPRM proposes that respondents will file a 
documented export policy meeting the requirements in Sec.  541.2(j) 
once per calendar year.
    Type of Respondents: Ocean common carriers.
    Number of Annual Respondents: The Commission anticipates an annual 
respondent universe of 140 ocean common carriers.
    Estimated Time per Response: The Commission estimates 40 hours of 
burden for developing, documenting, and submitting an export policy 
using the parameters in proposed Sec.  541.2(j) for the first year, 
assuming that no such policy already exists. For annual updates, the 
estimated burden would be 5 hours including review and revisions of the 
existing policy and submitting it electronically.
    Total Annual Burden: The Commission estimates the total person-hour 
burden at 5,600 hours for initial filing and 700 hours thereafter.
    Comments are invited on:
     Whether the collection of information will have practical 
utility;
     Whether the Commission's estimate for the burden of the 
information collection is accurate;
     Ways to enhance the quality, utility, and clarity of the 
information to be collected;
     Ways to minimize the burden of the collection of 
information on respondents, including the use of automated collection 
techniques or other forms of information technology.
    Please submit any comments, identified by the docket number in the 
heading of this document, by the methods described in the ADDRESSES 
section of this document.

D. 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 542

    Administrative practice and procedure, Non-vessel-operating common 
carriers, Ocean common carrier, Refusal to deal or negotiate, Vessel-
operating common carriers, Vessel space accommodations.

0
For the reasons set forth in the preamble, the Federal Maritime 
Commission proposes to add 46 CFR part 542 to read as follows:

PART 542--COMMON CARRIER PROHIBITIONS

Sec.
542.1 Definition of unreasonable refusal of cargo space 
accommodations when available and unreasonable refusal to deal or 
negotiate with respect to vessel space provided by an ocean common 
carrier.
542.2 [Reserved]

    Authority:  5 U.S.C. 553; and 46 U.S.C. 46105, 40307, 40501-
40503, 40901-40904, 41101-41106.


Sec.  542.1  Definition of unreasonable refusal of cargo space 
accommodations when available and unreasonable refusal to deal or 
negotiate with respect to vessel space provided by an ocean common 
carrier.

    (a) Purpose. This part establishes the elements and definitions 
necessary for the Federal Maritime Commission (Commission) to apply 46 
U.S.C. 41104(a)(3) with respect to refusals of cargo space 
accommodations when available and to apply 46 U.S.C. 41104(a)(10) with 
respect to refusals of vessel space accommodations provided by an ocean 
common carrier. This part applies to complaints brought before the

[[Page 38807]]

Commission by a private party and enforcement cases brought by the 
Commission.
    (b) Definitions. For the purposes of this section:
    (1) Cargo space accommodations means space which has been 
negotiated for aboard the vessel of an ocean common carrier for laden 
containers being imported to or exported from the United States. Cargo 
space accommodations includes the services necessary to access and load 
or unload cargo from a vessel calling at a U.S. port.
    (2) Documented export policy means a written report produced by an 
ocean common carrier that details the ocean common carrier's practices 
and procedures for U.S. outbound services.
    (3) Sweeper vessel means a vessel exclusively designated to load 
and move empty containers from a U.S. port for the purpose of 
transporting them to another designated location.
    (4) Transportation factors means factors that encompass the vessel 
operation considerations underlying an ocean common carrier's ability 
to accommodate laden cargo for import or export, which can include, but 
are not limited to, vessel safety and stability, weather-related 
scheduling considerations, and other factors related to vessel 
operation outside the vessel operators' control.
    (5) Unreasonable means ocean common carrier conduct that unduly 
restricts the ability of shippers to meaningfully access ocean carriage 
services.
    (6) Vessel space accommodations means space available aboard a 
vessel of an ocean common carrier for laden containers being imported 
to or exported from the United States. Vessel space accommodations also 
includes the services necessary to access or book vessel space 
accommodations.
    (c) Elements for claims. The following elements are necessary to 
establish a successful private party or enforcement claim under 46 
U.S.C. 41104(a)(3):
    (1) The respondent must be an ocean common carrier as defined in 46 
U.S.C. 40102;
    (2) The respondent refuses or refused cargo space accommodations 
when available; and
    (3) The ocean common carrier's conduct is unreasonable.
    (d) Non-binding considerations when evaluating unreasonable 
conduct. In evaluating the reasonableness of an ocean common carrier's 
refusal to provide cargo space accommodations, the Commission may 
consider the following factors:
    (1) Whether the ocean common carrier followed a documented export 
policy that enables the efficient movement of export cargo;
    (2) Whether the ocean common carrier made a good faith effort to 
mitigate the impact of a refusal;
    (3) Whether the refusal was based on legitimate transportation 
factors; and
    (4) Any other factors relevant in determining whether there was a 
refusal in that particular case.
    (e) Non-binding examples of unreasonable conduct. The following are 
examples of the kinds of conduct that may be considered unreasonable 
under 46 U.S.C. 41104(a)(3) when linked to a refusal to provide cargo 
space accommodations:
    (1) Blank sailings or schedule changes with no advance notice or 
with insufficient advance notice;
    (2) Vessel capacity limitations not justified by legitimate 
transportation factors;
    (3) Failing to alert or notify shippers with confirmed bookings;
    (4) Scheduling insufficient time for vessel loading so that cargo 
is constructively refused;
    (5) Providing inaccurate or unreliable vessel information;
    (6) Categorically or systematically excluding exports in providing 
cargo space accommodations; or
    (7) Any other conduct the Commission finds unreasonable.
    (f) Elements for claims. The following elements are necessary to 
establish a successful private party or enforcement claim under 46 
U.S.C. 41104(a)(10):
    (1) The respondent must be an ocean common carrier as defined in 46 
U.S.C. 40102;
    (2) The respondent refuses or refused to deal or negotiate with 
respect to vessel space accommodations; and
    (3) The ocean common carrier's conduct is unreasonable.
    (g) Non-binding considerations when evaluating unreasonable 
conduct. In evaluating the reasonableness of an ocean common carrier's 
refusal to deal or negotiate with respect to vessel space 
accommodations, the Commission may consider the following factors:
    (1) Whether the ocean common carrier followed a documented export 
policy that enables the efficient movement of export cargo;
    (2) Whether the ocean common carrier engaged in good-faith 
negotiations;
    (3) Whether the refusal was based on legitimate transportation 
factors; and
    (4) Any other factors relevant in determining whether there was a 
refusal in that particular case.
    (h) Non-binding examples of unreasonable conduct. The following are 
examples of the kinds of conduct that may be considered unreasonable 
under 46 U.S.C. 41104(a)(10) when linked to a refusal to deal or 
negotiate:
    (1) Quoting rates that are so far above current market rates they 
cannot be considered a real offer or an attempt at engaging in good 
faith negotiations;
    (2) Categorically or systematically excluding exports in providing 
vessel space accommodations; and
    (3) Any other interactions or communications with the shipper or 
other conduct the Commission finds unreasonable.
    (i) Use of sweeper vessels. Nothing in this part precludes ocean 
common carriers from using sweeper vessels previously designated for 
that purpose to reposition empty containers.
    (j) Documented export policy. Ocean common carriers must follow a 
documented export policy that enables the efficient movement of export 
cargo.
    (1) A documented export policy must be submitted once per calendar 
year and include, in a manner prescribed by the Commission, pricing 
strategies, services offered, strategies for equipment provision, and 
descriptions of markets served. Updates may be submitted more than once 
per year if the ocean common carrier chooses to do so. Other topics a 
documented export policy should also address, if applicable, include:
    (i) The effect of blank sailings or other schedule disruptions on 
the ocean common carrier's ability to accept shipments; and
    (ii) The alternative remedies or assistance the ocean common 
carrier would make available to a shipper to whom it refused vessel 
space accommodations.
    (2) A documented export policy required to be filed by this part 
must be submitted to: Director, Bureau of Trade Analysis, Federal 
Maritime Commission, [email protected].
    (k) Shifting the burden of production. In accordance with 
applicable laws, the following standard applies:

[[Page 38808]]

    (1) The burden to establish a violation of this part is with the 
complainant or Bureau of Enforcement, Investigations, and Compliance.
    (2) Once a complainant sets forth a prima facie case of a 
violation, the burden shifts to the ocean common carrier to justify 
that its action were reasonable.
    (3) The ultimate burden of persuading the Commission remains with 
the complainant or Bureau of Enforcement, Investigations, and 
Compliance.


Sec.  542.2  [Reserved]

    By the Commission.

William Cody,
Secretary.
[FR Doc. 2023-12744 Filed 6-12-23; 4:15 pm]
BILLING CODE 6730-02-P