FMC proposes rule to ease NSA restrictions on shippers’ associations
The U.S. Federal Maritime Commission said Wednesday it will propose a rulemaking to lift restrictions on shippers’ associations to enter service arrangements with non-vessel-operating common carriers.
The FMC’s NSA regulation allows NVOs for the first time to engage in contracting practices similar to those already used for the past five years by vessel-operating common carriers under the 1998 Ocean Shipping Reform Act.
The five-person commission unanimously approved going forward with the proposed rulemaking, which was published Wednesday on the FMC Web site at http://www.fmc.gov/Dockets/05-05%20proposed%20rule.htm. Comments are due to the agency by Aug. 23.
“We’ve come a long way on this NSA issue,” said FMC Commissioner Harold J. Creel Jr. “We’ve said before that we would address this NSA issue at the right time, and the right time is now.”
FMC Commissioner Joseph Brennan, who was the lone vote against the initial NSA rule “because it didn’t go far enough,” approved going forward with the proposed rulemaking. “I vote ‘yes’ today,” he said.
FMC Chairman Steven R. Blust said NSAs “provide flexibility that NVOs deserve” and open up more services to shippers. However, he called for the need to ensure regulatory compliance with the Shipping Act.
When the FMC implemented the initial NSA rule on Jan. 19, it excluded shippers’ associations with NVO members and NVOs in general from entering into these arrangements with NVOs.
The FMC had been closely watching the case United States vs. Gosselin World Wide Moving and The Pasha Group, which was pending in the U.S. Court of Appeals for the Fourth Circuit. The case involved price fixing in the movement of military household goods from Europe to the United States. The companies admitted to wrongdoing but said they had antitrust immunity under the 1984 Shipping Act. The Court of Appeals reversed the lower court’s decision in mid-June and solved the unintended antitrust immunity problem.
FMC General Counsel Amy Larson said at the time of the initial NSA rulemaking the commission was “not on sure footing” to allow shippers’ associations with NVO members to enter NSAs. The Fourth Circuit Court of Appeals decision on the Gosselin case now allows the FMC to move forward with the latest proposed rulemaking, she said.
The commission also approved a “notice of inquiry” (NOI) that would consider how NVOs will jointly manage and offer NSAs to the shipping public. The NOI is expected to be published in the Federal Register by the end of August.
Representatives for both shipper groups and NVOs that supported the initial NSA rule applauded Wednesday’s proposed rulemaking.
“Clearly it’s a move in the right direction,” said Peter Gatti, executive vice president for the National Industrial Transportation League, in an interview. “It further opens service options to shippers.”
“We’re getting there,” added Richard Gluck, counsel for the Transportation Intermediaries Association, the U.S. affiliate of the International Federation of Freight Forwarders Associations (FIATA). “We’d like to see maximum flexibility.”
“Hopefully this will resolve the shippers’ associations’ concerns and the industry will be able to fully embrace NSAs,” said Ashley W. Craig, attorney with Venable in Washington, a law firm which represents several large NVOs.
In February, two shippers’ associations — the American Institute for Shippers’ Associations and the International Shippers’ Association — filed petitions with the U.S. Court of Appeals for the District of Columbia Circuit to review the FMC’s decision to restrict shippers’ associations from entering NSAs.
The shippers’ associations said they look forward to reviewing the proposed rulemaking.
“We’re certainly pleased with what the commission has done,” said Ron N. Cobert, general counsel for AISA, in a telephone interview. “We can’t make a decision at this point on (whether to withdraw) our court petition until we analyze the commission’s notice of proposed rulemaking. But it looks like it may resolve the matter.”
“I look forward to receiving comments and suggestions on both the proposed rule and the notice of inquiry, so that the commission has the benefit of industry participating in this process,” Blust said. “We will continue our judicious approach in refining the scope of NSAs to ensure that we do so in a manner which will benefit all of our stakeholders and be consistent with the Shipping Act.”