FMC Says Final Rule on NVOCC Rate Tariffs Exemption Expected Soon, NCBFAA Lists Options for Those Foreign-Based

Federal Maritime Commission sources stated on February 23, 2011 that the agency expects to have its final rule to allow licensed non-vessel-operating common carriers (NVOCCs) that enter into Negotiated Rate Agreements with their customers to be exempt from the requirement of publishing their rates in tariffs if they meet certain conditions published in the Federal Register and on its website within a week.

Rule to Take Effect 45 Days After Publication in Federal Register

A FMC press release on the agency’s February 16 meeting, where FMC approved the draft final rule, stated that NVOCCs who follow its conditions will be relieved of rate publication requirements 45 days after the rule is published in the Federal Register.

Final Rule's Benefits to be Limited to U.S.-Licensed NVOCCs for Now

According to the FMC, the final rule will relieve more than 3,300 licensed NVOCCs from the costs and burdens of publishing in tariffs the rates they charge for cargo shipments. The final rule approved by the FMC limits the exemption to U.S.-licensed NVOCCs, but Commissioners in the majority said they would commence proceedings to receive public input on potential future modifications, including the possibility of extending the exemption to foreign, unlicensed NVOCCs.

NCBFAA Says Final Rule Has a Number of Limitations

According to the National Customs Brokers and Forwarders Association of America, the exemption contains a number of limitations, which are as follows:

• As noted above, foreign-based NVOCCs are not eligible at this time for use of NRAs.
• NRAs may contain only the rates that are agreed; other terms of the parties' agreement (e.g., credit) cannot be included in the NRA, but must be published in the NVOCCs Rules Tariff. As a practical matter, this means that NVOCCs that wish to make distinctions between shippers on non-rate terms will find it easier to use Negotiated Service Arrangements.
• Once agreed to, NRA's cannot be amended during their term.
• While NRA's can include maximum volume levels, they cannot include minimum volume requirements.
• NVOCCs using an NRA must state that fact on the bills of lading issued for NRA shipments.
• NRA rates may not be subject to GRIs published in the NVOCCs tariff.

Lists Options for Foreign-Based NVOCCs Wishing to Take Advantage of Final Rule

NCBFAA adds that in meantime, there are a number of options for foreign-based NVOCCs who wish to take advantage of the NRA exemption when it is effective. These include the following:

• If the foreign NVOCC already has offices in the U.S., it can get one of those offices licensed as a U.S. based NVOCC eligible to use NRAs.
• Foreign NVOCCs can establish an office in the U.S. and have that office obtain a license.
• Foreign NVOCCs can purchase a U.S. licensed NVOCC

(See ITT’s Online Archives or 02/17/11 news, 11021712, for BP summary of the FMC’s February 16 meeting.

See ITT’s Online Archives or 05/07/10, 10050749, for BP summary of the proposed rule.

See ITT’s Online Archives or 02/09/11 news, 11020924, for BP summary of the trade’s comments on it, including the belief that the rule’s exemption should also apply to registered but unlicensed NVOCCS, such as those that are foreign-based.)

NCBFAA’s notice on FMC adopting the tariff exemption is available via email by sending a request to documents@brokerpower.com