FMC Says NVOCC Tariff Requirements Stay in Place Until Rules Changed (DOJ Supports Exemption)

FMC has also issued a notice containing comments submitted by the Justice Department in support of NCBFAA's petition.

(On February 18, 2010, FMC voted to issue a rulemaking to relieve NVOCCs from certain Shipping Act of 1984 tariff publishing requirements, as petitioned. See ITT's Online Archives or 02/19/10 news, 10021905, for BP summary.)

FMC Says NVOCC Tariff Requirements Stay in Place Until Rulemaking Finalized

FMC clarifies that even though it has voted to initiate a rulemaking to relieve NVOCCs from certain tariff filing requirements, until the exemption is published in the Federal Register in its final form and becomes effective, NVOCCs must continue to comply with the Commission's regulations as currently stated.

This means that changes to the NVOCC tariff publication and adherence requirements will occur only after FMC has published a proposed rule, considered public comments on that proposal, and published a final rule, including an announced effective date.

FMC issued this clarification as it has received indications that some NVOCCs may have begun to implement such a change in their business operations.

Justice Supports NCBFAA Petition, Says NVOCC Tariff Publishing Unjustified

The Justice Department, in comments supporting the NCBFAA petition, states that NVOCC tariff publishing requirements impose significant costs that limit competition, resulting in higher shipping rates. It believes that these costs far outweigh any justification.

According to the Justice Department, tariff publishing requirements place a particularly high burden on NVOCCs due to the nature of their business, as they typically handle small to mid-size shipments on a spot basis rather than through long-term contracts.

For example, shippers routinely contact NVOCCs to negotiate rate quotes to move a particular shipment at a specific time. NVOCCs in turn deal with multiple VOCCs to provide the actual transportation, and the VOCCs frequently adjust rates and surcharges they impose on the NVOCCs. As a result, NVOCCs typically tailor their charged rates to the specific circumstances of each shipment and, accordingly, must make frequent tariff filings and adjustments to meet the regulatory requirements.

The Justice Department states it has long supported exempting NVOCCs from all tariff publishing requirements to produce the greatest competitive benefits, and that granting the relief requested in the Petition would represent a meaningful step in that direction.

¹The Shipping Act of 1984 requires that each common carrier, including NVOCCs, publish tariffs showing all ''rates, charges, classifications, rules, and practices between all points or ports.'' Tariffs must be published for all rates that are charged shippers regardless of whether the particular rate has been individually negotiated and, in addition to detailing the rates to be charged, must provide information about the places between which cargo will be carried, each classification of cargo in use, any rules that affect the total of the rates or applicable charges, and samples of contracts and bills of lading. The Act provides for substantial fines for each instance of noncompliance.

²In July 2008, NCBFAA petitioned for an exemption from the provisions of the Shipping Act of 1984 that require NVOCCs to publish and/or adhere to rate tariffs for ocean transportation in those instances where they have individually negotiated rates with their shipping customers and memorialized those rates in writing. (See ITT's Online Archives or 08/11/08 news, 08081125, for BP summary.)

FMC notice (FR Pub 02/23/10) available at http://edocket.access.gpo.gov/2010/pdf/2010-3325.pdf

FMC clarification (posted 02/23/10) available at http://www.fmc.gov/speeches/newsrelease.asp?SPEECH_ID=306