The Content of Ocean Common Carrier and Marine Terminal Operator Agreements Subject to the Shipping Act of 1984

FEDERAL MARITIME COMMISSION

46 CFR Part 535

[Docket No. 99-13]

The Content of Ocean Common Carrier and Marine Terminal Operator

Agreements Subject to the Shipping Act of 1984

AGENCY: Federal Maritime Commission.

ACTION: Notice of inquiry.

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SUMMARY: The Federal Maritime Commission is issuing this Inquiry to

solicit comments concerning the appropriate content of agreements filed

with the Commission pursuant to the Shipping Act of 1984, as amended by

the Ocean Shipping Reform Act of 1998. The comments received will

assist the Commission in preparing a proposal to update or refine the

existing content standards.

DATES: Submit comments on or before October 4, 1999.

ADDRESSES: Address all comments concerning this Inquiry to: Bryant L.

VanBrakle, Secretary, Federal Maritime Commission, 800 North Capitol

St., N.W., Room 1046, Washington, D.C. 20573-0001.

FOR FURTHER INFORMATION CONTACT:

Florence A. Carr, Director, Bureau of Economics and Agreement Analysis,

Federal Maritime Commission, 800 North Capitol Street, N.W.,

Washington, D.C. 20573-0001, (202) 523-5787

Thomas Panebianco, General Counsel, Federal Maritime Commission, 800

North Capitol St., N.W., Washington, D.C. 20573-0001, (202) 523-5740

SUPPLEMENTARY INFORMATION: The Federal Maritime Commission

(``Commission'') is seeking comments from interested parties regarding

possible changes to its rules that govern the content of ocean common

carrier and marine terminal operator agreements filed with the

Commission. This proceeding is being initiated in response to the

suggestions of several commenters in a recent rulemaking, Docket No.

98-26, Ocean Common Carrier and Marine Terminal Operator Agreements

Subject to the Shipping Act of 1984, 64 FR 11236 (March 8, 1999),

urging the Commission to address, by rule, the issue of what is

required to be included in agreements subject to the Shipping Act of

1984, 46 U.S.C. app. 1701 et seq. (``1984 Act''), as amended by the

Ocean Shipping Reform Act of 1998, Pub. L. 105-258, 112 Stat. 1902

(``OSRA'').

Effective May 1, 1999, in Docket No. 98-26, the Commission amended

its rules governing agreements among ocean common carriers and marine

terminal operators to reflect changes made to the 1984 Act by OSRA. As

part of that proceeding, the Commission also eliminated some agreement

form and manner requirements that had previously been in effect. The

Commission stated, however, that the elimination of the form and manner

requirements had no substantive effect on the content requirements for

agreements. Rather, the Commission retained the content requirements,

which mirror section 5(a) of the 1984 Act, which section was not

changed by OSRA. Section 5(a) requires that ``a true copy of every

agreement entered into with respect to any activity described in

section 4 (a) or (b) of this Act shall be filed with the Commission. *

* *''

46 U.S.C. app. 1704(a).

Section 4, as amended by OSRA, describes the agreements that are

within the scope of the 1984 Act. Section 4(a) applies to agreements by

or among ocean common carriers to

(1) discuss, fix, or regulate transportation rates, including

through rates, cargo space accommodations, and other conditions of

service;

(2) pool or apportion traffic, revenues, earnings, or losses;

(3) allot ports or restrict or otherwise regulate the number and

character of sailings between ports;

(4) limit or regulate the volume or character of cargo or

passenger traffic to be carried;

(5) engage in exclusive, preferential, or cooperative working

arrangements among themselves or with one or more marine terminal

operators;

(6) control, regulate, or prevent competition in international

ocean transportation; or

(7) discuss and agree on any matter related to service

contracts.

46 U.S.C. app. 1703(a).

Section 4(b) applies to agreements among marine terminal operators

and among one or more marine terminal operators and one or more ocean

common carriers to

(1) discuss, fix, or regulate rates or other conditions of

service; or

(2) engage in exclusive, preferential, or cooperative working

arrangements, to the extent that such agreements involve ocean

transportation in the foreign commerce of the United States.

46 U.S.C. app. 1703(b).

The Commission's rules governing agreements echo the requirement in

section 5(a) of the 1984 Act that agreements filed with the Commission

must be true and complete. 46 CFR 535.103(g) provides:

An agreement filed under the Act must be clear and definite in

its terms, must embody the complete understanding of the parties,

and must set forth the specific authorities and conditions under

which the parties to the agreement will conduct their present

operations and regulate the relationships among the agreement

members.

Similarly, 46 CFR 535.407(a) states:

Any agreement required to be filed by the Act and this part

shall be the complete agreement among the parties and shall specify

in detail the substance of the understanding of the parties.

In comments filed in Docket No. 98-26, a number of carrier

commenters expressed concerns that elimination of form and manner

requirements could create uncertainty as to what substantive content

should be included in filed agreements. The Commission rejected these

arguments; however, it further determined that it would institute a

subsequent rulemaking proceeding on the issue of the content of filed

agreements in response to requests from a nearly unanimous carrier

community. The carrier commenters sought more specific requirements as

to what matters do or do not have to be filed. They also suggested that

the Commission's rules should provide protections for confidential

business information, provide maximum flexibility for carriers to

modify cooperative arrangements without overly burdensome filing

requirements or waiting periods, and possibly include guidance tailored

for different types of arrangements. 64 FR at 11238-9.

At this juncture, the Commission is undertaking a review of its

existing agreement content regulations to determine whether, and in

what manner, they should be updated or refined. Comments received in

response to this Inquiry will assist the

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Commission in fashioning a notice of proposed rulemaking reflecting the

evolving shipping industry and the Commission's statutory mission.

Commenters are free to address any issue relevant to the agreement

content rules. In addition, set forth below are questions suggesting

particular areas of concern or focus for the Commission:

1. Should the current filing exemption for routine operational or

administrative matters be eliminated, retained in its current form, or

modified? If so, describe how.

2. If parties were required to file every arrangement or

understanding among themselves that came within the scope of section 4

(including all operational or administrative matters), would they be

subject to commercial harm or burden? If so, describe in detail

(providing copies of and using as many specific examples as possible

of) actual arrangements or understandings for which filing would give

rise to such burdens or harm; explain (and where possible, quantify)

exactly what such burdens would be.

3. Should the Commission adopt different standards for agreement

content for different types of agreements, i.e., would it be

appropriate to tailor content rules to rate agreements (conferences and

rate discussion agreements) vis-a-vis operational agreements (alliances

and space/vessel charter arrangements)?

4. Are there types of agreements currently filed with the

Commission that would be appropriate for exemption from filing under

the standard set forth in section 16 of the Act, i.e., the filing

exemption will not result in a substantial reduction in competition or

be detrimental to commerce? Exemptions may be either partial (e.g.,

eliminating waiting periods, or requiring notification in lieu of

filing) or complete.

5. Should the rates charged by one carrier to another for use of

space and/or vessels be exempt from filing or withheld from public

disclosure?

6. Is public disclosure of agreements filed with the FMC useful to

shippers, intermediaries, labor, non-party carriers, marine terminal

operators, or other interested persons? If so, describe in detail the

types of agreements and information used, and why the disclosure of

such information is useful.

7. Given the public notice requirement of section 6 of the 1984

Act, can the Commission implement measures to protect commercially

sensitive information contained in agreements?

8. How are competing concerns of completeness, burden, and

confidentiality resolved in the filing requirements of other regulatory

authorities, including antitrust and sector specific agencies?

Now therefore, It is ordered that this Notice of Inquiry be

published in the Federal Register.

By the Commission.

Bryant L. VanBrakle,

Secretary.

[FR Doc. 99-19847 Filed 8-2-99; 8:45 am]

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