May 12, 2020

FMC Provides Temporary Relief from Some Vessel Operator Service Contract Filing Requirements

Holland & Knight Alert
J. Michael Cavanaugh | Jameson B. Rice

The Federal Maritime Commission (FMC) has issued a Final Rule allowing the Commission more flexibility in issuing exemptions with respect to service contracts filed by vessel operating common carriers (VOCCs). 85 Fed. Reg. 23227 (April 27, 2020). The Shipping Act requires notice and an opportunity for a hearing for exemptions from the requirements of the Act. The FMC's regulations required the same for an exemption from its regulations, even though this was not required by statute. In light of COVID-19 concerns, the Commission has determined that in some instances the need to act quickly may be more prudent than affording notice and an opportunity for a hearing when granting an exemption. Thus, the Commission has revised 46 CFR 530.13 to allow for an exemption to the service contract requirements without notice or a hearing.

To make the final rule effective immediately, the Commission determined that the "final rule" was not actually a "rule" at all, at least not as defined by the Congressional Review Act. Specifically, it determined that the final rule does "not substantially affect the rights or obligations of nonagency parties." As such, review by Congress was not required. The FMC also determined that the final rule is a "rule of agency organization, procedure, or practice" and thus did not require notice and comment under the Administrative Procedures Act.

Wasting no time, also on April 27, 2020, the FMC issued an order granting a temporary exemption from the requirement that VOCCs file original service contracts with the Commission "before any cargo moves pursuant to that service contract." 46 CFR 530.8(a)(1); see also 46 CFR 530.8(b), 46 CFR 530.3(i) and 46 CFR 530.14(a). Instead, VOCCs will be permitted to file service contracts within 30 days after the effective date, which is consistent with permitted practices for service contract amendments. The temporary order will be in effect through the end of the year.

No contract relief was granted for non-vessel operating common carriers (NVOCCs) since, as of Aug. 22, 2018, they are no longer required to file service arrangements with the Commission. (See Holland & Knight's previous alert, "FMC Issues Final Rules for NVOCC Service and Rate Agreements," July 25, 2018.)

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Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.

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