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pdfFederal Register / Vol. 88, No. 114 / Wednesday, June 14, 2023 / Proposed Rules
request, to a duly authorized
investigating officer, administrative law
judge, officer or employee of the Coast
Guard.
*
*
*
*
*
■ 27. Revise § 4.05–20 to read as
follows:
§ 4.05–20 Report of accident to aid to
navigation.
Whenever a vessel, floating OCS
facility, or MODU collides with a buoy,
or other aid to navigation under the
jurisdiction of the Coast Guard, or is
connected with any such collision, the
person in charge must report the
accident to the nearest Officer in
Charge, Marine Inspection. No report on
Form CG–2692 is required unless one or
more of the results listed in § 4.05–1
occur.
■ 28. Revise the heading of subpart 4.06
to read as follows:
Subpart 4.06—Mandatory Chemical
Testing Following Serious Marine
Incidents Involving Vessels, Floating
OCS Facilities, or MODUs in
Commercial Service
29. Amend § 4.06–1 by revising
paragraphs (b) and (e) to read as follows:
■
§ 4.06–1 Responsibilities of the marine
employer.
*
*
*
*
(b) When a marine employer
determines that a casualty or incident is,
or is likely to become, a serious marine
incident, the marine employer must take
all practicable steps to have each
individual engaged or employed on
board the vessel, floating OCS facility,
or MODU who is directly involved in
the incident chemically tested for
evidence of drug and alcohol use as
required in this part.
*
*
*
*
*
(e) The marine employer must ensure
that all individuals engaged or
employed on board a vessel, floating
OCS facility, or MODU are fully
indoctrinated in the requirements of this
subpart, and that appropriate vessel
personnel are trained as necessary in the
practical applications of these
requirements.
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*
§ 4.06–3
[Amended]
30. Amend § 4.06–3 in paragraphs
(a)(1) introductory text and (b)(1)
introductory text, by adding the text ‘‘,
floating OCS facility, or MODU’’
following the text, ‘‘vessel’’.
■ 31. Amend § 4.06–5 by revising
paragraphs (a) and (b) to read as follows:
■
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§ 4.06–5 Responsibility of individuals
directly involved in serious marine
incidents.
MODU(s)’’ following the text,
‘‘vessel(s)’’.
(a) Any individual engaged or
employed on board a vessel, floating
OCS facility, or MODU who is
determined to be directly involved in an
SMI must provide a blood, breath,
saliva, or urine specimen for chemical
testing when directed to do so by the
marine employer or a law enforcement
officer.
(b) If the individual refuses to provide
a blood, breath, saliva, or urine
specimen, this refusal must be noted on
Forms CG–2692 and CG–2692B and in
the vessel’s official log book, if a log
book is required. The marine employer
must remove the individual as soon as
practical from duties that directly affect
the safe operation of the vessel, floating
OCS facility, or MODU.
*
*
*
*
*
■ 32. Amend § 4.06–15 by:
■ a. In paragraphs (a)(1), (a)(3), and
(b)(2), adding the text ‘‘, floating OCS
facility, or MODU’’ following the text,
‘‘vessel’’; and
■ b. Adding paragraph (b)(3).
The addition reads as follows:
PART 109—OPERATIONS
§ 4.06–15
devices.
Accessibility of chemical testing
*
*
*
*
*
(b) * * *
(3) The owner, operator, or person in
charge of a foreign vessel, floating OCS
facility, or MODU who is unable to meet
the drug testing requirements of 49 CFR
part 40 may request approval for an
alternative drug testing process from the
U.S. Coast Guard Drug and Alcohol
Prevention and Investigation Program
Manager via email at [email protected].
§ 4.06–30
[Amended]
33. In § 4.06–30 amend paragraph (a)
by adding the text ‘‘, floating OCS
facility, or MODU’’ following the text,
‘‘vessel’’ in the first sentence.
■ 34. Revise § 4.06–60(a) to read as
follows:
■
§ 4.06–60
results.
Submission of reports and test
(a) Whenever an individual engaged
or employed on a vessel, floating OCS
facility, or MODU is identified as being
directly involved in a serious marine
incident, the marine employer must
complete Form CG–2692B (Report of
Mandatory Chemical Testing Following
a Serious Marine Incident Involving
Vessels in Commercial Service).
*
*
*
*
*
§ 4.07–45
[Amended]
35. In § 4.07–45, add the text ‘‘,
floating OCS facility (facilities), or
■
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36. The authority citation for part 109
is revised to read as follows:
■
Authority: 43 U.S.C. 1333; 46 U.S.C. 3306,
6101, 10104; Department of Homeland
Security Delegation No. 00170.1, Revision
No. 01.3.
37. Revise § 109.411 to read as
follows:
■
§ 109.411
Notice and reporting of casualty.
The owner, operator, or person in
charge of a MODU regulated under this
part must provide notice and report
marine casualties in accordance with 46
CFR part 4.
Dated: June 4, 2023.
Linda Fagan,
Admiral, U.S. Coast Guard, Commandant.
[FR Doc. 2023–12513 Filed 6–13–23; 8:45 am]
BILLING CODE 9110–04–P
FEDERAL MARITIME COMMISSION
46 CFR Part 542
[Docket No. FMC–2023–0010]
RIN 3072–AC92
Definition of Unreasonable Refusal To
Deal or Negotiate With Respect to
Vessel Space Accommodations
Provided by an Ocean Common Carrier
Federal Maritime Commission.
Supplemental notice of
proposed rulemaking.
AGENCY:
ACTION:
The Federal Maritime
Commission (Commission) issues this
supplemental notice of proposed
rulemaking (SNPRM) to address a
statutory requirement arising from the
Ocean Shipping Reform Act of 2022 that
prohibits ocean common carriers from
unreasonably refusing to deal or
negotiate with respect to vessel space
accommodations and a related
prohibition against unreasonably
refusing cargo space accommodations.
This proposal revises certain aspects of
the proposed rule issued on September
21, 2022, by modifying defined terms
and discussing the relationship between
the United States Code and the elements
required to establish violations of those
provisions. This SNPRM is issued in
response to comments to the original
proposal and to more directly provide a
potential standard for unreasonable
conduct by ocean common carriers that
prevents shippers from obtaining space
aboard vessels for their cargo. In this
SNPRM, the Commission proposes to:
SUMMARY:
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define unreasonable by stating a general
principle and a non-exhaustive list of
examples of unreasonable conduct;
establish the elements for a refusal of
cargo space accommodations; revise the
definition of transportation factors to
focus on vessel operation
considerations; clarify that vessel space
services were already included in the
definition of vessel space
accommodations and add a definition
for cargo space accommodations; define
documented export policy and add
mandatory document export policy
requirements; and remove the voluntary
certification provision. The Commission
seeks comments on these changes.
DATES: Submit comments before 11:59
p.m. EDT on July 31, 2023.
ADDRESSES: Since the publication of the
NPRM, the Commission has transitioned
from accepting comments via email and
using its Electronic Reading Room for
rulemaking activities to accepting
rulemaking comments exclusively
through the Federal eRulemaking Portal
at www.regulations.gov. The docket of
this SNPRM can be found at https://
www.regulations.gov/ under Docket No.
FMC–2023–0010. The NPRM and
related comments can be found in this
new docket. Also, comments to this
SNPRM may be submitted and viewed
there. Please refer to the ‘‘Public
Participation’’ heading under the
SUPPLEMENTARY INFORMATION section of
this notice for detailed instructions on
how to submit comments, including
instructions on how to request
confidential treatment and additional
information on the rulemaking process.
FOR FURTHER INFORMATION CONTACT:
William Cody, Secretary; Phone: (202)
523–5725; Email: [email protected].
SUPPLEMENTARY INFORMATION:
I. Background
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A. Legislative Authority and Regulatory
History
On September 21, 2022, the
Commission proposed adding a new
part 542 under title 46 of the Code of
Federal Regulations (CFR) that would
address prohibited acts by ocean
common carriers under 46 U.S.C.
41104(a)(10). 87 FR 57674. The proposal
was issued in response to certain
obligations imposed on the Commission
as a result of legislation signed by the
President on June 16, 2022. That
legislation, the Ocean Shipping Reform
Act of 2022 (OSRA 2022), amended
various statutory provisions contained
in Part A of Subtitle IV of Title 46,
United States Code, which collectively
comprise the Shipping Act. Among
these changes were amendments to 46
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U.S.C. 41104(a)(3) and (a)(10) along
with accompanying requirements for the
Commission to initiate and complete
specific rulemakings related to each
amendment.
Although OSRA 2022’s focus on
export cargo is new, the Commission
and the courts have considered similar
Shipping Act prohibitions against
unreasonable conduct and refusals to
deal or negotiate in the past.
Section 7(d) of OSRA 2022 requires
the Commission, in consultation with
the United States Coast Guard, to
initiate and complete a rulemaking to
define the phrase ‘‘unreasonable refusal
to deal or negotiate with respect to
vessel space accommodations’’ and this
rulemaking implements that
requirement. This rulemaking now also
addresses OSRA 2022’s amendment to
part of section 41104(a)(3), which
prohibits a common carrier from
unreasonably refusing cargo space
accommodations when available. At a
different time, the Commission will
address the statutory requirement in
section 7(c) of OSRA 2022 to complete
a rulemaking defining unfair or unjustly
discriminatory methods in a separate
rulemaking.
B. Need for SNPRM
After receiving comments on its
proposal and examining the feedback
received in response, the Commission
has decided to issue this SNPRM to
further explore certain issues and to
modify other aspects of the initial
September 2022 proposal. The
Commission proposes to make the
following changes: (1) revise the
definition of transportation factors to
focus on vessel operation
considerations; (2) revise the definition
of the term unreasonable to include a
general definition and a non-exhaustive
list of unreasonable conduct scenarios;
(3) clarify that vessel space services are
already included in the definition of
vessel space accommodations; (4)
remove the voluntary export strategy
documentation language; (5) propose a
definition of documented export policy
and that ocean common carriers submit
a documented export policy to the
Commission once per year; and (6)
remove the voluntary certification
provision. These modifications, along
with the reasoning behind these
changes, are discussed in the sections
that follow.
In its September 2022 proposal, the
Commission explained that OSRA 2022
amended 46 U.S.C. 41104(a) as a whole
by replacing ‘‘may not’’ with ‘‘shall not’’
to highlight the mandatory nature of
that section’s list of common carrier
prohibitions and sought comment on
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the treatment of these terms. See 87 FR
57674. The Commission sought
comment on its initial proposal to apply
the amended prohibitions under section
41104(a)(10) to ocean common carriers
and its proposed definition of the
phrase ‘‘unreasonable refusal to deal or
negotiate with respect to vessel space
accommodations’’ contained in that
provision. The Commission also noted
other key terms and phrases remained
undefined, such as ‘‘unreasonably,’’
‘‘refuse to deal or negotiate,’’ and
‘‘vessel space accommodations,’’ and
sought comment regarding the meaning
of these terms. See 87 FR 57676–57677.
In applying the common carrier
prohibitions in 46 U.S.C. 41104, the
Commission stresses that the statute
does not distinguish between U.S.
exports or imports and this
supplemental proposal also applies to
both. The Commission explained its
basis for this view as part of its initial
proposal, noting the challenges faced by
U.S. exporters to obtain vessel space
and observing that the purpose of the
Commission’s authority under the
Shipping Act contains an export focus
while also noting reports of restricted
access to equipment and vessel space
for U.S. importers, particularly in the
Trans-Pacific market. 87 FR 57674–
57675. Further background and
discussion on market conditions can be
found in the notice of proposed
rulemaking. 87 FR 57674–57675.
The Commission also notes that
nothing in the previous proposed rule or
in this SNPRM is meant to restrict the
ability of ocean common carriers to
reposition empty containers. The
repositioning of empty containers can
include the use of sweeper vessels.
Vessels cannot be arbitrarily designated
as sweeper vessels to avoid accepting
exports. After the fact or ad hoc
reclassifications of a vessel as a sweeper
vessel may be closely scrutinized by the
Commission. A shipper or the
Commission’s Bureau of Enforcement,
Investigations, and Compliance (BEIC)
can also allege that a reclassification
was a subterfuge to avoid providing
vessel space for exports. As the
Commission previously explained, staff
review of ocean common carrier
documents indicates that ocean
common carriers typically maintain
documented procedures and policies
related to their operations. The
Commission stated further that effective
export policies should be tailored to
specific categories of cargoes and
include documented policies on export
business practices. Because every ocean
common carrier operating in the U.S.
market is presumed by the
Commission—barring the submission of
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further information to the contrary—to
be able to transport both exports and
imports, an ocean carrier may not
categorically exclude U.S. exports from
its service without showing how this
action is reasonable. 87 FR 57675. This
presumption continues to apply in this
SNPRM.
The Commission also took note of
common carrier assertions that they
have seen delays in the movement of
export cargo due to a lack of mutual
commitment between shippers and
common carriers leading to
cancellations of vessel space
accommodation by either party,
sometimes as late as the day of sailing.
These actions contribute to uncertainty
for both the common carriers and
shippers. See 87 FR 57675. Bookings
canceled by common carriers lead to
rolled freight and other negative
consequences for shippers. See
American Chemistry Council (ACC) at 4.
Finally, as stated in the initial
proposed rule and elsewhere, ocean
common carriers and those with whom
they contract to operate and load/
unload their vessels have the best
information on the ability of any
particular vessel to accept cargo for
import or export—information that
shippers generally do not have. See 87
FR 57675–57676; see also Fact Finding
Investigation 29 Final Report (F.M.C.),
2022 WL 2063347 at 11, 21–23, 26, 34–
35 (noting difficulties experienced by
non-carrier entities to obtain
information such as earliest return dates
and vessel scheduling information held
by ocean common carriers). As a result,
the Commission proposed a mechanism
by which, upon a prima facie case of a
violation of section 41104(a)(10) being
made, the burden would shift from the
shipper (or the BEIC) to the ocean
common carrier. At this step, the ocean
common carrier would need to satisfy
its burden of showing that the refusal to
deal or negotiate was reasonable. The
Commission stressed that its proposal
concerned the negotiations or
discussions that lead up to a decision
about whether an import or export load
is accepted for transportation. It added
that while there will be situations where
an ocean common carrier and a shipper
engage in good faith negotiations or
discussions that do not result in the
provision of transportation, cases where
an ocean common carrier categorically
excludes U.S. exports from its service
will create a presumption of an
unreasonable refusal to deal. See 87 FR
57675–57676.
The specific provisions of OSRA 2022
that are the subject of this SNPRM are
new, and accordingly there is a lack of
prior Commission precedent to aid in
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interpretation of this newly-enacted
amendment. In the Commission’s
history, many cases found the essence of
the prohibition on unreasonable refusals
to deal or negotiate in contravention of
the amended section 41104(a)(10) and
its predecessors to be the imposition by
a common carrier of an unreasonable
impediment to a shipper’s access to
common carriage. Such impediments
can take many forms, and no legislation
or regulatory process can predict or
attempt to encompass every possible
scenario in which an unreasonable
refusal to deal or negotiate might occur.
Thus, the caselaw is instructive when
considering the new legislation.
Commission determinations will be
factually driven and determined on a
case-by-case basis.
This SNPRM describes how the
Commission will consider private party
adjudications and agency-initiated
enforcement cases in which violations
of 46 U.S.C. 41104(a)(3) and (a)(10) are
alleged relating to unreasonable refusal
to provide cargo space accommodations
and/or refusals to deal by ocean
common carriers. It also considers the
common carriage roots in the Shipping
Act, as well as the overall competition
basis of the Commission’s authority,1
and lays out the framework for
considering violations of section
41104(a)(10). In this SNPRM, the
Commission continues to note that
future cases that allege violations of
section 41104(a)(3) and (a)(10) will be
factually driven and determined on a
case-by-case basis. The framework for
this supplemental proposal is taken
from Commission precedent on refusal
to deal cases generally and on
suggestions offered by commenters.
C. Inclusion of Claims of Unreasonable
Refusals of Cargo Space
Accommodations Subject to 46 U.S.C.
41104(a)(3)
Although this rulemaking was
initiated under OSRA 2022 section 7(d)
to define terms and elements required
for a cause of action under 46 U.S.C.
41104(a)(10), shippers and exporters in
particular commented on conduct that
occurs outside the scope of that
provision. Section 41104(a)(10)
prohibits unreasonable refusals during
the negotiation stage, when the parties
do not have an existing relationship
and/or are initiating negotiations over
terms and conditions of service. That is
different from conduct prohibited under
46 U.S.C. 41104(a)(3). The latter would
apply to situations where the parties
have an existing relationship and/or
1 See Orolugbagbe v. A.T.I.,U.S.A., Inc., Informal
Docket No. 1943(I) at *31–38.
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already mutually agreed on terms and
conditions via a booking confirmation,
but the ocean common carrier then
unreasonably refuses cargo space
accommodations when available, or in
other words, refuses to execute on the
deal negotiated on the previously
agreed-upon terms.
The restrictions that 46 U.S.C.
41104(a)(3) and (a)(10) impose on ocean
common carriers are distinct but closely
related. Both provisions address refusals
by ocean common carriers to
accommodate shippers’ attempts to
secure overseas transportation for their
cargo. The distinction between the
conduct covered by these two
provisions is timing, more specifically
whether the refusal occurred while the
parties were still negotiating and
attempting to reach a deal on service
terms and conditions (negotiation stage)
or after a deal was reached (execution
stage). If the refusal occurred at the
negotiation stage, 46 U.S.C. 41104(a)(10)
would apply. If the refusal occurred at
the execution stage, after the parties
reached a deal or mutually agreed on
service terms and conditions, then 46
U.S.C. 41104(a)(3) would apply. When a
shipper acting in good faith follows the
export policy of the ocean common
carrier with which it has been
negotiating, either 46 U.S.C. 41103(a)(3)
or (a)(10) would still apply if the
shipper was unreasonably denied space.
Comments to the NPRM show that
shippers and exporters in particular
consistently cited blank sailings, nonotice or delayed notice of schedule
changes, inadequate loading times, and
similar actions as primary drivers that
prevented them from getting their cargo
to overseas markets. These impediments
occur during the execution stage over
shippers’ interactions with ocean
common carriers, taking them outside
the scope of 46 U.S.C. 41104(a)(10) and
beyond the confines of the initial
proposal. In order to fully address the
comments received, the Commission
has decided to issue an SNPRM and
expand the scope of the rulemaking.
Rather than defer addressing these
concerns in a separate rulemaking, the
Commission proposes broadening the
scope of this rulemaking. The
Commission is also currently working
on addressing section 7(c) of OSRA
2022 and will separately complete a
rulemaking defining different terms
than those defined in this SNPRM from
section 41104(a)(3), i.e., ‘‘unfair or
unjustly discriminatory methods.’’
Protecting shippers from
unreasonable refusals to deal or
negotiate only partially addresses the
obstacles that shippers and trade
associations have identified in the
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comments as major impediments to
their ability to get their cargo to overseas
markets. As commenters have pointed
out, there are far-reaching consequences
that cannot easily or quickly be reversed
if they cannot meet their contractual
obligations to their overseas buyers. U.S.
exporters’ ability to rely on ocean
common carriers meeting their
obligations by providing cargo space
accommodations negotiated for or as
advertised is a critical component of
that equation. U.S. exporters are in an
untenable position if they cannot rely
on vessels calling at U.S. ports to load
and transport their cargo to overseas
destinations as scheduled or agreed to
by the ocean common carrier. Missed or
late deliveries to overseas buyers are
likely to cause them to lose confidence
in the reliability of their U.S. suppliers
and prompt them to look to alternative
suppliers from other countries able to
commit to a more reliable delivery
system. Overseas buyers would not
continue dealing with U.S. suppliers
who repeatedly miss delivery dates and
cannot promise on-schedule deliveries
because they are at the mercy of ocean
common carriers who unpredictably
change scheduled sailings, blank
scheduled sailings, or otherwise
unreasonably refuse to execute on their
commitments. Business that U.S.
exporters lose to competitors from other
countries will be difficult to recapture
over the short term and perhaps over the
long term as well. The longer reliability
issues persist, the more harm U.S.
exporters will suffer and the more
difficult it will be to restore lost
confidence in ocean transportation for
U.S. exports.
Restricting this rulemaking to refusals
to deal or negotiate under 46 U.S.C.
41104(a)(10) will not address the
reliability issues that commenters
identified as a critical and a driving
factor impeding their ability to ship
cargo overseas. Shippers impacted by
unlawful refusals to accommodate their
requests for vessel space
accommodations have been able to bring
a cause of action against ocean common
carriers since the OSRA 2022
amendments took effect immediately in
June 2022. They may find it more
difficult, however, to plead, and prevail
on those claims without implementing
regulations from the Commission
defining the elements and statutory
terms. Parties may also find it more
difficult to identify and litigate claims
for unreasonable refusals under 46
U.S.C. 41104(a)(3) without a clearer
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indication from the Commission of
conduct covered by that provision as
distinguished from 46 U.S.C.
41104(a)(10). Absent further guidance
now from the Commission, shippers and
BEIC are likely to devote considerable
resources to litigating how an
‘‘unreasonable refusal’’ under 46 U.S.C.
41104(a)(3) should be defined and the
elements required to prove a violation of
that provision. That may make litigating
46 U.S.C. 41104(a)(3) claims a timeconsuming and resource-intense process
as parties litigate not just the facts of
their particular case but also advocate
for their proposed interpretation of key
terms like ‘‘unreasonable refusal’’ and
the factors relevant in determining
whether an ocean common carrier acted
unreasonably. Parties would also
expend time litigating the difference
between ‘‘unreasonable refusals to deal
or negotiate’’ and ‘‘unreasonable
refusals to provide vessel space
accommodations.’’
Clearly delineating these distinctions
as part of the current rulemaking will
lessen the time and resources that
shippers, carriers and the Commission
will otherwise need to devote to
defining these concepts in individual
cases. Defining the elements and terms
used in 46 U.S.C. 41104(a)(3)
requirements as part of this rulemaking
is also important because in practice it
may be difficult to discern whether a
carrier’s refusal was at the negotiation or
execution stage and additional guidance
now from the Commission may help
avoid needless disputes over that issue.
Shippers’ and carriers’ interactions
about service terms and conditions and
securing vessel space may not always
march consistently forward from the
initial offer through booking and
loading cargo on the vessel bound for
the destination point. It is important for
ocean common carriers to have
sufficient guidance to conform their
conduct and practices to fall within the
bounds of reasonable or unreasonable
within the meaning of 46 U.S.C.
41104(a). Also, this rule would ensure
that shippers can readily discern when
a carrier has acted outside the bounds
of reasonableness and know what type
of claim to bring before the Commission.
Interpreting these related provisions
in tandem in a single rulemaking will
allow the Commission to delineate the
types of refusal conduct covered by 46
U.S.C. 41104(a)(3) and (a)(10) and
highlight where the differences are
between them.
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D. Differences in Cases Involving
Section 41104(a)(10) and Section
41104(a)(3)
Generally, the distinction between
those acts covered under section
41104(a)(3) and those falling under
section 41104(a)(10) is temporal-based.
Although it is possible for claims to
arise later in the process, ‘‘refusal to
deal or negotiate’’ (section 41104(a)(10))
will frequently involve those actions
occurring prior to a carrier providing a
shipper with a booking confirmation to
carry that shipper’s cargo. If
negotiations to reach an agreement have
ceased (or if efforts to engage in
negotiations were ignored), then a claim
of unreasonable refusal to deal or
negotiate under section 41104(a)(10)
could arise. When read in conjunction
with this provision, to ‘‘unreasonably
refuse cargo space accommodations’’ or
‘‘resort to other unfair or unjustly
discriminatory methods’’ under section
41104(a)(3) would necessarily involve a
set of acts that occur after a booking has
been confirmed. As a result, this
SNPRM adds to the scope of the original
NPRM by proposing to address those
refusals that occur at the execution
stage, after the parties reached a deal or
mutually agreed on service terms and
conditions via a booking confirmation
subject to section 41104(a)(3). In a
future rulemaking, the Commission will
define ‘‘unfair and unjustly
discriminatory methods’’ within the
meaning of section 41104(a)(3). The
Commission seeks comment on its
approach with respect to the difference
between potential violations of 46
U.S.C. 41104(a)(3) and 46 U.S.C.
41104(a)(10).
II. Comments to the NPRM and
Responses by the Commission
In developing this SNPRM, the
Commission carefully considered the
comments it received regarding its
previous proposed rule. These
comments, along with issues relevant to
those comments, are addressed in
greater detail in the discussion that
follows.
A. Commenters
The Commission received responses
from shippers, shipping industry trade
associations, common carriers, and
governmental entities. These
commenters consisted of the following
entities:
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Commenters
Entity type
Agriculture Transportation Coalition (AgTC) ............................................
American Chemistry Council (ACC) .........................................................
American Cotton Shippers Association (ACSA) ......................................
BassTech International (BassTech) .........................................................
Consumer Brands Association (CBA) ......................................................
CMA CGM (America) LLC ........................................................................
Dole Ocean Cargo Express, LLC (DOCE) ...............................................
International Federation of Freight Forwarders Association (FIATA) ......
International Dairy Foods Association (IDFA) ..........................................
International Fresh Produce Association (IFPA) ......................................
Lanca Sales, Inc .......................................................................................
Meat Import Council of America and North American Meat Institute
(MICA/NAMI).
National Association of Chemical Distributors (NACD) ...........................
National Association of Manufacturers (NAM) .........................................
National Customs Brokers & Forwarders Association of America, Inc.
(NCBFAA).
National Fisheries Institute (NFI) ..............................................................
Northwest Horticultural Council (NHC) .....................................................
National Industrial Transportation League and Institute for Scrap Recycling Industries, Inc. (NITL/ISRI).
Pacific Merchant Shipping Association (PMSA) ......................................
Retail Industry Leaders Association (RILA) .............................................
Tyson Foods (Tyson) ...............................................................................
U.S. Dairy Exporters Council (USDEC) ...................................................
World Shipping Council (WSC) ................................................................
Members of the House of Representatives (Congress) ..........................
United States Department of Justice (DOJ) .............................................
United States Department of Agriculture (USDA) ....................................
ddrumheller on DSK120RN23PROD with PROPOSALS1
Except as noted, each relevant
comment is addressed within the
context of the specific topics raised.
These topics are discussed in detail in
the sections that follow.
1. General Comments From Federal
Government Commenters
The Commission notes that it received
four separate submissions from Federal
commenters. One set of comments was
submitted by a group of seven Members
of the House of Representatives—
Representative John Garamendi,
Representative Dusty Johnson,
Representative Jim Costa,
Representative Adrian Smith,
Representative Mike Thompson,
Representative David G. Valadao, and
Representative Jimmy Panetta. The
Members made the specific point that
‘‘[o]cean carriers refusing to
accommodate American exports is an
unreasonable business practice and,
following passage of the Ocean
Shipping Reform Act of 2022, also is
now illegal.’’ Congress at 1. It also
received one comment jointly submitted
by Senator John Thune, Senator Amy
Klobuchar, Senator John Hoeven, and
Senator Tammy Baldwin. The Senators
state they have received reports of ocean
carriers refusing certain export cargo,
particularly agricultural cargo, even
when vessel space was readily available,
and often opting to carry empty
containers instead. Senate at 1. Also, the
Senators urge the Commission to
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Shippers Trade Association.
Shippers Trade Association.
Shippers Trade Association.
Shipper.
Shippers Trade Association.
Carrier.
Carrier.
Freight Forwarding Trade Association.
Shippers Trade Association.
Shippers Trade Association.
Shipper/Beneficiary Cargo Owner.
Shippers Trade Association.
Shippers Trade Association.
Shippers Trade Association.
Freight Forwarder, Custom Broker, and Ocean Transportation (incl’g
Carriers) Trade Association.
Shippers Trade Association.
Shippers Trade Association.
Shippers Trade Association.
Carrier Trade Association.
Shippers Trade Association.
Shipper.
Shipper Trade Association.
Carrier Trade Association.
Legislative Branch (Federal)—multiple comments.
Executive Branch (Federal).
Executive Branch (Federal).
consider whether additional clarifying
language about the magnitude of the
‘‘transportation factors’’ might provide
useful industry guidance. Id.
The Commission greatly appreciates
the comments offered by the Members
and Senators. As the Commission agrees
and explained in its proposal, the
categorical refusal to accommodate U.S.
exports, without demonstrating that the
refusal is reasonable, would violate 46
U.S.C. 41104(a)(10). 87 FR 57675. Under
section 41104(a)(10), an ocean common
carrier’s refusal to deal or refusal to
negotiate must be unreasonable to
constitute a violation. See 46 U.S.C.
41104(a)(10). By definition, not all
refusals will necessarily violate this
provision. Whether a refusal to deal or
a refusal to negotiate falls within the
scope of section 41104(a)(10) depends
upon the particular circumstances in a
given case.
In response to various public
comments, including those from
Senators Thune, Klobuchar, Hoeven,
and Baldwin, the Commission is
proposing new language that relies on
both 46 U.S.C. 41104(a)(3) and (a)(10) to
address more comprehensively potential
violations related to refusal to deal or
negotiate. The new proposed approach
covers a broader set of conduct,
explicitly including those instances
where an ocean common carrier refuses
export cargo even when vessel space
was readily available. This SNPRM also
revises the definition of transportation
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factors and proposes to remove the
language initially referring to
scheduling considerations.
The Antitrust Division of the United
States Department of Justice (DOJ) also
submitted comments and agreed that
reasonableness is necessarily a case-bycase determination. However, DOJ
expressed concern that the
Commission’s proposed criteria to prove
the statutory elements of ‘‘refusal to
deal’’ and ‘‘unreasonable’’ would be too
difficult to establish. DOJ also suggested
including additional considerations,
such as the parties’ prior course of
dealings or whether a carrier, after
issuing a refusal, offered the affected
shipper any remedies or assistance. DOJ
suggested that information may be
relevant in deciding whether the
carrier’s refusal was unreasonable. The
Commission adopted DOJ’s proposed
language on further remedies or
assistance offered to the shipper and
added it to the proposed rule in
§ 542.1(d)(1). DOJ also believes that it
would be critical to evaluate past
business actions in the context of
allegations to refuse the provision of
service.
As to DOJ’s concern that the proposed
standard for establishing the second and
third elements of a prima facie case may
set the bar too high by suggesting that
complainants must show an actual
refusal to even entertain their proposal,
this SNPRM clarifies that is not a
required showing and emphasizes that
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claims will be evaluated on a case-bycase basis.
As to the elements that the
Commission would rely on to make a
determination of reasonableness, the
Commission believes that the new
proposed elements form an appropriate
basis for determining whether an ocean
common carrier has acted reasonably in
refusing to deal with a particular
shipper. Those elements are: (1)
whether the ocean common carrier
follows a documented export policy
enabling the efficient movement of
export cargo; (2) whether the ocean
common carrier engaged in good-faith
negotiations; (3) the existence of
legitimate transportation factors; and (4)
any other factors the Commission deems
relevant. These elements, when coupled
with the opportunity for the ocean
common carrier to establish that
conduct was reasonable, are both
workable and fair by allowing potential
claimants to bring complaints of
violations under section 41104(a)(10)
and shifting the burden of production of
information to the carrier to justify its
actions. And in evaluating a given case,
the Commission’s proposed approach in
this SNPRM would provide the
information it would need and also
enable it to consider other relevant
factors such as prior dealings and
mitigation measures in determining
whether a refusal was unreasonable.
Finally, DOJ noted that the terms
‘‘deal’’ and ‘‘negotiate’’ have different
meanings under the antitrust laws and
encouraged the Commission to define
those terms in the Commission’s rule.
DOJ at 4–5. It states that the term
‘‘negotiate’’ refers to the discussion
about a particular transaction, while
‘‘deal’’ typically refers to the transaction
itself—whether it be the provision of
goods or services. DOJ at 5. The goal of
prohibiting unreasonable refusal to deal
or negotiate by ocean common carriers
with respect to vessel space will be
achieved better by giving the terms their
ordinary meanings. That way, the
Commission will be able to address
unreasonable refusal to deal or negotiate
with respect to vessel space with more
flexibility. That is consistent with our
case-by-case approach which DOJ
endorses.
The Secretary of the United States
Department of Agriculture (USDA)
submitted a comment and asked the
Commission to broaden the definition of
an unreasonable refusal to deal or
negotiate, narrow the proposal’s
guidance on reasonableness, and
encourage specific actions by carriers to
guard against engaging in an
unreasonable refusal. USDA suggested
the Commission specify certain actions,
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such as cancellations without sufficient
notice, perpetual re-bookings, and
failure to provide necessary equipment,
in the definition of refusal to deal or
negotiate. USDA at 2. The points that
USDA focuses on as potentially unfair
or unjustly discriminatory conduct may
be refined at a later date through
another rulemaking or on a case-by-case
basis.
USDA also suggested that in
considering reasonableness of refusal to
deal or negotiate, ‘‘[t]he Commission
should excuse only a few exceptional
circumstances.’’ USDA at 2. It urged the
Commission to narrow the language on
reasonableness and clarify that the
existence of multiple factors (such as
profitability, business development
strategy, or transportation factors) will
not absolve problematic practices.
USDA also encouraged ‘‘clearer, more
affirmative duties for carriers, greater
specificity with respect to the
requirements they need to meet, and
that non-confidential portions of these
documents be made available for
shippers and the public to review.’’
USDA at 2–3. This SNPRM includes
greater specificity and strives to better
delineate each party’s duties when
communicating with each other about
vessel space accommodations. The
Commission’s NPRM included some of
the factors USDA discussed, and it does
not absolve problematic practices based
upon just a few factors or certain
affirmative actions. Rather, each case
will be considered under the totality of
the circumstances to prohibit all
possible unreasonable refusals to deal or
negotiate by ocean common carriers
with respect to vessel space
accommodations.
2. Inability To Obtain Vessel Space for
Export Cargo Despite Having Previously
Negotiated Terms and Conditions
Comments from the Retail Industry
Leaders Association (RILA) assert that
an unreasonable refusal to deal or
negotiate is not confined to the
negotiation stage under 46 U.S.C
41104(a)(10) but can arise at any point
in the parties’ dealings short of the point
at which the shippers’ cargo is actually
loaded aboard the vessel. As RILA
explains:
The ‘‘lived experience’’ of U.S. importers
during the COVID–19 pandemic has
demonstrated that unreasonable refusals to
deal or negotiate can arise not only in the
context of negotiating (or refusing to
negotiate) the terms of a service contract
before it is entered into, or of booking (or
seeking to book) carriage pursuant to the
common carrier’s published tariff before
cargo is tendered, but also during the term of
a service contract and even after the
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provision of (or failure to provide) the
services contemplated.
RILA Comments at 3. RILA urged the
Commission to address this issue by
expansively defining unreasonable
refusals to deal or negotiate within the
meaning of section 41104(a)(10) to
include actions or communications that
‘‘can arise at any point in parties’
dealings with each other.’’ Id.
The Commission understands and
concurs with the concern underlying
this suggestion but does not agree that
expanding the definition of
unreasonable refusal to deal or negotiate
within the meaning of section
41104(a)(10) is the solution. As
discussed elsewhere in this proposal,
the Commission proposes defining
section 41104(a)(3) and (a)(10) in
tandem as the better solution. Further,
as also mentioned in this discussion,
expanding the definition of conduct
governed by 46 U.S.C. 41104(a)(10) to
include the same conduct prohibited by
section 41104(a)(3) would render
meaningless (at least in part) the section
41104(a)(3) language prohibiting
unreasonable refusals to accept cargo.
That interpretation would violate the
canon of statutory construction against
construing the statute in a manner that
renders language superfluous or
meaningless.2
RILA further explains that in its
experience,3 unless shippers have
enforceable service contracts, they ‘‘are
unable to protect themselves from
volatile shipping rates and ocean
carriers have few forecasting tools to
provide the shipping capacity necessary
to serve their customers.’’ Id. at 3. RILA
suggests as a partial remedy that the
Commission explicitly announce that
the existence of a service contract does
not insulate a common carrier from a
claim that it violated 46 U.S.C. 41104(a).
This SNPRM should clarify that carriers
2 ‘‘It is ‘a cardinal principle of statutory
construction’’ that ‘‘a statute ought, upon the whole,
to be so construed that, if it can be prevented, no
clause, sentence, or word shall be superfluous,
void, or insignificant.’ ’’ TRW Inc. v. Andrews, 534
U.S. 19, 31 (2001) quoting Duncan v. Walker, 533
U.S. 167 (2001); United States v. Menasche, 348
U.S. 528, 538–539, (1955) (‘‘It is our duty ‘to give
effect, if possible, to every clause and word of a
statute.’ ’’ (quoting Montclair v. Ramsdell, 107 U.S.
147, 152, (1883)).
3 RILA also points to concerns identified in the
Commission’s Final Report on Fact Finding
Investigation 29 in which Commissioner Rebecca F.
Dye emphasized that ‘‘[f]or some time, [she] has
been concerned that the contracts negotiated by
many U.S. importers and exporters lack . . .
mutuality of understanding and obligation and are
not enforceable. Without enforceable contracts,
shippers are unable to protect themselves from
volatile shipping rates and ocean carriers have few
forecasting tools to provide the shipping capacity
necessary to serve their customers.’’ RILA
Comments at 3.
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are not immune from 46 U.S.C.
41104(a)’s restrictions because they
have a service contract with the shipper.
Although the Commission does have
jurisdiction over 46 U.S.C. 41104(a)
violations, breach of contract claims are
not within the Commission’s
jurisdiction.
Other shippers and trade associations
expressed similar misgivings about the
proposed scope of 46 U.S.C.
41104(a)(10) and the urgent need for a
solution to refusals that arise past the
negotiation stage, i.e., after the parties
have (or ostensibly have) a contract to
transport the cargo. The U.S. Dairy
Export Council (USDEC) termed these
concerns ‘‘anti-backsliding
considerations’’ and explained why
these post-negotiation issues urgently
need to be addressed and how these
concerns relate to 46 U.S.C. 41104(a)(10)
restrictions on unreasonable refusals to
deal or negotiate. USDEC Comments at
3–4. As it explained:
Negotiations between shippers and carriers
are functionally intended to facilitate the
international carriage of goods on an ocean
vessel. The rule should not permit carriers to
negotiate for vessel accommodations, only to
have those bookings get rolled, delayed or
cancelled. Disruptions to vessel schedules
are understandable, but should a pattern
emerge where negotiated vessel space
accommodations are regularly unreliable,
that should raise questions at the FMC about
the intent and purpose of the negotiations.
Compliance on negotiating for vessel space
should be done in good faith and not solely
as a means of achieving compliance without
affording the service.
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Id. at 4.
The International Dairy Foods
Association (IDFA) raised the same
concerns and termed them ‘‘de facto’’
unreasonable refusals to deal. IDFA
Comments at 2. IDFA listed multiple
examples of de facto unreasonable
refusals to deal, such as:
skipping or cancelling services to certain
ports; changing the port of loading; calling on
such ports but not alerting exporters to their
presence; poorly communicating when vessel
schedules change; providing windows for
loading that are impractical due to their short
length; blank sailings without providing
sufficient notice to exporters; not prepositioning containers inland close to export
customers; providing inaccurate and
unreliable vessel, shipment and tracking
information; and continually rolling export
bookings, which amounts to an effective
denial of service.
Id. at 2–3. IDFA also emphasized the
untenable consequence of these de facto
refusals—‘‘a shipping environment
where there is no schedule reliability
which harms the competitiveness of
U.S. export in oversea markets.’’ Id.
IDFA also stated that its members have
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reported that as frequently as 90–100%
of the time, their bookings have been
rolled or canceled. Id.
IDFA proposed that the Commission
address these problems by declaring the
following actions presumptively
unreasonable under section
41104(a)(10): (1) a blank sailing with
less than six weeks’ notice; (2) not
providing at least 72 hours’ notice to
load a vessel; (3) skipping, suspending,
or discontinuing services to ports or
changing the port of loading despite
export demand at such ports; (4) not
clearly communicating or providing
consistent, accurate information directly
to cargo owners when ships come into
port or vessel schedules change; (5)
rolling a valid export booking; and (6)
refusing a booking for perishable cargo.
Id. at 4 and 7. Most of these actions
could not logically be considered part of
the negotiation stage since in most
cases, they would occur after shipper
and carrier have negotiated a deal.
IDFA criticized the proposed rule as
inappropriately ‘‘preoccupied with
solving unreasonable refusals to deal in
specific negotiation and discussion
contexts,’’ which it contends ‘‘is not the
heart of the problem.’’ Id. IDFA states
that ‘‘[i]n order to address the bulk of
the unreasonable refusal to deal issue, a
Commission rule must target the VOCC
[vessel-operating common carriers]
policies and procedures that systematize
and operationalize the de facto
unreasonable refusal to deal or negotiate
with cargo owners.’’ Id. at 7–8. The
Commission acknowledges that these
concerns are legitimate and proposes
broadening the scope of this rulemaking
to encompass section 41104(a)(3) as the
best solution. The revised rulemaking
will globally address unreasonable
refusals prohibited under Section
41104(a) that hamstring shippers’
attempts to transport their cargo to their
overseas buyers.
The American Chemistry Council
(ACC) raised the same concerns and
pointed out that if the NPRM only
covers contract negotiations and
discussions between carriers and
shippers, it will ‘‘leave[ ] a gaping hole
that will continue to allow unreasonable
conduct by’’ ocean common carriers.
ACC Comments at 2. To emphasize that
point, it lists numerous practices ‘‘that
amount to an effective refusal to deal
that the NPRM does not appear to
address.’’ Id. The examples ACC recited
include providing insufficient vessel
space allocations; calling on ports but
not alerting exporters to their presence;
poorly communicating when vessel
schedules change; providing insufficient
windows for loading a vessel; blank
sailings without providing sufficient
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notice to exporters; and repeated rolling
of export bookings. Id. at 3–4.
The American Cotton Shippers
Association (ACSA) highlighted the
same concerns about carriers not
loading their containerized export cargo.
ACSA Comment at 6–7. ACSA
submitted numbers showing their
calculations and comparisons on
warehouse pickup performance in terms
of cotton bales shipped and bales not
picked up between August 2019 and
June 2021. Id. at 7. The Commission has
not independently verified ACSA’s
statistics but notes that they reflect the
same general concern raised by others,
namely that unreasonable refusals to
deal or negotiate is only a part of the
export problem that OSRA 2022 was
meant to address. See also, Comments
from Bass Tech International at 1–2
(noting other ways, besides outright
refusal to deal or negotiate, that
common carriers use to avoid providing
service and stating that it ‘‘is critical
that the NPRM addresses these types of
conduct as well’’); Comments from
Members of Congress at 1 (identifying
service cancellations at ports that
agricultural exports rely on, like the Port
of Oakland, as concerns to be
addressed).
B. Distinguishing Between Negotiation
Refusals Under 46 U.S.C. 41104(a)(10)
and Execution Refusals Under 46 U.S.C.
41104(a)(3)
Comments from the USDEC highlight
the fallacy of presuming that as a
practical matter, it will always be
feasible to draw a discernible line
between unreasonable refusals covered
by section 41104(a)(10) as distinguished
from those covered by section
41104(a)(3). See USDEC at 2–4. USDEC
explained how communications
between shippers and carriers typically
flow in the real world. As it explained,
shippers’ and carriers’ negotiations are
not always neatly confined to rates and
general terms of service. Id. Rather,
negotiations may cover all
matters related to the shipment, such as the
cost of the shipment, the volume of the
shipment (both in terms of total TEU
containers as well as weight), the timing of
vessel accommodations, origin and location
of shipments, whether the shipment involves
any intermodal carriage, the inclusion of
equipment (containers, reefers, chassis),
among other details.
Id. at 2–3.
What these concerns mean as a
practical matter is that discerning
whether a common carrier has
unreasonably refused cargo or vessel
space accommodations is not a simple
binary question of determining what
prevented the shippers’ cargo from
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actually being loaded aboard an
outbound vessel. That question may be
bound up with an unbroken series of
interactions and communications that
cannot always be neatly separated into
the negotiation stage (covered by 46
U.S.C. 41104(a)(10)) and the execution
stage (covered by 46 U.S.C. 41104(a)(3))
of the parties’ interactions. Id. at 3–4.
USDEC suggests the Commission
address this concern by defining
‘‘whether negotiation can occur on only
limited aspects of this scope, or if it
must encompass all the aspects of a
vessel accommodation.’’ Id. Instead of
broadening the scope of section
41104(a)(10) as USDEC suggests, the
Commission proposes defining
unreasonable refusals covered by
section 41104(a)(3) in the same
rulemaking. For reasons already
discussed, this proposed approach is
superior to a bifurcated rulemaking that
defines the two provisions separately.
Further, the Commission proposes to
define what constitute unfair or unjustly
discriminatory methods within the
meaning of section 41104(a)(3) in a
separate rulemaking pursuant to section
7(c) of OSRA 2022.
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3. Reasonableness Factors
Most commenters addressed the
proposed reasonableness factors with
mixed support for the existence of a
documented export strategy or policy
and the scope of legitimate
transportation factors.
a. Documented Export Policy
The concept of having a documented
export policy as stated in § 542.1(b)(2)(i)
of the NPRM was generally supported
by ACSA, ACC, CBA, IDFA, USDEC,
and DOJ. Nearly all commenters in
support provided additional context for
how export strategies should be
structured. ACC commented that the
Commission should make it clear that
export strategies should include
provisions that facilitate exports, not
just maintain the status quo. ACC at 4–
5. ACC also asserted that carriers should
report every year. ACC at 5.
Multiple commenters suggested that a
more specific definition of export
strategy should be provided. See CBA at
2, DOJ at 5. IDFA further recommends
mandatory standards for an export
strategy and regulations concerning
failure to adhere to such standards.
IDFA at 9–11. USDEC recommended
that carrier export strategies be made
public. See USDEC at 3.
PMSA and WSC opposed the
proposed export strategy component for
a variety of reasons. WSC stated that
including an export strategy is
equivalent to requiring such a strategy
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and the Commission lacks the authority
to do so. WSC at 3. They further
asserted that the Commission failed to
explain how such a document would be
relevant and to consider that they are
sensitive business documents. WSC
provided additional information it
believed supports its assertion that the
Commission lacks the authority to
require such a document. WSC at 4.
WSC also asserted that this proposed
requirement will result in the lack of a
document being interpreted as a per se
indicator of unreasonableness, resulting
in a disadvantage to the carrier. It
further asserted that the lack of a
required ‘‘import strategy’’ means that
the proposed rule would not equally
apply to both imports and exports,
contradicting an assertion included by
the Commission in the preamble. It
added that this criticism should not be
interpreted as suggesting that an
‘‘import strategy’’ document should be
required. WSC at 7. Finally, it asserted
that the lack of specifics on how the
export strategy will be used further
supports WSC’s view that such a
document should be stricken from the
list of factors and that any information
in such a document would not be able
to be made public.
Similarly, PMSA contended that the
NPRM ignores imports, and as the
Commission has no authority to require
an import or export strategy from ocean
common carriers, it cannot use the
existence, or not, of such a strategy as
a factor in the reasonableness analysis.
PMSA at 1. It further contended that
only shippers regard cargo as imports or
exports and ocean carriers simply regard
freight as cargo, regardless of the
direction of trade.
The Commission notes the concerns
of WSC that export strategies are
constantly evolving as the nature of
international trade changes and for this
reason does not define an exhaustive list
of items that must be included in an
export policy but instead identifies
certain elements that would be helpful
in determining reasonableness. If an
ocean common carrier also wanted to
provide an import policy to help
establish how a refusal to deal is
reasonable, the Commission would
consider that information. And while
the Commission will not adopt the IDFA
recommendation that the Commission
directly compare a carrier’s export
strategy to key performance indicators,
the Commission notes that there are
many sources of data on the amount and
type of freight that carriers transport for
both imports and exports which provide
insight into whether the carrier’s
behavior aligns with its purported
policy or strategy.
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While WSC is concerned that the lack
of an export strategy might be
considered a per se indicator of
unreasonableness, that is not the intent
behind the inclusion of this provision.
The intent is to provide carriers with the
opportunity to document that their
actions align with a documented export
policy. And while both WSC and PMSA
comment that no similar documentation
was requested for imports, the
Commission notes that there are few
carriers who would need to rely on such
a document to provide evidence that
they intend to serve the U.S. markets
when their ships are already visiting
U.S. ports. On the other hand, a cursory
glance at the continued decline in
containerized exports carried by some
ocean common carriers raises the
question about the carriers’ operations
concerning export trades. Further, while
PMSA asserts that carriers do not
consider exports and imports as
separate types of cargo, there is ample
evidence in comments from the public,
including WSC, that they do. See, e.g.,
CMA CGM at 2; AgTC at 2; RILA at 2–
3. In addition, PMSA’s assertion in this
regard ignores the existence of
exporters, such as USDEC and NHC. In
this SNPRM, the Commission has newly
proposed revisions on the use of export
policy to show what type of information
from an existing export policy may be
useful in establishing that a refusal to
deal was reasonable. In § 542.1(b)(1), the
Commission is proposing a definition of
‘‘documented export policy.’’ Also, the
Commission is proposing extensive
revisions to § 542.2(d) by revising the
burden shifting framework found in the
NPRM (this framework applies even if it
is not included in the regulatory text)
and adding a proposed requirement to
have ocean common carriers follow and
submit to the Commission on a yearly
basis a documented export policy. It is
noted that it is possible that an export
policy will have different applications
in different situations. An export policy
is a long-term document, but it can shed
light on what an individual ocean
common carrier’s best business practice
would generally be and whether it was
adhered to in an individual case. An
export policy can also address import
concerns given that the two are
interconnected. Proposing a
requirement to submit a documented
export policy to the Commission
pursuant to its authority under 46
U.S.C. 40104 is an important part of
monitoring the industry for
unreasonable behavior vis-a`-vis exports
in an effort to address those concerns.
Also, in § 542.1(d)(1), the Commission
identifies what type of information
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would be required to be included in a
documented export policy that would
help the Commission determine
whether an ocean common carrier’s
conduct in a specific matter aligns with
their general policies and thus acted
reasonably.
b. Legitimate Transportation Factors
The proposed inclusion of legitimate
business factors as one of the
reasonableness factors was opposed by
the majority of commenters. Two
commenters expressed concerns that
legitimate business factors would be
used to justify rejecting entire classes of
cargo, such as hazardous materials.
NACD at 3 and NITL/ISRI at 9–10.
While WSC favored the use of legitimate
business factors, it objected to a
reference to the ‘‘character of the cargo’’
as vague (87 FR 57677) and suggested
removing it from the final rule (WSC at
11). The Commission clarifies that this
reference is not intended to allow ocean
common carriers to wholesale refuse to
deal or negotiate with respect to carriage
of certain categories of cargo, such as
hazardous materials. The Commission
further notes that the definition
proposed in the regulatory text does not
include ‘‘character of the cargo.’’ This
SNPRM does revise the definition of
transportation factors to focus the scope
more squarely on vessel operation
considerations.
Multiple commenters worried about
including profit or revenue as a
legitimate business factor. AgTC cited
including revenue factors as part of
transportation factors will create a
‘‘loophole’’ for carriers. AgTC at 4–5.
Likewise, several commenters suggested
dropping profit and business decisions
or strategies from the list of legitimate
factors. See BassTech at 3; IDFA at 9–
11; IFPA at 1; NITL/ISRI at 10. CMA
CGM stated that profitability and
legitimate business decisions must be
factors. CMA CGM at 2. WSC suggested
adding business decisions to the
regulatory text. In its view, the scope of
business decisions would include past
poor performance from the shippers,
changing port calls due to blank sailings
or other factors, and balancing import
and export customer needs. WSC at 9–
11. Given the thoughtful and varied
comments received on the concept of
reasonable business decision-making,
this SNPRM removes the general
concept from the definition of
unreasonableness. Information on
business decisions relevant to
establishing a reasonable refusal to deal,
however, would still be relevant in the
Commission’s analysis. The SNPRM
does not preclude considerations that an
ocean common carrier can present when
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articulating its justification for refusing
to deal.
The Commission notes that in its
proposed regulatory text at § 542.1(b)(1)
of the NPRM, the term ‘‘transportation
factors’’ would encompass ‘‘the genuine
operational considerations underlying
an ocean common carrier’s practical
ability to accommodate laden cargo for
import or export, which can include,
but are not limited to, vessel safety and
stability, scheduling considerations, and
the effect of blank sailings.’’ The
Commission notes the disconnect
between this language and language in
the preamble that, ‘‘[a]n ocean common
carrier may be viewed as having acted
reasonably in exercising its business
discretion to proceed with a certain
arrangement over another by taking into
account such factors as profitability and
compatibility with its business
development strategy.’’ In this SNPRM,
at § 542.1(b)(2), the transportation
factors have been changed and the
Commission now proposes to focus
those factors on considerations related
to vessel operations. Some relevant
business decisions do need to be
explained as part of an export policy.
Business decisions that should be
explained as part of an export policy
include providing a justification for why
a refusal to deal by an ocean common
carrier is reasonable when there was a
blank sailing that affected the ocean
common carrier’s ability to take on a
shipment to the detriment of the
shipper. Also relevant are business
decisions that show that the ocean
common carrier offered alternative
remedies or assistance to the shipper
after refusing to deal or negotiate for
vessel space accommodations.
The Commission further notes,
however, profit and business factors
may be present when engaging in
negotiations, but these factors would
have to be considered alongside other
factors presented when the Commission
is determining what the true driving
factor is for refusing to deal in a given
case and whether that driving factor is
reasonable.
FIATA noted a concern with the
characterization of ocean common
carriers’ operational decisions,
particularly with request to canceled
sailings and capacity decisions; namely,
that the final rule needed to provide
clarity around when an ocean common
carrier’s operational decisions,
particularly with respect to canceled
sailings and capacity decisions, will
result in a finding of an unreasonable
refusal to deal or negotiate. FIATA at 1.
WSC explained that its list of business
decisions includes schedule changes,
including canceled sailings. WSC at 11.
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The Commission notes the concern from
FIATA that since carriers control
capacity, they might strategically alter
capacity to refuse to deal or negotiate.
Canceled sailings or schedule changes
are typically driven by decreased
demand, port congestion, or changes in
service by a vessel sharing partner. The
Commission notes that evidence that an
ocean common carrier changes
schedules for other purposes would
result in those changes not being
considered a legitimate transportation
factor under § 542.1(b)(2)(iii) of the
NPRM. This SNPRM proposes changes
to the transportation factors definition at
§ 542.1(b)(2) that addresses these
concerns.
ACC and IDFA suggested that
shippers’ lost sales be considered a
reasonableness factor. ACC at 4; IDFA at
8. As noted elsewhere, the rule allows
the Commission to consider any
relevant factor in determining whether a
refusal to deal or negotiate was
unreasonable. The focus of the
definition of reasonableness, however,
is on the ocean common carrier’s
conduct rather than the impact on the
shipper. Generally, however,
transportation factors relate to the
characteristics of the vessel, not the
status of the shipper.4
Finally, commenters addressed the
key role of contract carriage in ocean
transportation and expressed concerns
that the rule will interfere with contract
carriage. DOCE at 5–6, WSC at 14. The
Commission notes that service contracts
are key to ocean carriage and the intent
of the rule is not to dictate a return to
carriage under tariff, nor is it intended
to interfere with the substance of service
contracts reached between parties.
Presumably, an enforceable service
contract would not allow for the type of
conduct that the Commission would be
likely to consider an unreasonable
refusal to deal or negotiate, and if a
service contract is materially breached,
the parties have remedies that are
beyond the Commission’s purview. The
Commission also recognizes that, as
stated in the preamble, its ‘‘role is not
to ensure all interested parties get the
same deal,’’ and understands that ‘‘me
too’’ contracts were abolished in the
Ocean Shipping Reform Act of 1998.
Fully cognizant of the privilege that
private parties may enter into their own
service contracts, the Commission
means to clarify here that, regardless of
contract status, an ocean common
carrier may not effectively bar a shipper,
4 See, e.g., Credit Practices of Sea-land Serv., Inc.,
& Nedlloyd Lijnen, B.V., No. 90–07, 1990 WL
427463 (F.M.C. Dec. 20, 1990); Dep’t of Def. v.
Matson Navigation Co., 19 F.M.C. 503 (1977).
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including one without a service
contract, from having direct access to
ocean common carriage by failing or
refusing unreasonably to deal or
negotiate the terms of such carriage.
This can include an ocean common
carrier’s failure or refusal to timely
provide a rate quotation upon request or
to refuse to provide required ancillary
intermodal services, if available.
3. Elements
Pursuant to OSRA 2022 and
Commission precedent, the Commission
proposed that complainants would be
required to meet three elements to
establish a violation for unreasonable
refusal to deal or negotiate. As indicated
in the NPRM, the elements would apply
in cases where the allegation relates to
vessel space accommodations by an
ocean common carrier. As proposed, the
elements were derived directly from the
statutory text established in OSRA 1998
and are: (1) the respondent is an ocean
common carrier under the
Commission’s jurisdiction; (2) the
respondent refuses to deal or negotiate
with respect to vessel space
accommodations; and (3) that the
refusal is unreasonable. See 87 FR
57679.
Commenters were generally
supportive of the proposed elements,
see, e.g., BassTech at 1; MICA/NAMI at
2; NFI at 2, although some specific
comments expressed concerns regarding
the impact of the rule in general and
meeting the required elements. As noted
earlier, DOJ worried that satisfying the
‘‘refusal to deal’’ and ‘‘unreasonable’’
elements would be difficult. DOJ at 4–
5. While NHC viewed the proposal as
falling short of the objective of ensuring
the carriage of export containers, see
NHC at 1, most other comments
regarding the proposed elements sought
a lengthier or stronger definition of
‘‘refusal’’ and ‘‘unreasonable,’’ but did
not criticize the elements as a whole.
See MICA/NAMI at 3–4; NITL/ISRI at 6–
7, 13–14; RILA at 1, 5 (suggesting
additional clarifying language for the
proposed regulatory text for 46 CFR
542.1(c)(2)); Tyson at 1. This SNPRM
includes changes to the definition of
unreasonable to include a nonexhaustive list of scenarios of
unreasonable conduct and to propose
the removal of business decisions from
the definition. Regarding PMSA’s
concerns that the elements of the
proposed rule may impact individual
contract negotiations addressing price,
volume, timing, payment, delivery,
prior experiences, dual commitment
contracts and all other factors that are
addressed, see PMSA at 1, the
Commission notes that this rule does
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not dictate the contractual terms that
may be reached between an ocean
common carrier and a shipper.
4. Definitions
As the Commission noted in its
preamble discussion for its proposal,
neither the Shipping Act, as amended,
nor OSRA 2022 define the phrase
‘‘vessel space accommodations,’’ and
this phrase has not been interpreted in
prior Commission matters. Therefore,
the Commission proposed to define
‘‘vessel space accommodations’’
generally as space provided aboard a
vessel of an ocean common carrier for
laden containers being imported to, or
exported from, the United States. In this
SNPRM, the Commission also clarifies
that ‘‘vessel space services’’—i.e., the
services necessary to access or book
vessel space accommodations—are
included in the definition of ‘‘vessel
space accommodations.’’ This definition
continues to be based on the common
meaning of the words in the phrase as
applied in ocean shipping.
Because the phrase ‘‘refusal to deal or
negotiate’’ does not lend itself to a
general definition, the Commission
proposed using a case-by-case
evaluation. This SNPRM proposes a
revised definition of unreasonableness
after further consideration of the
comments received. Additionally, the
proposed definition now includes a
non-exhaustive list of examples of
unreasonable conduct.
a. Vessel Accommodations
The Commission received several
comments regarding its proposed
‘‘vessel space accommodations’’
definition. Comments were generally
supportive, with a few suggestions and
critiques. In broad summary, the
comments urged the Commission to
broaden its definition of ‘‘vessel space
accommodations’’ to include access to
vessel space accommodations, meaning
the services to book vessel space, the
equipment to obtain vessel space, and
other ancillary services that would
impact exporters’ ability to obtain vessel
space. While some comments supported
the proposed definition but urged
expansion, others withheld support due
to the definition’s perceived narrow
interpretation.
First, the National Industrial
Transportation League (NITL) and
Institute for Scrap Recycling Industries
(ISRI) asked that the Commission
broaden its definition of vessel space
accommodation to include ‘‘vessel
services.’’ NITL/ISRI at 7. Without the
expansion, the NITL and ISRI
contended that the proposed rule ‘‘fails
to adhere to the intent of Congress.’’ Id.
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Similarly, the Agriculture
Transportation Coalition (AgTC) says
the rulemaking and the above definition
is unable to ‘‘recognize the various
means the carriers decline to carry
export cargo.’’ AgTC at 1. While AgTC
did not critique the ‘‘vessel space
accommodations’’ definition
specifically, it deliberately used the
phrase ‘‘export cargo’’ instead of ‘‘vessel
space accommodations’’ when
discussing unreasonable refusals to deal
or negotiate. Vessel space
accommodation and export cargo hold
different meanings. The Commission
interprets this deliberate use of ‘‘export
cargo’’ as a suggestion to revise the
vessel space accommodation definition
to refer specifically to ‘‘export cargo.’’
As explained elsewhere, this proposed
rule applies to both import and exports.
The differences between the ‘‘vessel
space accommodations’’ definition and
‘‘cargo space accommodations’’ will be
addressed below.
Second, the International Federation
of Freight Forwarders Associations
(FIATA) asked the Commission to
clearly define vessel space
accommodations to give context to
‘‘operational decisions’’ by ocean
common carriers that result in a refusal
to deal or negotiate. FIATA at 1. It listed
‘‘operational decisions’’ as common
carrier actions to ‘‘carry out blank
sailings, withdraw or reposition
capacity, and impose peak season
surcharges.’’ Id. BassTech also asked the
Commission to revise the proposed
definition of ‘‘vessel space
accommodation.’’ BassTech at 1.
Although it agreed with the
Commission’s proposed definition, it
asked the Commission to consider the
processes and practices that would
obstruct a shipper from obtaining vessel
space. Id. at 2.
Third, related to the Commission’s
proposed definition of vessel space
accommodations, the National Customs
Brokers & Forwarders Association of
America, Inc. (NCBFAA) suggested that
non-vessel-operating common carriers
(NVOCCs) be excluded from the rule
because they do not control vessel space
accommodations. NCBFAA at 2–3. It
cited the inability of these entities ‘‘to
control vessel space accommodations.’’
Id. at 2. The Commission recognizes the
role NVOCCs play and concur that their
exclusion is appropriate as they do not
control vessel space accommodations.
Thus, like the proposed rule, this
SNPRM only applies to ocean common
carriers.
The Commission notes the potential
hardships a narrow reading of ‘‘vessel
space accommodations’’ would impose
on certain industry members. In the
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Commission’s view, services that would
impact the actual acquisition of a
‘‘vessel space’’ could also be used by
ocean common carriers to frustrate
shippers and amount to an
‘‘unreasonable refusal to deal or
negotiate.’’ Therefore, the definition of
‘‘vessel space accommodations’’
necessarily implies that ‘‘vessel space
services,’’ i.e., the services necessary to
access or book vessel space
accommodations, are included. Thus,
this SNPRM adds a sentence to the
definition to acknowledge that vessel
space services are included.
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5. Shifting Burden From Complainant to
Ocean Common Carrier
The Commission’s initial proposal
also set forth a framework for an ocean
common carrier to establish that its
efforts to consider an entity’s proposal
or efforts at negotiation were done in
good faith based on the criteria above.
Once a complainant (or the BEIC) has
established a prima facie case for each
of the three elements above, the ocean
common carrier will have the burden of
production to show or justify why its
refusal was reasonable. However, the
ultimate burden of persuasion remains
with the complainant to show that the
refusal to deal or negotiate was
unreasonable. Further, the proposed
rule included a rebuttable presumption
of unreasonableness for those situations
where an ocean common carrier
categorically excludes U.S. exports
shipments.
a. Burden-Shifting
The Commission received various
comments with regard to the proposed
burden-shifting regime in the NPRM.
Three entities (ACSA, NACD, NFI)
supported the burden-shifting regime
laid out in the NPRM without further
comment. ACSA at 10; NACD at 4; NFI
at 2. Three entities (AgTC, CBA, IDFA)
commented that the ultimate burden
should be on the ocean common
carriers, not the shippers, due to the
ocean common carriers’ superior access
to real-time data on space availability.
AgTC at 5–6; CBA at 2; IDFA at 3–4.
CMA CGM commented that Congress
did not expressly direct the Commission
to incorporate a burden-shifting regime
as part of the proposal, as it did with
regard to charge complaints. CMA CGM
at 2–3.
Other entities supported the burdenshifting regime, but with caveats. AgTC
and WSC supported the approach but
pointed out that the burden-shifting
explanation in the preamble is not in
the proposed regulatory text. AgTC at 5;
WSC at 15. BassTech supported the
proposal so long as the carrier’s
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evidence can be challenged (which, as
noted below, would occur in Step 3).
BassTech at 3–4. MICA/NAMI suggested
that the Commission should also
consider whether the carrier has
actually engaged in good-faith
communications and negotiation.
MICA/NAMI at 3. NITL/ISRI strongly
supported burden-shifting but did not
want a carrier’s self-certification to be
given dispositive or outsized weight
(this SNPRM proposes the deletion of
the self-certification provision). NITL/
ISRI at 14–15. RILA broadly supported
burden-shifting but asked it to be more
closely aligned with the charge
complaints procedure found in 46
U.S.C. 41310(a) and (b). RILA at 1, 4.
Several entities (ACSA, CBA, IDFA)
sought the addition of time limits on
carrier responses, especially in cases
dealing with refusals of perishable
goods. ACSA at 10–11; CBA at 3; IDFA
at 4.
The Commission has given careful
consideration to the comments received
on its proposed burden-shifting
approach. As a preliminary matter, the
Commission notes that this SNPRM
proposes to continue using the process
followed in cases arising under the
Administrative Procedure Act (APA).
The initial burden of production is with
the complainant (Step 1). If the
complainant can satisfy its initial
burden of producing evidence sufficient
to make out a prima facie case of a
violation, the burden then shifts to the
respondent to produce evidence
sufficient to rebut the complainant’s
prima facie case (Step 2). But the
ultimate burden of persuading the
Commission always remains with the
complainant (Step 3). See 46 CFR
502.203; 5 U.S.C. 551–559. Although a
given practice could be treated as per se
unreasonable, the occurrence of which
would suffice to create a prima facie
case of an unreasonable refusal to deal
and trigger the ocean common carrier’s
burden to produce evidence that the
refusal was not unreasonable and thus
move the case directly to Step 2, the
complainant or BEIC would still have to
persuade the Commission in Step 3 that
the refusal was unreasonable.
Congress tasked the Commission with
defining whether a particular action is
an unreasonable refusal to deal or
negotiate with respect to vessel space
under 46 U.S.C. 41104(a)(10). It did not
prescribe a particular method for the
Commission to follow in developing
this definition and it did not proscribe
the Commission from using any
particular approach. Thus, the
Commission adopts the existing process
for APA cases and notes in proposed
§ 541.2(k) that the standard is based ‘‘in
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38799
accordance with applicable laws’’ such
as the APA. The Commission also
proposes to include Step 3 so that the
full standard is available in the
regulatory text.
As to the additional suggested
modifications of the proposed burdenshifting approach, the Commission does
not adopt them at this time. The
Commission believes that the approach
laid out in this SNPRM sufficiently
expresses its expectations as to what is
required and provides a reasonable
approach that will effectively produce
the information needed to allow the
Commission to decide whether a given
matter involves an unreasonable refusal
to deal or negotiate.
Regarding the inclusion of specific
aspects such as the application of time
limitations in the context of cases
involving perishable goods, the
Commission may consider the inclusion
of such conditions within a given case
as appropriate but has opted not to
mandate such limits consistent with our
case-by-case approach. Regarding
suggestions that the procedure be
modified to more closely align with that
which Congress detailed for charge
complaints under 46 U.S.C. 40310, the
Commission also does not adopt such
an approach because section 40310 on
charge complaints does not apply to
refusal to deal cases. Similarly, the
evidence produced by the ocean
common carrier in making its case that
refusal to deal or negotiate was not
unreasonable is subject to challenge by
the opposing party, and all evidence, as
in any contested case, will be subject to
scrutiny by the Commission. 5 U.S.C.
556(d).
b. Rebuttable Presumption
A number of commenters responded
to the Commission’s proposed
rebuttable presumption approach. For
the most part, commenters generally
favored the Commission’s proposal,
with some strongly favoring it, see
ACSA at 5; MICA/NAMI at 2; Tyson at
1, others offering general support, see
NCBFAA at 2; NFI at 2; RILA at 1; and
others offering suggestions along with
their support. See NITL/ISRI at 14;
PMSA at 3; WSC at 16. One commenter
opposed the approach (and the proposal
as a whole) as being insufficient in
protecting exporters from being denied
service whenever there is available
cargo space on a vessel and urged that
the proposal be revised to limit
exceptions and clearly define when it is
unreasonable for carriers to deny
service. NHC at 1–2.
With respect to those commenters
who offered specific suggestions for the
Commission to consider, NITL/ISRI
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suggested that the regulatory text should
include language specifying that a
rebuttable presumption of
unreasonableness applies in those cases
where an ocean common carrier
categorically excludes U.S. exports from
its backhaul trips from the United
States. NITL/ISRA at 14. PMSA offered
a number of specific factors for the
Commission to use in establishing a
rebuttable presumption of
reasonableness: (1) the presence of
Federal, state or local/port policies that
advocate the prioritization of the export
of empty containers either through
stowage plans or through the use of
sweeper vessels; (2) prior experience
with individual cargo owners who have
engaged in unlawful or improper
behavior (e.g., misdeclaration of cargo or
shipment of hazardous cargo that has
caused or threatened the safety of a
vessel and/or that has given rise to
adverse governmental action, penalties,
fines or other liability); (3) a history of
late or nonpayment of services; (4)
whether viable alternatives exist,
whether through other VOCCs or via
NVOCCs, Ocean Freight Forwarders or
through Shippers’ Associations; (5) the
failure to provide contracted amount of
cargo or to meet minimum quantity
commitments or a history of falling
down (i.e., cancellation by either party)
or making ghost bookings; (6) changes in
vessel rotations due to inland
congestion or other factors beyond the
carrier’s control; (7) whether the export
customer is prepared to pay prevailing
market freight rates for shipments
together with all reasonable charges
associated with the destination; and (8)
whether the export destination is one
with sufficient infrastructure to handle
the return of equipment (containers,
chassis) such that a return shipment
and/or repositioning can be
accomplished at a reasonable time and
cost. PMSA at 3.
The WSC suggested that the
Commission modify the proposed
regulatory text for the shifting of the
burden of production to emphasize that
the burden of persuasion ultimately
remains with the complainant or BEIC:
A complainant (or the BEIC) may seek to
establish a violation of 46 U.S.C. 41104(a)(10)
by producing sufficient evidence to establish
a prima facie case of a violation. If a
complain[ant] (or the BEIC) establishes a
prima facie case of a violation, the burden of
production shifts to the ocean common
carrier to rebut the complainant’s [or the
BEIC’s] evidence and justify that its actions
were reasonable. Once the ocean common
carrier has fulfilled its burden of production,
the burden of persuasion rests with the
complainant (or BEIC) to prove its case.
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WSC at 16. The Commission is
proposing to include similar language in
§ 541.2(k)(3).
Regarding the specific suggestion
offered by the NITL/ISRA, the
Commission notes that the regulatory
text proposed in this SNPRM is
sufficient to cover those situations
where an unreasonable refusal to carry
U.S. exports occurs. The inclusion of
the specific example of a carrier’s
exclusion of U.S. exports from a
backhaul trip is unnecessary given the
criteria for evaluating whether an ocean
common carrier’s action is
unreasonable. While PMSA’s specific
examples are illustrative of the types of
factors that the Commission may
consider when evaluating a specific
claim, including these examples within
the regulatory text is also unnecessary
for similar reasons. However, the
Commission notes that this rulemaking
does not restrict the ability of ocean
common carriers to reposition empty
containers, including through use of
sweeper vessels. As for the WSC’s
suggested rewriting of the proposed
regulatory text for the shifting of the
burden of production, the Commission
is proposing language that shows that
the burden of persuasion lies with the
complainant within the regulatory text.
6. Certification
The proposed rule also sought to
include a mechanism for an ocean
common carrier to justify its actions
through means of a certification.
Although the proposal did not require a
certification for this purpose, the
Commission indicated that it was
considering whether to make
certification by a U.S.-based compliance
officer mandatory. The Commission also
noted that any justification must be
directly relevant and specific to the case
at hand and further noted that
information or data supporting
generalized propositions would not be
helpful in determinations of
reasonableness for a specific case.
Instead, a certification should document
the ocean common carrier’s decision in
a specific matter, the good faith
consideration of an entity’s proposal or
request to negotiate, and the specific
criteria considered by the ocean
common carrier to reach its decision.
The Commission explained that
certification in this context meant that
an appropriate U.S.-based representative
of the ocean common carrier attests that
the decision and supporting evidence is
correct and complete. An appropriate
representative can include the ocean
common carrier’s U.S.-based
compliance officer. As explained above,
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however, certification by a compliance
officer that a refusal to deal was not
unreasonable, and the evidence
underlying the certification, are
elements that the Commission will
consider in the context of deciding the
case. The Commission will receive
evidence that is relevant and will give
it the appropriate weight. Certification
by a compliance officer would be but
one factor; it does not automatically end
the case in favor of the ocean common
carrier.
Some commenters supported the
proposed certification. See BassTech at
3–4 (supported so long as the
certification can still be disputed), DOJ
at 5; MICA/NAMI at 2; NCBFAA at 2;
NFI at 2; Tyson at 1 (supporting MICA/
NAMI comments). Others raised
concerns. See NACD at 4 (indicating
that while it did not oppose the use of
an optional certification by carriers it
harbored concern over that certification
being given undue weight in
determining reasonableness); NITL/ISRI
at 15 (expressing concern over undue
weight being afforded to carrier
decisions when evaluating
reasonableness under the proposed
certification approach); WSC at 15–16
(suggesting that (1) the proposed
certification method be only one of a
variety of permissible ways for an ocean
common carrier to demonstrate
reasonableness, (2) ocean common
carriers who do not certify not be
prejudiced, (3) the Commission explain
the probative value of certifying, and (4)
the Commission explain why it is
considering making certification by a
U.S.-based compliance officer
necessary). Still other commenters
expressly opposed allowing any selfcertification by carriers. See IDFA at 10–
11 (opposing carrier self-certification
and suggesting that certification be
continuous and overseen by an
independent third party), NHC at 1–2
(generally critical of the proposal in its
entirety).
After carefully considering these
comments, the Commission has decided
not to adopt a mandatory requirement
that the certification be made by a U.S.based compliance officer. Although selfcertification could have provided some
useful information, a robust and
mandatory self-certification approach
would require a more holistic and costly
approach and the Commission finds it is
not necessary at this time.
7. Other Issues
Finally, the Commission received a
number of comments that did not fall
within the categories already discussed.
These comments covered a broad range
of topics ranging from simply offering
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the commenter’s expertise through
further individualized discussions to
help better understand the
Commission’s proposal (e.g., Lanca at 1)
to more in-depth suggestions falling
outside the immediate scope of the
proposal (e.g., Tyson at 1–2 (suggesting
that the Commission require carriers to
provide accurate forecasting and
updated information to ensure that
shippers can position their shipments at
port terminals within agreed-upon time
windows, supporting greater
transparency with respect to vessel
capacity, loading timeframes, and vessel
schedule changes that would impact
contracted delivery times, and urging
the Commission consider how it plans
to address forthcoming changes to
import rotation and the impact of these
changes on port congestion)). Some of
these issues are under consideration in
the Maritime Transportation Data
System project. See https://
www.fmc.gov/fmc-maritimetransportation-data-initiative/.
AgTC and IDFA both commented that
the proposal failed to deal with ‘‘de
facto unreasonable refusals to deal’’ that
are not the product of negotiations, but
rather are dropped on the shipper by the
carrier at the last minute. AgTC at 3;
IDFA at 2–3. FIATA suggested that the
Commission should address whether
the rule applies to shipments of foreign
cargo as long as there are some U.S.
shipments involved in the same service
contract. FIATA at 2. BassTech
appreciated that the status of the
shipper is not a legitimate
transportation factor sufficient to refuse
a booking but expressed concern that a
shipper’s status could nevertheless be
grounds for a refusal based on a
reasonable business decision (i.e.,
especially with regard to hazardous
cargo). BassTech at 3. ACC believed that
the proposed rule failed to consider the
negative effect on the exporter of a
refused booking. ACC at 2. CBA argued
that there should be a national data
portal or similar information technology
infrastructure to allow all parties to
have access to all the relevant booking
and space-availability data. CBA at 3.
CMA CGM commented that ‘‘me too’’
contracts were abolished in 1998 and
parties must continue to be free to
contract as they wish. CMA CGM at 2.
MICA/NAMI noted that difficulties in
getting perishable cargo shipped has led
to the loss of business for U.S. suppliers
and enabled in-roads by competitors in
Europe and Australia. MICA/NAMI at 2.
They cited to export data showing blank
sailings rose as chilled beef and pork
exports to high-value markets declined.
MICA/NAMI at 2. MICA/NAMI also
pointed to insufficient information
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shared by ocean common carriers
regarding vessel schedules and space
availability as factors complicating the
ability of shippers to identify alternate
routes or means of transportation for
their products. MICA/NAMI at 3. MICA/
NAMI further noted that ocean common
carriers often cancel meat and poultry
export bookings up to the sailing date
with no warning to shippers and that its
member experiences with ‘‘failures to
deal or negotiate’’ on detention and
demurrage fees posed a major problem.
MICA/NAMI at 3. They also urged that
‘‘[i]n cases where a carrier may be
holding cargo until an invoice is paid
regardless of its validity, the lack of a
clear channel of communication to
challenge the billing statement is
unconscionable and should be
addressed by the FMC’’ as part of this
(and other) rulemakings. MICA/NAMI at
3.
As indicated elsewhere, this
supplemental proposal addresses the
criteria that the Commission will
consider in evaluating whether there
has been a refusal to deal or negotiate,
which will occur on an individualized
basis. The Commission appreciates the
additional feedback provided regarding
the field experiences shared by MICA/
NAMI members. These experiences will
be considered as appropriate within the
context of a given case. Also, some
proposals may be outside the scope of
this rule and/or better addressed by
other Commission initiatives such as the
Demurrage and Detention Billing
Requirement rule, Commission’s Docket
No. 22–04, other future rulemakings or
the Maritime Transportation Data
System project.
NAM observed that ocean common
carriers own and operate the ships (and
often, the containers) used in ocean
transit and noted that any enforcement
measures should be directed towards
those parties responsible for schedules
and operational disruption. NAM at 2.
NAM also generally noted that
disruptions to the supply chain have a
ripple effect and indicated that
‘‘[e]stablishing minimum notification
thresholds for ocean common carriers as
they plan strategic equipment
movement and port calls would ease
burdens for all shipping partners and
enhance system-wide transportation
supply chain reliability.’’ NAM at 2.
NAM also noted that the prominence of
blank sailings and a rising propensity/
apparent partiality of ocean common
carriers to accept empty containers for
profitability goals are linked to
economic viability and competitiveness
for U.S. manufacturers and encouraged
the Commission to consider these
factors in this rulemaking. NAM at 2–3.
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The Commission acknowledges the
disruptions noted by NAM and
appreciates the concerns it raised with
respect to the impacts these disruptions
have on the overall supply chain. With
respect to the factors noted by NAM
regarding the evaluation of blank
sailings, the Commission notes that the
causes of blank sailings may vary,
ranging from inclement weather, force
majeure events, port congestion, vessel
mechanical failure and a steep decline
in demand. As a result, an individual
ocean common carrier may not
necessarily have control over the causes
leading to blank sailings. While the
impacts of these actions often lead to
cascading negative impacts, the
Commission’s focus in the context of
this rule is to address instances where
ocean common carriers fail to mitigate
the impacts flowing from blank sailings
and other similar actions instead of
actively working with the shipper to get
alternative accommodations for the
freight. In its evaluations, the
Commission anticipates that it will
consider the relevant facts present in an
individual situation to determine
whether those actions by an ocean
common carrier fall within the scope of
the definition being set out as part of
this SNPRM.
NCBFAA suggested that NVOCCs be
excluded from the scope of the rule and
described the supportive role that
NVOCCs play in helping their
customers navigate the complex ocean
shipping industry by securing
competitive pricing and favorable
transportation routes by using the
unique industry experience and
relationships NVOCC have developed
with ocean common carriers. NCBFAA
at 2. NCBFAA emphasized that
NVOCCs, unlike ocean common
carriers, do not control vessel space
accommodations. NCBFAA at 2–3. This
SNPRM continues to restrict its
application to VOCCs and does not
include NVOCCs at this time. The
Commission agrees that NVOCCs,
unlike ocean common carriers, do not
control vessel space accommodations.
NFI noted its members continue to
face carrier-related shipping issues,
including unpredictable dwell times;
exponential increases in demurrage and
other port-related costs; unfair and
discriminatory commercial practices
against shippers by oceangoing carriers
and NVOCCs; shortages of containers,
chassis, and labor; dramatically higher
tariff/contract rates for oceangoing
freight; and limited cold storage
availability. NFI at 2.
The Commission acknowledges the
presence of the issues noted by NFI but
also notes that issues centering on
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container, chassis, and labor shortages
are, in many cases, not carrier-related in
origin. This SNPRM may not necessarily
directly resolve each of these issues, but
the Commission acknowledges that
shippers face significant stresses
stemming from supply chain congestion
and also notes that these factors fall
outside the scope of the Commission’s
task in defining what constitutes an
unreasonable refusal to deal or refusal to
negotiate.
NITL/ISRI asserted that blank sailing
decisions must be reasonable to justify
refusals to deal or negotiate, such as
being based on a legitimate need to
right-size supply based on demand
rather than an action to reduce capacity
to artificially inflate prices. NITL/ISRI at
11.
As noted previously, blank sailings
may be attributed to a variety of causes
that may fall outside of an ocean
common carrier’s control. The
Commission notes that an ocean
common carrier’s refusal to deal or
negotiate within a blank sailing context
must also be weighed against an ocean
common carrier’s efforts to mitigate the
impacts on its customers when a blank
sailing (or other similarly adverse
outcome due to vessel schedule
changes, including timing and port
calls) occurs. Through this SNPRM, the
Commission is setting forth the criteria
that will be applied to determine
whether a given refusal to deal or
negotiate satisfies the condition of being
unreasonable. Such a determination will
necessarily include a consideration of
the mitigating steps taken by an ocean
common carrier to work with its shipper
customers. The Commission will
monitor these activities and act
accordingly. Any future refinements to
the Commission’s regulations may be
considered, if appropriate.
PMSA asserted that the proposal
ignored imports even though imports
are part of the overall network. PMSA
at 1. It added that the proposal also did
not mention the roles of shipper
associations, NVOCCs, and ocean freight
forwarders. PMSA asserted that these
entities can collectively combine their
bargaining power and provide exportrelated support to individual shippers
and their respective roles should factor
into any export policy or inquiry. PMSA
at 2.
The September 2022 proposal
specifically noted that the current
statutory framework does not
distinguish between U.S. exports or
imports and that it would apply to both.
See 87 FR 57674. The Commission
recognizes that imports are an inherent
component of the overall shipping
network and the application of this rule
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to both imports and exports reflects that
recognition. As to the roles of those
entities who are not VOCCs, the
Commission notes that while this
SNPRM would apply only to VOCCs,
the roles of other entities who play a
role in potential Shipping Act violations
would be addressed in the context of the
appropriate statutory provisions
applicable to those violations, such as
those provided under 46 U.S.C. 41102
and 41104, and the Commission will
evaluate those violations as appropriate.
RILA urged the Commission to
strengthen the language of its proposal,
particularly with respect to its
applicability to conduct occurring in the
context of an existing service contract
relationship to help ensure that the rule
addresses the concerns and real-world
experiences of U.S. importers and
exporters. RILA at 1. RILA also
emphasized that the Commission
should account for the circumstances
and criteria relevant to U.S. importers in
addition to exporters. RILA at 2. It noted
that many U.S. importer plans were
disrupted when VOCC contract partners
abruptly stopped providing cargo space
for which importers had contracted,
thereby forcing them onto the spot
market and its accompanying higher
rates. RILA at 2.
The Commission assumes that in
those instances where a service contract
already exists between an ocean
common carrier and a shipper, a refusal
to deal or negotiate would be addressed
within the context of the provisions of
the agreement made between those
parties and the remedies afforded when
there is a breach of contract. However,
it is possible that there are
circumstances in which a contract is
silent on what to do if there is a refusal
to deal or negotiate within the bounds
of the contractual relationship. The
Commission is interested in comments
identifying those situations where a
contract does not address how a refusal
to deal with respect to vessel
accommodations would be remedied.
In addition to the issues noted earlier,
Tyson stated that the proposed rule
would enable the Commission to ensure
carriers are ‘‘providing a sound business
rationale for either failing to accept a
booking request or failing to fulfill an
existing booking agreement.’’ Tyson at
2. It added that changes are needed ‘‘to
ensure the flow of information is
balanced and allows each party, both
carriers and shippers, to have fair and
informed discussions regarding vessel
space.’’ Tyson at 2.
The Commission acknowledges the
importance of ensuring that a sufficient
information flow exists between ocean
common carriers and shippers regarding
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vessel space, but this particular issue
falls outside the scope of this
rulemaking.
USDEC indicated that the regulations
that the Commission adopts must
emphasize consistency and to this end,
suggested that the Commission establish
a ‘‘consistency test’’ to help it assess
whether a carrier is deviating from its
past practices with respect to
negotiating for vessel accommodations.
USDEC at 3. It also suggested that the
Commission consider what information
a shipper should retain to substantiate
a violation under whatever regulation is
adopted. USDEC at 3. In its view, the
adopted regulations should result in
increasing a shipper’s ability ‘‘to
effectively seek and secure vessel space
accommodations in a competitive
marketplace.’’ USDEC at 3. With respect
to the scope of negotiation, USDEC
suggested that the Commission outline
‘‘whether negotiation can occur on only
limited aspects’’ or all aspects of vessel
accommodation such as the shipment’s
cost, volume, origin or location, and the
involvement of intermodal carriage.
USDEC at 3–4. USDEC suggested that
the Commission consider adopting
‘‘anti-backsliding’’ provisions as part of
its rule to ensure that carriers negotiate
in good faith and to prevent carriers
from engaging in a pattern of rolling,
delaying, or cancelling shipper
bookings. USDEC at 4. Additionally,
USDEC asserted that the Commission
should consider the impacts to shippers
from a failure to negotiate on vessel
accommodations within the context of
potential enforcement actions and
penalties for violations, impacts such as
those on potential lost sales, diminished
product values, additional shipping
costs, and increased administrative
costs. USDEC at 4–5. USDEC added that
penalties imposed by the Commission
should operate as a deterrent to willful
or negligent violations of the regulations
and be sizable enough to encourage
corrective action by the carrier. USDEC
at 5.
The Commission agrees that its rules
should be applied consistently after a
careful consideration of the facts
presented in a given case. Regarding the
types of information that a shipper
should retain to substantiate a potential
violation, each shipper should retain
those materials that it believes clearly
demonstrates that the violation being
alleged has occurred. This information
may differ based on the specific
circumstances involved and may
involve items such as (but not limited
to) the documenting of attempts to reach
an ocean common carrier and, if
available, written communications
indicating a refusal by an ocean
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common carrier. The scope of any
negotiation will depend on the
individual circumstances that present
themselves and the Commission will
evaluate those circumstances as they
appear in a given case as appropriate.
Consideration of an anti-backsliding
provision to ensure that ocean common
carriers negotiate in good faith and do
not engage in a pattern of disrupting
shipper bookings, along with the setting
of appropriate penalties for violations,
are issues falling outside the scope of
this specific rulemaking but may be
considered in the context of other
rulemakings as well as enforcement
actions taken by the Commission.
III. Proposed Changes to the NPRM
The Commission is modifying aspects
of the NPRM in this SNPRM after
evaluating the proposed rule in light of
the comments received. The SNPRM
proposes to modify the definition of
transportation factors to focus on vessel
operation considerations. The SNPRM
proposes a revision of the definition of
the term unreasonable as well as
includes a non-exhaustive list of
examples of unreasonable conduct. This
change is intended to provide a better
idea of what types of conduct that
Commission believes would generally
be considered unreasonable. The
Commission proposes to clarify that
vessel space services were already
included in the definition of vessel
space accommodations and add a
definition for cargo space
accommodations as well. It also
includes new text discussing the
relationship between 46 U.S.C.
41104(a)(3) and (a)(10) and the elements
required to establish violations of those
provisions. Also, many comments
expressed concerns about how business
decisions would affect the overall
analysis and thus this SNPRM changes
how business decisions will be
considered. This SNPRM then revises
the voluntary export policy
documentation language and proposes
that ocean common carriers submit a
documented export policy to the
Commission once per year. It also
revises the burden shifting framework to
clarify that it applies even if it was not
included in the rule and notes that the
ultimate burden of persuasion lies with
the complainant or BEIC. Finally, this
SNPRM proposes to remove the
voluntary certification provision as it is
not necessary.
A. Section 542.1(b)—Definitions
In § 542.1(b), this SNPRM proposes a
new definition of ‘‘cargo space
accommodations,’’ ‘‘documented export
policy,’’ and ‘‘sweeper vessel.’’ It also
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proposes to modify the definitions for
‘‘transportation factors’’ and
‘‘unreasonable,’’ and ‘‘vessel space
accommodations.’’ After careful
consideration of the comments, these
proposed definitions now provide more
clarification and specificity to allow
parties to identify unreasonable refusal
to deal more easily.
The proposed definition of ‘‘cargo
space accommodations,’’ like the
definition of ‘‘vessel space
accommodations’’ has not been
interpreted in prior Commission
matters. The two definitions are similar
because both terms are part of concepts
aimed at preventing similar conduct at
different points of a shipping
transaction. Because the term ‘‘cargo
space accommodations’’ concerns
situations where the parties have an
existing relationship and/or already
mutually agreed on terms and
conditions via a booking confirmation,
it is presumed that there is some
evidence that negotiation for space
aboard the vessel has already occurred.
The Commission is interested in
comments addressing if, in fact, that
space has been agreed to at the time of
a booking confirmation.
The new proposed definition of
‘‘vessel space accommodations’’ means
space that is available aboard a vessel.
Since 46 U.S.C. 41104(a)(10) prohibits
unreasonable refusals during the
negotiation stage—when the parties do
not have an existing relationship and/or
are initiating negotiations over terms
and conditions of service, it is presumed
that space has not yet been provided but
that it may be available.
Both definitions, ‘‘cargo space
accommodations’’ and ‘‘vessel space
accommodations’’ should also include
the concept of vessel space services. The
Commission proposes to include in
these definitions a reference to the
services necessary to access or book
vessel space accommodations. As some
comments pointed out and is discussed
above, services that would impact the
actual acquisition of a ‘‘vessel space’’
could also be used by ocean common
carriers to frustrate shippers and
amount to an ‘‘unreasonable refusal to
deal or negotiate.’’ Thus, an
unreasonable refusal to deal over the
related services should also be included
in the definition. These services could
include for example, a shipper’s access
to a representative or a booking portal
for vessel space, in summary any service
impacting a shipper’s ability to confirm
its booking. It could also include
services involving operational decisions
that would impact a shipper’s alreadyconfirmed booking for purposes of the
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definition of ‘‘cargo space
accommodations.’’
The Commission is also proposing a
new definition of ‘‘documented export
policy.’’ This proposed definition uses
the term ‘‘policy’’ instead of ‘‘strategy’’
to better describe the type of
information the Commission seeks. The
proposal is intended to identify that the
export policy must be in the form of a
report and it must detail practices and
procedures for U.S. outbound services.
Pursuant to its authority in 46 U.S.C.
40104, the Commission seeks to require
ocean common carriers to provide this
information to the Commission on a
yearly basis. It will use this information
to monitor the industry for any
unreasonable behavior with respect to
refusals to deal or negotiate.
This SNPRM newly proposes a
definition for ‘‘sweeper vessel.’’ After
reviewing the public comments, the
Commission wanted to note that the use
of sweeper vessels is a legitimate
practice that is critical to the efficiency
of our transportation system. This new
definition, however, does specify that a
sweeper vessel must be one exclusively
designated for that purpose, i.e., a
carrier that does not want to take
exports cannot designate a vessel as a
sweeper vessel in order to avoid certain
shipments.
In the ‘‘transportation factors’’
definition, this SNPRM proposes to
focus the definition on ‘‘vessel
operation considerations’’ rather than
the broader ‘‘genuine operational
considerations’’ phrase that included
factors other than those related to the
safe operation of the vessel. For that
reason, this SNPRM also proposes to
remove the phrase ‘‘the effect of blank
sailings’’ since this factor is not directly
related to vessel safety or operational
needs. Given the focus on operational
considerations, the proposed definition
now also includes ‘‘weather-related
scheduling considerations’’ to ensure
that scheduling within the control of the
ocean common carrier is not used as a
factor. The Commission also seeks to
clarify with this SNPRM that
transportation factors are not a way for
a carrier to refuse to carry entire classes
of cargo such as properly tendered
hazardous cargo, heavier products or
inland shipments. Instead, legitimate
transportation factors must exist, be
outside the vessel operators’ control and
relate to the facts of a specific
transaction or vessel.
The Commission also seeks to revise
the definition of the term
‘‘unreasonable’’ by proposing an
overarching definition that applies in
both 46 U.S.C. 41104(a)(3) and
41104(a)(10) claims. In later sections of
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the rule, the SNPRM proposes revised
factors and examples of unreasonable
conduct that are non-binding and
illustrate the type of conduct that
Commission will consider
unreasonable. The new proposed
definition of the term ‘‘unreasonable’’ is
ocean common carrier conduct that
unduly restricts the ability of shippers
to access ocean carriage services. The
Commission believes this definition
better aligns with the purpose of OSRA
2022 and the Shipping Act, as amended,
as a whole.
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B. Section 542.1(c) Through (e)—Claims
Under 46 U.S.C. 41104(a)(3)
The Commission proposes adding
new § 542.1(c) through (e) to define how
a shipper can address unreasonable
conduct by ocean common carriers that
prevents shippers from obtaining space
aboard vessels, when available, for their
cargo pursuant to 46 U.S.C. 41104(a)(3).
Section 542.1(c) proposes the elements
of a claim. These elements are similar to
those for a 46 U.S.C. 41104(a)(10) claim
under § 542.1(f) given that both claims
aim to prevent similar conduct at
different points of a shipping
transaction. As previously stated above,
46 U.S.C. 41104(a)(3) claims focus on
those refusals that occur at the
execution stage, after the parties reached
a deal or mutually agreed on service
terms and conditions via a booking
confirmation subject to section
41104(a)(3).
Section 542.1(d) proposes a list of
factors that the Commission may choose
to consider in evaluating whether a
particular ocean common carrier’s
conduct was unreasonable. Like in a
claim under 46 U.S.C. 41104(a)(10), the
factors mentioned would help establish
an ocean common carrier’s bona fide
attempts and interest in fulfilling its
previously made commitment to a
shipper to take its cargo. Provision of a
documented export policy includes a
good faith effort in mitigating the impact
of the refusal as well as evidence that
the refusal was based on legitimate
transportation factors. These are all
considerations the Commission could
rely on to make a reasonableness
finding.
In § 542.1(e), the Commission
proposes a non-binding and nonexhaustive list of examples to show the
type of conduct it could consider
unreasonable pursuant to 46 U.S.C.
41104(a)(3). The examples listed are the
types of situations that could signal that
an ocean common carrier was not
sincere in attempting to fulfill the
previously agreed-to service terms and
conditions.
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The example in § 542.1(e)(4) identifies
an issue raised in the comments. See,
e.g., Bass Tech at 1; IDFA at 2. The
imposition by ocean common carriers of
time restrictions on when a vessel can
be loaded that are impracticably short
thereby denies a shipper actual access to
cargo space accommodations that have
ostensibly been provided. As discussed,
the focus of the rule is on eliminating
impediments to access. The
Commission may view carrier-imposed
time constraints as unreasonable if they
unduly deprive a shipper acting in good
faith of access to cargo space.
Finally, the Commission believes it
should keep open the opportunity to
consider any other interactions or
communications with the shipper as
well as other conduct that the
Commission finds unreasonable in any
given case. Thus, the proposed list is
considered non-exhaustive and only
provides examples of conduct that
could be considered unreasonable. The
decision will be made on a case-by-case
basis.
C. Section 542.1(f) Through (h)—Claims
Under 46 U.S.C 41104(a)(10)
The Commission proposes adding
new § 542.1(f) through (h) to define how
a shipper can address unreasonable
conduct by ocean common carriers that
refuses to deal or negotiate with
shippers regarding vessel space
accommodations pursuant to 46 U.S.C.
41104(a)(10). Section 542.1(f) contains
the elements of a claim. These elements
are the same as those proposed in the
NPRM.
Section 542.1(g) proposes a list of
factors that the Commission may choose
to consider in evaluating whether a
particular ocean common carrier’s
conduct was unreasonable. The factors
in this section are those that were
proposed in § 542.1(b)(2)(i) through (iv)
of the NPRM except that business
decisions are no longer a factor to be
explicitly considered. The Commission
decided with the help of the public
comments that there is the potential for
business decisions to overwhelm the
rest of the factors and thus it decided to
remove that language from the proposed
rule. In this SNPRM, the provision of a
documented export policy, good faith
effort showing an interest and ability in
mitigating the impact of the refusal and
evidence that the refusal was based on
legitimate transportation factors are all
considerations the Commission could
rely on to make a reasonableness
finding. The list is not exhaustive as
other facts the Commission finds
relevant could be considered. The
factors in § 542.1(g) are the same as
those proposed in § 542.1(d).
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In 46 CFR 542.1(h), the Commission
proposes a non-binding and nonexhaustive list of examples to show the
type of conduct it could consider
unreasonable pursuant to 46 U.S.C.
41104(a)(10). The examples listed are
the types of situations that could signal
that an ocean common carrier was not
sincere in attempting to fulfill the
previously agreed-to service terms and
conditions.
The various proposed scenarios the
Commission finds involve unreasonable
conduct by ocean common carriers.
These include: (1) quoting rates that are
so far above market as to render the
quote not a serious negotiation; (2)
categorically or systematically
excluding exports in providing vessel
space accommodations, and (3) any
other interactions or communications
with the shipper or other conduct the
Commission finds unreasonable.
The SNPRM rule proposes that
quoting rates that are so far above
market as to render the quote not a
serious negotiation is unreasonable
conduct. An ocean common carrier
would be required to consider in good
faith a shipper’s effort at negotiation.
Consideration in good faith includes,
among other things, quotes that are
within reasonable market rates. See, e.g.,
NITL/ISRI at 13–14. If in response to a
shipper’s request for vessel space
accommodations the carrier quotes rates
far above market (or insists on other
terms, such as unrealistic quantity
demands), it will likely be regarded
under the SNPRM as an unreasonable
refusal to deal or negotiate under 46
U.S.C. 41104(a)(10).
Finally, the Commission believes it
should keep open the opportunity to
consider any other interactions or
communications with the shipper as
well as other conduct generally the
Commission finds unreasonable in any
given case. Thus, the proposed list is
considered non-exhaustive and just
provides examples of conduct that
could be considered unreasonable. The
decision will be made on a case-by-case
basis.
1. Section 542.1(i)—Use of Sweeper
Vessels
In § 542.1(i), the Commission is
proposing that the use of sweeper
vessels is a legitimate practice that is
critical to the efficiency of our
transportation system. Along with the
proposed definition, this paragraph
serves as a reminder that a sweeper
vessel must be one designated for that
purpose. This provision is proposed to
prevent ocean common carriers from
using ad hoc designations of vessels as
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sweeper vessels to avoid having to take
certain export shipments.
2. Section 542.1(j)—Documented Export
Policy
This SNPRM modifies the voluntary
documented export policy found in the
NPRM and now proposes a requirement
that ocean common carriers follow and
submit to the Commission on a yearly
basis a documented export policy.
Proposing a requirement to submit a
documented export policy to the
Commission pursuant to its authority
under 46 U.S.C. 40104 is an important
part of monitoring the industry for
unreasonable behavior vis-a`-vis exports
in an effort to address those concerns.
Also, in § 542.1(j)(1), the Commission
identifies what type of information it
seeks to have included in a documented
export policy that would help the
Commission determine whether an
ocean common carrier’s conduct in a
specific matter aligns with their general
policies and that the ocean common
carrier thus acted reasonably. The yearly
requirement would provide an
appropriate but not overly burdensome
time frame on which to report updates
to the policy relative to changes in the
industry. The proposed report
documenting an ocean common carrier’s
export policy would remain
confidential. Aggregate data may be
provided in annual reports submitted to
Congress or compiled for other purposes
but will not reveal confidential
information provided by or about
individual carriers.
Although the Commission is not
proposing in this SNPRM a voluntary
export policy, it is interested in
receiving comments on this alternative.
The Commission believes the new
proposed requirement to submit the
export policy to the Commission on a
yearly basis will enhance its ability to
monitor the industry for prohibited
actions but would also consider a
voluntary approach. Maintenance of a
voluntary documented export policy
would allow ocean common carriers to
maintain and provide a documented
export policy showing how it developed
and applied business decisions in a fair
and consistent manner in the instance of
a claim before the Commission. The
documented export policy could also
address situations, such as schedule
disruptions (due to blank sailings or
other conditions) on the ability to take
on shipments. Carriers may also address
the alternative remedies or assistance it
will make available to a shipper who is
refused vessel space accommodations.
Developing this type of detailed
information and providing it during the
burden shifting process could assist the
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Commission’s analysis when deciding
whether the ocean common carrier’s
conduct was reasonable. The
Commission seeks comments on these
two approaches.
3. Proposed language in the NPRM
Removed in This SNPRM
The Commission is proposing
revisions to § 542.1(d) of the NPRM by
moving the burden shifting framework
to § 542.1(k) and clarifying certain
issues raised in the comments. Various
commenters pointed out that this is the
existing process under the APA. The
new proposed section emphasizes that
the burden shifting framework is not
unique to this proposed rule and
remains a legal requirement whether it
appears in the SNPRM or not. Also, this
SNPRM proposes including in
§ 542.1(k)(3) that the ultimate burden of
persuading the Commission remains
with the complainant (or BEIC). This
language is responsive to comments
received recommending this language
be included.
The Commission also proposes to
remove the self-certification by ocean
common carrier provision in § 542.1(d)
of the original proposed rule. Numerous
commenters raised concerns about this
voluntary provision and that they would
be given undue weight in the
Commission’s analysis. Some
commenters supported the provision if
it was part of a more robust process
including an independent evaluation of
the information forming the basis of the
certification. Although self-certification
could have provided some useful
information, a robust and mandatory
self-certification approach addressing
some of these concerns would require a
more holistic and costly approach and
the Commission finds it is not necessary
at this time.
The Commission seeks comment and
supporting information regarding all the
proposed changes in this SNPRM.
IV. Public Participation
How do I prepare and submit
comments?
Your comments must be written and
in English. You may submit your
comments electronically through the
Federal Rulemaking Portal at
www.regulations.gov. To submit
comments on that site, search Docket
No. FMC–2023–0010 and follow the
instructions provided.
How do I submit confidential business
information?
The Commission will provide
confidential treatment for identified
confidential information to the extent
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allowed by law. If your comments
contain confidential information, you
must submit the following by mail to
the address listed above under
ADDRESSES:
• A transmittal letter requesting
confidential treatment that identifies the
specific information in the comments
for which protection is sought and
demonstrates that the information is a
trade secret or other confidential
research, development, or commercial
information.
• A confidential copy of your
comments, consisting of the complete
filing with a cover page marked
‘‘Confidential-Restricted,’’ and the
confidential material clearly marked on
each page. You should submit the
confidential copy to the Commission by
mail.
• A public version of your comments
with the confidential information
excluded. The public version must state
‘‘Public Version—confidential materials
excluded’’ on the cover page and on
each affected page and must clearly
indicate any information withheld. You
may submit the public version to the
Commission by email or mail.
How can I read comments submitted by
other people?
You may read the comments received
on this SNPRM at www.regulations.gov
by searching Docket No. FMC–2023–
0010, Definition of Unreasonable
Refusal to Deal or Negotiate with
Respect to Vessel Space
Accommodations Provided by an Ocean
Common Carrier.
V. Rulemaking Analyses
A. Regulatory Flexibility Act
The Regulatory Flexibility Act, 5
U.S.C. 601–612, provides that whenever
an agency publishes a notice of
proposed rulemaking under the
Administrative Procedure Act (APA), 5
U.S.C. 553, the agency must prepare and
make available for public comment a
regulatory flexibility analysis describing
the impact of the rule on small entities,
unless the head of the agency certifies
that the rulemaking will not have a
significant economic impact on a
substantial number of small entities. 5
U.S.C. 603–605. As the head of the
agency, the Chairman, by voting to
approve this SNPRM, is certifying that
it will not have a significant economic
impact on a substantial number of small
entities.
B. National Environmental Policy Act
The Commission’s regulations
categorically exclude certain
rulemakings from any requirement to
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prepare an environmental assessment or
an environmental impact statement
because they do not increase or decrease
air, water or noise pollution or the use
of fossil fuels, recyclables, or energy. 46
CFR 504.4. This SNPRM describes the
Commission’s criteria to determine
whether an ocean common carrier has
engaged in an unreasonable refusal to
deal with respect to vessel space
accommodations under 46 U.S.C.
41104(a)(10), and the elements
necessary for a successful claim under
that section. This rulemaking thus falls
within the categorical exclusion for
matters related solely to the issue of
Commission jurisdiction and the
exclusion for investigatory and
adjudicatory proceedings to ascertain
past violations of the Shipping Act. See
46 CFR 504.4(a)(20), (22). Therefore, no
environmental assessment or
environmental impact statement is
required.
C. Paperwork Reduction Act
The Paperwork Reduction Act of 1995
(44 U.S.C. 3501–3521) (PRA) requires an
agency to seek and receive approval
from the Office of Management and
Budget (OMB) before collecting
information from the public.5 The
agency must submit collections of
information in proposed rules to OMB
in conjunction with the publication of
the notice of proposed rulemaking.6 As
defined in 5 CFR 1320.3(c), ‘‘collection
of information’’ comprises reporting,
recordkeeping, monitoring, posting,
labeling, and other similar actions. An
agency may not collect or sponsor the
collection of information, nor may it
impose an information collection
requirement, unless it displays a
currently valid OMB control number.
This action contains new information
collection requirements. The title and
description of the information
collection, a description of those who
must collect the information, and an
estimate of the total annual burden
follow. The estimates cover the time for
reviewing instructions, searching
existing sources of information,
gathering and maintaining the
information needed, and completing
and reviewing the collection.
Title: Documented Export Policy.
OMB Control Number: None assigned
yet.
Summary of the Collection of
Information: This SNPRM proposes a
requirement that ocean common carriers
create and maintain a documented
export policy they submit to the
Commission on a yearly basis.
5 44
65
U.S.C. 3507.
CFR 1320.11.
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Need and Proposed Use of
Information: Proposing a requirement to
submit a report documenting an ocean
common carrier’s export policy to the
Commission pursuant to its authority
under 46 U.S.C. 40104 is an important
part of monitoring the industry for
unreasonable behavior vis-a`-vis exports.
Also, in proposed § 542.1(j)(1), the
Commission identifies what type of
information it seeks to have included in
a documented export policy that would
help the Commission determine
whether an ocean common carrier’s
conduct in a specific matter aligns with
their general policies and that the ocean
common carrier thus acted reasonably.
The yearly requirement would provide
an appropriate but not overly
burdensome time frame on which to
report updates to the policy relative to
changes in the industry. An ocean
common carrier can update their policy
more frequently than once per year if it
chooses to do so. The proposed
reporting by individual ocean common
carriers would remain confidential but,
in practice, the Commission would
provide aggregate descriptions and
potentially best practices that do not
contain individual carrier-level
information but do provide information
to the public and Congress (via annual
report or other documents available to
the public).
Frequency: This SNPRM proposes
that respondents will file a documented
export policy meeting the requirements
in § 541.2(j) once per calendar year.
Type of Respondents: Ocean common
carriers.
Number of Annual Respondents: The
Commission anticipates an annual
respondent universe of 140 ocean
common carriers.
Estimated Time per Response: The
Commission estimates 40 hours of
burden for developing, documenting,
and submitting an export policy using
the parameters in proposed § 541.2(j) for
the first year, assuming that no such
policy already exists. For annual
updates, the estimated burden would be
5 hours including review and revisions
of the existing policy and submitting it
electronically.
Total Annual Burden: The
Commission estimates the total personhour burden at 5,600 hours for initial
filing and 700 hours thereafter.
Comments are invited on:
• Whether the collection of
information will have practical utility;
• Whether the Commission’s estimate
for the burden of the information
collection is accurate;
• Ways to enhance the quality, utility,
and clarity of the information to be
collected;
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• Ways to minimize the burden of the
collection of information on
respondents, including the use of
automated collection techniques or
other forms of information technology.
Please submit any comments,
identified by the docket number in the
heading of this document, by the
methods described in the ADDRESSES
section of this document.
D. Regulation Identifier Number
The Commission assigns a regulation
identifier number (RIN) to each
regulatory action listed in the Unified
Agenda of Federal Regulatory and
Deregulatory Actions (Unified Agenda).
The Regulatory Information Service
Center publishes the Unified Agenda in
April and October of each year. You
may use the RIN contained in the
heading at the beginning of this
document to find this action in the
Unified Agenda, available at https://
www.reginfo.gov/public/do/
eAgendaMain.
List of Subjects in 46 CFR Part 542
Administrative practice and
procedure, Non-vessel-operating
common carriers, Ocean common
carrier, Refusal to deal or negotiate,
Vessel-operating common carriers,
Vessel space accommodations.
■ For the reasons set forth in the
preamble, the Federal Maritime
Commission proposes to add 46 CFR
part 542 to read as follows:
PART 542—COMMON CARRIER
PROHIBITIONS
Sec.
542.1 Definition of unreasonable refusal of
cargo space accommodations when
available and unreasonable refusal to
deal or negotiate with respect to vessel
space provided by an ocean common
carrier.
542.2 [Reserved]
Authority: 5 U.S.C. 553; and 46 U.S.C.
46105, 40307, 40501–40503, 40901–40904,
41101–41106.
§ 542.1 Definition of unreasonable refusal
of cargo space accommodations when
available and unreasonable refusal to deal
or negotiate with respect to vessel space
provided by an ocean common carrier.
(a) Purpose. This part establishes the
elements and definitions necessary for
the Federal Maritime Commission
(Commission) to apply 46 U.S.C.
41104(a)(3) with respect to refusals of
cargo space accommodations when
available and to apply 46 U.S.C.
41104(a)(10) with respect to refusals of
vessel space accommodations provided
by an ocean common carrier. This part
applies to complaints brought before the
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Commission by a private party and
enforcement cases brought by the
Commission.
(b) Definitions. For the purposes of
this section:
(1) Cargo space accommodations
means space which has been negotiated
for aboard the vessel of an ocean
common carrier for laden containers
being imported to or exported from the
United States. Cargo space
accommodations includes the services
necessary to access and load or unload
cargo from a vessel calling at a U.S. port.
(2) Documented export policy means
a written report produced by an ocean
common carrier that details the ocean
common carrier’s practices and
procedures for U.S. outbound services.
(3) Sweeper vessel means a vessel
exclusively designated to load and move
empty containers from a U.S. port for
the purpose of transporting them to
another designated location.
(4) Transportation factors means
factors that encompass the vessel
operation considerations underlying an
ocean common carrier’s ability to
accommodate laden cargo for import or
export, which can include, but are not
limited to, vessel safety and stability,
weather-related scheduling
considerations, and other factors related
to vessel operation outside the vessel
operators’ control.
(5) Unreasonable means ocean
common carrier conduct that unduly
restricts the ability of shippers to
meaningfully access ocean carriage
services.
(6) Vessel space accommodations
means space available aboard a vessel of
an ocean common carrier for laden
containers being imported to or
exported from the United States. Vessel
space accommodations also includes the
services necessary to access or book
vessel space accommodations.
(c) Elements for claims. The following
elements are necessary to establish a
successful private party or enforcement
claim under 46 U.S.C. 41104(a)(3):
(1) The respondent must be an ocean
common carrier as defined in 46 U.S.C.
40102;
(2) The respondent refuses or refused
cargo space accommodations when
available; and
(3) The ocean common carrier’s
conduct is unreasonable.
(d) Non-binding considerations when
evaluating unreasonable conduct. In
evaluating the reasonableness of an
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ocean common carrier’s refusal to
provide cargo space accommodations,
the Commission may consider the
following factors:
(1) Whether the ocean common carrier
followed a documented export policy
that enables the efficient movement of
export cargo;
(2) Whether the ocean common carrier
made a good faith effort to mitigate the
impact of a refusal;
(3) Whether the refusal was based on
legitimate transportation factors; and
(4) Any other factors relevant in
determining whether there was a refusal
in that particular case.
(e) Non-binding examples of
unreasonable conduct. The following
are examples of the kinds of conduct
that may be considered unreasonable
under 46 U.S.C. 41104(a)(3) when
linked to a refusal to provide cargo
space accommodations:
(1) Blank sailings or schedule changes
with no advance notice or with
insufficient advance notice;
(2) Vessel capacity limitations not
justified by legitimate transportation
factors;
(3) Failing to alert or notify shippers
with confirmed bookings;
(4) Scheduling insufficient time for
vessel loading so that cargo is
constructively refused;
(5) Providing inaccurate or unreliable
vessel information;
(6) Categorically or systematically
excluding exports in providing cargo
space accommodations; or
(7) Any other conduct the
Commission finds unreasonable.
(f) Elements for claims. The following
elements are necessary to establish a
successful private party or enforcement
claim under 46 U.S.C. 41104(a)(10):
(1) The respondent must be an ocean
common carrier as defined in 46 U.S.C.
40102;
(2) The respondent refuses or refused
to deal or negotiate with respect to
vessel space accommodations; and
(3) The ocean common carrier’s
conduct is unreasonable.
(g) Non-binding considerations when
evaluating unreasonable conduct. In
evaluating the reasonableness of an
ocean common carrier’s refusal to deal
or negotiate with respect to vessel space
accommodations, the Commission may
consider the following factors:
(1) Whether the ocean common carrier
followed a documented export policy
that enables the efficient movement of
export cargo;
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(2) Whether the ocean common carrier
engaged in good-faith negotiations;
(3) Whether the refusal was based on
legitimate transportation factors; and
(4) Any other factors relevant in
determining whether there was a refusal
in that particular case.
(h) Non-binding examples of
unreasonable conduct. The following
are examples of the kinds of conduct
that may be considered unreasonable
under 46 U.S.C. 41104(a)(10) when
linked to a refusal to deal or negotiate:
(1) Quoting rates that are so far above
current market rates they cannot be
considered a real offer or an attempt at
engaging in good faith negotiations;
(2) Categorically or systematically
excluding exports in providing vessel
space accommodations; and
(3) Any other interactions or
communications with the shipper or
other conduct the Commission finds
unreasonable.
(i) Use of sweeper vessels. Nothing in
this part precludes ocean common
carriers from using sweeper vessels
previously designated for that purpose
to reposition empty containers.
(j) Documented export policy. Ocean
common carriers must follow a
documented export policy that enables
the efficient movement of export cargo.
(1) A documented export policy must
be submitted once per calendar year and
include, in a manner prescribed by the
Commission, pricing strategies, services
offered, strategies for equipment
provision, and descriptions of markets
served. Updates may be submitted more
than once per year if the ocean common
carrier chooses to do so. Other topics a
documented export policy should also
address, if applicable, include:
(i) The effect of blank sailings or other
schedule disruptions on the ocean
common carrier’s ability to accept
shipments; and
(ii) The alternative remedies or
assistance the ocean common carrier
would make available to a shipper to
whom it refused vessel space
accommodations.
(2) A documented export policy
required to be filed by this part must be
submitted to: Director, Bureau of Trade
Analysis, Federal Maritime
Commission, [email protected].
(k) Shifting the burden of production.
In accordance with applicable laws, the
following standard applies:
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(1) The burden to establish a violation
of this part is with the complainant or
Bureau of Enforcement, Investigations,
and Compliance.
(2) Once a complainant sets forth a
prima facie case of a violation, the
burden shifts to the ocean common
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carrier to justify that its action were
reasonable.
(3) The ultimate burden of persuading
the Commission remains with the
complainant or Bureau of Enforcement,
Investigations, and Compliance.
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§ 542.2
[Reserved]
By the Commission.
William Cody,
Secretary.
[FR Doc. 2023–12744 Filed 6–12–23; 4:15 pm]
BILLING CODE 6730–02–P
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| File Type | application/pdf |
| File Modified | 2023-06-14 |
| File Created | 2023-06-14 |