Client Alert
Federal Maritime Commission to Issue New NPRMs

September 27, 2019

On September 26, 2019, the Federal Maritime Commission issued a Notice of a series of new notices of proposed rulemakings that have significant potential effect on OTIs and vessel operators. At this point, the actual NPRMs have not been issued, so it is not clear what issues are to be specifically addressed. Nevertheless, the press release of the Commission’s votes on these proceedings provides interesting news.

The first NPRM will address a petition filed by the World Shipping Council in September 2018 in Docket Petition P3-18. In that proceeding, the World Shipping Council requested that the Commission issue an exemption so that the vessel operators would no longer need to file service contracts or publish the essential terms of those contracts in their tariffs. Essentially, the carriers were taking the position that since the Commission granted that relief to NVOCCs (due to the petition filed by NCBFAA with respect to NVOCC service arrangements), the same should be done for the carriers. However, according to the Notice, the Commission is moving forward only with a portion of the World Shipping Council request. The NPRM will only address eliminating the publication of essential terms, but not the filing of the service contracts themselves. It is not clear why the full Commission decided to continue service contract filing, but Commissioner Dye would have approved the entire request by the World Shipping Council.

Among other things, the second NPRM directly affects OTIs and is intended to update the Commission’s regulations to:

  • Expand the class of persons that must be licensed as OTIs
  • Expand the prohibition on vessel operators knowingly and willfully accepting cargoes for unlicensed/nonregistered NVOCCs
  • Make clear that the OTI licensing requirements do not apply to agents of licensed OTIs

Until the NPRM is actually published, it is not entirely clear what changes in the OTI regulations are being contemplated. It will be important to review that once it is published. Finally, in closed session, the Commission voted to issue a Request for Comments on what would be a significant change to the enforcement procedures of the Bureau of Enforcement. The revised procedures would:

  • (1) Provide notice to the subjects of investigations that BOE intends to recommend that the Commission initiate enforcement proceedings and allow these subjects an opportunity to respond before BOE submits those recommendations;
  • (2) require full Commission approval before any formal or informal enforcement action is taken; and
  • (3) require Commission approval of any proposed settlement agreements.

According to the FMC press release, that rule will become final 75 days from its publication in the Federal Register.

While the first NPRM noted above relating to VOCC service contracts really affects only the vessel operators, the other proposed actions by the FMC will likely have a substantial effect on OTI practices, and we will provide a complete description of these issues once the agency releases the final document.

Whom to Contact for More Information

If you have any questions about this issue or desire additional information, please do not hesitate to contact Ed Greenberg (egreenberg@gkglaw.com).

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