Updated: Economic and Regulatory Relief Approved for More than 3,300 Businesses
April 7, 2011
Contact: Karen V. Gregory, Secretary (202-523-5725)
Update #2 - April 7, 2011: This is to advise that the Commission has eliminated the requirement in the final rule that NVOCCs file new FMC-1 forms to indicate their intention to move cargo under negotiated rate arrangements. The correction to the Final Rule will be published in the Federal Register on April 8, 2011.
Update #1 - March 1, 2011: This is to advise that the Commission’s Final Rule in Docket No.10-03: Non-Vessel-Operating Common Carrier Negotiated Rate Arrangements will be published in the Federal Register on March 2, 2011. The Final Rule will become effective on April 18, 2011, the date on which licensed NVOCCs may begin amending their FMC-1.
Original Information - February 16, 2011
The Federal Maritime Commission took several steps today to reduce regulatory burdens and bring cost savings and flexibility to the shipping industry and the customers they serve:
(1) Lifting rate-tariff publication requirements for Non-Vessel-Operating Common Carriers: The Commission voted 3-1 today to issue a final rule that will relieve more than 3,300 licensed Non-Vessel-Operating Common Carriers (NVOCCs) from the costs and burdens of publishing in tariffs the rates they charge for cargo shipments. The Shipping Act gives the Commission authority to grant exemptions from its requirements if doing so will not result in substantial reduction in competition or detriment to commerce. The final rule will be issued by February 23, 2011, and NVOCCs who follow its conditions will be relieved of rate publication requirements 45 days after the rule is published in the Federal Register. According to comments filed with the Commission, this action could save each of these businesses up to $200,000 per year.
The final rule establishes an instrument called a negotiated rate arrangement. Licensed NVOCCs who enter into negotiated rate arrangements with their customers will be exempted from the requirement of publishing their rates in tariffs if they meet conditions that include:
- NVOCCs would continue to publish rules tariffs containing terms and conditions governing shipments;
- NVOCCs would be required to provide those rules to the public free of charge;
- Rates charged by NVOCCs must be agreed to and memorialized in writing by the date cargo is received for shipment; and
- NVOCCs must retain documentation of the agreed rate for a period of five years, and must make that documentation available promptly to the Commission upon request.
Chairman Richard A. Lidinsky, Jr., Commissioner Rebecca F. Dye, and Commissioner Michael A. Khouri voted to issue the final rule. Commissioner Joseph E. Brennan dissented.
The final rule approved by the Commission limited the exemption to U.S.-licensed NVOCCs, but Commissioners in the majority said they would commence proceedings to receive public input on potential future modifications, including the possibility of extending the exemption to foreign, unlicensed NVOCCs.
"After a year of work and many years of debate, the Commission has provided thousands of dollars per year in cost savings to these critical U.S. supply chain businesses and the hundreds of thousands of exporters and importers they serve," said FMC Chairman Richard A. Lidinsky, Jr. "When we began this process last year, I supported it because it would help the Obama Administration’s efforts to give small American businesses tools to create American jobs, and to double exports in the coming years. The FMC is making these unprecedented reforms to help our ongoing recovery."
Commissioner Dye stated: "I strongly supported taking action today to extend regulatory relief to thousands of licensed non-vessel-operating common carriers. The action will simplify the business processes of American companies, put cash back into businesses, and generate additional American jobs. I also strongly support responding to the needs of the entire U.S. international supply chain by extending the exemption to all lawful non-vessel-operating common carriers doing business in the United States."
Commissioner Khouri stated: "I am pleased that the Commission voted today to move forward with a final rule to exempt licensed NVOCCs from the tariff publication requirement. This important step, taken pursuant to our Section 16 authority, provides regulatory relief that will save three quarters of all NVOCCs an unnecessary expense and will directly benefit American exporters and importers. I look forward to working with the Chairman and my fellow Commissioners to find alternatives, such as appropriate exemption conditions, so the exemption can be promptly extended to the remaining NVOCC community."
Commissioner Brennan stated in dissent: "The Commission lacks the authority to rewrite the Shipping Act by making tariff publication optional for licensed NVOCCs. Congress clearly took up the tariff issue with the 1998 Ocean Shipping Reform Act and determined to maintain tariff requirements for all common carriers. Three commissioners of the Federal Maritime Commission should not, and cannot, trump the judgment made by a previous Congress and President on this issue."
(2) Modernizing FMC Rules of Practice and Procedure: The Commission voted unanimously today to update its filing requirements and clarify its procedures for informal proceedings for small claims. The changes reduce filing burdens on the public, are eco-friendly, and enhance privacy protections for parties to FMC proceedings. The rule change approved today is the first step in the Commission’s ongoing project to make its procedural rules more clear, modern, efficient, and environmentally friendly.
(3) Applying the President’s Executive Order on Improving Regulation and Regulatory Review: The Commission today declared its intention to prepare a plan to systematically review its existing rules to make them more effective or less burdensome in achieving the agency’s regulatory objectives. This plan will follow the guidance of President Obama’s January 18, 2011 Executive Order 13563, which instructs agencies to prepare a preliminary plan for the review within 120 days. The Commission also declared its intent to give full consideration to the additional provisions of the Executive Order during its rulemaking processes. Although Executive Order 13563 does not apply to independent agencies such as the FMC, the White House has encouraged independent agencies to voluntarily follow its guidance.
The Federal Maritime Commission (FMC) is the independent federal agency responsible for regulating the nation’s international ocean transportation for the benefit of exporters, importers, and the American consumer. The FMC’s mission is to foster a fair, efficient, and reliable international ocean transportation system while protecting the public from unfair and deceptive practices.