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Citing Consumer Protection, Commissioner Brennan Opposes Elimination of NVO Rate Tariff Requirements

February 19, 2010

At a meeting of the Federal Maritime Commission, Commissioner Joseph E. Brennan, former governor and congressman from Maine, voiced his opposition to a petition that seeks to exempt non-vessel-operating common carriers (NVOCCs) from publishing rate tariffs online and adhering to them.

The 2008 petition, filed by the National Customs Brokers and Freight Forwarders Association of America, Inc. requested that rate disputes between NVOCCs and their shipper customers be settled solely under contract law and not the tariff provisions of the Shipping Act of 1984.

Mr. Brennan opposed the petition on the basis of both law and policy. The Commissioner saw no new evidence or argument in the NCBFAA's petition that would justify an outcome different than that reached by the Commission in response to substantially the same petitions in 1991 and 2003.

In addition, Commissioner Brennan cited a Supreme Court case, Maislin Industries, U.S., Inc. v. Primary Steel, Inc., 497 U.S. 116 (1990) as authority prohibiting the FMC from undermining the common-carriage aspects of the Shipping Act that Congress explicitly retained when revising the Shipping Act of 1984 by the Ocean Shipping Reform Act (OSRA).

The Commissioner said that granting the petition would give NVOCCs an unfair advantage over vessel-operating carriers and would effectively exempt NVOCCs from the regulatory oversight of the Federal Maritime Commission.

Referencing tariff publishers' assertions in the record that their websites receive thousands of hits, Commissioner Brennan questioned the petition's claim that tariffs are rarely, if ever, used to determine ocean-shipping rates.

He asked the Commission to look into why NVOCCs, unlike other major businesses in the United States, do not wish to make their rates publicly available on the Internet.

In Commissioner Brennan's view, exempting NVOCCs from tariff rate requirements represents a step backward from the standpoint of consumer protection. He predicted that granting the petition would frustrate shippers' ability to comparison shop and to prevent hostage-cargo situations in which a carrier refuses to release a shipper's goods, even though the shipper has paid 100 percent of the legitimate rate.

Commissioner Brennan also strongly urged that the Commission hold a public hearing at which all interested parties could present their arguments as to the merits of the petition.