FMC Posts Final Rule for NRA Exemption from NVOCC Rate Tariffs Publication
The Federal Maritime Commission has posted to its web site a final rule to amend 46 CFR Part 520 and create a new Part 532 to make available to licensed non-vessel-operating common carriers (NVOCCs) a new, voluntary exemption from the requirement to publish rate tariffs, if they agree to Negotiated Rate Arrangements (NRAs) with their shippers.
(An NRA will be a written and binding arrangement between a shipper and eligible NVOCC to provide specific transportation service for a stated cargo quantity, from origin to destination, on and after the receipt of the cargo by the carrier or its agent (or the originating carrier in the case of through transportation).)
The rulemaking, which is expected to be published in the Federal Register this week, will take effect 45 days after publication, and is in response to a petition filed by the National Customs Brokers and Freight Forwarders Association of America, Inc. (NCBFAA).
Final Rule Similar to Proposal, but with Two Definitions Added, Etc.
The NRA final rule is largely the same as the proposed rule, with several changes, including (partial list):
NRA shipper. A definition of "NRA shipper” has been added, which can include such parties as shippers' associations and OTIs. The definition states that:
"NRA shipper means a cargo owner, the person for whose account the ocean transportation is provided, the person to whom delivery is to be made, a shippers’ association, or an ocean transportation intermediary, that accepts responsibility for payment of all applicable charges under the NRA."
Affiliates. A new provision for NRAs and a definition of "Affiliate” have been added, which indicate that with the mutual concurrence of the NRA parties, affiliates of the shipper are entitled to access the NRA rates.1
The new NRA provision states that an NRA must "contain the legal name and address of the parties and any affiliates; and contain the names, title and addresses of the representatives of the parties agreeing to the NRA."
"Affiliate" is also newly defined to mean two or more entities which are under common ownership or control by reason of being parent and subsidiary or entities associated with, under common control with or otherwise related to each other through common stock ownership or common directors or officers.
No agreement modification. The requirement stating that NRAs cannot be modified has been amended by the addition of the word "initial' as follows:
An NRA "may not be modified after the time the initial shipment is received by the carrier or its agent (including originating carriers in the case of through transportation)."
Recordkeeping. The final rule clarifies that the five-year period for the NRA recordkeeping requirement begins once performance of the NRA by the NVOCC is complete. In addition, all records must be in English or be accompanied by a certified English translation.
Rules tariff. The proposed requirement for NVOCCs (prior to entering into an NRA) to provide the shipper all the applicable terms as set forth in its rules tariff has been deleted from the final rule. However, the final rule continues to require the NVOCC to provide free electronic access for the public to its rules tariffs.
Extensive Discussion of Comments Submitted on Proposed Rule
The FMC, at length, responds to the 44 comments submitted on the proposed NRA rule. Their responses are divided into the following sections:
- authority of the FMC to grant the exemption
- the scope of an NRA
- extension of the exemption to foreign, bonded, unlicensed NVOCCs
- memorialization of NRAs and recordkeeping requirements
- access to rules tariffs
- terms of an NRA
- NRA disputes, dispute resolution services and safe harbor provisions
- extending the exemption to Sections 10(b)(4) and 10(b)(8), 46 USC 41101(4) and (8)
- Regulatory Flexibility Act
- Statutory reviews
See future issue for detailed ITT summary of the final rule and the FMC's responses to comments.
1The FMC noted that if finds no reason to treat affiliates differently under NRAs than they are treated under NSAs (NVOCC Service Arrangements).
(See ITT's Online Archives or 02/24/11 news, 11022420, for BP summary of NCBFAA's list of options for foreign unlicensed NVOCCs.
See ITT’s Online Archives or 02/17/11 news, 11021712, for BP summary of the FMC’s February 16 meeting on NRA rulemaking.
See ITT’s Online Archives or 05/07/10, 10050749, for BP summary of the NRA 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.)
FMC contacts (legal) Elisa Holland (202) 523-5740 (generalcounsel@fmc.gov); (technical) George Quadrino (202) 523-5800 (tradeanalysis@fmc.gov )
(D/N 10-03)