26506 Federal Register / Vol. 65, No. 89 / Monday, May 8, 2000 / Rules and Regulations

TABLE 8 TO SUBPART PPP.ÐROUTINE REPORTS REQUIRED BY THIS SUBPART

Reference Description of report Due date

§ 63.1439(b) and subpart A of this part ...... Refer to § 63.1439(b), Table 1 of this subpart, Refer to subpart A of this part. and to subpart A of this part. § 63.1439(e)(3) ...... Initial notification ...... New affected sources w/ initial start-up at least 90 days after June 1, 1999: submit the application for approval of construction or reconstruction in lieu of the initial notifi- cation report. New affected sources w/ initial start-up prior to 90 days after June 1, 1999:by 90 days after June 1, 1999. § 63.1439(e)(4) ...... Precompliance Report a ...... Existing affected sources: 12 months prior to compliance date. New affected sources: with the application for approval of construction or reconstruction. § 63.1439(e)(5) ...... Notification of Compliance Status b ...... Within 150 days after the compliance date. § 63.1439(e)(6) ...... Periodic Reports ...... Semiannually, no later than 60 days after the end of each 6-month period. See § 63.1439(e)(6)(i) for the due date for this report. § 63.1439(e)(6)(iii) ...... Quarterly reports for sources with excursions No later than 60 days after the end of each (upon request of the Administrator). quarter. § 63.506(e)(7)(i) ...... Storage Vessels Notification of Inspection ...... At least 30 days prior to the refilling of each storage vessel or the inspection of each storage vessel. a There may be two versions of this report due at different times; one for equipment subject to § 63.1434 and one for other emission points subject to this subpart. b There will be two versions of this report due at different times; one for equipment subject to § 63.1434 and one for other emission points sub- ject to this subpart.

* * * * * Background TIA’’); and (8) Ocean World Lines, Inc. [FR Doc. 00–10418 Filed 5–5–00; 8:45 am] The Federal Maritime Commission (‘‘OWL’’). BILLING CODE 6560±50±P initiated this proceeding by Notice of The NPR Proposed Rule (‘‘NPR’’) published in the Federal Register on June 25, 1999. 64 The NPR noted that the Commission FR 34183. The NPR noted that the had previously proposed a new FEDERAL MARITIME COMMISSION Commission was proposing to amend definition for the term ‘‘ocean common carrier’’ in the context of the rulemaking 46 CFR Parts 515, 520, 530 and 535 several of its regulations to clarify the definition of ‘‘ocean common carrier’’ governing agreements which was contained in section 3(16) of the undertaken to implement OSRA. Docket [Docket No. 99±10] Shipping Act of 1984 (‘‘Shipping Act’’), No. 98–26, Ocean Common Carrier and 46 U.S.C. app. § 1702(16), as amended Marine Terminal Operator Agreements Ocean Common Carriers Subject to the Subject to the Shipping Act of 1984, 64 Shipping Act of 1984 by the Ocean Shipping Reform Act of 1998 (‘‘OSRA’’), P.L. 105–258, 112 Stat. FR 11236, March 8, 1999. However, the AGENCY: Federal Maritime Commission. 1902, to reflect the Commission’s then- Commission received only two ACTION: Final rule. interpretation of that term. In essence, comments on that particular proposal the proposed rule defined ‘‘ocean and subsequently decided to provide SUMMARY: The Federal Maritime common carrier’’ to include only the public an additional opportunity to Commission is amending its regulations common carriers that operate vessels comment through this proceeding. The implementing the Shipping Act of 1984 serving ports in at least one United NPR then stated that the heart of the to clarify the definition of ‘‘ocean States trade. matter was how to distinguish between common carrier’’ to reflect the The NPR solicited comment on the ocean common carriers (‘‘OCCs’’) and Commission’s interpretation of the term. proposed rule from the public, and the non-vessel-operating common carriers As a result, only common carriers that Commission received comments from: (‘‘NVOCCs’’). The distinction is operate vessels in at least one United (1) The Ocean Carrier Working Group significant under the Shipping Act States trade will be subject to these (‘‘OCWG’’); (2) Maersk, Inc.; (3) Samskip because only OCCs can enter into and rules. Hf (‘‘Samskip’’); (4) the Council of file agreements with the Commission and receive antitrust immunity therefor. DATES: This rule becomes effective European & Japanese National In addition, only OCCs can offer service August 7, 2000. Shipowners’ Associations (‘‘CENSA’’); (5) the Calcutta, East Coast of India and contracts to shippers, although NVOCCs FOR FURTHER INFORMATION CONTACT: Bangladesh Conference and Waterman can enter into service contracts as Thomas Panebianco, General Counsel, Steamship Corporation (‘‘India shippers. Federal Maritime Commission, 800 Carriers’’);(6) the National Industrial The NPR conceded that at first glance North Capitol Street, N.W., Room 1018, Transportation League (‘‘NITL’’); (7) the the defining of an OCC as a ‘‘vessel Washington, D.C. 20573, (202) 523– American International Freight operator’’ does not appear to be 5740. Association & Transportation ambiguous. However, the Commission SUPPLEMENTARY INFORMATION: Intermediaries Association (‘‘AIFA/ stated that its staff has encountered

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Lastly, the OCWG argues calling at a U.S. port, and that if a asserts that various types of VSAs have that the proposed approach would have carrier is an OCC in one trade, it should grown significantly, and offer more the effect of removing all transshipment be considered an OCC for all U.S. efficient and frequent service at lower agreements from the scope of the trades. The proposed rule therefore cost. It contends that it is possible, for Commission’s jurisdiction and require codified this approach and stated: a variety of operational factors, that the the Commission to repeal 46 C.F.R. Ocean common carrier means a common parties may decide that all of the vessels § 535.306. of a member be deployed in non-U.S. carrier that operates, for all or part of its B. Maersk common carrier service, a vessel on the high trades and it will only serve the U.S. via seas or the Great Lakes between a port in the the vessels of its fellow members. The Maersk observes that the United States and a port in a foreign country, OCWG concludes that such a carrier Commission’s proposed definition except that the term does not include a would not be considered an OCC and would exclude feeder operators common carrier engaged in ocean would have to withdraw from the U.S. providing foreign-to-foreign transportation by ferry boat, ocean tramp, or portion of the agreement or restructure transportation from the definition of chemical parcel-tanker. its service. OCC. It suggests that the final rule The OCWG therefore suggests a should accommodate such activity. In The NPR noted that this multi-trade modified definition. It would allegedly addition, Maersk believes that a carrier approach avoids making interpretations preserve the ability of VSAs to function signatory to a vessel sharing agreement as to a carrier’s status on a trade-by- efficiently, while at the same time (‘‘VSA’’) should be considered an OCC trade basis, which would be maintaining a distinction between when another carrier participating in administratively impractical and might carriers that commit assets to a service the agreement contributes ships making prompt a less efficient redeployment of in U.S. trades and those that do not. U.S. port calls. vessels. The proposal was also intended Next, the OCWG argues that the to clarify that companies that operate proposed definition should not change C. Samskip vessels solely outside the U.S. are not the applicable law regarding Samskip, a self-defined vessel- deemed to be OCCs. The NPR suggested transshipment agreements. It contends operating common carrier, argues that that the proposal was consistent with that for over 50 years the Commission the proposed rule overturns legislative intent that a ‘‘vessel has held that a person may be an OCC, Commission precedent that carriers operator’’ be one whose vessels call at within the meaning of the Shipping Act providing a portion of vessel service to U.S. ports and all other common carriers and its predecessor legislation, without or from the U.S. qualify as OCCs even should be classified as NVOCCs. having a vessel call directly at a U.S. though their vessels do not actually call The NPR further stated that if the port, citing Restrictions on at U.S. ports. It suggests, therefore, that definition of OCC included carriers that Transshipment at Canal Zone, 2 the supplemental information to the operate vessels only in foreign-to- U.S.M.C. 675 (1943). It notes further that final rule state that a common carrier foreign trades, it could expand the scope in adopting OSRA, Congress did not which offers a through bill of lading and of antitrust immunity and also remove change the statutory definition of operates a vessel on which part of the certain carriers from NVOCC financial ‘‘common carrier’’ and contends, service is provided is an OCC, even if responsibility requirements in U.S. therefore, that there is no statutory basis the vessels it operates do not call trades even though they have no vessels for the change in law being proposed by directly at a U.S. port. Lastly, Samskip or assets in the U.S. Lastly, the NPR the Commission. urges the Commission to adopt a concluded, based on principles of In addition, the OCWG maintains that definition of OCC that provides that a statutory construction, that when the proposed change would overturn common carrier that becomes an OCC Congress used the term ‘‘vessel’’ in the longstanding Commission precedent by virtue of carriage in a transshipment definition of OCC, it likely was referring that a carrier providing a portion of a situation should be considered an OCC to those vessels specified in the through vessel service to or from the for purposes of entering into slot definition of ‘‘common carrier,’’ i.e., U.S. qualifies as an OCC even though its chartering and vessel space sharing those that operate on the high seas vessels do not call at a U.S. port, citing agreements with other OCCs. between the U.S. and a foreign country. Transshipment & Apportionment Agreements from Indonesian Ports to D. CENSA Comments on Proposed Rule U.S. Atlantic & Gulf Ports, 10 F.M.C. CENSA supports that portion of the A. OCWG 183 (1964); and Transshipment and proposed rule that states that a carrier Through Billing Arrangements Between operating a vessel in one U.S. trade is The OCWG agrees with the East Coast Ports of South Thailand and an OCC for all U.S. trades. However, Commission that the distinction U.S. Atlantic and Gulf Ports, 10 F.M.C. CENSA believes that the requirement between OCCs and NVOCCs is 201 (1966). These carriers therefore urge that a carrier must have at least one significant. It also supports continuation the Commission to clarify in the vessel calling at a U.S. port may exclude of the Commission’s past practice that a supplemental information that a two categories of carriers—those common carrier that operates a vessel in common carrier offering a through bill involved in VSAs and transshipment one U.S. trade is an OCC for all U.S. of lading to or from the U.S. that arrangements. trades. It contends that this practice is operates a vessel on which part of the CENSA contends that most OCCs are consistent with the Shipping Act and, as service is provided meets the definition parties to one or more forms of VSAs— a practical matter, has worked well in of OCC, even if its vessels do not call space charters, slot charters, and the past, presenting no problems. directly at a U.S. port. The OCWG alliances—many of which are global in

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CENSA part of that transportation, and that an believes that under the proposed NITL supports the interpretation that OCC is defined simply as ‘‘a vessel- definition such a carrier would not be a carrier that operates a vessel in a operating common carrier.’’ AIFA/TIA an OCC and would consequently have single trade is an OCC in all trades. It submits that the Commission should put to withdraw from the U.S. portion of the maintains that the plain language of the these two definitions together and issue agreement or restructure its service to statute does not require a trade-by-trade a statement that an entity that otherwise have a vessel call at a U.S. port. It analysis and to do so would lead to meets the definition of common carrier suggests amending the definition to inefficiencies. NITL is concerned, and operates a single vessel on a single include a VOCC that contributes vessels however, about the exclusion of carriers route between a single U.S. port and a to a VSA. that do not offer direct port calls but single foreign port, over either the high CENSA further asserts that instead offer indirect ocean seas or the Great Lakes, must be treated longstanding Commission precedent transportation by way of VSAs or as an OCC for all of its operations in holds that carriers that provide a portion similar arrangements. U.S. trades. This interpretation would of vessel service to or from the U.S. NITL asserts that the proposed allegedly extend the status of OCC to the qualify as OCCs even though their definition is narrower than the statutory largest possible universe of operators. vessels do not call at U.S. ports. CENSA definition, which simply defines an AIFA/TIA also does not object to suggests that there is no need to OCC as a ‘‘vessel-operating common proposals that carriers involved in overrule this precedent and that carrier’’ and does not restrict the trade nonexclusive transportation agreements Congress is presumed to have been lanes in which the vessel can operate. also should be accorded OCC status aware of it when it adopted the NITL contends that there is no support even if they have no operations directly definition of ‘‘common carrier’’ in for the Commission’s assertion that the between a U.S. and foreign port. OSRA. ‘‘vessel’’ in the definition of OCC was likely the vessels specified in the H. OWL E. India Carriers definition of ‘‘common carrier.’’ NITL OWL, one of the largest NVOCCs in The India Carriers contend that the further states that under that definition the world, proposes a significant change proposed rule would classify a carrier a common carrier does not need to in the traditional carrier/shipper which operates oceangoing vessels as an operate a vessel; it must merely relationship between VOCC and NVOCC, if the vessels did not call at ‘‘utilize’’ a vessel in U.S. trades for part NVOCC. Instead of obtaining space from U.S. ports. They believe that this or all of the transportation. It concludes a vessel owner by a service contract, contradicts the definition of NVOCC in that the ‘‘other part’’ of the OWL presents a scenario in which an the Shipping Act—i.e., a common transportation can be wholly outside the NVOCC would obtain space via a slot carrier that does not operate the vessels U.S., i.e., foreign-to-foreign. It further charter with a VOCC. Under such by which the ocean transportation is contends that the plain language of the circumstances, OWL argues that the provided. They further submit that an statute, unchanged by the passage of NVOCC would no longer be a shipper, OCC that serves the U.S. trades by slot- OSRA, does not restrict the provision of vis-a-vis the VOCC, and would instead chartering space on another carrier’s OCC service to only those carriers that be a co-venturer, who should likewise vessels, but issues its own bills of make direct calls at U.S. ports. be permitted to hold itself out to the lading, would be held to be a ‘‘shipper’’ NITL also finds the proposed public as an OCC in the trade lanes. under the proposed definition. This, definition inconsistent with the policy OWL thus suggests a bifurcated they argue, could confuse the traditional objective of OSRA, particularly section approach to the definition of OCC: (1) liability relationship between shipper 2(4), which requires the FMC to The Commission’s multi-trade approach and carrier under the Carriage of Goods administer the law in a manner that for vessel operators in one or more trade by Sea Act (‘‘COGSA’’), 46 U.S.C. 1310– promotes competitive and efficient lanes; and (2) a trade-by-trade approach 1315. ocean transportation services and relies for NVOCCs slot chartering with The India Carriers also argue that the to a greater extent on the marketplace. VOCCs. proposed rule would exclude carriers It notes that carriers may decide that the OWL’s proposal is premised on the that operate vessels as only part of their U.S. market is more efficiently and assumption that a slot charter between U.S. service, thereby overturning economically served through a VSA and a VOCC and an NVOCC provides the longstanding precedent. In addition, claims that the Commission’s narrow NVOCC with sufficient operational they contend that the rationalization of definition of OCC would prevent some interest or nexus in the voyages to vessel space through various VOCCs from offering such services to warrant classification as an OCC in that cooperative agreements allows carriers shippers through service contracts. trade. If the Commission decides to provide service more efficiently and Ultimately, NITL believes the FMC otherwise, then OWL asserts that the at a reduced cost. The proposed rule should maintain the existing statutory Commission should not allow a VOCC allegedly might prompt carriers to definition of OCC in its regulations and in one trade to become a VOCC in redeploy vessels solely to satisfy a should broadly construe it. It contends another by virtue of a slot charter. At the regulatory requirement. that there is nothing in the Shipping Act very least, OWL submits that the FMC The India Carriers note that vessels or OSRA that indicates that Congress should set out guidelines similar to operating under slot charters or other intended a more narrow definition. those recently adopted by the U.S. VSAs are presently subject to the Customs Service (‘‘Customs’’) which Commission’s regulatory requirements, G. AIFA/TIA require a slot or time-chartering including that they publish tariffs. They AIFA/TIA supports the proposed common carrier to have significant also contend that FMC or court definition as providing necessary, clear, responsibility or involvement in the judgments could be enforced by and precise guidance to the ocean actual operation of the vessels before requiring carriers who offer through transportation industry. It notes that the being considered a VOCC.

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OWL concedes that slot charters or leased by the ‘‘owner or operator’’ of between the U.S. and a foreign country. would be inherently risky for NVOCCs, a vessel transporting those containers Congress employed the word ‘‘utilize’’ but it is willing to face those risks in for its own use in the foreign commerce so that the definition of common carrier order to be able to offer service of the U.S. In this regard, Customs has could encompass both ocean common guarantees (i.e., service contracts) to its issued several rulings dealing with carriers and NVOCCs; the very underlying shipper clients. It contends carriers involved in slot charter definition of ocean common carrier as further that the enhanced competition of agreements. In 1977, Customs ‘‘vessel-operating common carrier’’ new entrants would outweigh any purportedly issued a ruling holding that indicates that Congress intended ocean possible adverse impact of possibly a time charterer was not a vessel common carriers actually to operate, not broadening the scope of antitrust operator and, in 1983, expanded this merely utilize, vessels. The reference to immunity. OWL also believes that the position to slot charterers. In that case, ‘‘all or a part of the transportation’’ Commission’s concerns about its and Customs allegedly looked at one trade simply reflects the fact that a common shippers’ ability to arrest or attach a lane without reference to status in other carrier can offer port-to-port vessel are unfounded. It suggests that lanes. In 1999, Customs reviewed a joint transportation or point-to-point through the best way to protect shippers is by service agreement between Italian Line transportation, using inland carriers for requiring adequate insurance or a surety and d’Amico Line. It determined that the latter. bond, such as it already possesses. both were VOCCs because they shared The final rule is also consistent with OWL contends that there is no statute, operational control under the Congress’ intent to delineate between code or policy that would prohibit it agreement. ocean common carriers and NVOCCs. In from obtaining space on vessels by adopting the Shipping Act, Congress means of space charters, and the fact The Final Rule clearly wanted to distinguish between that such space charters are not within General Discussion those common carriers that operate the scope of the Shipping Act does not vessels and those that do not. The mean they are prohibited. In this regard, For the reasons set forth below, and former are ocean common carriers and OWL references a decision of the in full consideration of all of the European Commission (‘‘EC’’) relating to comments, the Commission has decided the latter are NVOCCs. As the House the Trans-Atlantic Conference to adopt the proposed rule as the final Committee on Merchant Marine and Agreement (‘‘TACA’’). Commission rule. As a result, the term ‘‘ocean Fisheries noted with respect to H.R. Decision of 16 September 1998 Relating common carrier’’ will include only 1878: to a Proceeding Pursuant to Articles 85 those common carriers who actually The Shipping Act does not contain a and 86 of the EC Treaty. (Case No. I/ operate a vessel in at least one United definition of ‘‘non-vessel-operating common 35.134) (‘‘EC Decision’’). That decision States trade. In addition, if a common carrier.’’ One is added to this bill so that the discussed two types of NVOCCs—(1) carrier is an ocean common carrier in distinction may be made between those those that operate vessels in another one U.S. trade, it can act as an ocean carriers that operate vessels and those that do not. Both types are included in the term trade, and (2) those that do not operate common carrier in all U.S. trades. This decision is fully supported by a ‘‘common carrier.’’ vessels anywhere. The EC stated that The term ‘‘ocean common carrier’’ is based neither type competes with VOCCs in straightforward reading of the relevant definitions contained in the Shipping on the definition of ‘‘common carrier by terms of quality of service, but the first water in foreign commerce’’ in section 1 of is able to compete on price. OWL Act. Section 3(16) of the Shipping Act the Shipping Act with the added provision further asserts that the EC Decision defines an ‘‘ocean common carrier’’ as that the carrier must operate the vessel recognizes three types of common ‘‘a vessel-operating common carrier.’’ providing the transportation by water. carriers: (1) A VOCC in the trade; (2) And, section 3(6) of the Shipping Act H.R. Rep. No. 53, 98th Cong., 1st Sess. VOCCs in another trade; and (3) defines a ‘‘common carrier’’, in part, as: 29 (1983) (‘‘House Report’’). See also, S. NVOCCs. It submits that the critical * * * a person holding itself out to the Rep. No. 3, 98th Cong., 1st Sess. 20 distinction is not that the second owns general public to provide transportation by (1983) (‘‘Senate Report’’). In addition, vessel in another trade, but that it has water of passengers or cargo between the Congress wanted to ensure that carriers the ability to compete with VOCCs on United States and a foreign country for operating solely through ports of price through its space charter compensation that— (A) assumes responsibility for the contiguous nations not be included in arrangements. OWL seeks this ability to transportation from the port or point of the definition of ‘‘common carrier.’’ See, compete on price by means of space receipt to the port or point of destination, House Report at 29; Senate Report at 19. charters and be deemed an OCC. and Congress’ concern not to establish the OWL further contends that the term (B) utilizes, for all or part of that ‘‘vessel operator’’ is growing transportation, a vessel operating on the high Commission’s jurisdiction over carriers increasingly ambiguous in light of seas or the Great Lakes between a port in the operating through ports in countries vessel sharing and consortia agreements. United States and a port in a foreign country. contiguous to the United States reflects It submits that the Commission has not *** its overall determination not to expand faced the difficult question of what When these two definitions are read the Commission’s jurisdiction, and with degree of involvement is required to be together, it is logical to conclude that it, the conferring of antitrust immunity, considered a vessel operator and has the vessels operated by an ocean to carriers operating solely between instead taken a rudimentary approach of common carrier are those referenced in foreign ports. defining a VOCC as a common carrier the common carrier definition, i.e., As noted in the preamble to the NPR, that operates a vessel somewhere in the those ‘‘operating on the high seas or the Congress viewed vessel operators as U.S. Great Lakes between a port in the those whose vessels call at U.S. ports OWL notes that Customs has United States and a port in a foreign and classified all other common carriers struggled with the definition of VOCC country.’’ in U.S. commerce as non-vessel- for the past 25 years in the context of The Commission recognizes that the operating common carriers. For the Sixth Proviso to the Jones Act, 46 definition of common carrier refers to example, in its report on the Shipping U.S.C. app. 883, that exempts coastwise one who ‘‘utilizes, for all or part of that Act, the Senate Commerce, Science, and movements of empty containers owned transportation’’ a vessel operating Transportation Committee observed:

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The Committee strongly believes that it is further contends that a variety of would appear to encompass a broad and in our national interest to permit cooperation operational and other factors will indefinite class of foreign companies. among carriers serving our foreign trades to dictate how a member of a VSA will Also, it refers to a vessel sharing permit efficient and reliable service. * * * deploy its vessels in non-U.S. trades and agreement that ‘‘operates’’ vessels. Our carriers need; a stable, predictable, and that such a carrier may choose to serve However, VSAs do not collectively profitable trade with a rate of return that warrants reinvestment and a commitment to U.S. trades solely with vessel space operate vessels—their individual carrier serve the trade; greater security in obtained on its partners’ ships. members do so. Moreover, if the investment. * * * Some commenters suggest that the members are subject to an arrangement proposed definition could discourage that covers more than the U.S. trades, Senate Report at 9. We continue to the formation of VSAs or prevent the those non-U.S. portions of the believe that Congress intended to parties from maximizing the benefits of arrangement would not be in the VSA provide antitrust immunity and other such cooperation by redeploying vessels and filed with the Commission.1 The special privileges and protections only out of U.S. trades. Maersk, CENSA and Commission could be left unable to to those carriers that have made the the OCWG thus propose an exception to determine the full extent of any such financial commitment to provide vessel the proposed definition for a vessel arrangement or ascertain whether the service in United States trades. operating common carrier that carrier involved is a vessel operator in The importance of the distinction contributes vessels to a VSA that serves some non-U.S. trade, and not an NVOCC between OCC and NVOCC was noted in the U.S. NITL likewise believes that or some other entity unlawfully seeking the preamble to the proposed rule: an VSAs should be encouraged, but VOCC status. Lastly, this proposal OCC can be a party to agreements filed suggests that this could be provides no protection to the shipping with the Commission and receive accomplished simply by maintaining public who might use the services of antitrust immunity therefor, and can the existing statutory definition and by such a carrier in its U.S. service. The enter into service contracts with broadly construing it. Lastly, OWL carrier would have no attachable assets shippers. An NVOCC can do neither. argues that if the Commission does not in the U.S. and might not have an agent Moreover, NVOCCs are subject to a adopt its proposal concerning NVOCC for service of process in the U.S. to financial responsibility requirement, space chartering, then parties to VSAs receive the claims of injured parties. with foreign NVOCCs subject to higher should be considered OCCs only if they This too would appear to contravene amounts under the scale promulgated have significant responsibility or OSRA’s general objective of providing by Commission regulation. Thus, there involvement in the actual day-to-day more, not fewer, protections to U.S. is ample incentive for NVOCCs to operations of the vessels. interests utilizing foreign entities, as characterize themselves as OCCs, and While the intended benefit of the reflected in the strengthened ocean this could inure to the detriment of their exception urged by some of the transportation intermediary (‘‘OTI’’) and shipper customers who would commenters is to facilitate formation controlled carrier provisions, for otherwise have been protected by an and operation of efficient VSAs, there example. NVOCC’s financial responsibility. are several problems with this approach. For the reasons stated above, the The Commission continues to be First, it appears to address a mostly Commission is not adopting the carrier concerned about the effect of the theoretical concern. Commenters do not proposal concerning VSAs. This does definition of ocean common carrier on identify, nor is the Commission aware not mean that a VSA member without the scope of antitrust immunity of, any instances where entities are ships calling at a U.S. port would be envisioned by Congress under the planning to operate major VSAs with precluded from offering a common Shipping Act. If the definition of OCC parties who are not in the U.S. trades, carriage service to the U.S. However, it somehow included carriers that or where current, vessel-operating would simply have to offer its service as operated vessels only in foreign-to- members of VSAs are contemplating an NVOCC. It could then enter into foreign trades, this could substantially withdrawing vessel service from U.S. service contracts with OCCs, but could expand the scope of antitrust immunity trades and proposing to serve the U.S. not offer its own service contracts or fix beyond that contemplated by Congress. only through space-sharing rates with other vessel operators in a In this regard, we note the longstanding arrangements with fellow VSA trade. judicial policy of narrowly construing members. In addition, this type of The Commission is fully cognizant of antitrust exemptions. See, Federal arrangement would expand the reach of the new policy objective added to the Maritime Commission v. Seatrain Lines, antitrust immunity well beyond that Shipping Act by OSRA—i.e., promoting Inc., 411 U.S. 726, 733 (1973). envisioned by Congress when it recently the growth and development of United passed OSRA. Since 1984, the only Vessel Sharing Arrangements States exports through competitive and carriers that could enter into agreements efficient ocean transportation and by Several of the commenters (Maersk, subject to the Act and receive antitrust placing a greater reliance on the CENSA, OCWG, India Carriers and immunity were ‘‘ocean common marketplace. The Commission further NITL) suggest that the definition of OCC carriers.’’ The inclusion of VSA believes that there may be arrangements should be extended to include shipping participants in the OCC definition between common carriers that offer lines who are parties to VSAs serving would effectively confer antitrust more efficient and rationalized services, U.S. ports but who themselves do not immunity to carriers who do not make while at the same time providing call at U.S. ports. While the term VSA a commitment to serve the U.S. trades shippers with more service options and is undefined by the commenters, they by operating their own vessels. lower costs for their ocean suggest it is virtually any cooperative In addition to these very serious arrangement among OCCs. These policy-based concerns, the carriers’ 1 In Transpacific Westbound Rate Agreement v. commenters note that VSAs have grown proposal raises other technical or legal Federal Maritime Comm’n, 951 F.2d 950 (9th Cir. over the years and are likely to continue problems, and may generate further 1991), the court upheld the Commission’s decision to grow. These arrangements often confusion or ambiguity. Since the term that it did not have jurisdiction over foreign-to- foreign portions of agreements that also had U.S.- permit carriers to offer more efficient VSA is undefined, but seems to include to-foreign portions. As a result, foreign-to-foreign and frequent service to the shipping an almost unlimited range of carrier portions of agreements are generally not filed with public and at a lower cost. The OCWG relationships, the proposed exemption the Commission, even for informational purposes.

VerDate 272000 20:11 May 05, 2000 Jkt 190000 PO 00000 Frm 00028 Fmt 4700 Sfmt 4700 E:\FR\FM\08MYR1.SGM pfrm03 PsN: 08MYR1 Federal Register / Vol. 65, No. 89 / Monday, May 8, 2000 / Rules and Regulations 26511 transportation, and that some of these position was reaffirmed and further particular, it noted that this could arrangements may be precluded by the explicated by the Commission in 1966, remove certain companies from the final rule as a result of specific statutory in the two Transshipment Cases. In the scope of the NVOCC bonding constraints limiting the Commission’s first case, the Commission found requirement even though they have no flexibility in interpreting the Shipping carriers moving cargo from Indonesian vessels or assets in the U.S. that can be Act. We appreciate commenters’ outports to the U.S. under a through bill attached to satisfy a Commission or U.S. arguments regarding efficient of lading who transshipped the cargo at court judgment. NPR at 6. As noted operations. We fully support and wish a base port to be common carriers by earlier, there is a very strong incentive to encourage arrangements and water, and stated: under the Shipping Act, as modified by operations that enhance efficiency and Where there exists a unitary contract of OSRA, for NVOCCs to want to be competition. However, we do not think affreightment such as a through bill of lading considered OCCs. They can then offer it appropriate to adopt an overly broad by which two or more carriers or conferences confidential service contracts to their exception to address what, to date, is of carriers hold themselves out to transport shipper customers and avoid the costs only a hypothetical problem. We would cargo from a specified foreign port to a point of maintaining a bond as required by the remind the carriers that the Commission in the United States with transshipment at Act and the Commission’s regulations. would, as always, give serious one or more intermediate points from one Some NVOCCs are likely to engage in carrier to another, each of the carriers so consideration to any petition for complex machinations to be considered involved is ‘‘engaged in’’ transporting cargo OCCs under some of the proposals rulemaking, reconsideration of this rule, by water from a foreign country to the United or an exemption. States. suggested by certain commenters. This is not some idle threat or hypothetical Transshipment Arrangements 10 F.M.C. at 191. The Commission fear—even before passage of OSRA Transshipment agreements are reached a similar conclusion in the many NVOCCs were simply holding arrangements between ocean common second Transshipment case, 10 F.M.C. themselves out as OCCs.3 Now, post- carriers by which one carrier serving a 201 (1966), where carriers moving cargo OSRA, a review of the carriers holding port of origin and the other carrier from Thailand to Singapore were also themselves out as VOCCs on the serving a port of destination provide held to be subject to the 1916 Act. Commission’s web page reveals that transportation between such ports via The Commission does not believe that many of these carriers may well be an intermediate port at which the cargo these cases are controlling today. The NVOCCs, a matter for probable is transferred from one carrier to the Transshipment cases were decided enforcement action. In addition, it other. See 46 CFR 535.306(a). under the 1916 Act, which defined appears that some carriers that may Nonexclusive transshipment agreements ‘‘common carrier by water in foreign have at one time served U.S. ports with are exempt from the filing requirements commerce’’ to mean ‘‘a common carrier their own vessels are continuing to hold of the Shipping Act, 46 CFR engaged in the transportation by water themselves out as OCCs even though 535.306(b),2 but exclusive of passengers or property between the they have withdrawn these vessels from transshipment agreements must still be United States * * * and a foreign service. country.’’ When Congress enacted the filed with the Commission. Multi-trade Approach Several commenters have raised Shipping Act it chose different language concerns about the effect of the to define ‘‘common carrier’’ in section Almost all of the commenters support proposed rule on the status of vessel 3(6), 46 U.S.C. app. 1702(6), and the Commission’s multi-trade approach operator parties to transshipment separately defined ‘‘ocean common to determining OCC status—if a carrier agreements who do not directly serve carrier’’ and ‘‘non-vessel-operating is an OCC in one U.S. trade, it will be the United States. They contend that the common carrier.’’ In light of the fact that considered an OCC for all U.S. trades. rule would overturn longstanding the Commission decided the NITL suggests that this approach is Commission precedent that such Transshipment cases prior to the supported by the plain language of the carriers are considered to be OCCs. As statutory distinction being drawn statute. The OCWG notes that this is a result, Maersk has proposed an between NVOCCs and OCCs, the simply a continuation of past additional exception to include feeder Commission finds that the Commission practice and avoids having operators in the rule, while Samskip Transshipment cases are non- to make status determinations on a and the OCWG suggest that the controlling as to these issues and trade-by-trade basis. It further argues Commission can address the issue in the declines to adopt the commenters’ that making such determinations on a supplemental information to the final recommendations with regard thereto. trade-by-trade basis would be rule without further amending the As noted in the House Report, the impractical and inefficient. As reflected actual definition. difference between a ‘‘common carrier by the endorsement of the commenters, Beginning in 1943, in the Canal Zone by water’’ and an ‘‘ocean common the Commission’s position in this regard case, the Commission’s predecessor carrier’’ is that the latter has ‘‘the added is a sound one, and the Commission found that ocean carriers moving cargo provision that the carrier must operate will continue the multi-trade approach from Colombia or Ecuador to the Canal the vessel,’’ a significant distinction. to determining OCC status in the final Zone and then transferring that cargo to Thus, the Transshipment cases are rule. carriers moving it to the U.S., under probably controlling as to whether OWL’s Proposal someone is a ‘‘common carrier,’’ but through bills of lading, were ‘‘engaged OWL’s proposal to consider NVOCCs in the transportation by water of irrelevant to ‘‘ocean common carrier’’ status. who space charter from VOCCs to be property between the United States and considered OCCs on a trade-by-trade a foreign country’’ and consequently Avoidance of OTI Responsibilities basis is most problematic. At the very were ‘‘common carriers by water’’ The NPR raised concerns about subject to the Shipping Act, 1916. This permitting vessel operators in foreign- 3 In Docket No. 98–31, Publication of Inactive or Inaccurate Ocean Common Carrier Tariffs, order 2 Nonexclusive transshipment agreements do not to-foreign trades to be considered OCCs served May 19, 1999, the Commission found that prohibit either carrier from entering into similar in U.S. trades by virtue of VSA or 13 NVOCCs operating in the Far East trades held agreements with other carriers. transshipment arrangements. In themselves out to be VOCCs.

VerDate 272000 20:11 May 05, 2000 Jkt 190000 PO 00000 Frm 00029 Fmt 4700 Sfmt 4700 E:\FR\FM\08MYR1.SGM pfrm03 PsN: 08MYR1 26512 Federal Register / Vol. 65, No. 89 / Monday, May 8, 2000 / Rules and Regulations least, such a proposal is outside the supplementary information section that PART 515ÐLICENSING, FINANCIAL scope of the proposed rule and would payment against financial responsibility RESPONSIBILITY REQUIREMENTS, require additional notice and comment should only be made on ‘‘final’’ AND GENERAL DUTIES FOR OCEAN were the Commission inclined to pursue judgments; however, it mistakenly TRANSPORTATION INTERMEDIARIES such an approach. But, more failed to add the word ‘‘final’’ in the importantly, OWL’s proposal does not actual language of § 515.23(b)(2). In 1. The authority citation continues to appear to be a proper matter for a response to petitions for reconsideration read as follows: rulemaking proceeding. OWL is not of the final rule in 46 CFR 515, the Authority: 5 U.S.C. 553; 31 U.S.C. 9701; 46 asking that the Commission explicate Commission ordered the correction of U.S.C. app. 1702, 1707, 1709, 1710, 1712, some statutory or regulatory provision. this oversight to be made in the instant 1714, 1716, and 1718; Pub. L. 105–383, 112 Stat. 3411; 21 U.S.C. 862. Instead, it is asking the Commission to rulemaking proceeding in order to rewrite the Shipping Act to give certain preserve resources. Therefore, in NVOCCs the ability to offer service 2. In § 515.2 revise paragraph (m) to accordance with the Commission’s contracts to their shipper customers. read as follows: decision in Docket No. 98–28, we are Regardless of whether this is sound amending 46 CFR 515.23(b)(2) to add § 515.2 Definitions policy, Congress recently and very * * * * * consciously chose not to permit such the word ‘‘final.’’ (m) Ocean common carrier means a activity when it enacted OSRA. The In accordance with the Regulatory common carrier that operates, for all or Commission will not now do what Flexibility Act, 5 U.S.C. 601 et seq., the part of its common carrier service, a Congress declined to do. Chairman of the Federal Maritime vessel on the high seas or the Great Effective Date Commission has certified to the Chief Lakes between a port in the United Counsel for Advocacy, Small Business It appears that there may be some States and a port in a foreign country, Administration, that the rule will not except that the term does not include a vessel operators currently holding have a significant impact on a themselves out as ocean common common carrier engaged in ocean substantial number of small entities. In transportation by ferry boat, ocean carriers even though they do not operate its Notice of Proposed Rulemaking, the vessels that directly serve U.S. ports. tramp, or chemical parcel-tanker. Commission stated its intention to The Commission understands that these * * * * * certify this rulemaking because the carriers may have been confused about proposed changes affect only ocean 3. Revise § 515.23(b)(2) to read as the legitimacy of such services, in light follows: of the Commission’s pre-1984 policies common carriers and passenger vessel implementing the 1916 Shipping Act. operators, entities the Commission has § 515.23 Claims against an ocean Regardless of the validity of this determined do not come under the transportation intermediary. position, the Commission appreciates programs and policies mandated by the * * * * * the situation these carriers are in and Small Business Regulatory Enforcement (b) * * * desires to give them sufficient time to Fairness Act. As no commenter refuted (2) If the parties fail to reach an restructure their services in accordance this determination, the certification agreement in accordance with paragraph with the final rule. As a result, the final remains unchanged. (b)(1) of this section within ninety (90) rule will not become effective for 90 List of Subjects days of the date of the initial days. And, of course, the rule will not notification of the claim, the bond, be enforced retroactively as to such 46 CFR Part 515 insurance, or other surety shall be carriers. available to pay any final judgment for It is also possible that some of these Exports; Freight forwarders; Non- damages obtained from an appropriate carriers operating as OCCs may have vessel-operating common carriers; court. The financial responsibility entered into service contracts with Ocean transportation intermediaries; provider shall pay such judgment for shippers that may still be effective. At Licensing requirements; Financial damages only to the extent they arise the very least, our decision here should responsibility requirements; Reporting from the transportation-related activities operate as the type of force majeure and recordkeeping requirements. of the ocean transportation intermediary situation that would warrant the 46 CFR Part 520 ordinarily within 30 days, without termination of such contracts without requiring further evidence related to the any penalty to the shipper. If the parties Common carrier; Freight; Intermodal validity of the claim; it may, however, to such contracts wish to continue transportation; Maritime carriers; inquire into the extent to which the operating under them, the Commission Reporting and recordkeeping judgment for damages arises from the believes that this would not be possible requirements. ocean transportation intermediary’s since the carrier would no longer be transportation-related activities. considered an ocean common carrier, 46 CFR Part 530 * * * * * but rather would be an NVOCC. Freight; Maritime carriers; Reporting However, a similar arrangement might PART 520ÐCARRIER AUTOMATED and recordkeeping requirements. possibly be reflected in the common TARIFF SYSTEMS carrier’s tariff rates or perhaps as a time/ 46 CFR Part 535 volume rate. 1. The authority citation for part 520 Administrative practice and Amendment to Part 515 continues to read as follows: procedure; Maritime carriers; Reporting In the final rule of Docket No. 98–28, Authority: 5 U.S.C. 553; 46 U.S.C. app. and recordkeeping requirements. 1701–1702, 1707–1709, 1712, 1716; and sec. Licensing, Financial Responsibility 424 of Pub. L. 105–383, 112 Stat. 3411. Requirements, and General Duties for Therefore, for the reasons set forth Ocean Transportation Intermediaries, above, Parts 515, 520, 530, and 535 of 2. In § 520.2 revise the definition of adding section 515 to part 46 CFR, the Subchapter C of Title 46 Code of Federal ocean common carrier to read as Commission stated in the Regulations, are amended as follows: follows:

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§ 520.2 Definitions States and a port in a foreign country, Report and Order, 64 FR 67416 * * * * * except that the term does not include a (December 1, 1999), on October 21, Ocean common carrier means a common carrier engaged in ocean 1999. Specifically, we clarify the common carrier that operates, for all or transportation by ferry boat, ocean method by which quarterly line count part of its common carrier service, a tramp, or chemical parcel-tanker. data will be incorporated in the new vessel on the high seas or the Great * * * * * high-cost mechanism for purposes of Lakes between a port in the United calculating and targeting support By the Commission. States and a port in a foreign country, amounts. except that the term does not include a Bryant L. VanBrakle, We also clarify that, until the common carrier engaged in ocean Secretary. Commission adopts new line count transportation by ferry boat, ocean [FR Doc. 00–11338 Filed 5–5–00; 8:45 am] input values, forward-looking costs for tramp, or chemical parcel-tanker. BILLING CODE 6730±01±P universal service support purposes shall * * * * * be estimated using the line count input values adopted in the Tenth Report and PART 530ÐSERVICE CONTRACTS FEDERAL COMMUNICATIONS Order, 64 FR 67372 (December 1, 1999). COMMISSION This clarification does not alter the 1. The authority citation for part 530 methodology adopted in the Ninth continues to read as follows: 47 CFR Part 54 Report and Order except to account for line growth when the wire center line Authority: 5 U.S.C. 553; 46 U.S.C. app. [CC Docket No. 96±45; FCC 00±126] 1704, 1705, 1707, 1716. count data reported quarterly by the carriers differs from the input values 2. In § 530.3 revise paragraph (n) to Federal-State Joint Board on Universal Service used to estimate forward-looking cost. read as follows: Finally, we clarify that high-cost § 530.3 Definitions. AGENCY: Federal Communications support shall be available on a regular Commission. quarterly basis for competitive eligible * * * * * telecommunications carriers serving (n) Ocean common carrier means a ACTION: Final rule; petition for reconsideration. lines in areas served by non-rural common carrier that operates, for all or incumbent local exchange carriers. part of its common carrier service, a SUMMARY: This document concerning vessel on the high seas or the Great II. Discussion the Federal-State Joint Board on Lakes between a port in the United Universal Service clarifies the method 2. In general, there are four stages in States and a port in a foreign country, by which quarterly line count data will the forward-looking high-cost except that the term does not include a be incorporated in the new high-cost mechanism for non-rural carriers where common carrier engaged in ocean mechanism for purposes of calculating line count information is required: (1) transportation by ferry boat, ocean and targeting support amounts. It also To estimate forward-looking costs of tramp, or chemical parcel-tanker. clarifies that, until the Commission providing supported services; (2) to * * * * * adopts new line count input values, determine statewide support amounts; forward-looking costs for universal (3) to target those statewide support PART 535ÐAGREEMENTS BY OCEAN service support purposes shall be amounts to individual wire centers; and COMMON CARRIERS AND OTHERS estimated using the line count input (4) to determine the per-line support SUBJECT TO THE SHIPPING ACT OF values adopted in the Tenth Report and amounts in individual wire centers. 1984 Order. Finally, it clarifies that high-cost In addition, the interim hold-harmless support shall be available on a regular provision uses line counts to target 1. The authority citation for part 535 carrier-by-carrier hold-harmless support is amended to read as follows: quarterly basis for competitive eligible telecommunications carriers serving amounts to individual wire centers. The Authority: 5 U.S.C. 553; 46 U.S.C. app. lines in areas served by non-rural interim hold-harmless provision also 1701–1707; 1709–1710, 1712 and 1714–1718; incumbent local exchange carriers. uses line counts to determine the per- Pub. L. 105–383, 112 Stat. 3411. line support amounts in individual wire DATES: Effective May 8, 2000. 2. Revise § 535.101 to read as follows: centers. As discussed, we provide FOR FURTHER INFORMATION CONTACT: specific guidance on how these line § 535.101 Authority. Katie King, Attorney, Common Carrier counts are used in the four stages of the The rules in this part are issued Bureau, Accounting Policy Division, forward-looking mechanism and the pursuant to the authority of section 4 of (202) 418–7400. interim hold-harmless provision. the Administrative Procedure Act (5 SUPPLEMENTARY INFORMATION: This is a 3. Estimating Forward-Looking Costs. U.S.C. 553), sections 2, 3, 4, 5, 6, 7, 8, summary of the Commission’s We clarify that the line counts used in 10, 11, 13, 15, 16, 17 and 19 of the Twentieth Order Reconsideration, CC the model to estimate forward-looking Shipping Act of 1984 (‘‘the Act’’), and Docket No. 96–45; FCC 00–126, released economic costs shall be used to the Ocean Shipping Reform Act of 1998, on April 7, 2000. The full text of this calculate average forward-looking costs Pub. L. 105–258, 112 Stat. 1902. document is available for public in all the cost calculations in the 3. In § 535.104 revise paragraph (u) to inspection during regular business methodology adopted in the Ninth read as follows: hours in the FCC Reference Center, Report and Order for determining Room CY–A257, 445 Twelfth Street, support. This approach is consistent § 535.104 Definitions. S.W., Washington, D.C., 20554. with the Commission’s and the Federal- * * * * * State Joint Board’s decision to use a cost (u) Ocean common carrier means a I. Introduction model. The model estimates the common carrier that operates, for all or 1. In this Order, we clarify certain forward-looking costs of providing the part of its common carrier service, a aspects of the new high-cost universal supported services in each wire center vessel on the high seas or the Great service support mechanism for non- served by non-rural carriers. We clarify Lakes between a port in the United rural carriers adopted in the Ninth that model lines shall be used in

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