A recent amendment to the Shipping Act and FMC regulations has significantly increased FMC’s responsibility to monitor potential anti-competitive behavior by ocean carriers and marine terminal operators. The Frank LoBiondo Coast Guard Authorization Act of 2018 (Senate Bill S.140), which also bears the short title Federal Maritime Commission Authorization Act of 2017, provides FMC with increased funding for fiscal years 2018 and 2019 and makes several changes to the text of the Shipping Act and to FMC regulations as provided in the U.S. Code of Federal Regulations (46 CFR).
Several of the key changes made by S. 140 are focused on harbor services, including berthing and bunkering of vessels, loading and unloading of cargo from vessels, pilotage and towing services. A new definition of “covered services” has been added to Section 40102 of the Shipping Act to which prohibits carrier alliances and agreements from negotiating as a group with harbor service providers for vessel berthing, bunkering of vessels, cargo loading/vessels, pilotage and towing services. This change is expected to help harbor service providers who complained to the FMC and Congress that carrier alliances and agreements were attempting to negotiate for their services in an anti-competitive manner. The FMC has also now gained increased authority to require ocean carriers and marine terminal operators (MTOs) to submit reports and data. S.140 also includes new requirement for the Commission to provide a formal report and analysis of the impacts on competition for the purchase of these covered harbor services by carrier alliances “including a summary of actions, including corrective actions, taken by the Commission to promote such competition.”
Another important change made by S.140 prohibits ocean carriers who participate in vessel sharing agreements from participating simultaneously in a rate discussion agreement in the same trade lane if FMC determines the overlapping agreements will cause an unreasonable reduction in competition or an unreasonable increase transportation costs to shippers.
The FMC licensing and tariff requirements for ocean transportation intermediaries (OTIs) are amended by S.140 in two areas. Section 41104 of the Shipping Act is amended to prohibit carriers from “knowingly and willfully accept cargo from or transport cargo for the account of a non-vessel-operating-common carrier that does not have a tariff as required” by FMC regulations. Section 40902 is amended to specify that no person may “advertise” or “hold oneself out” as an OTI unless the person holds a valid FMC license. This section is also amended to make it clear that a licensed OTI may use a “disclosed agent” who is not licensed. The addition of the word “disclosed” is significant; it means an unlicensed person or company who provides OTI services in the USA and fails to clearly disclose the name of the licensed OTI it represents is violating the Shipping Act.
Under the sub-heading “Transparency” S.140 also includes a new requirement for the FMC to begin issuing biannual reports to Congress that that describe the Commission’s progress toward addressing the issues raised in each unfinished regulatory proceeding. The rules for meetings of the FMC Commissioners are also changed by S.140; a new section is added to the regulations on nonpublic collaborative discussions of the Commissioners which for the first time requires all non-public meetings to include at least one Commissioner from each political party. Prior to the recent re-appointment of Commissioner Daniel Maffei, the FMC had only two Commissioners, both of whom are registered Republicans.
In addition to increasing FMC’s authority S.140 also mentions two other U.S. federal agencies: S.140 adds a new requirement for the Comptroller General of the United States to conduct a study that examines the immediate aftermath of a major ocean carrier bankruptcy and its impact through the supply chain. The Comptroller General is the head of the U.S. Government Accountability Office (GAO), which is an independent, nonpartisan agency that works for Congress. S. 140 also states that nothing in the Shipping Act “shall be construed to limit the authority of the Department of Justice regarding antitrust matters.”