FMC Issues Final Rule To Allow NVOCCs and Shippers Associations with NVOCC Members to Act as Shippers in NSAs

(See ITT's Online Archives or 09/28/05 news, 05080505 for BP summary of proposed rule.)

The final rule's regulatory text, which is unchanged from the proposed rule's regulatory text, makes the following changes to 46 CFR Part 531:

Definition of "NSA shipper" amended. The FMC is amending the definition of NSA shipper in 46 CFR 531.3(o) to read as follows (new language denoted by plusses ( ) and deleted language denoted by carrots (< >)):

"NSA shipper means a cargo owner, the person for whose account the ocean transportation is provided, the person to whom delivery is to be made, a shippers' association , or an ocean transportation intermediary, as defined in section 3(17)(B) of the Act, that accepts responsibility for payment of all applicable charges under the NSA. <The term does not include NVOCCs or shippers' associations whose membership includes NVOCCs.>

(Under this amended definition, the term NSA shipper no longer excludes NVOCCs and shippers' associations with NVOCC members.)

Duty to file NSAs, publish essential terms, etc. The FMC is amending 46 CFR 531.5(a), regarding the duty to file NSAs, amendments and notices, and to publish statements of essential terms, to read as follows (new language denoted by plusses( )):

"The duty under this part to file NSAs, amendments and notices, and to publish statements of essential terms, shall be upon the NVOCC acting as carrier party to the NSA."

Cross-referencing tariffs in NSAs. The FMC is also amending 46 CFR 531.6(c)(2) regarding the cross-referencing of tariffs in NSAs, etc. to state that the terms of a NSA may not (new language denoted by plusses ( )):

(2) Make reference to terms not explicitly contained in the NSA itself unless those terms are contained in a publication widely available to the public and well known within the industry. Reference may not be made to a tariff of a common carrier other than the NVOCCacting as carrier party to the NSA.

Prohibition on entering into NSAs with OTIs not in compliance with the Act. The FMC is amending 46 CFR 531.6(d) by adding a new paragraph (4) which reads as follows:

"No NVOCC may knowingly and willfully enter into an NSA with an ocean transportation intermediary that does not have a tariff and a bond, insurance or other surety as required by sections 8 and 19 of the Act."

FMC Has Issued "Notice of Inquiry" on Possible Changes to Allow NSAs to be Jointly Offered by Unaffiliated NVOCCs

The FMC has also issued a Notice of Inquiry (NOI) seeking comment from the public on further changes to the tariff publication exemption that could allow multiple unaffiliated NVOCCs to jointly offer NSAs. (See ITT's Online Archives or 09/02/05 news, 05090220 for BP summary of this NOI. See ITT's Online Archives or 09/06/05 news 05090699 3 for BP summary of FMC correction to NOI.)

(Currently, two or more NVOCCs cannot offer joint NSAs unless they are corporate affiliates.)

- final rule effective October 28, 2005

FMC final rule (FR Pub 09/28/05, D/N 05-05), available at http://a257.g.akamaitech.net/7/257/2422/01jan20051800/edocket.access.gpo.gov/2005/pdf/05-19369.pdf

BP Note on FMC's Prior Concern Regarding Antitrust Immunity

In the preamble addressing comments submitted in response to its proposed rule, the FMC states that due to recent case law, United States vs. Gosselin World Wide Moving, N.V., 411 F.3d. 502 (4th Cir 2005), its has some assurance that courts are not likely to find that NVOCCs acting concertedly in NSAs are immune from the prohibitions of the antitrust laws. Therefore, the FMC's previous concerns, that allowing NVOCCs to act as both shipper and carrier parties in an NSA would create a potential for reduction in competition through immunity from antitrust laws, have been largely alleviated.

The FMC also notes that its regulations have recognized and provided for the sale of ocean transportation services by one NVOCC acting as carrier to another acting as shipper under tariff regulations (see 46 CFR 520.11(c)(iii) (co-loading). Although this final addresses the same commercial relationship, it should provide greater flexibility over such transactions done under a tariff. (See ITT's Online Archives or 03/29/05 news, 05032915 for BP summary of FMC Commissioner's discussion of judicial concerns regarding NSAs.)