FMC Updates Rules for Service Contract and NVOCC Service Arrangements

A final rule adopted by the Federal Maritime Commission (FMC) will update the requirements for amendments to service contracts (SC) and NVOCC service arrangements (NSAs). This final rule in FMC Docket No. 16-05 makes a key change to FMC's filing and implementation regulations for amendments to service contracts and NSAs; effective May 5, 2017 the regulation as provided in Chapter 46 of the U.S. Code of Federal Regulations (46 CFR) will be revised to read:

46 CFR Part 530.14 Implementation
(a) Generally. Performance under an original service contract may not begin before the day it is effective and filed with the Commission. Performance under a service contract amendment may not begin until the day it is effective, provided that the amendment is filed with the Commission no later than thirty (30) calendar days after the effective date.

This revised wording, as shown here in italics, is limited to amendments to service contracts. It does not apply to original (initial) service contracts. This update to FMC's regulation will allow carriers and shippers to agree in writing to amendments to existing service contracts, and implement these upon agreement, and then file the amendment with FMC within 30 days. This will enable carries to streamline the current process for SC amendments. However, this does not change the filing and implementation requirements for original (initial) service contracts, which must continue to be signed by carriers and shippers and filed with FMC prior to any cargo movement. For NVOCC service arrangements (NSAs), an identical update to the regulations, as provided in 46 CFR Part 531.11, will also be effective May 5, 2017.

The final rule in Docket 16-05 will also revise the regulations that govern the correction of service contracts and NSAs by extending the time limits allowed for these. Under FMC's current regulations, requests for corrections to SCs and NSAs which have a retroactive effect must be submitted within forty-five (45) of filing with the Commission; this will be revised to one-hundred eighty (180) days. Correction requests will continue to require a USD 95 service fee and detailed documentation from both the carrier and shipper. The current regulations also allow for the correction of electronic transmission errors with forty-eight (48) hours of the SC or NSA filing. This option will be revised to allow for filing of corrected transmissions within thirty (30) days of the date and time of receipt recorded in FMC's SERVCON database. This "corrected transmission" or "CT" option is allowed only for purely technical electronic transmission errors or data conversion errors, which occur in transmitting service contracts or NSAs.

Under Docket 16-05, FMC considered other changes to its regulation of service contracts and NSAs, but decided not to proceed with these at this time. Changes that were not adopted include the addition of a definition of "affiliate" to the regulations, and a change to requirement for the publication of the essential terms of service contracts and NSAs, and an expansion of the list of commodities that are exempt from the FMC tariff publication and service contract filing requirements. The Commission concluded "opening a dialogue on whether to expand the exempt commodity list could significantly delay this rulemaking." Docket No. 16-05 is the first comprehensive review of the FMC's service contract regulations since May 1999.