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FMC Votes in Meeting on Carrier Petition & Changes to Enforcement Procedures

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The Federal Maritime Commission (FMC) voted today to move forward with proposed rules that would provide partial regulatory relief sought by a petition of ocean carriers, would implement regulatory changes mandated by recent legislation, and publish a direct final rule that would restructure how the agency oversees enforcement matters.

The vote to approve an order exempting ocean carriers from publishing essential terms of service contracts came at a meeting of the FMC where Commissioners granted in part a petition filed by the World Shipping Council (Petition P3-18) in September 2018 seeking regulatory relief from 46 U.S.C §40502(b) and (d).

The Shipping Act requires vessel operating common carriers to publish concise statements of certain essential terms in tariff format when they file each service contract with the Commission. These essential terms include the origin and destination port ranges, the commodities involved, the minimum volume, and the service contract duration.  The Commission denied a second aspect of the petition that sought exemption from service contract filing requirements because the agency found it was unable to determine such an exemption would not be detrimental to commerce.

The order will be finalized by the Commission following the addition of a dissent by Commissioner Rebecca Dye, who stated she would have granted the petition in its entirety.  The Commission approved the issuance of the Notice of Proposed Rulemaking (NPRM) to adopt this regulatory relief subject to finalization of the order.

The second NPRM approved at today’s meeting will implement FMC specific provisions of the Frank LoBiondo Coast Guard Authorization Act of 2018 (Public Law 115-282).  Once finalized, the rule will update Commission’s regulations to:

  • Include provisions on “nonpublic collaborative discussions”
  • Expand the class of persons that must be licensed as OTIs and meet associated financial responsibility requirements
  • Expand the prohibition on common carriers knowingly and willfully accepting or transporting cargo for OTIs that do not have a tariff or do not meet financial responsibility requirements
  • Make clear that OTI licensing and financial responsibility requirements do not apply to a person performing OTI services on behalf of an OTI for which it is a disclosed agent
  • Make comments submitted to the Commission regarding filed ocean common carrier and marine terminal operator agreements confidential

The Commission met in closed session to discuss revisions to the delegated authority of the Bureau of Enforcement (BoE) and enforcement procedures.  Commissioners voted to issue a Request for Comments on a Direct Final Rule creating a new enforcement process for BoE, especially regarding Commission oversight.  The revised procedures will:

  1. Provide notice to the subjects of investigations that BoE intends to recommend that the Commission initiate enforcement proceedings and allow them an opportunity to respond before BoE submits those recommendations;
  2. Require Commission approval before formal or informal enforcement action is taken; and,
  3. Require Commission approval of any proposed informal compromise agreements.

Barring significant adverse comments to the changes, the rule will become final 75 days from its publication in the Federal Register.

Both NPRMs and the Request for Comments on a Direct Final Rule will be published in the Federal Register in the coming weeks.

“The Commission’s actions today will reduce burdens on ocean carriers and improve the governance of the agency.  Our vote on revising the delegated authority to the Bureau of Enforcement for informal settlements of civil penalties is especially important as it ensures that the Commissioners have the responsibility for approving informal enforcement proceedings and settlements. In addition, giving targets of investigations the opportunity to provide their views to the Bureau and Enforcement and the Commission prior to the initiation of enforcement proceedings will provide an additional element of fairness to the process and improve the Commission’s decisions,” stated Chairman Khouri.

Finally, the open session of the meeting included two briefings by Commissioners.

The first was a report by Commissioner Dye about her participation in the US-Japan Bilateral Maritime Consultations hosted by the Maritime Administration in Washington on August 15, 2019.  Topic presented by Commissioner Dye included the competitive state of the shipping industry, the upcoming deadline to adopt low sulfur fuel (“IMO 2020”), and the increasing digitalization of the supply chain.  Japan was represented by the Maritime Bureau of the Ministry of Land, Infrastructure, Transport, and Tourism.

The second presentation was a summary by Commissioner Daniel Maffei of a field visit he and Commissioner Louis Sola made to Mobile, Gulfport, and Pascagoula where they held meetings with port directors, industry professionals, maritime attorneys, and equipment providers.