FMC Seeking Public Comment on Unreasonable Refusal to Deal Proposed Rule
The Federal Maritime Commission is seeking public comments in response to a Notice of Proposed Rulemaking (NPRM) issued today implementing a requirement of the Ocean Shipping Reform Act of 2022 (OSRA) to define unreasonable refusal to deal or negotiate with respect to vessel space accommodation provided by an ocean common carrier.
One provision of OSRA requires that an ocean common carrier shall not unreasonably refuse to deal or negotiate with respect to vessel space accommodation. The NPRM outlines the elements which would be necessary to establish a violation and the criteria the Commission would consider in assessing reasonableness if the NPRM is finalized. It would also shift the burden of proving the refusal to deal was reasonable from shippers to ocean common carriers.
The NPRM would apply to both import and export shipments.
Interested parties will have 30 days to submit comments to the Commission once the NPRM is published in the Federal Register. Because the law requires the Commission to publish a Final Rule within six months of OSRA’s enactment, comments should be submitted by the deadline.
In the NPRM, the Commission proposes that complainants alleging an unreasonable refusal to deal with respect to vessel space accommodation would be required to meet three elements:
- That the respondent is an ocean common carrier;
- That the respondent refuses to deal or negotiate with respect to vessel space; and
- That the refusal is unreasonable.
The NPRM proposes a burden-shifting regime that would allow ocean common carriers to establish why it was not unreasonable to refuse vessel space to a particular complainant. The Commission proposes a non-exhaustive list of factors it will consider when deciding whether a refusal to deal was unreasonable. Some factors the NPRM proposes the Commission consider include whether the ocean common carrier followed a documented export strategy, engaged in good faith negotiations, and articulated legitimate transportation factors. This burden-shifting would happen after the complainant or the Commission’s Bureau of Enforcement, Investigations, and Compliance has established a prima facie case that the three elements listed above have been met.
As the phrase “vessel space accommodations” has never been defined in legislation, or interpreted by the Commission, the NPRM proposes to define this term.
As the circumstances of each shipment are unique, the Commission acknowledges it is impossible to regulate for every possible scenario, and accordingly, cases alleging a violation will be factually driven and considered on a case-by-case basis.
The Commission consulted with the U.S. Coast Guard on this NPRM as required by the law.
This NPRM is the latest initiative taken by the FMC to implement OSRA, signed into law by President Joseph R. Biden on June 16, 2022. Commission progress in meeting the requirements established by the law can be found on the dedicated “OSRA Implementation” landing page established on the Commission’s website.Tags: Notice of Proposed Rulemaking, OSRA