Service Contracts Subject to the Shipping Act of 1984

SUMMARY: The Federal Maritime Commission has revised its regulations

governing service contracts between shippers and ocean common carriers

to implement changes made to the Shipping Act of 1984 (``Act'') by Pub.

L. 105-258 (the Ocean Shipping Reform Act of 1998) and section 424 of

Pub. L. 105-383 (the Coast Guard Authorization Act of 1998).

Specifically, the Commission has revised its regulations implementing

section 8(c) of the Act and has created a new 46 CFR part 530 to govern

service contract filing. The interim nature of this rule is due to a

major revision of the proposed regulation, which did not include the

internet-based filing system of the interim final rule. The proposed

regulations have been revised to accommodate the alternative system.

Portions of the proposed rule have been redrafted for clarity,

repetitive sections have been deleted and the remaining sections are

accordingly renumbered.

DATES: Effective date May 1, 1999. Submit comments on this interim

final rule on or before April 1, 1999.

ADDRESSES: Address all comments to: Bryant L. VanBrakle, Secretary,

Federal Maritime Commission, 800 North Capitol Street, NW., Room 1046,

Washington, DC 20573-0001.

FOR FURTHER INFORMATION CONTACT:

Thomas Panebianco, General Counsel, Federal Maritime Commission, 800

North Capitol Street, NW., Washington, DC 20573-0001, (202) 523-5740

Austin L. Schmitt, Director, Bureau of Tariffs, Certification and

Licensing, Federal Maritime Commission, 800 North Capitol Street, NW.,

Washington, DC 20573-0001, (202) 523-5796

SUPPLEMENTARY INFORMATION: On December 23, 1998, the Federal Maritime

Commission (``Commission'') issued proposed regulations to implement

changes to the Shipping Act of 1984 (``Act'') mandated by the Ocean

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

(``OSRA''), enacted on October 14, 1998. 63 FR 71062-71076. OSRA made

several changes to the existing system by which the Federal Maritime

Commission regulates ocean shipping in the foreign commerce of the

United States, particularly to the provisions governing service

contracts under the Act.

As noted in the Notice of Proposed Rulemaking (``NPR''), the

Commission sought to balance the general deregulatory intent of OSRA

with the important oversight role that Congress has assigned to it,

through the proposed rules. The difficulty in achieving that balance is

apparent in the reactions the proposal received from members of the

industry. Further, while the Commission recognized that the filing

requirements must be crafted with an appreciation for regulated

entities' interests in simple, speedy and straightforward filing

procedures, the Commission also noted in the NPR that the procedures

must enable the Commission to fulfill its statutory duty to guard

against section 10 violations and perform its section 6 functions. As

several of the comments urge, this responsibility on the part of the

Commission is especially important as service contracts will be

confidential and potentially aggrieved parties will have to rely on the

Commission for oversight. This will be complicated by the predicted

increase in the sheer number of service contracts filed. It was with

these goals in mind that the Commission originally proposed the draft

regulations, designed to enable the Commission to fulfill its

regulatory mandate while imposing a minimal burden on regulated

parties.

Comments

The Commission received twenty-eight (28) responses to the NPR,

from the following: Seaboard Marine (``Seaboard''); International

Longshoremen's Association (``ILA''); Cargo Brokers International, Inc.

(``CBI''); China Ocean Shipping (Group) Company (``COSCO''); Effective

Tariff Management Corporation (``ETM''); Trans-Atlantic Conference

Agreement (``TACA'') (endorses OCWG comments); Household Goods

Forwarders Association of America, Inc. (``HGFAA''); Council of

European & Japanese National Shipowners' Association (``CENSA'');

Bicycle Shippers' Association, Inc. (``BSA''); United States Council

for International Business, Sea Transportation Committee (``USCIB'');

International Longshore & Warehouse Union (``ILWU'') (endorses ILA

comments); IBP, Inc. (``IBP''); National Industrial Transportation

League (``NITL''); Japan-United States Eastbound Freight Conference

(``JUSEFC''); American Institute for Shippers' Associations, Inc.

(``AISA''); Ocean Carrier Working Group Agreement (``OCWG''); National

Customs Brokers & Forwarders Association of America, Inc. (``NCBFAA'');

American Import Shippers' Association (``AImpSA''); E.I. DuPont de

Nemours and Company (``DuPont''); Conagra, Inc. (``Conagra''); P&O

Nedlloyd, Ltd. (``P&O''); Pacific Coast Tariff Bureau (``PTCB'');

American President Lines, Ltd., Sea-Land Service, Inc., Crowley

Maritime Corporation, Farrell Lines, Inc., Lykes Lines Ltd., LLC, the

Transportation Institute, the American Maritime Congress, and the

Maritime Institute for Research and Development (joint comments)

(``Carriers''); Chemical Manufacturers Association (``CMA''); American

President Lines, Ltd. and APL Co. Pte. Ltd. (``APL'') (endorses OCWG

comments); Sea-Land Service, Inc. (``Sea-Land'') (endorses OCWG and

TACA comments); American International Freight Association and

Transportation Intermediaries Association (``AIFA'') (joint comments)

(endorses NITL comments); and Wal-Mart Stores, Inc. (``Wal-Mart'').

These comments reflected the views of large, beneficial interest

shippers (DuPont, Wal-Mart, Conagra, and IBP), shippers' associations

and representatives (BSA, NITL, AISA, AImpSA, and CMA), labor

organizations (ILA and ILWU), carriers, conferences, agreements and

carrier associations (APL, COSCO, P&O, CENSA, OCWG, TACA, JUSEFC, Sea-

Land Service, Inc., Crowley Maritime Corporation, Farrell Lines, Inc.,

Lykes Lines Ltd., LLC, the Transportation Institute, the American

Maritime Congress, and the Maritime Institute for Research and

Development), ocean transportation intermediaries (CBI, HGFAA, NCBFAA,

AIFA and the Transportation Intermediaries Association), third-party

filing services (ETM and PTCB), and, finally, the American affiliate of

the International Chamber of Commerce, representing the general

business interests of shippers and carriers (USCIB).

A significant number of comments generally oppose the proposed

regulations as inflexible, overly technical, rigid, burdensome and

costly, and, as such, inconsistent with the deregulatory aims of OSRA.

OCWG; NITL; USCIB; P&O; Sea-Land; Seaboard; CENSA and Conagra. Most of

the opposition to the proposed regulation is aimed at the Commission's

proposal to adapt an electronic system already in its possession, and

the technical constraints that would accompany the use of that system.

There are also comments that applaud the Commission's proposal as a

[[Page 11187]]

conscientious effort to implement a key feature of OSRA in a timely

manner, but which also express concern that some of the provisions may

be at odds with OSRA. Conagra.

Several other comments are just as strongly in favor of the

regulations as proposed, and support them as a fair reflection and

implementation of the changes intended to be made by Congress through

OSRA. AISA; AImpSA; NCBFAA; and BSA. Shipper groups urge the Commission

to be mindful that, under OSRA, smaller shippers will be disadvantaged

and thus will rely more on FMC oversight. Therefore, they argue, OSRA

has placed a heightened obligation on the Commission to oversee and

prevent potential service contract discrimination, and unreasonable

refusals to deal or negotiate. They also comment that while the

proposed regulations represent positive initial steps the Commission

must take to fulfill its oversight role, they fail to propose

adequately strong regulations to enforce section 10's anti-

discrimination prohibitions. The shippers further argue that OSRA

directed the Commission to concentrate on discrimination based on

shipper status, and the regulations fall short in this respect as well.

Section 530.3 Definitions

One commenter takes issue with the proposed definition of

``conference,'' being different from the statute, and not referring to

the requirement of a common tariff. APL, 1. The comment suggests that

the definition track the statute. The change to the definition of

``conference'' in this rule conforms with the changes made in the

Commission's rulemaking on agreements, Docket No. 98-26, and tariffs,

Docket No. 98-29.

Similarly, the Commission in this proceeding had proposed a new

definition of ``ocean common carrier'' to match that proposed in the

agreements rulemaking. However, upon receipt of opposition to that

proposal from one commenter and little input from other industry

interests, the Commission has determined to carry over its former

definition of ``ocean common carrier'' and take the matter up in a

later, separate rulemaking. See, Docket No. 98-26.

APL also questioned the proposed definition of ``service

contract.'' APL, 1-2. The comment urges the Commission to adopt a

definition of ``service contract'' which would correct a ``persisting

drafting error in OSRA'' as a contract between one or more shippers and

an ocean common carrier or an agreement between or among carriers. APL,

1-2. APL complains that this definition literally contemplates an

agreement that is a party to an agreement, a circular and legally

impossible definition. APL, 2. The comment suggests either redefining

or interpreting OSRA so that wherever the statute refers to ``an

agreement,'' that the meaning will be two or more ocean common carriers

acting pursuant to an agreement on file with the Commission or exempt

from such filing. APL, 2.

Prior to revisions made by OSRA, the Act provided that only a

certain type of agreement between ocean common carriers, namely a

conference agreement, could enter into service contracts. OSRA changed

the definition of service contract from ``a contract between a shipper

and an ocean common carrier or conference'' to ``a written contract,

other than a bill of lading or a receipt, between one or more shippers

and an individual ocean common carrier or an agreement between or among

ocean common carriers.'' This had two effects. First, it allows a group

of two or more unrelated (i.e. not a shippers' association) shippers to

jointly enter into a service contract. Second, it allows any ocean

common carrier agreement (not just a conference agreement) to enter

into service contracts. Therefore, the definition of service contract

in the regulation is revised to appear as it does in the Act. APL's

observation appears correct. The authority to enter into service

contracts extends to carriers acting collectively pursuant to a filed

agreement, even if the agreement does not provide for any central

administrative entity.

For the sake of clarity, the definitions of ``effective date'' and

``expiration date'' are moved from the Appendix to the definitions

section, Sec. 530.3. Finally, a definition of ``motor vehicle'' is

added, comporting with the definition of that term in the Commission's

tariff regulation, Docket No. 98-29. See also infra, discussion of

exempt commodities.

Section 530.4 Confidentiality

Carriers, shippers and one filing service commented on Sec. 530.4

of the proposed rule. While most agree that the Commission has the

authority to share service contract information with other federal

agencies, they also request clarification on how the Commission intends

to ensure that other agencies maintain confidentiality. CMA, 3; DuPont,

5. One suggests the following addition to the section:

any information from or access to service contracts to another

agency of the Federal government shall, to the full extent permitted

by law, also will be (sic) held in confidence by such other agency

or notice of the confidentiality of such information will be

provided by the Commission to such other agency.

ETM, 1.

Another suggests,

The Commission shall seek to ensure, prior to providing access

to confidential service contract information to another Government

agency, that such other agency will protect the confidentiality of

the service contract information.

NITL, 23.

Two comments suggest that the regulations should ensure that

information shared not be inadvertently publicized through the Freedom

of Information Act (``FOIA'') or other means, and that the same level

of protection afforded within the Commission should follow the

information when it is shared with another federal agency. DuPont, 5;

NITL, 23.

Exemption 4 of FOIA would presumably protect service contract

information confidentially filed with the Commission from requests for

public disclosure. 5 U.S.C. 552(b)(4)(1994). Exemption 4 of FOIA

protects ``commercial or financial information obtained from a person

(that is) privileged or confidential.'' The exemption affords

protection to those submitters who are required to furnish commercial

or financial information to the government by safeguarding them from

the competitive disadvantages that could result from disclosure. See

U.S. Department of Justice, Office of Information and Privacy, Freedom

of Information Act Guide and Privacy Act Overview, at 123.

Another comment suggests this provision should be amended to

provide that all confidential information will be provided to other

government agencies which have a Memorandum of Understanding (``MOU'')

agreeing that they will maintain confidentiality of the information in

accordance with the letter and spirit of OSRA. Conagra, 4. The

Commission has concluded that it will provide confidential service

contract information only to federal government agencies with which it

has an MOU ensuring that the recipient agency will accordingly protect

the information from public disclosure. This should adequately address

the reasonable concerns expressed in the comments.

One commenter asserts that the confidentiality requirement of the

Act applies to the Commission only, and does not give the Commission

any authority to review the parties' complaints for breach of a

[[Page 11188]]

confidentiality clause in the contract itself. Such a breach, they

argue is purely a contract matter and as such, for a court to decide.

APL, 2. The comment suggests that in order to clarify this point, the

phrase ``by the Commission'' should be added at the end of the first

sentence. APL, 2. The statute appears to be adequately clear on this

matter, and there is no need for further clarification at this time.

Wal-Mart is concerned that disclosure of the actual international

freight rate required by U.S. Customs Service (``USCS'') (form CF 7501)

will provide an opportunity for unscrupulous customs brokers to obtain

confidential rate information and disclose it. Wal-Mart, 1. Wal-Mart is

concerned that, even with a confidentiality agreement with the broker,

the monitoring and enforcement of such confidentiality agreements may

prove difficult, or impossible. Wal-Mart, 2. Wal-Mart therefore

requests the Commission coordinate with other federal government

agencies, especially USCS, in its final implementation of the

regulations to ensure that the confidentiality of service contracts be

preserved by those other agencies, and suggests that one approach may

be to declare average or estimated freight rates on the CF 7501 form

supplemented by actual data directly to USCS without using the broker.

Wal-Mart, 2.

The commenter's request is outside the Commission's jurisdiction.

While it understands Wal-Mart's concerns, the Commission has no

authority to dictate to other agencies what information they may or may

not require from the entities they regulate. Therefore, the comment is

more appropriately directed towards USCS.

In contrast, one commenter argues that the proposed regulations do

not acknowledge limitations on the Commission's authority to release

service contract information, recognize the complexity of the

associated issues, or provide procedures for making a determination to

release information. Carriers, 2. First, the Carriers argue, the

Commission's authority to disclose confidential service contract

information to other federal government agencies at all is

questionable. Carriers, 2. These comments argue that the colloquy

between Senators McCain and Hutchison is of limited value for the

purpose of legislative history because it followed, rather than

preceded, the adoption of the bill which became OSRA. Carriers, 2 n.1.

This argument is unconvincing, however, as we note that Senator

Hutchison, with specific reference to section 8(c)(2) of S. 414 (which

remained unchanged in the final passage of OSRA), remarked on April 21,

1998, that the Commission ``is encouraged to work with affected Federal

agencies to address'' their concerns about how they are to ensure rate

compliance with U.S. cargo preference law in an era of service contract

rate confidentiality. Cong. Rec S3320 (daily ed., April 21, 1998)

(statement of Sen. Hutchison). While the statute itself reads only,

``each contract entered into under this subsection * * * shall be filed

confidentially with the Commission'' (section 8(c)(2) of OSRA), and

``[w]hen a service contract is filed confidentially with the

Commission, a concise statement of the essential terms * * * shall be

published and made available to the general public in tariff format''

(section 8(c)(3)), taken with the remarks made on the same day the

Senate passed S. 414, the legislative history indicates that it was the

intent of the drafters that the confidentiality provision not hamper

other federal government agencies which have legitimate need to access

the confidentially filed information in order to carry out their

respective duties.

There is further indication that the drafters intended that the

confidentiality provision would apply to preclude Commission disclosure

to the public. As Senator Hutchison remarked in the aforementioned

floor colloquy, ``(o)f course * * * confidential service contract

information would remain protected from disclosure to the public

consistent with the Shipping Act of 1984, as amended by the Ocean

Shipping Reform Act and other applicable Federal laws.'' Cong. Rec.

S11302 (daily ed. Oct. 1, 1998) (Statement of Sen. Hutchison) (emphasis

added). This emphasized the importance of the Commission protecting

information filed confidentially with it from disclosure to the public,

but does not limit the Commission's right to disclose such information

to other federal agencies where clearly warranted and justified.

Finally, the Commission noted in the NPR that it would only ``allow

access to filed contracts to Federal government agencies where

appropriate; any such disclosure will not jeopardize the statutory aim

of non-disclosure of confidential service contract information to non-

governmental entities.'' 63 FR 71065. This continues to correctly

express Commission policy on the subject.

The Carriers argue further that even if the authority of the

colloquy is accepted, the only exception to the statutory requirement

that the Commission keep service contract information confidential is

``to ensure compliance of U.S.-flag ocean common carriers with cargo

preference law shipping rate requirements.'' Carriers, 3. Therefore,

they contend that this does not authorize the Commission to disclose

such information when a government agency is acting in a proprietary

capacity as shipper. Carriers, 2. This implies that the following

language of the second sentence of proposed Sec. 530.4 is at least over

broad: ``Nothing contained in this part shall preclude the Commission

from providing certain information from or access to service contracts

to another agency of the Federal government of the United States.'' The

Carriers are concerned that there is too large a potential for

procurement officials to use such information to drive down rates.

Carriers, 4.

The Carriers question whether any statutory requirements, including

the cargo preference laws, actually exist which would require

information from confidentially filed service contracts and further

question the relevancy of the information, as procurement is typically

based on ``competitively bid, lowest landed cost awards.'' Carriers, 4.

We are not persuaded that service contract information should be

withheld from agencies that ship cargo with ocean carriers. The

Commission, however, is not attempting in these regulations to predict

every situation in which the requested information may or may not be

relevant to the purposes of the requesting agency. This would be

another matter most appropriately addressed by an MOU.

The Carriers' reference to the pending litigation against the

Department of Defense (``DoD'') serves to further illustrate this

point. Carriers, 5. The Commission simply does not have the ability to

predict in what situations confidential service contract information

may or may not be relevant to the execution of the requesting agency's

statutory duties, but can require that the agency support its request

with a good faith argument for relevancy, in an accordingly drafted

MOU.

Furthermore, because Congress did not indicate that it wished to

limit the agencies with which the Commission should cooperate, but

instead used the term ``other federal agencies,'' the Commission

interprets this admonition to include agencies other than DoD and laws

other than the Cargo Preference Act of 1904. Again, as the Commission

cannot presently predict which statutory requirements other agencies

may have for confidential service contract information, the Commission

declines to add to its regulations at this

[[Page 11189]]

time any such limitation on its future action. Rather, the Commission

asserts that disclosure of confidentially filed service contract

information will only be made to other federal government agencies with

which it has negotiated an MOU which will protect the information from

disclosure to the public.

The Carriers complain that the proposed regulations do not provide

for procedures for informed comment on and consideration of the

conflicting interests, but rather appear to envision an approach to

such interagency requests on a unilateral and ad hoc basis. Carriers,

2. The Carriers assert that they are entitled to a ``careful and open

appraisal'' based on an informed record before the Commission, rather

than the approach contemplated by the proposed rule. Carriers at 6. The

Carriers' comments appear to request that the Commission create a

formal review proceeding for each request before any service contract

information is released to a requesting Federal government agency.

Again, the MOU should adequately address the Carriers' concerns without

requiring that the Commission initiate an adversary proceeding which

would require the Commission to implement new procedures, and undertake

the time and expense which would accompany each evaluation.

Finally, the Carriers comment that if the Commission does not

delete the provision in question, that a separate proceeding should be

initiated to ``permit full ventilation of the issues by concerned

parties.'' Carriers at 6. On the contrary, it appears that the notice

and comment period in this rulemaking proceeding has given the Carriers

an opportunity, of which they have availed themselves, to address such

issues.

For the foregoing reasons, therefore, the Commission shall require

a requesting federal agency to enter into a Memorandum of Understanding

that it will protect the confidentiality of any information it receives

from the Commission and that such information is necessary to its

statutory functions, and adopts as final the language in Sec. 530.4 of

the proposed regulations.

Section 530.5 Duty to File

As stated in the NPR, the Commission's past regulations generally

imposed on a conference the duty to file and publish service contract

material on behalf of its members. 46 CFR 514.4(d) (duty and authority

to file). Specifically, the Commission's former regulation placed the

duty to file service contracts and publish their essential terms on

either: A service contract signatory carrier which is not a member of a

conference for the service covered by the contract; or the conference

which is signatory or has one or more members for service otherwise

covered by the conference agreement. Conferences could file for and on

behalf of one or more of its member lines for service outside the scope

of the conference agreement. Sec. 514.4(d)(5)(B)(ii). In such case, the

statement of essential terms was to be filed simultaneously in both the

essential terms publication of the conference and the carriers

involved.1

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\1\ While it related to the responsibility to file tariffs,

Sec. 514.4(d)(4)(ii)(A) reminded carrier participants in a

conference tariff that they are not relieved from the necessity of

complying with Commission regulations and the requirements of

section 8(a)(1) of the Act.

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The Commission's past approach distinguished duty to file based on

the subject matter of the contract itself. In this respect, for

contracts entered into by a member of a conference but which fell

outside the scope of that conference, the duty to file and publish fell

on the signatory carrier. For contracts which concerned subject matter

within the scope of a conference agreement, the duty to file and

publish fell upon the conference which was the signatory to the

contract or whose member or members were signatories. Conferences,

under the Commission's prior regulations, were authorized to file and

publish for their member lines for services outside the scope of the

conference. Sec. 514.4(d)(5)(ii). For such filing, essential terms were

required to be published by both individual carrier and conference. Id.

OCWG suggests that the Commission continue this approach, and merely

revise the previous regulations by changing the term ``conference'' to

``agreement.''

In the proposed rule, the Commission recognized that agreement

service contracts would pose somewhat different problems for filing and

publishing than did conferences, which unlike some other agreements,

maintain a central authority or secretariat. The proposed regulation

sought to anticipate situations in which members of an agreement

without a central authority enter a service contract. The proposal

would have allowed members of such an agreement to delegate the filing

duty to one member, but also indicated that such delegation would not

relieve the other carrier parties from any liability should there be a

failure to comply with the filing requirements of the regulations.

OCWG objects to the proposed rules' provisions placing filing

requirements generally on individual carriers. OCWG asserts that a

carrier breach of contract confidentiality 2 is not a

violation of the Act, citing Senator Hutchison's April 21, 1998 floor

remarks. OCWG further asserts that a carrier could publish confidential

service contract information in the New York Times and not violate the

Act. OCWG at 16. We note, however, that some disclosures could raise

issues under section 10(b)(13) of the Act which prohibits any common

carrier, either alone or in conjunction with any other person,

indirectly or directly, from knowingly disclosing, offering,

soliciting, or receiving any information concerning the nature, kind,

quantity, destination, consignee or routing of any property tendered or

delivered to a common carrier without the consent of the shipper or

consignee if that information may be used to the detriment or prejudice

of the shipper or consignee, may improperly disclose its business

transaction to a competitor, or may be used to the detriment or

prejudice of any common carrier.

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\2\ We agree with the comments that for publication, no

confidentiality issue exists. The underlying duty to publish,

however, is identical as that for filing. For publication, the

Commission's concern lies primarily in ensuring that the public not

be misled by the location of the statement of essential terms. When

an essential terms publication appears in an individual carrier's

tariff, there must be some indication of whether the underlying

service contract was made by that carrier independently or jointly

as part of an agreement. For further discussion of publication

requirements, see infra, Sec. 530.12.

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Carriers and conferences urge they should have the ability to take

advantage of the efficiencies membership in an agreement provides for

the accomplishment of such ministerial acts as filing. OCWG, 13; CENSA,

2; COSCO, 2; JUSEFC, 2-5. The comments of BSA reveal serious concerns

shippers rightfully may have about filing done by agents closely

controlled by agreement authorities. The comments of COSCO and JUSEFC

also recognize this legitimate shipper concern.

The Commission has determined to revise Sec. 530.5 and simplify the

filing duties in accordance with the comments. Section 530.5, as

revised, places the duty to file on the individual carrier party to a

service contract, as Commission regulations always have. For multi-

party service contracts, the duty to file falls equally upon all the

carrier parties participating or eligible to participate in the

contract. Multi-party service contracts must indicate the agreement

(conference or otherwise) under whose authority the contract is

entered. Carrier parties may designate any agent they choose for

filing, including an agreement secretariat. The

[[Page 11190]]

Commission shall closely monitor filing or other ministerial tasks

undertaken by central authorities for violations of section 10(b)(13)

and other activities which may have implications for the Commission's

section 6(g) oversight.

Contrary to the assertion of OCWG, simply adopting the former

regulation language and substituting the term ``agreement'' for

``conference'' will not account for the individual member of an

agreement which wishes to take independent action within the scope of

the agreement, but which does not wish to disclose the service contract

information to the agreement. The regulation, therefore, makes clear

provision for the contract parties' election on who shall be authorized

as filer. Furthermore, the regulation would allow shippers to negotiate

a requirement, for filing done by a conference or agreement

secretariat, for example, that provisions for confidentiality be

undertaken, e.g., through the use of ``firewalls.'' Finally, the use of

an agent for filing does not relieve the carrier parties in any way for

a failure to duly file or publish. They are unquestionably responsible

for ensuring their agents comply with these regulatory requirements.

Section 530.6 Certification of Shipper Status

Proposed Sec. 530.6(a) requires each shipper party to a service

contract to sign and certify on the signature page of the service

contract its shipper status and the status of all its affiliates which

have access to the service contract. NITL, AIFA, and DuPont oppose the

proposed regulation, and particularly complain that the rationale for

the requirement is unclear and the certification itself is burdensome.

NITL, 21; AIFA, 3; DuPont, 3. They recommend that this requirement

should only apply when the shipper is an NVOCC. DuPont, 3; AIFA, 3,

NITL, 21.

NITL, APL and DuPont assert that contracting parties should be able

to resolve on their own the capacity in which a particular shipper is

acting with respect to the service contract as a matter of negotiation

between the parties, not one mandated by the Commission. NITL, 21; APL,

3; DuPont, 3.

The regulation as proposed, however, does not appear to impose any

limitations on the commercial negotiations of service contracts. The

parties are free to contract with any individual or entity entitled to

enter into service contracts under the Act, and in certain capacities

(e.g., no NVOCCs as carrier parties).3 This was one of the

compromises made by OSRA: In return for confidentiality, the parties

would report their operations to the Commission, in order that it would

continue to be able to monitor the industry for prohibited acts.

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\3\ CBI comments that NVOCCs should be able to offer

confidential service contract to their shippers. This was explicitly

rejected by Congress when it rejected the Gorton Amendment (No.

2287) to S. 414, which would have so allowed. Cong. Rec. S3306-11

(daily ed.) (April 21, 1998).

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DuPont is concerned that the requirement would unnecessarily

increase the Commission's workload. DuPont, 3. NITL comments that there

are less burdensome ways for the Commission to obtain information about

the status of a shipper party. For instance, they suggest that the

Commission could request the information informally after the service

contract has been executed. Further, AIFA comments that the proposed

regulation would require the parties to make fine legal judgments.

AIFA, 3.

Contrary to several comments, it appears that the certification

does not create an unreasonable burden for shippers. Proposed

Sec. 530.7 (here renumbered Sec. 530.6) was adopted nearly verbatim

from the Commission's current regulation, 46 CFR 514.7(e)(1), which

requires the shipper party to certify its status. Original

Sec. 514.7(e)(1) had the same intent, namely to enable the Commission

to monitor service contract arrangements for discrimination. Rather

than increasing any burden on the parties to service contracts, or

creating additional workload for the Commission, Sec. 530.6(a)

continues to enable the Commission to monitor service contracts for

trends in practices and to guard against OSRA's prohibition on refusals

to deal and on concerted unjust discrimination based on shipper status.

The burden on the shipper signatory is also minimal. Contrary to the

comments of AIFA, determining the shipper's status should be relatively

simple and shippers have been doing this since the rules were first

implemented.

While NITL is correct that there are other ways for the Commission

to obtain this information, the method promulgated herein is not

unreasonable because the burden it places on service contract parties

is light, and it is of high utility to the Commission, not only because

of its intrinsic nature, but also because of the early point at which

it is provided. Finally, contrary to the concerns of DuPont, the

maintenance of this provision will not create an additional burden on

the Commission.

Some commenters suggest that the certification provision should be

deleted altogether or redrafted. APL, 3; AIFA, 3; NITL, 22. NITL

suggests the proposed regulation be revised to read as follows:

If the shipper contract party or any affiliate or member of a

shippers' association entitled to access a service contract is an

NVOCC, it shall sign and certify on the signature page of the

service contract that its status under the service contract is that

of an NVOCC.

NITL, 22.

With respect to the first purpose of the proposed regulation, NITL

and DuPont incorrectly assert that OSRA prohibits discriminatory

treatment and refusal to deal towards NVOCCs only. As the shippers'

comments correctly point out, smaller shippers which negotiate for

service contracts through their shippers' associations are also

entitled to such protection, as are all shippers, regardless of whether

they are beneficial cargo interests, their representatives, or

unaffiliated groups of shippers. OSRA prohibits discrimination and

refusals to deal based on anything other than valid transportation

factors (such as volumes) and the regulation as proposed intends to

guard against such discrimination, prohibited by section 10(b)(10) of

the Act.

The comments of several shippers' organizations point to the

competing congressional mandates with which the Commission must craft

these regulations: to allow parties to negotiate their commercial

arrangements with as little interference as possible while maintaining

its ability to monitor for discrimination and refusals to deal in

violation of section 10. AISA, 5. AISA's comments remind the Commission

that with confidential contracts, smaller shippers will be

disadvantaged and will, therefore, rely more on the Commission's

oversight. AISA, 3. AISA asserts that the Act places an affirmative

obligation upon carriers to negotiate and deal in good faith with

shippers' associations and to offer them competitively equivalent

contracts to those offered to beneficial shippers for the same volumes

and goods between the same ports. AISA, 5.

AISA asserts that OSRA requires the Commission to establish

mechanisms by which it and the public can discover such discrimination,

and point out that filing and publishing essential terms of

confidential contracts, as well as establishing a listing on the

Commission's website is only a first step in the right direction. AISA,

3-6. AISA is disappointed with the proposed regulations because they

fail to be strong enough to enforce section 10 anti-

[[Page 11191]]

discrimination prohibitions. Further, they allege that the Commission

is wrong in saying the law does not continue to prohibit carrier

actions which unreasonably discriminate against small- and medium-sized

shippers and shippers' associations. AISA, 3-6.

One commenter urges the Commission to acknowledge Congress' intent

that anti-discrimination protections be strengthened and expanded as

they apply to shippers' associations and OTIs. BSA, 13-15. NCBFAA

believes OSRA directs the Commission to concentrate on discrimination

based on a shipper's status as an OTI. NCBFAA, 1. For AImpSA, OSRA's

direction to the Commission is to concentrate on status-based

discrimination against shippers' associations or OTIs. AImpSA, 2-3.

While NCBFAA is concerned about the possibility of collusive,

discriminatory and anti-competitive behavior by carrier agreements, it

recognizes that Congress intended to allow parties to service contracts

to behave like private contract parties in a deregulated environment.

NCBFAA, 1. NCBFAA, also, however, recognizes a need for the service

contract regulations to be sufficient for Commission oversight in order

to combat discriminatory practices such as those which have been

carried out by the carriers in the past. NCBFAA, 1.

The opposition of some shipper parties, especially NVOCCs, to this

provision is puzzling. Shippers should be willing to assist the

Commission in its enforcement of the Act's prohibition on

discrimination against them due to their status and refusals to deal

because of shipper status. Indeed, the comments of shippers'

associations (BSA, AISA, AImpSA) and OTIs (NCBFAA) urge the Commission

to adopt strong regulations to protect against shipper status-based

discrimination by carriers. This provision serves the simultaneous

functions of giving shipper parties to contracts an additional reminder

of the capacity in which they may act (e.g., not as an ``agent,''

``broker'' or ``freight forwarder'') while also decreasing the need for

investigations which may unnecessarily burden shippers.

One commenter urges the Commission to establish a separate docket

to address regulations to specifically guard against section 10

violations. AImpSA, 2-3. We decline, and point out that the regulations

in all the areas that the Commission regulates were drafted with an eye

toward our responsibilities in this regard. There is no need for

another, separate rulemaking to address this issue at this point. The

certification requirement has served the Commission well in the past

and appears to continue to be a useful tool for monitoring without

being an intrusion into commercial contract negotiations or an overly

burdensome reporting requirement. Whether other regulations will be

necessary will be a question better answered after the Commission has

had some experience with and insight into the way the industry will

develop in the new era of confidential service contracting.

BSA requests that the Commission give notice to the shipping public

of the extent to which shippers' associations can rely on DOJ safe

harbor guidelines for unaffiliated shippers entering joint contracts.

BSA, 2-5. The Commission, in Docket 92-31, revised its definition of

``shippers' association'' and found that ``such associations between or

among shippers will remain subject to anti-trust laws.'' 57 FR 49665,

49666 (Nov. 3, 1992). Presumably, therefore, shippers operating in

informal groups would be similarly subject to the antitrust laws, and

could rely on DOJ guidelines for their behavior.

APL complains that the proposed regulation's requirement that

carriers identify NVOCC parties and determine that they are compliant

is ``overkill.'' APL, 3. The provision, they complain, unreasonably

delegates the policing of NVOCCs to ocean common carriers. APL, 3. APL

offers that there are other effective and less burdensome ways of

ensuring that NVOCC members of shippers' associations are compliant:

For instance, requiring an association in the contract to warrant that

any of its NVOCC members are compliant and providing evidence of such

compliance. APL recommends that Sec. 530.6(b) be deleted or redrafted

by changing the word ``signing'' to ``implementing'' and deleting ``or

an affiliate or member of a shippers' association''. APL, 3.

Section 530.6(b) as proposed was intended to ensure that carriers

do not violate section 10(b)(11) of the Act, which forbids the knowing

or willful acceptance of cargo for the account of unbonded or

unlicensed NVOCCs. Similar to the benefit to shippers provided by

Sec. 530.6(a), Sec. 530.6(b) also inures to the benefit of the carrier

party, as certification of its belief that the NVOCC with whom it

contracts is in compliance with Commission regulation may assist in

establishing it did not act knowingly and/or willfully if later the

Commission finds the NVOCC was not properly licensed or bonded.

Furthermore, the burden on the carrier signatory has been

significantly reduced, as carriers will now have the ability to confirm

an NVOCC's bond status by checking the Commission's website (see, 46

CFR 515.27(d)) and its license by reference to an NVOCC's letterhead,

as required by 46 CFR 515.31(b). Finally, this provision does not

appear to intrude into the negotiations between contract parties, as

parties generally would already have a desire to either assert their

status, or have good commercial reasons for avoiding entering into

business arrangements with a non-compliant entity. Proposed Sec. 530.6,

entitled ``service contracts with NVOCCs'' was seen to be repetitive of

the certification language of final Sec. 530.6(b). That section is

therefore deleted, and the remaining sections are renumbered. For the

foregoing reasons, the provision is adopted as it appeared in the

notice of proposed rulemaking, except that it is renumbered as

Sec. 530.6.

Section 530.7 Duty to Labor Organizations

The proposed regulation included a definition of ``reasonable

period of time'' by which a carrier must respond to a labor

organization's request. Section 530.7(a)(2). This definition was

crafted with sensitivity toward labor organizations' interests in

knowing about cargo that is due to arrive in port before it arrives, so

that the movement of that cargo may be ``claimed'' as labor work.

However, labor interests contend that the definition is inadequate

as it will not ensure a timely response, which they claim should be

within 24 hours of receipt of request. ILA, 4. If the carrier is unable

to respond, labor argues, the regulation should specify that it shall

so state and explain. ILA, 4.

Carrier interests, on the other hand, object to any definition of

the term, and assert that it should be determined on a case-by-case

basis. OCWG, 21-22. Several argue that the Commission contravenes OSRA

by defining the term at all. One maintains that implicit in the concept

of ``reasonable'' is the phrase ``under the circumstances.'' APL, 3. If

Congress had intended the term to be defined on anything other than a

case-by-case basis, it would have defined the term itself in OSRA. APL,

3. It is arbitrary, they argue, for the Commission to fix a reasonable

time for reporting. Furthermore, consideration should be given to the

carrier's situation and reasonable ability to respond to the request.

APL, 3; Sea-Land, 6. Sea-Land asserts that because the Commission

determines what is reasonable for other matters (e.g., Sections 6(g);

10(b)(8),(9),(10); 10(c)(8); and 10(d)(1)) on a case-by-case basis, it

should do the same in this context. Sea-Land, 7.

[[Page 11192]]

The carriers argue that fixing a reasonable period of time is

unfair because it gives the labor organization the exclusive control of

the timetable in that it is labor who starts the clock with the

request. APL, 3; Sea-Land, 6. Also, the comments urge, the requests

might be repetitious or unclear, or the labor organization could

inundate the carrier with hundreds of requests at a time in which it

could not possibly respond in the time allotted by this definition.

Sea-Land, 6.

One carrier comments that because service contracts run for terms

of many months, no significant union work will be irrevocably lost if

the information is not acted on within a matter of hours or days. APL,

3. This assertion is in direct contradiction to the emphatic comments

by the ILWU and the ILA that time is most certainly of the essence in

these matters. Another carrier is concerned that imposing a specific

time limit may be inconsistent with obligations under collective

bargaining agreements or labor laws. Sea-Land, 7.

It appears that the approach taken by the Commission in the

proposed rule will achieve a workable compromise and protect both

carrier and labor interests. But we note the objections of the carriers

that the definition of ``reasonable period of time'' as two or four

days would not appear to recognize that the reasonableness of any

response may depend on the circumstances. Requests may, for example, be

made in large batches, or at a time when a two or four day response is

not reasonably achievable. It is also unknown at this time how often

labor organizations will invoke these provisions, and how simple or

burdensome it will be for the carriers to supply the appropriate

response. To this end, the Commission amends the definition to include

the word ``ordinarily.'' The definition provides the sense, at this

pre-implementation stage, of what should normally constitute a

reasonable, good faith response to a legitimate request. Any complaints

of deviations from these standards resulting in harm to labor

organizations would be adjudged in the context of the particular

circumstances and the Commission's overall experience with this new

provision of the statute.

The Commission is not persuaded by the arguments of the carriers

that no definition of reasonable time is appropriate. OSRA is replete

with general guidelines and standards for which the Commission is

expected to supply more detailed qualifications of elements such as

time and dollar amounts. Here, the amended rule provides only general

guidelines of what the Commission expects will meet the general

standard, in hopes that such guidance will help obviate the need for

more formal complaints and procedures. As to the carrier concern that

the time limit contravenes collective bargaining agreements or labor

laws, it is impossible for the Commission to respond in a meaningful

way, as it has no direct involvement in administering either.

Labor organizations criticize other provisions of this section as

falling short of the mark. ILA, 1; ILWU, 1-2. They recommend that the

Commission add a requirement that a response be adequate as well as

timely. The required response, they argue, should include supporting

documentation, such as bills of lading, delivery orders, and other non-

privileged documents. This is a determination that the Commission must

make on a case-by-case basis, as the text of the statute requires only

that the response state ``whether'' the carrier is responsible. While

one floor remark by Senator Hutchison alludes to the requirement that

further documentation be produced,4 it is unclear what the

Commission's role in the disclosure of this information may be and

therefore, the Commission declines to assume the authority to impose a

requirement that particular documents be produced.

---------------------------------------------------------------------------

\ 4\ ``Section 8(c)(4) envisions the release of information not

necessarily contained in the service contract (and that provision)

may require the use of documents other than the service contract.''

Cong. Rec. S3320 (daily ed., April 21, 1998)(Statement of Sen.

Hutchison).

---------------------------------------------------------------------------

ILWU and ILA comments recommend that a particular Commission

investigator be assigned in advance to all of the investigations which

might arise out of complaints of non-compliance with this section. The

ILWU suggests that the regulations include a requirement that requests

for information be concurrently filed with the Commission to help avoid

disputes over whether a given response was made within a reasonable

period of time. ILWU, 5-6. Then, the ILWU suggests, the regulation

should require that the Commission shall promptly solicit the carrier's

written position on the complaint and conduct an administrative

investigation on the merits of the complaint. The recommended procedure

further includes the requirement that the Commission's investigator

issue a report within thirty days, including findings to recommend a

formal proceeding or dismissal and penalties. ILA, 5; ILWU, 1,2.

There is no requirement that such a procedure be contained in the

regulations, and no indication from the legislative history of OSRA

that it was the intent of Congress for the Commission to use any

procedures other than its current complaint procedures to address

violations of this section of the Act. An early version of the bill,

which was to become OSRA, did include specific procedures which the

Commission would undertake to enforce the responsiveness of ocean

common carriers to labor requests for information. The April 3, 1998

version of S. 414 included a different version of section 8(c)(4) and

included a section 8(c)(5), which read:

(4) Disclosure of Certain Unpublished Terms.--A party to a

collective-bargaining agreement may petition the Commission for the

disclosure of any service contract terms not required to be

published by paragraph (3) which that party considers to be in

violation of that agreement. The petition shall include evidence

demonstrating that

(A) A specific ocean common carrier is a party to a collective-

bargaining agreement with the petitioner;

(B) The ocean common carrier may be violating the terms and

conditions of that agreement; and

(C) The alleged violation involves the moment [sic] of cargo

subject to this Act.

(5) Action By Commission.--The Commission, after reviewing a

petition under paragraph (4), the evidence provided with the

petition, and the filed service contracts of the carrier named in

the petition, may disclose to the petitioner only such unpublished

terms of that carrier's service contracts that the Commission

reasonably believes may constitute a violation of the collective-

bargaining agreement. The Commission may not disclose any

unpublished service contract terms with respect to a collective-

bargaining agreement term or condition determined by the Commission

to be in violation of this Act.

Cong. Rec. S3194 (daily ed., April 3, 1998).

Between the version of April 3, 1998 and the bill as finally

adopted by the Senate on April 21, 1998, this section underwent

significant change. It is clear, therefore, that Congress specifically

considered requiring the Commission's involvement in disclosing

confidential carrier information to labor organizations. In the final

analysis, Congress rejected such Commission involvement, and chose

instead to minimize the role of the Commission in implementing the

objectives of this section of the statute. The Commission indicated in

the NPR that it ``expects that aggrieved labor organizations will use

existing Commission processes in the event of noncompliance by a

carrier. The Commission would entertain proposals for more specific and

stringent rules if the existing standards and procedures prove

inadequate in practice.'' 63 F.R. 71064. We are hopeful that labor

organizations and carriers will

[[Page 11193]]

operate diligently and in good faith in exercising their rights and

responsibilities in implementing this section of the Act. The

Commission expects not to have to initiate programs or promulgate

particularized procedures to ensure what should be the routine and

noncontentious transmittal of information. We reiterate, however, that

the Commission will revisit these issues if experience under the

provision suggests such a need. Therefore, the proposed rule in

Sec. 530.7 will be finalized, except that the term ``ordinarily'' is

added to the definition of ``reasonable period of time'' in Sec. 530.7

(a)(2), and the placement of the provisions defining relevant terms

have been re-organized for clarity.

Section 530.8 Filing Provisions

The proposed regulation requires service contracts to be filed in

their entirety (except for signatures) in a system which would be

modified from the current ATFI essential terms publication system. The

proposed regulations make no provision for waiver, transition, or other

filing options. As stated in the supplemental information to the

proposed rule, the Commission proposed that, ``due to the volume of

service contract filings * * * expect[ed] after May 1, 1999, adoption

of an electronic, as opposed to paper-based, system appears to be the

most practical approach.'' 63 F.R. at 71063. Further, the Commission

noted that while the ``only viable approach to implementing an

electronic system at this juncture would be to create a system adapted

from the Commission's currently used filing system for Essential Terms

of service contracts,'' it also sought comment on other ``approaches to

establishing a new system * * * treating the proposed system as a

transitional solution.'' Id. Furthermore, comment on continuing the

paper filing of service contracts was specifically requested. Id.

The comments generally oppose the use of any modified ATFI system

for filing, even as an optional system. Seaboard; CENSA; USCIB; NITL;

AIFA; OCWG; P&O; Conagra; and Sea-Land. Several commenters assert that

using ATFI (as modified) is inconsistent with the deregulatory thrust

of OSRA, and the regulations should allow for filing by any electronic

means which ``meet the OSRA objective.'' CENSA, 1-2; Sea-Land, 3; NITL,

5-8. Two comments assert that because Congress expressly rejected

continuing ATFI for tariffs, it could not have intended to continue its

use for service contract filing. NITL, 5-6; Sea-Land, 3.

NITL urges that the Commission, rather than ``clinging to an

outmoded electronic system'' for filing common carrier tariffs, and

imposing that system on a very different contracting environment, give

up its reliance on ATFI in the face of systems for communication that

are changing for the better on a daily basis. NITL 5-8. Sea-Land

contends that the Commission's assertion that ATFI is the ``only viable

approach'' is incorrect and that there are other viable approaches, as

evidenced by other agencies which have adopted electronic filing

systems using ``off the shelf'' software. Sea-Land, 3.

Generally, CMA and other commenters are concerned that the Appendix

requirements are too detailed and would restrict the freedom of parties

to negotiate terms. CMA, 2; NITL, 14-15; DuPont, 4. NITL urges the

Commission to delete the Appendix entirely because it is completely

unworkable, unnecessarily burdensome, very costly and because there is

no statutory basis for its requirements. NITL, 14. Further, NITL is

concerned that the risks of contract rejection, and its associated

costs and penalties, are heightened by the inclusion of so many

technical details. NITL, 14.

Two comments object to the regulation as proposed because it

appears that it was designed for the administrative ease of the agency

without regard to the convenience to the parties. NITL, 5-8; OCWG. 3-4.

While electronic filing is the preferred long-term approach, OCWG

comments that the proposal to use ATFI would impose substantial burdens

on carriers. OCWG, 3-4. OCWG objects to using ATFI because, like CENSA,

it believes that the proposal would require filers to create two

documents: One for the commercial transaction, and another for FMC

filing. CENSA, 1.

These concerns appear somewhat justified. While in the past filers

have been required to file an ``essential terms publication'' in ATFI

format, the Commission concludes that applying ATFI-like restrictions

on the entirety of a filed service contract may not fully benefit both

filers and the Commission. In the ATFI-based system, filers may be

required to either re-format their commercial agreement or draft it in

ATFI format in the first place, or the system may make it difficult for

filers to provide the Commission with the true and complete terms of

the contract.

On the other hand, several commenters support the draft

regulation's proposal to modify and utilize ATFI. ETM; PTCB; AISA; and

NCBFAA. Others accept the modification of ATFI provided that there is

at least one alternative means of filing. JUSEFC; COSCO. JUSEFC finds

the Commission's proposal to use ATFI ``logical.'' JUSEFC, 6. NCBFAA

comments that the detailed filing requirements of the proposed

regulation (and appendix A) are required if the Commission is to be

able to police prohibited conduct. NCBFAA, 1. NCBFAA asserts that the

industry will not be able to monitor for prohibited conduct because

public essential terms will be limited. NCBFAA, 2. Furthermore, NCBFAA

presents, as indication that this was the intent of Congress, that

while OSRA specifically eliminates tariff filing, it also retains the

requirement that service contracts be filed with the Commission.

NCBFAA, 2.

Other commenters oppose any justification of the filing

requirements based on section 10(b)(2) monitoring. NITL, 5-8. They

suggest rather than imposing strict filing requirements, that the

Commission determine whether carriers are providing service in

accordance with the rates in their service contracts in the same way

that shippers and carriers themselves will monitor each other's

contract compliance, namely by consulting the terms of the contracts,

and comparing those terms to the actual billed amounts. NITL, 5-8.

Similarly, Sea-Land comments that the Commission's interest in

oversight for unjust discrimination is limited to protecting ports,

shippers' associations and OTIs due to their status and that carriers

are relieved by the Act of any affirmative obligations towards

shippers. Sea-Land, 5-6. It asserts that the Commission's enforcement

of section 10 does not require continuation of ATFI in any form. Sea-

Land, 5.

P&O complains that continuing the use of ATFI is not a secure

option because it will require third party compilers and filers who

will have access to confidential information. P&O, 3-4. BSA also

worries that the proposal to ``grandfather'' previously approved

software might not ensure confidentiality. BSA, 6. It requests

clarification from the Commission on the ability of the proposed system

to ensure rate confidentiality, and urges the use of new software and

systems which would provide total assurance of confidentiality. BSA, 6-

7. BSA recommends that the Commission draft specific regulations to

address technical qualifications which software must meet to ensure and

guarantee to shippers that service contract information will be

confidential during filing, and that the Commission also draft

regulations which include penalties for violating the security of the

websites and

[[Page 11194]]

computer systems which contain service contract information

(``hacking''). BSA, 8.

Similar to the preceding comments expressing concern for modernity

and the ability to upgrade any system based on ATFI, BSA suggests that

the Commission require that all common carrier websites are ``Y2K''

compliant. BSA, 6-7. As the internet is a communication line, and

digital, this is not a concern for filing.

With regard to the registration requirements in the proposed

regulation, PTCB urges the Commission to allow current ATFI registrants

to maintain their current registrations and organization records

without having to re-register. PTCB, 3. PTCB agrees that requiring

batch filers to re-register for new log-ons and passwords is

acceptable, but requests clarification that the organization number

will remain the same, thus avoiding a requirement that filing services'

clients amend their organizational records in order to re-authorize.

PTCB, 4.

The Commission has directed its Office of Information Management

(``OIRM'') to allow filers who intend to use either the internet-based

system (discussed infra) or the dial-ups system to apply for

registration and obtain log-on IDs and passwords prior to May 1, 1999

in order that they may be ready on May 1 for filing on that date.

Organization numbers will remain the same in the service contract

database. OIRM will notify via U.S. mail all presently-registered

organization record holders to ensure that the individual will remain

the same. If the ``org. holder'' will not be the same individual, a

registration form will be included in the letter for the recipient to

respond regarding who would ``own'' the organizational I.D. Any other

log-ons will have to re-register.

Also, PTCB requests that the Commission continue, as is currently

the case in ATFI, the method by which delegation of authority to file

is done, namely by revising the organizational record. PTCB, 4. PTCB

points out a deficiency in proposed Form FMC-83: It does not have a

place to indicate delegation. PTCB, 4. Finally, PTCB requests that the

Commission delete the requirement that individuals only (as opposed to

organizations) are registered for filing because this unnecessary

limitation is time-consuming and expensive. PTCB, 4.

The Commission must deny PTCB's request to allow log-on IDs and

passwords to be granted to organizations, not individuals, due to

security concerns and the requirements of the Computer Security Act.

Therefore, the requirement that individuals, rather than organizations

will be the registered filers will continue. Filing authority and

delegation will be indicated on the Registration Form, FMC-83.

Four of the comments opposing the proposed regulation's adaptation

of the ATFI system for service contract filings offer alternatives.

Seaboard; OCWG; NITL; and P&O. Seaboard, OCWG, and P&O propose that the

Commission allow filing in a generic word processing format as an

attachment via electronic mail (``e-mail''). Seaboard, 1. OCWG suggests

the Commission adopt a system based on commercially available software

already in common use in the industry, but does not suggest precisely

what that may be. OCWG, 4. NITL and OCWG offer generally that there are

electronic alternatives to the proposed regulation which include filing

via e-mail, internet, and diskettes. NITL, 7; OCWG, 8. OCWG proposes

that the only technical requirements which would arise from using

``off-the-shelf'' software would be the assignment of user

identification codes and security. OCWG, 4. Sea-Land recommends that

filers be allowed to file their service contracts via the internet on a

confidential site established by the Commission or via diskette, which

apparently would be mailed to the Commission. Sea-Land, 4. They assert

that this would be simple, flexible, inexpensive, complete, accessible

and accurate and would fulfill all statutory requirements. Sea-Land, 4.

Finally, while DuPont praises the Commission's desire to use modern

electronic means, it recommends that the Commission approach the U.S.

Customs Service to ascertain whether a joint system, or at least a

compatible system, could be created to serve both agencies and their

``customers.'' DuPont, 5.

NITL recommends that the Commission revise proposed Sec. 530.8(a)

to read:

Authorized persons pursuant to Sec. 530.5 of this part shall

file with the Commission electronically or in paper format a true

and complete copy of every service contract before any cargo moves

pursuant to that service contract. Service contracts filed

electronically may be submitted via electronic mail, the internet,

or on diskettes using software that is compatible with the

Commission's computer systems.

NITL, 14-15.

P&O offers the most detailed suggestion. P&O suggests the

Commission adopt an electronic filing system which allows the carrier/

filer to send the entire text of the service contract via e-mail as an

attachment to a Commission-designated e-mail address, which would be

based on the filer's current organizational record. P&O, 2-3. Upon

receipt of the service contract, P&O suggests, the Commission then open

a directory for each carrier into which it downloads the service

contract and therefore would be able to organize the information

according to its own needs. P&O, 3. This information could be easily

organized because all word-processing programs are searchable. P&O, 3.

P&O analogizes the management of this system to the Commission's

current maintenance of a list of filed agreements, which is done on a

WordPerfect file. P&O, 3. Finally, P&O recommends that the Commission

use passwords for confidentiality. P&O, 3.

Other Federal Agencies' Approaches

Several comments urge the Commission to follow the examples of

other Federal government agencies in crafting its approach to

electronic service contracts filing, namely the Federal Communication

Commission (``FCC'') and the Surface Transportation Board (``STB'').

NITL, 7; OCWG, 8. It appears that, after review of the approaches of

these agencies, as well as that of the Federal Energy Regulatory

Commission (``FERC''), the Commission is still faced with limitations

of time and resources which might make the adoption of one of these

systems inappropriate for the FMC.

1. Federal Communications Commission

Under the Telecommunications Act of 1996, the FCC receives tariff

filings for its common carrier tariffs via its website. This process

was developed over two years. The FCC requires that tariff publications

be filed in both paper copy and on diskette, subject to various format

requirements.5 Filers must submit a cover letter on paper

with the diskette and changes (amendments) to the tariff must be made

by re-filing the entire tariff on a new diskette, with the changed

material, and indicating the changes. The FCC also receives filing via

its internet homepage. This filing system was designed and is managed

by a private contractor.

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\5\ The diskette must be 3\1/4\ inch, IBM-compatible form and

use MS-DOS 5.0 and WordPerfect 5.1 software, in ``read-only'' mode,

and labeled with the carrier's name, tariff number, and date of

submission.

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2. Surface Transportation Board

One commenter suggested that because the STB ``requires the filing

of pleadings and reports in electronic form, which permits those

agencies to analyze filings electronically,'' that modifying ATFI is

not the only feasible

[[Page 11195]]

approach available to the Commission. NITL, 7. A review of the STB

regulations on filing methods, however, indicates that the STB has not

reached an electronic panacea for filing. For the filing of summaries

of railroad contracts for the transportation of agricultural products,

the STB requires that ``two copies of each contract summary'' be filed.

49 CFR 1313.4(a)(1). There does not appear to be an electronic option

for this type of filing. For the filing of tariffs for the

transportation of cargo by or with a water carrier in a noncontiguous

domestic trade, the STB requires that ``tariffs shall be printed on

paper not larger than 8\1/2\ x 11 inches.'' 49 CFR 1312.4(b). Filers

for these tariffs do have the option of electronic filing; however,

that option is accomplished through the FMC's ATFI system. 49 CFR

1312.17. Obviously, this option will be eliminated with the removal of

the ATFI system, and there appears to be no contemplation by the STB

for the implementation of a new method for receiving these filings

electronically after ATFI is discarded.

The notice requirements, on the other hand, under STB regulations

may be achieved electronically, but only where there is agreement

between the parties. See, e.g., 49 CFR Sec. 1300.2(b); 1300.4(b);

1305.2(b),(c); 1305.3; and 1305.4(a),(b). These notice requirements are

between carrier and shipper and are not official filings.

3. Federal Energy Regulatory Commission

While none of the comments referred to the approach of FERC, the

Commission has investigated FERC's approach to the crafting of a viable

electronic filing system. FERC issued a Notice of Inquiry on May 19,

1998 (Docket No. PL98-1-000, 63 FR 27529-27533) requesting comments on

various issues which arise with the implementation of electronic

filing, including formats, citations, signatures, methods of

transmission, confidentiality, security, attestation and service. FERC

held a conference on electronic filing on October 22, 1998. FERC has

since taken a broader, agency-wide approach for completely re-

engineering its methods for accepting filings and managing documents.

For the present, the official copies of filed documents are still in

paper form. FERC staff manually scans those documents which are not

filed electronically (about 120,000 pages per month) but hopes to

achieve a system which would provide for hyper-linking all public

filings in a particular docket to the docket sheet so the user has the

ability to select a document on the docket sheet list and go to the

full text of the document immediately.

Due to the general response in opposition to adapting the ATFI

filing system for service contract filings, the Commission will make

available an option which will address most of the commenters' concerns

that the proposed regulations would be too rigid, cumbersome and

costly. Interactive internet filing of service contracts with the

Commission will be provided, and while the dial-up system will be

available, the Commission expects to phase it out as soon as possible,

but certainly no later than the end of Fiscal Year 1999.

Specific details on internet-based filing will be made available on

the Commission's website (http://www.fmc.gov) when final development

and testing is complete. This option will provide for interactive

internet filing of service contracts via the Commission's homepage.

Individuals filing service contracts will presumably already have filed

Form FMC-1, registering them as tariff publishers, and will have been

assigned an organization number. Upon review, the Commission will

provide prospective service contract filers with a user ID and

password. A service contract filer will sign on to the Commission's

website and provide its user ID and password. A screen will then

indicate several options (e.g., filing a single contract, amendment or

batches of contracts or amendments) in addition to detailed filing

instructions. A single initial service contract will be filed by

providing certain basic information such as a carrier contract number

(which will enable linking of amendments to the initial contract),

effective date, organization number, and the location of the service

contract file which will be uploaded to the Commission upon activating

the screen's ``submit'' button. Amendment filings will be done in the

same manner, with the addition of a filer-provided service contract

amendment number. Batch filings will require similar information for

each contract, but will enable the filer to submit more than one

contract per session. Finally, the Commission foresees assessing user

fees at a later date, as the Commission gains experience and the

details of the system are completed.

Therefore, Sec. 530.8 and appendix A to this part, in which the

options for filing are detailed, are accordingly revised to reflect the

addition of internet-based filing.

Section 530.8 and Appendix A Transition Issues

Several commenters request that the Commission accept paper filings

of service contracts as well as electronic filings for a transitional

period. COSCO, 1-2; CMA, 3; JUSEFC, 5-7; OCWG, 6; P&O, 4; NITL, 7;

DuPont, 5. OCWG recommends that such a transition period be at least

one year. OCWG, 6 n.1. OCWG also asserts that there is no need to have

a system in place on May 1, 1999. OCWG, 5. P&O also suggests that if

the Commission needs more time to put an electronic system into place,

it can receive paper filings. P&O, 4. Only BSA and the filing services

(PTCB and ETM) support the immediate adoption of electronic-only

filing. BSA, 5.

A satisfactory response to the commenters' general opposition to

the modification of the Automated Tariff Filing Information (``ATFI'')

system and their general support for electronic filing is achieved by

the Commission's determination to offer an alternative filing method to

the modified ATFI filing which is internet filing (herein referred to

as ``internet-based'' or ``option 1''). This option offers filers great

ease and flexibility, while allowing the Commission to receive the

entirety of the contract information and to organize those filings for

the Commission's monitoring and enforcement duties. Furthermore, most

of the commenters' concerns about the rigidity and the cumbersome

nature of the dial-up filing system are removed with the implementation

of this filing method.

While most comments oppose any transitional system which does not

include a paper option, the flexibility of the new system will make it

extremely easy to file. Filers need only have created their contract on

one of several word-processing systems and have access to the internet.

It is not unreasonable to expect that carriers have access to this

equipment, or that if they do not, they may choose to out source the

filing. Removal of the requirement that they use a dial-up system

appears to enable all carriers to do their own filing, if they wish to

do so, thus removing any confidentiality concerns they expressed in the

comments regarding the use of third party filing services.

The Commission intends to allow the filing of service contracts

which have an effective date of May 1, 1999 or later in advance of May

1, 1999, as soon as filing systems are ready. The Commission

contemplates that the systems could be ready in the week

[[Page 11196]]

prior to May 1, 1999. The Commission will issue further advisory

notices of the status of the availability of the revised filing systems

as information becomes available.

Again, due to the expense of maintaining the dial-up service, the

Commission expects to phase it out as soon as possible, but certainly

by the end of FY 1999. Finally, the Commission will request further

industry input, if necessary, as it refines the internet-based system.

Section 530.8(c) and 530.12 Cross Referencing

Two comments generally voice support for the regulation allowing

for the cross-referencing to tariffs and general rules filing as part

of service contract register. BSA, 16; JUSEFC, 7. BSA recommends that

the Commission make available on its FMC website the general rules

tariff of any carrier or conference and periodically inspect that

tariff to determine that changes made by amendments have been made, and

thereby ensure that the shipping public will be able to obtain

necessary information regarding applicable items (e.g. rules for

hazardous cargo). BSA, 16.

P&O comments that the proposed regulation's prohibition against

cross-referencing has no support in OSRA and no reasonable regulatory

purpose, and that as such it should be withdrawn and the regulations

should allow cross-referencing to a carrier's own tariff as well as its

conference tariffs. P&O, 8. NITL and OCWG, as a means to allow greater

commercial flexibility, both support revision of Sec. 530.8(c)(2) to

allow cross-referencing not only to tariffs but also to ``widely

available public information.'' OCWG, 19; NITL, 13. OCWG recommends

that the Commission add to Sec. 530.8(c)(2) the phrase, ``or unless

those terms are available in a regularly published and readily

available public source commonly known in the industry.'' OCWG, 18-19.

NITL also believes that this change will ensure that the Commission

could obtain all of the contract's terms. NITL, 13.

The Commission, in an effort to make filing less burdensome for

carriers, but while ensuring that it had the entire contents of, or

access to, the service contract terms, proposed that carriers may

``cross-reference'' their own tariff publications or their conference

tariff publications in their filed service contracts. This provision

was intended to allow carriers to refer to rules of general

applicability (free time and demurrage, bunkering rates, currency

matters, etc.) for the ``boilerplate'' or terms which appear in all

their contracts. Further, the Commission recognized that it was

Congress' intent, by lifting the requirement that tariffs be filed with

the Commission, to allow parties to service contracts more freedom and

flexibility in their commercial arrangements. For those reasons, the

proposed rule, originally numbered Sec. 530.9(c)(2), was drafted to

permit filed service contracts to refer to terms outside the four

corners of the filed service contract, but only if they are contained

in the carrier's or conference's tariff publication. P&O appears to

have misread the proposed rules as not allowing any cross-referencing

whatsoever. This was not the intent of the proposed rules. Rather, the

regulation would have allowed cross-referencing, but only to matter

contained in a published tariff of the carrier or conference of which

it was a member.

However, in response to comments that allowing cross-referencing

only to published tariff matter would unduly stifle the parties'

contract terms, the Commission has decided to allow cross-reference to

a ``publication widely available to the public and well known within

the industry.'' Sec. 530.8(c)(2). The Commission wishes to stress,

however, that exact terms of the contract must be determinable and

certain, in keeping with the requirements of the Act. In response to a

comment by COSCO that this approach would undermine the confidentiality

of the contract terms, we point out that any term, except of course

published essential terms, can be kept confidential by inclusion in a

general rules filing or by filing in the text of the contract itself.

The Commission is confident that this approach will satisfy both the

concerns of filers for confidentiality, and the requirement that the

complete contract be filed.

Section 530.8(b)(9) Naming Affiliates

AISA believes that proposed Sec. 530.8(b)(9) should be amended to

remove the requirement that shippers' associations name all of their

members. They assert that this requirement is not mandated by any

change made by OSRA and is contrary to current Commission regulation

and policy which requires only such naming if the contract specifically

excludes or includes specific members. AISA, 7. AISA is concerned that

such disclosure would give carriers blackmail potential, as was found

in Fact Finding 15, and Docket 91-1. AISA, 8.

AISA suggests the provision be revised to read as follows:

(9) The legal names and business addresses of the contract

parties; the legal names of affiliates entitled to access the

contract, except that in the case of a contract entered into by a

shippers' association, individual members need not be named unless

the contract includes or excludes specific members; the names,

titles and addresses of the representatives signing the contract for

the parties; and the date upon which the service contract was

signed. An agreement service contract must identify the FMC

Agreement Number(s) under which the service contract is filed.

Carriers, conferences, and/or agreements which enter into contracts

that include affiliates must in each instance either: (further

unchanged).

AISA, 10.

CMA and NITL agree that reporting all names and addresses of

shippers would be unnecessarily burdensome. CMA, 2; NITL, 12-13. NITL

questions the purpose of this requirement. NITL, 12. If the Commission

has a question about identity or location of a particular affiliate,

NITL suggests that it obtain the information informally, on a case-by-

case basis. Therefore, NITL argues, this requirement should be either

deleted or the production period of 10 days should be increased. NITL,

12.

The deletion of the exception for shippers' associations being

required to list all members in a service contract was a drafting

oversight. We therefore re-insert the exception. However, the

production period of 10 days was fully explored when the currently

effective rule was put into place and this will be unchanged. OSRA

makes no changes which would have an impact on this requirement.

APL complains that proposed Sec. 530.8(b)(9)(ii) (identifying

affiliates) is unintelligible, as it is unclear to whom the

certification information must be provided. APL, 4. Further, it asserts

that the last two sentences of the paragraph seem to be unrelated to

clause 9(ii), and requests clarification of the regulation. APL, 4.

Section 530.8(b)(9) as proposed reads, (the filed contract or

amendment shall include)

(9) the legal names and business addresses of the contract

parties; the legal names of affiliates entitled to access the

contract; the names, titles and addresses of the representatives

signing the contract for the parties; and the date upon which the

service contract was signed. An agreement service contract must

identify the FMC Agreement Number(s) under which the service

contract is filed. Carriers, conferences and/or agreements which

enter into contracts that include affiliates must in each instance

either:

(i) list the affiliates' business addresses; or

(ii) certify that this information will be provided to the

Commission upon request within ten (10) business days of such

request. However, the requirements of this section do not apply to

amendments to contracts that have been filed in accordance with the

[[Page 11197]]

requirements of this section unless the amendment adds new parties

or affiliates. Subsequent references in the contract to the contract

parties shall be consistent with the first reference (e.g., (exact

name), ``carrier,'' ``shipper,'' or ``association,'' etc.);

The Commission has re-drafted this provision for clarity, and these

alterations should sufficiently address the reasonable concerns of the

commenters.

Appendix A General Rules Filings

COSCO and JUSEFC comment that allowing filers to make general rules

filings or register filings is beneficial and will allow carriers to

avoid repetitious filing. COSCO, 1; JUSEFC, 7. COSCO urges that

publishing general rules in a tariff would be unacceptable because of

the confidentiality issues and, further are concerned that such

publication would require a thirty-day delay for the implementation of

such rules. COSCO, 1.

ETM is concerned that the proposed regulations are unclear as to

whether the Commission would allow for multiple service contract

registers, and whether the registers are to be based on strict location

group application or if overlapping scopes are allowed. ETM 2-3. Both

ETM and PTCB foresee future problems if the Commission intends for the

registers to be unique, such as by location group, without conflicting

scopes or overlapping of scopes and does not allow different and

overlapping scopes between registers. These problems may include

amendment numbering, effective dates and contract terms. ETM 2-3; PTCB,

9.

Other comments disfavor allowing service contract registers as

being unnecessary, burdensome and without meaningful regulatory

purpose. P&O, 7. P&O further comments that using a service contract

register for general rules filing seems contrary to the continued

requirement to publish essential terms where carriers have

traditionally published, and they assume would continue to publish,

their ``boilerplate.'' P&O, 7.

The provision for a ``general rules'' filing is somewhat

complicated by the fact that there may be two electronic filing systems

in place. However, the Commission allowance of more liberal cross-

referencing as well as a filing system which would accept the full text

of the document in a word processing format (i.e., the same as the

document signed by the parties), this should relieve any burden on

filers to file with the Commission anything other than the commercially

agreed upon service contract, and should be adequate for the Commission

to determine the terms of the contract with precision.

Other Term Requirements

Many of the system requirements and restrictions opposed in the

comments diminish, if not completely disappear, with the addition of

the option for a web-based filing system. First, PTCB's concern that

ATFI will not accept port ranges disappears when filers file the full

and original text of their contract on-line. PTCB, 5. The Commission

has revised the regulations relating to the ATFI-based system to allow

the filed matter+ to reflect the true agreement of the parties, to the

maximum extent possible, given some inherent technical limitations of

that system.

The same is true for location and commodity descriptions: There

would be no need to require NIMA or WPI locations, or to use the

Harmonized Schedule for commodity descriptions in a ``free text''

system. OCWG, 21; P&O, 8; NITL, 11; Conagra, 4. The Commission agrees

that this unduly limited the parties in contracting and might cause

confusion, and so has removed references to the US HTS, NIMA and WPI in

the interim final rule.

For duration requirements, however, the Commission will continue to

require service contracts to have specific effective and expiration

dates. P&O, 7; NITL, 12. This is required by the statutory definition,

that a service contract be ``a commitment * * * over a fixed time

period.'' Section 2(19) of the Act. See below, discussion on amendments

for renewal of service contracts.

System requirements may also dictate the Commission's ability to

allow filers to have access to their filed contracts for reviewing and

auditing. PTCB, 3. At first blush, this may create confidentiality/

security issues which are, at present, unforeseen. While the new system

may give the filer the ability to review (on a read-only basis) its

filings, the contents of a filed service contract may only be changed

through a subsequent filed amendment or correction.

Finally, the Commission will make the addition of a provision which

requires agreement-authorized service contracts to include the filed

agreement number, Sec. 530.8(d)(3), and a provision for filers to

inform the Commission where the statement of essential terms will be

filed, Sec. 530.8(d)(4). For the reasons described above, the proposed

regulation is revised to add the alternative system, remove unnecessary

requirements and further simplify the filing procedures.

Section 530.9 Notices

Proposed Sec. 530.9 (as renumbered) requires the carrier party to a

service contract to notify the Commission within 10 days of the

occurrence of certain events which affect the service contract. Those

events include: Correction ((a)(1)); cancellation ((a)(2)); termination

not covered by the contract ((a)(3)); adjustment of accounts (by re-

rating, liquidated damages, or otherwise under Sec. 530.16)((a)(4));

final settlement of any account adjusted as described in Sec. 530.16

((a)(5)); and any changes to the name of a basic contract party or the

list of affiliates, including changes to legal names and business

addresses, of any contract party entitled to receive or authorized to

offer services under the contract ((a)(6)).

Commenters suggest that there is no need for the Commission to

receive notice of matters which are affected by amendment of the

service contract because such amendments are filed with the Commission.

NITL, 15. They suggest that the events which are enumerated in the

proposed regulation are events that would require such amendment.

CMA and NITL believe that requiring changes to be reported within

ten days is overly burdensome. CMA, 2. NITL suggests that if the

proposal is not completely deleted, the time period should be

lengthened to ninety days. NITL, 15-17. In the original regulation,

found at Sec. 514.7(g)(2), notices were required to inform the

Commission within thirty days of such events, and that period of time

was based on the commercial practice for settlements of accounts.

The proposed rules reduced the time in which notification must be

made from thirty to ten days based on an understanding that this would

be in line with the speed at which these transactions now occur and

that, therefore, no additional burden would be created for regulated

entities. However, due to the commentary to the contrary, the

Commission has decided to simply revert to the former requirement of

thirty days.

NITL and DuPont comment that the requirements cover too many

events, and are overly broad. DuPont asserts that such notices should

only be required to be reported when events occur which affect the

essential terms of the service contract. DuPont, 2. The proposed

regulation would give the Commission power to limit, restrict and

dictate the content of changes to service contracts. DuPont, 2.

Contrary to these assertions, the Commission will continue to

require that all changes to a filed service

[[Page 11198]]

contract must be filed with the Commission, not only those which effect

the essential terms. The Commission must monitor the operation of

service contracts for acts prohibited by the statute and simply cannot

fulfill this duty if it is not guaranteed of having all the terms of

service contracts within its jurisdiction.

The comments suggest the proposed regulation be altered to permit

periodic reporting, perhaps on a semi-annual basis in a prescribed

format (but not one which would restrict the parties right to mutually

alter, modify or terminate) of routine changes which effect essential

terms. DuPont, 2,3. CMA suggests this approach for changes to shipper

affiliates only. CMA, 2.

Proposed Sec. 530.9 (as renumbered) was adapted from original

Sec. 581.5(b) (52 FR at 23939, 23999), which the Commission asserted

was

necessary to enable the Commission to perform its contract

surveillance role and ensure the terms of contracts are met. The

notice requirements should not be burdensome since such information

is exchanged in the normal course of business by the contract

parties. Compliance with the notice requirement can be met merely by

providing the Commission with a copy of whatever documents are

exchanged between the parties under such circumstances.

The Commission continues to have such a surveillance role, which is

made more important by the fact that service contracts will not be

publicly available. Furthermore, the Commission particularly reminds

filers that any changes to the public essential terms must be updated

in the essential terms publication, regardless of such notification to

the Commission. See Sec. 530.12 (publication).

NITL is correct not only that the Commission ``would like'' to

receive notice, but that it must receive notice of changes in service

contracts in order that it have the complete terms of the contract

which are in effect, and to be aware that a certain filed contract is

no longer in effect. NITL, 15. Also, NITL argues that corrections

should be handled through amendments. NITL, 15-17. If the filer uses

the modified ATFI, the filer will receive a special case number with

which it will make its own corrections. As the Commission itself does

not enter the corrections into the system, the Commission must know

when that is done. The introduction of an alternate system filing may

or may not have the capability of alerting the Commission when a

correction is made, so while there may be no need for notice, the

Commission will continue to require it at this point. See, discussion

regarding correction, Sec. 530.10.

As cancellations (Sec. 530.10(a)(2)) are necessarily only those not

anticipated by the terms of the contract, there is a clear need for the

Commission to have notice of that event. If the termination has

occurred as anticipated by the service contract, we agree, in

accordance with the rationale above, that there is no need for

additional notice to the Commission. If, however, an event has occurred

which was not contemplated by the parties in the service contract but

which affects its operation, the Commission must be so notified in

order to assess whether the parties are employing an unjust device to

obtain rates otherwise not applicable. Similarly, for terminations not

covered by the contract (Sec. 530.10(a)(3)), the parties will no longer

have the right to use the rates in the service contract and there are

section 10(a)(1) concerns.

Several commenters assert that the notification requirements of

Secs. 530.10 (a)(4), (a)(5) and (b) for account adjustments are

unnecessary and arbitrary, intrude into the commercial relationship,

create needless burdens and are outside the Commission's oversight

functions. OCWG, 20; Conagra, 4-5; NITL, 15-17. Notice of account

adjustments and final settlement which are made pursuant to the terms

of the service contract filed with the Commission appear to have no

legitimate basis. NITL, 16. They appear to stem from prior ``me-too''

requirements. NITL, 16.

Again, and contrary to the comments, however, the Commission must

know what the adjustments or final settlements of an account may be,

not to impose the rate differential on the carrier or shipper, but to

ensure that no section 10 violations are being carried out. There is

little burden on the filers in providing this information, as they may

simply copy the information to the Commission as they send it to the

shipper.

Similarly, for final settlement of any account adjusted, the

Commission requires notice. Both of these notice requirements were

``intended to apply to only those service contracts where there has

been a change to the basic compensation required by the terms of the

service contract.'' 52 FR at 23999. The applicable rate must be

determinable at any given time, to ensure compliance with the Act and

section 10(a)(1). Therefore, while parties are free to provide for

liquidated damages, contingencies, etc., in their service contracts,

using a rate from a service contract which is not lawful under the Act

would create section 10(a)(1) and possibly other violations.

NITL comments that changes to names of parties (requirement of

which is discussed supra) should be handled through amendments, and

that additional notice of these should therefore not be required. NITL

15-17. NCBFAA and CMA suggest that there is no need to notify the

Commission of changes to lists of shipper affiliates as required in

Sec. 530.9(a)(6)(ii). NCBFAA, 2; CMA, 2. Furthermore, this is too

burdensome to shippers. NCBFAA, 2; CMA, 2. DuPont recommends that

Sec. 530.9(a)(6)(ii) be altered to eliminate the requirement to report

all names and addresses of shippers (except NVOCC) because identity of

shippers is not an essential term, is not reported to the public and

could be required to be maintained in the records of the carrier,

records which can be obtained by the FMC through subpoena power.

DuPont, 2-3.

Notice to the Commission of changes to shipper parties arises from

the same concerns the Commission has when any other term of the filed

service contract changes. The Commission must have the ability at any

time to examine the filed service contract and assess whether or not

parties (or non-parties) are operating in conformity to the service

contract, or whether they may be employing an unjust means or device to

elude the requirements of the Act. The Commission must be able to

ascertain at any given moment who has the right to access a service

contract.

Furthermore, there appears to be no reason at this juncture for the

Commission to consider whether periodic reporting of changes to who may

have access to a service contract (affiliates) would be adequate to

meet its responsibilities. No change to OSRA mandates such a change,

and the regulation was carried over from prior Commission regulation

found at 46 CFR 514.7(g)(2).

OCWG complains that proposed Sec. 530.9(b) (notice to contract

party) fails to acknowledge commercial realities, including the

sometimes protracted negotiations and communications delays relating to

the covered subject matter and, further, that carriers and shippers

have both regulatory and commercial incentives to promptly pursue their

contract rights. Thus, they argue, there is no reason to graft further

deadlines onto the commercial relationship. OCWG, 20-21.

Originally, this provision was crafted with respect to the general

commercial practice of settling accounts in thirty days; additional

time was provided, and the regulation as adopted required notice to the

shipper party of the final settlement of account within 60 days of

[[Page 11199]]

the termination of the contract. 52 FR 23999.

OSRA shifts parties' remedies to their common law contract rights,

and as such, this provision appears to be no longer necessary, as it

was originally intended to protect the shipper party. With the

deregulatory goals of OSRA, parties are expected to protect their own

contract rights and as such the Commission's role as mediator between

the parties for contract disputes is removed. Accordingly,

Sec. 530.10(b)(as originally numbered) is deleted completely.

Section 530.10 Amendment, Correction and Cancellation

The proposed regulation provides that either party to a filed

service contract may request permission to correct clerical or

administrative errors in a filed service contract by filing a request

with the Commission's Office of the Secretary within 45 days of the

contract's filing with the Commission, for a fee of $233 pursuant to

Sec. 530.11(c)(4). Any notices in connection with the filing of such

corrections would be filed with the Commission under Sec. 530.9 within

10 days. Amendments are intended by the rule as proposed to be filed in

the same manner as initial service contracts. Finally, cancellation of

the service contract is provided for by this section.

COSCO requests clarification about what rules, and specifically

whether confidentiality, will apply to service contract amendments

filed after May 1, 1999, where the original service contract was filed

before May 1, 1999. COSCO, 2.

Amendments filed on or after May 1, 1999 to service contracts filed

before May 1, 1999 must comply with the regulations in effect as of May

1, 1999. The Commission expects that many parties to service contracts

entered into before May 1, 1999 may wish to obtain confidentiality for

more of their service contract terms under OSRA, and therefore will

terminate the contracts, write new ones and file them in their entirety

rather than simply making amendments. As we previously indicated, the

Commission will strive to have the filing systems ready to accept

service contracts in the week prior to May 1, 1999 and thereby allow

the filing of service contracts which have an effective date of May 1,

1999 or later as soon as possible.

Two commenters believe that requiring a formal correction

proceeding and justification for correcting clerical errors of proposed

Sec. 530.10(b) incorrectly carries over provisions from the previous

regulations on ``me-too,'' which has been eliminated by OSRA. CMA, 2;

DuPont, 3. It appears that confusion has arisen among the commenters

regarding the differences between the terms ``correction'' and

``amendment'' to a service contract filed with the Commission under the

Act. Parties to a filed service contract are free to amend its terms

prospectively at any time, by filing their amendments pursuant to

Sec. 530.8. Meanwhile, the ability to correct clerical or

administrative errors retroactively helps contract parties avoid undue

hardships in instances where the parties discover, subsequent to filing

a contract with the Commission, that a clerical or an administrative

error had been made.

There is utility to having in place a procedure by which the

parties may correct inadvertent errors through the correction

procedure. However, this procedure must be structured so as to enable

the Commission to distinguish between legitimate requests and requests

crafted to avoid the statutory requirements of the Act, regardless of

the fact that me-too rights have been eliminated by OSRA. The ability

to change provisions retroactively without Commission scrutiny would

undermine the clear intent of section 10(b)(2)(A) which provides that

no common carrier, either alone or in conjunction with any other

person, directly or indirectly may provide service in the liner trade

that is not in accordance with the rates, charges, classifications,

rules, and practices contained in a tariff published or a service

contract entered into under section 8 of OSRA.

Furthermore, allowing parties to ``correct'' retroactively terms of

the filed service contract would make any such agreement illusory and

thereby bring it outside the requirements contained in section 2(19) of

the Act that a service contract be certain and contain commitments on

the parts of both parties. It appears that allowing for corrections

(retroactive) and amendments (prospective) to filed service contracts

provides more than adequate flexibility for parties to take advantage

of their commercially negotiated arrangements while ensuring adherence

to the Act's requirements.

CMA asserts that the Commission has no authority to accept or

reject a contract change, as it is a matter for the parties. CMA, 2;

DuPont, 3. NITL believes it is nonsensical to require permission to

correct a clerical error. NITL, 17. We disagree. The authority for the

Commission to scrutinize a retroactive change to a service contract is

based on the requirement of section 8(c) of the Act that service

contracts be filed with the Commission and that they reflect certain,

meaningful commitments. Thus, allowing parties to make retroactive

corrections devoid of any review or oversight would render that

statutory requirement meaningless.

CMA argues that there should be no distinction between changes that

are made prospectively (amendments) and changes that are made

retrospectively (corrections). CMA, 2. Again, we disagree, and point

out that the Commission has made such a distinction: the terms of

corrections, but not those of amendments, are subject to Commission

review before they may be made.

Two commenters complain that the correction procedure is

excessively burdensome. NITL, 15; NCBFAA, 2. Further, NITL argues, the

fee for corrections is too high. NITL, 17. The service fee associated

with such requests became effective November 2, 1998, and reflects the

costs incurred by the Commission in providing this service to the

parties which elect to use it. Correction requires a significant amount

of work by Commission staff, because the request must be scrutinized to

ensure it is not an attempt to circumvent the requirements of the Act.

Again, the need for notice of correction (see Sec. 530.9(a)) will

depend on the capabilities of the filing system.

PTCB comments that filers should have access to their filings to

check them for errors and to audit them. PTCB, 1. The read-only access

to filings may be possible, but certainly filers will have no ability

to change their filings (except by amendment) once submitted to the

Commission's database for the reasons set forth above.

NITL comments that the 45-day period by which filers must report

clerical and administrative errors is too short. NITL, 17. This

deadline, however, has been a longstanding requirement of the

regulations and the Commission is unaware of complaints of hardship in

the past. Furthermore, given the recent advances in communication

technologies, 45 days would be more than adequate time for parties to

detect clerical errors in their service contracts. Also, the

requirement that such request be filed within a 45-day period for a

service fee encourages contract parties to carefully review contracts

before submitting them to the Commission and to take corrective action

without undue delay. Finally, the Commission has previously fully

assessed the time period required for requesting a correction, and it

is not apparent why this analysis would have changed. Docket No. 88-61,

54 FR 1363 (Jan. 13, 1989).

[[Page 11200]]

The correction procedure set forth under Sec. 530.10 will serve a

useful purpose and will be maintained. Experience has shown that there

will likely be only a minimal need to file such requests: during FY

1998, only four such requests were filed with the Commission and this

number is not anticipated to increase significantly in the future,

particularly given the Commission's determination to encourage contract

parties to file their actual arrangements rather than arrangements

``translated'' into FMC formats.

Commenters complain that Sec. 530.10(c)(2)(cancellation) is

anachronistic and urge the Commission to delete the provision. One

commenter complains that these provisions are inconsistent with general

principles of contract law and would penalize shippers in situations

where both the shipper and the carrier believe the termination is in

their self-interest, and as such is not appropriate in a marketplace

oriented system, such as the one OSRA contemplates. AImpSA, 1-2. NCBFAA

complains that the proposed rule is burdensome and inappropriately

harms shippers when the carrier may not have suffered any damages due

to unilateral cancellation of a service contract. NCBFAA 3,4. NCBFAA

also complains that it is unfairly punitive to re-rate at tariff rates

when a shipper cancels a service contract. NCBFAA, 3,4.

The Commission has concluded to redraft this section to reflect the

very limited situations in which re-rating will be required. First, we

point out that the rejection provision has been eliminated. Second, re-

rating, as discussed below, will only be required in situations where a

filed service contract has not contemplated and which the parties have

not determined to amend the contract. If there is a liquidated damages,

or another fall-back rate provision, there will be no need to re-rate

cargo which has already been carried. Therefore, most of the shippers'

concerns that they may be held unreasonably accountable for a carrier-

filer's filing mistakes are removed.

The Commission first added the allowance that parties prospectively

may amend their filed service contracts in Docket 92-21, 57 FR 46318

(Oct. 8, 1992). There, the Commission noted that the parties may make

retroactive corrections of clerical or administrative errors through

the corrections procedure. Id. at 46318. Second, the Commission noted,

the parties can similarly provide for substantive modifications through

contingency clauses. As pointed out below, examples of such contingency

clauses had been listed in Sec. 514.17 (d)(7)(viii).6 As

further discussed in the supplemental information to this regulation,

any of the terms of the service contract may be amended with

prospective effect. 57 FR at 46322.

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\6\ That section read, in pertinent part, Later events causing

deviation from ET (if any); Where a contract clause provides that

there can be a deviation from an original essential term of a

service contract, based upon any stated event occurring subsequent

to the execution of the contract (this term) shall include a clear

and specific description of the event, the existence or occurrence

of which shall be readily verifiable and objectively measurable.

This requirement applies, inter alia, to the following types of

situations:

(A) Retroactive rate adjustments based upon experienced costs;

(B) Reductions in the quantity of cargo or amount of revenues

required under the contract;

(C) Failure to meet a volume requirement during the contract

duration, in which case the contract shall set forth a rate, charge,

or rate basis which will be applied;

(D) Options for renewal or extension of the contract duration

without any change in the contract rate or rate schedule;

(E) Discontinuance of the contract;

(F) Assignment of the contract; (or]

(G) Any other deviation from any original essential term of the

contract.

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The terms amendment, correction and cancellation are clarified by

the revised section. It is apparent that commenters are confused about

the reasoning behind the distinction the Commission has made in the

past. Further, we point out that the Commission's Bureau of Tariffs,

Certification and Licensing (``BTCL'') received only four petitions for

correction last year. This is simply an issue which has not been a

problem in the past, but which the Commission will continue to monitor

against the abuse of procedures such as correction to evade the

prescriptions and prohibitions of the Act.

Therefore, due to the apparent confusion of the comments over the

distinction between the terms correction, amendment, and cancellation

the proposed regulations are revised to include definitions of these

terms.

Section 530.12 Publication of Essential Terms

OSRA continues to require the publication of certain essential

terms of service contracts and instructs carrier parties to service

contracts to make these essential terms available to the public ``in

tariff format.'' Section 530.12 of the proposed regulation suggested

that carriers and conferences should be able to satisfy this obligation

in the same way they publish their tariff information under proposed 46

CFR part 520. Further, in an effort to assist the shipping public to

find statements of essential terms published according to this part,

the Commission proposed making a list of the locations of all such

publications available on the FMC website. 46 CFR 530.12(f).

OCWG comments that the proposed regulation's requirement that

essential terms be published with the tariffs is misplaced because that

is just format, not location. OCWG, 18. The proposed rule cross-

referenced many of the technical requirements of the newly proposed

tariff publication regulations to effectuate the essential terms

publication required under this part, in an effort to ease the burden

on carriers, and to allow them to take advantage of means by which they

would already publish their tariff information. The Carrier Automated

Tariff regulation, Commission Docket No. 98-29, gives carriers a wide

array of options regarding the location at and method by which they

publish. Therefore, requiring carriers to publish statements of

essential terms alongside their tariffs would not create any new

burdens. Indeed, requiring that a different location be used would

appear to be much more burdensome, as it would not allow carriers to

take advantage of publications they must already make in accordance

with the tariff regulations.

However, the Commission is again faced with issues which arise when

a service contract is entered by members of a non-conference agreement

which does not publish a common tariff with which its service contract

essential terms may be published. One commenter supports the proposal

that individual service contracts are published by the individual, and

that multiparty service contracts are filed by one party, but published

by all the parties. P&O, 8. However, the comments request that the

Commission clarify that for individual service contracts, essential

terms would be published on the carrier's own essential terms

publication and not on a conference's essential terms publication. P&O,

8. We agree that this remains the simplest approach.

Individual carrier service contracts are to be published alongside

that carrier's tariff matter, in a separate document, as outlined in

Sec. 530.12. Multi-party service contracts entered into under the

authority of a conference must be published alongside the conference

tariff, and not in the individual member's tariff.

For service contracts jointly entered into by multiple parties of a

non-conference agreement, the publication of the statement of essential

terms will be published as for individual service contracts, but note

must be made of the

[[Page 11201]]

relevant FMC-designated Agreement number. Commenters assert that, by

requiring a list of fellow carrier participants, the proposed

regulation was adding a non-statutory public essential term: the names

of the carrier parties. With that in mind, together with the

limitations which exist as to tariff-associated statements of essential

terms publication, reference to the agreement number will allow the

public to ascertain whether certain activity is joint or independent.

This approach, while it does not provide the public with a list of

which member is or is not participating in an agreement-authorized

multi-party service contract, will indicate that the service contract

is not an independent, sole-carrier service contract.

One commenter suggested that rather than require all individual

carriers to publish the full text of their non-conference agreement

contract statements of essential terms, simply a reference to where the

published essential terms may be found would be adequate and less

burdensome to carriers. COSCO, 2. Due to the automated nature and the

limited terms which are required to be published in a statement of

essential terms under OSRA, the burden appears to be rather light on

carriers, in comparison to the benefits it provides the shipping

public.

P&O further requests that the Commission clarify the different

publication requirements for non-conference agreement multi-party

service contracts, conference agreement multi-party service contracts

where the conference is the signatory but not all members are

participants, and conference agreement multi-party service contracts

where the carriers themselves are the signatories. P&O, 8. We agree

that for statements of essential terms, because the terms are public in

contrast to the balance of the filed matters, there is no corresponding

issue of confidentiality. The clarification in Sec. 530.12 will

indicate that service contracts which are entered jointly by members of

conferences, regardless of signatory, must be published with the

conference's tariff and not in the individual carrier's publication.

For an independent service contract, the statement of essential terms

will be published with the individual carrier's tariff publication, but

not with the conference's tariff. Allowing such would lead to public

confusion.

ETM requests that the Commission provide further clarification

regarding the failure to make published essential terms

contemporaneously available. ETM, 1. We reiterate that such liability

would rest on the carrier parties to a service contract under the

Commission's jurisdiction, regardless of the appointed agent for

publishing.

Section 530.13 Exceptions

One commenter asks the Commission to clarify in supplementary

statements that service contracts which are limited to the carriage of

used military household goods and personal effects, or shipments of

used household goods and personal effects of civilian executive

agencies tendered to OTIs under the International Household goods

program, administered by GSA, or both, are required to be filed with

the Commission. HGFAA, 3. The exemption for used military household

goods, granted by the Commission under section 16 of the Act, exempts

those services from the tariff filing requirement only. The language in

the rule as revised should remove any confusion.

The inclusion of the phrase, ``as those terms are defined in

section 3 of the Act'' appears to adequately address any concerns

regarding the definitions for exempted commodities. The one exception

to this is for the term ``motor vehicle'' which is not defined by the

Act. Therefore, the addition of that term to the definitions,

Sec. 530.3, which mirrors the terms definition in the Commission's

regulation on Carrier Automated Tariffs Systems (Docket 98-29) will

adequately address such concern. It does not appear necessary to

further repeat other definitions here.

The proposed regulations also provided for ``non-acceptance,'' a

new term reflecting the congressional mandate that the Commission not

accept for filing service contracts which cover only excepted

commodities. It appears now that this was a confusing new term. The

term ``non-acceptance'' has been removed from the regulation, and the

provisions in this section should otherwise adequately address

``mixed'' contracts.

The Commission will retain the provision requiring any service

contracts which are filed to relate to commodities or services for

which a tariff rate can be established. This is because the situation

may arise in which the Commission would require re-rating, and for such

re-rating, an ``otherwise applicable rate'' would be required. While

such need may be very rare, those concerns remain for replacement

applicable rates for such situations.

Finally, issues arise similar to those discussed under the sections

on rejection and re-rating. For the reasons discussed, mixed commodity

contracts may only be filed if a replacement rate is available. We

therefore revise the proposed regulations to clarify this approach.

Finally, as it was repetitious, Sec. 530.15, as originally numbered in

the proposed regulation, entitled ``non-acceptance'' is deleted

entirely, and the following sections have been accordingly renumbered.

Proposed Sec. 530.15--Rejection

Several comments remark on the Commission's authority and criteria

it would use for rejection of service contracts as presented in

proposed Sec. 530.15. Commenters generally argue that the Commission

may only reject service contracts submitted for filing if they do not

meet the requirements of the Act, but that the Commission does not have

the authority to reject them on the basis that they do not meet the

requirements of the Commission's regulations. OCWG, 19-20; CENSA, 3;

P&O, 6; NITL, 19. IBP urges the Commission to revise the regulation,

and to provide more guidance on when a service contract could be

rejected and suggests that rather than a general reference to the Act,

this section refer to the requirements in Sec. 530.8 (as renumbered).

IBP, 1. Finally, P&O complains that the Commission is wrongfully

attempting to intrude on the commercial nature of service contracts

through rejection. P&O, 6.

Commission regulations currently outline the procedures for

rejection of service contracts and essential terms filed with the

Commission. 46 CFR 514.7(j). The Commission rejects service contract

essential terms publications filed into the ATFI system which do not

conform to the requirements of the Act or Commission regulation,

including timeliness of filing and adequacy and accuracy of the

publication of the statement of essential terms. The proposed

regulation attempted to adapt the current rejection rules as necessary

to meet the changes to the Act made by OSRA.

JUSEFC recommends the re-insertion of Sec. 514.7(j)(2) which

specifies that rejection is limited to those instances where parties

fail to file a corrected copy. JUSEFC, 8-9. The filer, they comment,

should be given a chance to cure even if the deficiencies are major,

and a notice of intent to reject be sent to the shipper party, because

the sanction of re-rating is too harsh on the shipper who relies on the

carrier party to do the filing. IBP, 2. This argument is considerably

diminished, as the Commission under section 13(f)(1) of the Act as

revised by OSRA no longer has the ability to order shippers to pay the

undercharge if there is an

[[Page 11202]]

enforceable agreement in writing.7 See infra, discussion of

re-rating at Sec. 530.14, originally numbered Sec. 530.16 in the

proposed regulation.

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\7\ This does not, however, relieve parties of liability for

acting pursuant to an unfiled service contract.

---------------------------------------------------------------------------

Several commenters request that the Commission decrease the

``review period'' and increase the ``cure period'' proposed in the

regulations. COSCO requests that the Commission shorten the review

period from 20 days to 1 day. COSCO, 2. OCWG also recommends a no-

penalty cure period of 20 days. OCWG, 20.

NITL suggests amending Sec. 530.15(b) as proposed to read:

Within 20 days after the initial filing of an initial or amended

service contract, the Commission may reject a service contract that

does not conform to the requirements of section 8(c) of the 1984

Act. Prior to rejection, the Commission shall provide notice to the

filing party of the deficiencies in the contract and shall provide

such party 20 days to cure the deficiencies. A failure to cure the

deficiencies within the stated time period will result in rejection

of the contract. The filer of the contract shall notify the shipper

of any contract rejection within 10 days of its receipt of notice of

rejection. Until the cause for potential rejection is cured, no

cargo may be transported under the contract following the receipt of

notice of the rejection by the shipper.

NITL, 21

JUSEFC suggests a two-tier approach to review. First, they suggest,

a short period (3 days) in which the Commission would determine whether

there is a serious enough breach as to require rejection ab initio,

notify the filer and give it the opportunity to make corrections. Then,

a second period (10 days)(if the deficiency is not corrected) for

continuing review, after which (again if not corrected), rejection

would be effective as of the close of the correction period, but not as

of the date the contract was originally filed. JUSEFC, 8-9. JUSEFC's

proposal would appear to allow the contract rates to be effective for a

period of up to 13 days, even if the deficiencies are never cured, and

to allow the contract rates to be lawful. JUSEFC, 8-9. This procedure,

JUSEFC claims, would comply with the Commission's practice with respect

to tariff rates rejected after they have become effective as well as

the Filed Rate Doctrine as affirmed in Maislin Industries, Inc. v.

Primary Steel, Inc., 497 U.S. 116 (1990).8

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\8\ The Supreme Court in Maislin construed the Interstate

Commerce Act (``ICA'') requirement that tariffs be filed (49 U.S.C.

10762(a)(1)(1982 ed.)), that carriers were prohibited from providing

services at any other rate other than the filed rate (49 U.S.C.

10761(a)(1982 ed.), and that the Interstate Commerce Commission

(``ICC'') assess those rates for reasonableness. Like the Commission

under the 1984 Act as amended by OSRA, the ICC had the authority to

impose civil penalties for deviation from the filed rate (49 U.S.C.

11902-11904(1982)). However, unlike the Commission under OSRA, the

ICC was directed by statute to order that the difference between the

filed rate and the actual rate be paid. With the addition of the

second sentence to section 13(f)(1) to the Act, the Commission no

longer has either that mandate or authority.

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With the changes the Commission has made to the filing system, and

the relief from many of the technical requirements which accompany

those changes, the Commission will completely remove the rejection

procedure in the proposed regulation. There will therefore be no

requirement that the Commission conduct a review of service contract

filings according to any deadline. Of course, this would have no effect

on the Commission's ability to review service contract filings for

statutory and regulatory compliance and pursue investigatory or

enforcement action as it deems necessary.

JUSEFC's concern that the Commission has compromised the right of

filing parties to amend their contracts to meet the Commission's

objections and preserve the original effective dates of their contracts

is misplaced. The assertion that parties have a right to ``correct'' or

``cure'' their deficient service contracts and preserve the filing date

is unsupported by any statutory requirement. Commenters who argue for

the Commission to give filers time to correct deficiencies appear to

suggest that the Commission must review filings for facial defects as

they are filed, and further, that if the Commission does not notify the

filer of a deficiency, that the service contract is compliant with the

Act and regulations. While it has been the past policy and practice of

the Commission in the past to review essential terms documents as they

were filed with the ATFI system and its ability to conduct associative

checks, there is no statutory requirement that the Commission give

parties time to ``cure'' their defective filings during which they may

operate under the defective service contract.

The rejection procedure was originally intended to, first, be a

service to filers and, second, to preserve the system integrity of the

data in the ATFI-based statements of essential terms. When transmission

to ATFI failed, BTCL, through the rejection procedure outlined in the

proposed regulations, would notify filers that the essential terms

publication they had attempted to file was defective. The automated

nature of conformity checks made this possible.

Acceptance by the Commission of a document, including an

electronically-filed statement of essential terms does not and never

did, indicate the Commission's ``approval'' of a service contract. The

Commission expects that BTCL, as it detects minor deficiencies in filed

service contracts, may notify the filers and allow for re-filing within

a reasonable period of time, at their discretion, but will not be

required to do so. Therefore, the rejection procedures are deleted

entirely.

Carrying cargo under a service contract before it has been filed

with the Commission is prohibited by proposed Commission regulation

Sec. 530.8(a). Carrying cargo under a defective service contract (for

example, one which does not contain one of the eight essential terms or

which fails to state them with adequate certainty; or does not contain

the shipper certification; or does not conform to the filing

requirements of Sec. 530.8; or does not concurrently publish the four

public essential terms) would be a violation of the Act, and subject to

penalties of section 13 of the Act. The comments reveal confusion on

this point which the Commission wishes to dispel. The filing of a

service contract does not, nor did it ever, imbue the service contract

with any type of Commission approval or imprimatur, any more than would

the filing of a tax return with the Internal Revenue Service.

It has, however, been the past practice of BTCL to informally

notify filers of deficiencies in their service contract filings. BTCL

would provide filers of essential terms statements an opportunity to

cure the defects by re-transmitting the electronic data to the ATFI

system. Furthermore, it appears that BTCL has rarely, if ever, invoked

the predecessor section of this regulation. However, the reception of

the entirety of service contracts in electronic form will significantly

change the method by which the Commission may review the filings.

Therefore, with that, and the following discussion in mind, the

Commission has concluded that the rejection provision of the proposed

rule will be removed.

A service contract is defined by section 2(19) of the Act, as

revised by OSRA, as

a written contract, other than a bill of lading or a receipt,

between one or more shipper and an individual ocean common carrier

or an agreement between or among ocean common carriers in which the

shipper or shippers makes a commitment to provide a certain volume

or portion of cargo over a fixed period of time, and the ocean

common carrier or the agreement commits to a certain rate or rate

schedule and a defined service

[[Page 11203]]

level, such as assured space, transit time, port rotation, or

similar service features. The contract may also specify provisions

in the event of nonperformance on the part of any party.

Two specific requirements for service contracts are found in

section 8(c)(2): First, that the service contract be filed with the

Commission; and second, that it contain seven specific terms. Section

(8)(c)(2)(A)-(G). If the service contract either (1) does not meet the

definition in the Act; (2) is not filed with the Commission; or (3)

does not contain one of the terms required by the Act, it is not a

service contract as defined by the Act.

Finally, the comments agree that the Commission should accept for

filing mixed contracts, but recommend that the requirement that exempt

commodities in such filed service contracts have a tariff rate be

deleted, as there is no need for the Commission to regulate exempt

commodity rates, charges and conditions of service in a mixed exempt

and non-exempt commodity service contract any more than the Commission

has a need to regulate contracts that are exclusively exempt

commodities. P&O, 5. The exempt commodities to which P&O refers are

those exempted from tariff publication and from service contract filing

by the Act in section 8. A service contract of mixed exempt and non-

exempt commodities therefore may not have corresponding tariff rates.

Therefore, in the unlikely event that the service contract is canceled

as described in Sec. 530.10 (as renumbered), and there is no provision

for such cancellation in the terms of the contract itself, there would

be no corresponding tariff rate at which the exempt cargo would be re-

rated. Therefore, some ``general rate'' must be available if an exempt

commodity is to be filed in a service contract, and the proposed rule

will not be amended in this regard. As this is adequately provided for

in Sec. 530.13 as revised, and with regard to the foregoing discussion

of rejection, Sec. 530.15 is deleted entirely and the following

sections are accordingly renumbered.

Proposed Regulation Sec. 530.16--Implementation, Prohibition and Re-

Rating

The proposed regulations in Sec. 530.16 (as originally numbered)

had carried over some of the provisions of current Sec. 514.7(l)(ii)

which read,

In the event of a contract which is not provided for in the

contract itself and which results from mutual agreement of the

parties or because the shipper * * * has failed to tender the

minimum quantity required by the contract: * * * (B) The cargo

previously carried under the contract shall be re-rated according to

the otherwise applicable tariff provisions of the carrier or

conference in effect at the time of each shipment.

The proposed regulations anticipated re-rating 9 for

service contracts with non-conference agreements, but did not address

how the regulations should be changed in recognition of the new

limitations to penalties added by section 13(f)(1) of OSRA. Re-rating

under the proposed rules would take place only if the contract did not

contemplate mutual termination or if the shipper failed to meet minimum

cargo requirements. Many comments generally appear to misconstrue the

congressional intent of the prohibition of 13(f)(1), and the Commission

seeks to clarify the matter in this supplemental information and in the

revised text of the regulations.

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\9\ Such re-rating was proposed to be pursuant to regulation 46

CFR part 530 subpart E, at the tariff rate of the carrier which

actually carried the cargo in question.

---------------------------------------------------------------------------

Commenters have three basic objections to proposed regulation

Sec. 530.16, namely that re-rating by the Commission is: (1) Contrary

to section 13(f)(1) of the Act as amended by OSRA; (2) contrary to the

deregulatory spirit of OSRA; and (3) unfair to the shipper parties to

service contracts.

Several comments point to section 13(f)(1) of OSRA as expressly

forbidding the re-rating provision in the proposed rules. Conagra, 5;

P&O, 6. Other commenters express the belief that re-rating for

rejection based on failure to meet regulatory, as opposed to statutory

requirements. BSA, 11; CMA, 2; Dupont, 4; NITL, 19-20. NITL asserts

that re-rating either for termination by the parties or for rejection

by the Commission would be contrary to OSRA. NITL, 18. NITL comments

that section 13(f)(1) of the revised Act ``expressly prohibits the

Commission or a court from ordering a shipper to pay the difference

between rates that the shipper and carrier agree upon in writing and

that are billed by the carrier, and the rates that are set forth in a

tariff or service contract that would otherwise cover the

transportation movements.'' NITL, 18-19.

BSA remarks that re-rating during the period between initial filing

and rejection by the Commission under Sec. 530.16 is counter to the

deregulatory spirit of OSRA. BSA, 11. Commenters also point to this

deregulatory spirit to support their assertion that Congress intended

parties resolve the question of re-rating due to FMC rejection as a

private contractual matter. BSA, 11. Further, P&O comments, re-rating

is not consistent with the ability of service contract terms to include

liquidated damages or amendments to reduce minimum volume requirements.

P&O, 6. NITL also complains that proposed Sec. 530.10(c)(2) (as

renumbered) appears to be mandating liquidated damages terms (i.e., the

tariff rate) even though parties did not do so. NITL, 19-20.

Comments also cite OSRA's permission to parties to resolve

undercharge matters with a written agreement. Dupont, 4. The proposed

provisions for re-rating, Dupont complains, would deprive parties of

their right to mutually determine settlement of outstanding charges.

Dupont, 3-4. Therefore, if there is any Commission rejection at all,

the regulations should require the Commission to also notify the

shipper of the rejection, and either limit re-rating to shipments made

after receipt of such notice or impose penalty on the carrier alone.

Dupont, 4.

Shippers complain that re-rating for rejection penalizes the

shipper, when it is the carrier who has the responsibility of complying

with the filing requirements. Conagra, 4; Dupont, 4; NITL, 19-20; IBP,

2. Several comments suggest that a solution to this injustice would be

for the regulations to require the filing of corrections within a

specific period of time and to impose a monetary penalty on the filing

carrier for significant filing errors. Conagra, 6; Dupont, 4.

NCBFAA complains that proposed Sec. 530.10(c)(2)(ii) (as

renumbered), which requires all cargo to be re-rated in the event the

service contract is canceled, is arbitrary and punitive. NCBFAA, 20.

Furthermore, proposed Sec. 530.16(b)(2) (as originally numbered) would

unfairly impose the higher tariff rates on the shipper when it is the

carrier who is at fault, especially in a situation, for instance, in

which the Commission rejects a service contract six months after

filing. NCBFAA 4, 5. Our response to rejection arguments is outlined in

the previous discussion of proposed Sec. 530.15 (as originally

numbered) which has been deleted from this interim final rule.

As the comments correctly indicate, OSRA adds a new limitation to

the remedies the Commission may impose on parties with an added

sentence to section 13(f)(1) of the Act, which as revised reads

[n]either the Commission nor any court shall order any person to pay

the difference between the amount billed and agreed upon in writing

with a common carrier or its agent and the amount set forth in any

tariff or service contract by that common carrier for the

transportation service provided.

As explained by Senator Hutchison as she introduced the amendment to S.

414

[[Page 11204]]

which added the above language, the drafters intended to

[r]evise section 13(f) of the 1984 Act to make clear that, while a

common carrier may be penalized for charging shippers less than its

tariff or service contract rates, a carrier should not be able to

collect from the shipper the difference between the tariff or

contract rate and the rate actually charged and agreed upon in

writing. The collection of these so-called ``undercharges'' was a

major problem for shippers when the trucking industry was

deregulated. We want to avoid any recurrence of that problem in

connection with ocean shipping reform.

144 Cong. Rec. S1068 (March 4, 1998) (Statement of Sen. Hutchison).

The intent of the provision was not, contrary to the assertion of

some comments, that parties to a meaningless service contract may

circumvent the prohibitions of sections 10(a) and (b) of the Act. Nor

was it Congress' intent that parties which wrongfully terminate a

service contract have the ability to impose higher rates on an innocent

party for cargo that has already moved. The redrafted regulations at

Secs. 530.10 (as renumbered) and 530.14 (as renumbered) therefore make

it clear that if a service contract does not contemplate termination,

neither can the parties have illegal access to contract rates, nor can

the carrier which wrongfully terminates bill the shipper at the higher

tariff rates. Section 530.14 (as renumbered) indicates re-rating is

only applicable to such cancellation, and prohibition or suspension of

service contracts pursuant to the Commission's authority under sections

9 and 11 of the Act. See, Docket No. 98-25; 46 CFR 560.7.

In regard to comments on the unfairness of re-rating after

rejection, the concerns of the commenters generally become moot with

the elimination of the rejection provisions. The regulations have been

redrafted with these particular shipper concerns in mind. First, the

Commission points out that it is in the best interests of both parties

that a service contract make provision for mutual termination,

unilateral termination, and termination for failure to meet minimum

cargo commitments. It is only in the absence of such provisions in the

terms of the contract itself that the re-rating provisions will apply.

The regulations are intended to ensure that parties conform to sections

10(a)(1) 10 (illusory contract or failure to meet minimum

quantity commitment); 10(b)(1) 11 (carrier billing contract

rate when shipper fails to meet minimum quantity commitment); and

10(b)(2) 12 (failing to charge rate other than that in a

filed and valid service contract) of the Act.

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\10\ Section 10(a)(1) prohibits any person to, knowingly and

willfully, directly or indirectly, by means of false billing, false

classification, false weighing, false report of weight, false

measurement, or by any other unjust or unfair device or means obtain

or attempt to obtain ocean transportation for property at less than

the rates or charges that would otherwise be applicable.

\11\ Section 10(b)(1) prohibits a common carrier from,

allow[ing] any person to obtain transportation for property at less

than the rates or charges established by the carrier in its * * *

service contract by means of false billing, false classification,

false weighing, false measurement, or by any other unjust or unfair

device or means.

\12\ Section 10(b)(2)(A) prohibits a common carrier to provide

service in the liner trade that

(A) is not in accordance with the rates, charges,

classifications, rules and practices contained in a * * * service

contract entered into under section 8 of this Act unless excepted or

exempted under section 8(a)(1) or 16 of this Act.

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If a carrier has entered into a contract with a shipper, that

contract would appear to satisfy the requirements of section 13(f)

(``an amount agreed upon in writing'') which would in turn protect the

shipper from having the cargo re-rated; the charged rates would be

those in the service contract. The carrier would likely be hard-pressed

to seek to enforce contract obligations upon a shipper where the

carrier has unilaterally terminated. Finally, depending on the

circumstances, the carrier may be in violation of various proscriptions

of section 10, or the shipper may have a cause of action in court for

breach of contract.

The Commission finds that section 13(f)(1) was particularly

intended to avoid the type of requirement ordered by the Supreme Court

in Maislin. In Maislin, the trustee in bankruptcy of a carrier sought

to recover the difference between amount billed (negotiated rate) and

the tariff rate. Maislin at 135. In response to the deregulatory spirit

of the Motor Carrier Act, the Interstate Commerce Commission (``ICC'')

had instituted a ``Negotiated Rates Policy,'' namely, that the ICC

would not order the shipper to pay the shortfall between a negotiated

rate and a tariff rate. The Court found that the ICC was required by

the Interstate Commerce Act (``ICA'') to review for reasonableness the

rates charged to shippers. Because ``secret'' (negotiated) rates were

unreasonable under the ICA, in the event that those rates were not in

conformity to the tariff rates, the ICC was required by the Interstate

Commerce Act to order the shippers to pay the difference between the

filed rate and the negotiated rate (the ``filed rate'' doctrine).

Maislin at 129. The Court further found that ``if strict adherence to *

* * the filed rate doctrine has become an anachronism in the wake of

the MCA, it is the responsibility of Congress to modify or eliminate

these sections.'' Maislin at 135. With this background squarely in

mind, taken together with the balance of the Act and the remarks of the

sponsors of the bill as finally adopted, it is clear that section

13(f)(1), as added by OSRA, only limits the Commission from ordering a

shipper to pay the undercharge in a Maislin-type situation. The

limitation of section 13(f)(1) was not intended to allow shippers and

carriers to use service contracts as an ``unfair or unjust means or

device'' to avoid the application of the ``otherwise applicable rate''

contrary to other provisions in the Act. If there are no provisions

which anticipate the shipper's failure to meet the minimum cargo

requirements of the service contract and the cargo is not subject to

re-rating, the contract would appear to be illusory. Allowing the

parties to take advantage of an illusory contract would be contrary to

the prohibitions of section 10 and the intent of the Act.

Proposed regulations Secs. 530.10 and 530.14 (as renumbered) are

revised to reflect OSRA's intent that parties to a service contract may

not use that agreement as an unfair means or device to avoid the

otherwise applicable rate.13 Thus, the regulations require

re-rating for cargo which has already moved under a service contract

which is nullified due to a shipper shortfall (unless due to carrier

misconduct) and which is not contemplated by the contract's terms.

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\13\ The provision will also require re-rating if the service

contract has been prohibited or suspended under sections 9 or 11 of

the Act, pursuant to Sec. 560.7 of this chapter.

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Finally, subpart D is re-titled, ``Exceptions and Implementation,''

proposed regulation Sec. 530.15 is deleted, and proposed regulation

Sec. 530.16 is retitled ``Implementation'' and correspondingly

renumbered Sec. 530.14.

Section 530.15 (as Renumbered)--Recordkeeping and Audit

P&O comments that the notice of proposed rulemaking did not

adequately explain why this rule is necessary or appropriate. P&O, 7.

Further, it complains, there is no statutory authority for the

requirement, and it is pointless because the service contract is

already subject to a filing requirement. P&O, 7. Also it questions why

there is no provision for confidentiality for records obtained by the

Commission under this provision of the proposed regulations. P&O, 7.

[[Page 11205]]

Section 530.15 (as renumbered) was carried over nearly verbatim from

the current Secs. 514.7(m)(1) and 514.7(m)(3), which read:

(1) Every common carrier or conference shall maintain service

contract records in an organized, readily accessible or retrievable

manner for a period of five years from the termination of each

contract.

* * * * *

(3) Every common carrier or conference shall, upon written

request from the FMC's Director, Bureau of Enforcement or any Area

Representative, submit requested service contract records within 30

days from the date of the request.

The purpose and statutory authority for these provisions has been

examined previously by the Commission and its regulated entities when

Secs. 514.7(m)(1) and (m)(3) were added to the Commission's regulation.

The electronic filing options that the Commission has chosen to

offer, in an effort to reduce burdens on ocean common carrier filers

and at their urging, both fall short in one significant respect: The

electronic versions of the documents will not have the ability to

capture the signature of the parties. Because the Commission will still

need to examine the originally executed service contracts, the

shortcoming of the electronic filing system continues to make the

language in the proposed regulation necessary. While it is true that

the Commission has the authority to obtain the information in any event

under section 12 of the Act, the Commission has found it useful to

reiterate that authority here in order to impress upon carriers that

their executed service contracts and related records must be retained

and ready for inspection.

It is difficult to imagine how this provision would create any

additional burden on filers, as they would presumably retain the

originally executed service contract to protect their rights under that

contract. With respect to P&O's concerns about confidentiality, the

statute already provides for the confidentiality of service contracts

and there appears to be no need for further clarification of the issue

through rulemaking. For the foregoing reasons, the regulation in this

section will be adopted as proposed.

Global Service Contracts

The Commission, in an effort to minimize burden on filers, and

encourage them to structure their commercial negotiations based on

market forces rather than to conform them to regulatory requirements,

requested comment on the filing of global service contracts. Comments

generally commend the Commission for recognizing the commercial

desirablility of global service contracting. Dupont, Conagra, NITL,

CENSA, P&O, P&O and CENSA request confirmation from the Commission that

the voluntary inclusion of extrajurisidictional matter in a filed

service contract would not expand the Commission's jurisdiction over

those matters.

The Commission's intent was to allow parties to enter into service

contracts which fit their commercial needs, and relieve them of the

burden of negotiating contracts which ``carve out'' the U.S. trades

simply because of U.S. filing requirements. Again we confirm that

Commission will not assert jurisdiction over foreign-to-foreign matters

due solely to the fact that they are included in a service contract

filed with the Commission. We also note, however, that the extent to

which the U.S. trade matters are affected by, contingent on or reliant

on foreign-to-foreign movements, the Commission will have the statutory

duty and jurisdiction to obtain the relevant records.

While voluntary filing of global contracts will not subject the

non-U.S. matters to FMC jurisdiction, as discussed above, there is a

difficulty with how the statement of essential terms shall be made.

There is too great a danger that the public will be misled if only the

``U.S. trade'' volumes, for instance, are published, when those volumes

are affected by foreign-to-foreign volumes. Therefore, the interim

final rules require that the statement of essential terms for filed

contracts which include both U.S. trade and non-U.S. trade matters

which affect those terms must indicate that the contract includes

matter outside the Commission's jurisdiction. Failing to require this

disclaimer has too great a potential for confusion by the public

reviewing those essential terms. See, Sec. 530.12 (publication section

regarding exempt and global service contracts).

Inland European Movements in Conference Contracts

In the NPR, the Commission noted the difference in the approaches

by the United States and the European Commission (``E.C.'') to the

question of inland rate setting by conferences. The NPR requested

comment on how the Commission may treat carriers which participate in a

conference service contract covering U.S.-Europe ocean movements but

sign an individual service contract covering European inland transport

for the same shipper customer. The Commission noted in the NPR that it

would appear that filing would be consistent with statutory

requirements to the extent the contracts establish the European inland

portion of a through rate charged by a carrier in a U.S.-Europe

intermodal movement. However, the Commission wished to make an effort

to minimize the regulatory burdens occasioned by these differences in

regulatory regimes, to the extent it may do so given its own statutory

responsibility.

The comments make three basic arguments with respect to inland

rates in Europe. First, to the extent that service contracts for inland

movements in Europe are within the Commission's jurisdiction, they

should be exempt from filing because the EU regulates them adequately.

BSA and TACA. Second, that they are completely outside the Commission's

jurisdiction. BSA. Finally, P&O comments that European charges, if

included in a service contract, must be filed with the Commission and

are part of the filed essential terms, but not the public essential

terms.

P&O's approach appears to be sound. As rate information is not one

of the essential terms required to be published by the Act, any

regulatory requirement would not order rate information to be

published, although it would be filed. As discussed in the filing of

``mixed contracts'' it would appear that the allowance of such filing

is for the ease of the filer.

TACA suggests that sections of a service contract relating to

inland movements of cargo in Europe should not be required to be filed

with the Commission. TACA, 8. TACA proposes that sections of service

contracts stating the terms and conditions of European inland transport

of shipments covered by the service contract be available from the

individual carrier upon request from the Commission (in electronic or

paper format at the option of the carrier) within ten days of the

request. TACA, 8-9. This would ease the burden on the Commission,

completely harmonize with E.C. law, ensure no breach of confidentiality

that might take place due to filing via third parties, and ensure

public access to the information. TACA, 9.

The disparity between Commission and E.C. requirements generally

only becomes problematic when a conference or members of an agreement

enter into a service contract in which the rate calculation for port-

to-port rates are included, but for which the inland movements in

Europe are not included because of the E.C. prohibition on joint rate

setting for inland rates. The conference contract filed with the

[[Page 11206]]

Commission would presumably include a ``multi-factor through rate''

which would be the ocean transport rate as laid out in the contract,

plus an unspecified rate arising from the inland portion of the

transportation. If the conference is required by the Commission to file

the independent inland rate so that the Commission can calculate the

total through rate, the conference may be in violation of the E.C.''s

prohibition on confidentiality.

P&O argues that it is clear that inland European charges, if

included in a service contract, would have to be filed with the FMC.

P&O points out that carriers and shippers may choose to construct

multi-factor through rates to and from Europe by using a confidential

port/port rate, or a point/port and then adding a published European

inland tariff rate to construct a ``multi-factor through rate.''

TACA's suggestion that the Commission exempt these inland movements

from filing is a substantial deviation from the filing requirements

under the Act. Such an exemption is more properly adopted after a full

examination of the matter under Section 16 of the Act. For these

reasons and because the change is not mandated by OSRA, the Commission

will continue to require that the service contracts in question be

filed.

Interim Final Rule Status

As the Commission is introducing substantial matters which were not

explored in the NPR, this shall be an interim final rule, under the

Commission's authority granted by section 17(b) of the Act.

Regulatory Flexibility Act Analysis

In accordance with the Regulatory Flexibility Act, 5 U.S.C. 601 et

seq., the Chairman of the Commission has certified to the Chief Counsel

for Advocacy, Small Business Administration, that the rule will not

have a significant impact on a substantial number of small entities. In

its NPR, the Commission stated that it intended to certify the

rulemaking since the affected universe of parties is limited to vessel-

operating common carriers. The Commission has determined that such

entities do not typically qualify as small under the Small Business

Administration guidelines. No comments disputed the Commission's

intention to certify. The certification is, therefore, continued.

The Commission has received Office of Management and Budget (OMB)

approval for the collection of this information required in this part.

Section 530.91 displays the control numbers assigned by OMB to

information collection requirements of the Commission in this part by

the pursuant to the Paperwork Reduction Act of 1995, as amended. In

accordance with that Act, agencies are required to display a currently

valid control number. In this regard, the valid control number for this

collection of information is 3072-0065.

This regulatory action is not a ``major rule'' under 5 U.S.C.

804(2).

List of Subjects for 46 CFR Part 530

Freight, Maritime carriers, Reporting and recordkeeping

requirements.

For the reasons set out in the preamble, the Commission removes 46

CFR part 514 and add new 46 CFR part 530, to subchapter B to read as

follows:

PART 514--[REMOVED]

PART 530--SERVICE CONTRACTS

Subpart A--General Provisions

Sec.

530.1 Purpose.

530.2 Scope and applicability.

530.3 Definitions.

530.4 Confidentiality.

530.5 Duty to file.

530.6 Certification of shipper status.

530.7 Duty to labor organizations.

Subpart B--Filing Requirements

530.8 Service contracts.

530.9 Notices.

530.10 Amendment, correction, and cancellation.

530.11 Filing fees and other costs.

Subpart C--Publication of Essential Terms

530.12 Publication.

Subpart D--Exceptions and Implementation

530.13 Exceptions.

530.14 Implementation.

Subpart E--Recordkeeping and Audit

530.15 Recordkeeping and audit.

530.91 OMB control numbers assigned pursuant to the Paperwork

Reduction Act.

Appendix A to Part 530--Instructions for the Filing of Service

Contracts

Exhibit 1 to Part 530--Service Contract Registration [Form FMC-83]

Authority: 5 U.S.C. 553; 46 U.S.C. App. 1704, 1705, 1707, 1716.

Subpart A--General Provisions

Sec. 530.1 Purpose.

The purpose of this part is to facilitate the filing of service

contracts and the publication of certain essential terms of those

service contracts as required by section 8(c) of the Shipping Act of

1984 (``Act''). This part enables the Commission to review service

contracts to ensure that these contracts and the parties to them

comport with the requirements of the Act. This part also implements

electronic filing provisions for service contracts to facilitate

compliance and minimize the filing burdens on the oceanborne commerce

of the United States.

Sec. 530.2 Scope and applicability.

An individual ocean common carrier or an agreement between or among

ocean common carriers may enter into a service contract with one or

more shippers subject to the requirements of the Act.

Sec. 530.3 Definitions.

When used in this part:

(a) Act means the Shipping Act of 1984 as amended by the Ocean

Shipping Reform Act of 1998.

(b) Agreement means an understanding, arrangement, or association

(written or oral) and any modification or cancellation thereof which

has been filed and effective under part 535 of this chapter with the

Commission. The term does not include a maritime labor agreement.

(c) Authorized person means a carrier or a duly appointed agent who

is authorized to file service contracts on behalf of the carrier party

to a service contract and to publish the corresponding statement of

essential terms and is registered by the Commission to file under

Sec. 530.5(d) and appendix A to this part.

(d) BTCL means the Commission's Bureau of Tariffs, Certification

and Licensing or its successor bureau.

(e) Commission means the Federal Maritime Commission.

(f) Common carrier means a person holding itself out to the general

public to provide transportation by water of passengers or cargo

between the United States and a foreign country for compensation that:

(1) Assumes responsibility for the transportation from the port or

point of receipt to the port or point of destination; and

(2) Utilizes, for all or part of that transportation, a vessel

operating on the high seas or the Great Lakes between a port in the

United States and a port in a foreign country, except that the term

does not include a common carrier engaged in ocean transportation by

ferry boat, ocean tramp, or chemical parcel tanker, or by a vessel when

primarily engaged in the carriage of perishable agricultural

commodities:

(i) If the common carrier and the owner of those commodities are

wholly owned, directly or indirectly, by a

[[Page 11207]]

person primarily engaged in the marketing and distribution of those

commodities and

(ii) Only with respect to those

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