June 7, 2018

FMC Provides Regulatory Relief and Flexibility

Holland & Knight Transportation Alert
J. Michael Cavanaugh | Barbara Efraim

Leer en español: Comisión Federal Marítima de Estados Unidos Provee Alivio y Flexibilidad a Consolidadores de Carga Marítima

On June 6, 2018, the Federal Maritime Commission (FMC) voted unanimously (3-0) to approve significant changes that will relieve regulatory burdens on Ocean Transportation Intermediaries (OTI) and simplify requirements for using non-vessel-operating common carrier (NVOCC) Negotiated Rate Arrangements (NRAs) and NVOCC Service Arrangements (NSAs).

The vote was the final step of an administrative action that began in April 2015, when the National Customs Brokers and Forwarders Association of America (NCBFAA) filed its petition. Specifically, the NCBFAA requested that the FMC allow NRAs to include economic terms beyond rates and that they be able to be modified at any time upon agreement by NVOCC and a customer. Additionally, the NCBFAA petitioned to eliminate the filing and essential  terms publications requirement of NSAs.  

The FMC's unanimous vote grants the NCBFAA's petition. As a result, NVOCCs and their customers are free to negotiate business arrangements in the interest of both parties. The FMC will publish the Final Rule concerning NRAs and NSAs early this summer.

Acting Chairman Michael A. Khouri expressed the FMC's commitment to openly consider well-founded petitions that seek exemptions from Shipping Act requirements, as was the case with the approval of this petition.

Commissioner Daniel B. Maffei voted in favor of granting the petition, despite voicing support for maximized review and reserving final judgment concerning the implementation of these changes.

Commissioner Rebecca F. Dye also emphasized the competitive nature of the Shipping Act and stated, "The changes that will be made to NRAs and NSAs will remove impediments on the ability of NVOCCs and their customers to negotiate a single business arrangement that serves the interests of both parties. The Final Rule will provide industry with the flexibility and freedom to fully meet the business needs of their customers, not the government—as should be the case."

The Commission's order granting the petition has not yet been published, but the docket can be located here.

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