FMC to Issue Proposed Rule Regarding Certain 'Unreasonable' Ocean Carrier Conduct

The Federal Maritime Commission will soon seek public comments on the set of factors it should consider when determining whether an ocean carrier is violating shipping regulations by refusing vessel space to shippers. The effort, outlined in a notice of proposed rulemaking required by the Ocean Shipping Reform Act, also seeks to define certain “unreasonable” conduct by ocean carriers, specifically their “unreasonable refusal to deal or negotiate with respect to vessel space accommodation,” FMC said. The commission will accept comments up to 30 days after the notice is published in the Federal Register.

In the rule, FMC proposes that any complaints alleging an “unreasonable refusal” of vessel space by an ocean carrier should meet three elements: the respondent must be an ocean common carrier; the respondent must refuse to deal or negotiate with respect to vessel space; and the refusal must be “unreasonable.”

The rule also proposes to shift the burden of proof from shippers to the ocean carriers, which would require carriers to “establish why it was not unreasonable to refuse vessel space to a particular complainant.” But FMC said “the ultimate burden of proof persuasion remains with the complainant to show that the refusal to deal or negotiate was unreasonable.” The proposed rule does, however, include a “rebuttable presumption of unreasonableness” for situations in which a carrier “categorically excludes U.S. exports from its backhaul trips from the U.S.” Industry and lawmakers have urged FMC to penalize carriers that decline to carry U.S. exports in favor of imports (see 2103100027 and 2205190035).

The rule also includes a “non-exhaustive list of factors” FMC will consider when ruling on a complaint, the commission said, including whether the carrier followed a “documented export strategy, engaged in good faith negotiations, and articulated legitimate transportation factors.”

“The Commission further recognizes that an ocean common carrier does not have a duty to grant a contract to every potential party,” FMC said. “However, upon establishing its criteria for granting preferential terms to parties who are able to meet those specified terms, the ocean common carrier then has a duty under the Shipping Act to apply such criteria in a consistent and fair manner without differentiating based on illegitimate transportation factors.”

FMC’s rule also proposes a definition for “vessel space accommodations” as “space provided aboard a vessel of an ocean common carrier for laden containers being imported to, or exported from, the United States.” Other terms, such as “refusal to deal or negotiate,” don’t lend themselves “to a general definition and instead must be evaluated on a case-by-case basis,” FMC said.