Federal Maritime Commission Begins Rulemaking Process to Amend Regulations to Eliminate Filing of Rate Tariffs By Licensed NVOCCs

On April 29, 2010, the Federal Maritime Commission published a proposed rulemaking to implement its February 18, 2010, decision to relieve licensed NVOCCs from the costs and burdens of tariff rate publication. The April 29 rulemaking promulgated new and amended regulations that, when given effect, will establish the criteria that must be adhered to by NVOCCs that seek to be exempt from the tariff rate publishing requirement. Publication of rules tariffs would still be required under the regulations.

The proposed FMC regulations would recognize “negotiated rate agreements,” or NRAs, as a new type of instrument that, in function, would serve to set individualized rates as between a shipper and NVOCC. An NRA is defined in the regulations as a “written and binding arrangement between a shipper and an eligible NVOCC to provide specific transportation service for a stated cargo quantity, from origin to destination, on or after the receipt of the cargo by the carrier or its agent (or the originating carrier in the case of through transportation).”

For an NVOCC to avail itself the FMC’s newly-relaxed tariff rate publication requirement, it must follow certain rules outlined in the new regulations, namely:

  • The NVOCC must give notice to the public that it is opting out of rate publication by publishing that fact in a prominent place in its filed rules tariff. An NVOCC can also elect to invoke the exemption by filing with the FMC a Form FMC-1, which would then be reflected on the FMC website along with the NVOCC’s tariff location.
  • The rules tariff must be available to the public free of charge, or it must be provided with each of the NVOCC’s proposed NRAs or rate quotes.
  • NRAs must be (1) be agreed to by both parties; (2) be memorialized in writing; (3) include the applicable rate for each shipment; (4) be agreed and memorialized on or before the date on which the cargo is received by the common carrier or its agent (including originating carrier in the case of through transportation rates); and (5) include prominent notice of the existence and location of the NVOCC’s rules tariff.
  • NRAs and associated records must be retained for five years and are subject to the records availability requirements of the Commission’s regulations at 46 CFR § 515.31(g).

When these criteria are met, a NVOCC will be exempted from the requirement that rates tariffs be published in an automated tariff system. Associated tariff rate regulations, such as those governing the timing of rate increases and decreases, which would then be inapplicable insofar as there would be no published rate to adjust.

An NVOCC who fails to maintain its bond or license or has had its tariff suspended or cancelled by the FMC is ineligible to avail itself of the new exemption.

Interestingly, the new proposed regulations would only exempt licensed NVOCCs from the tariff rate publication requirement. Registered but unlicensed NVOCCs, which are those that have no physical U.S. location and are incorporated abroad, would not be exempt from rate publication even if the proposed regulations go into effect. The FMC has stated that it will consider whether to expand the exemption to cover registered, unlicensed entities. Already there have been some cries of discrimination from foreign NVOCCs due to this disparate treatment.

The deadline for interested parties to file comments concerning the new proposed regulations with the FMC is June 4, 2010.

The proposed regulations can be found on the FMC’s website at http://www.fmc.gov/userfiles/pages/file/NVOCC%20Tariff%20Exemption%20NPRM.pdf

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