January, 1997   Oakland, California

SIGNALS™ provides detailed information on the regulations and activities of the US Federal Maritime Commission (FMC), and related developments in the ocean freight industry.

Anti-Rebating Certification for 1997/1998 - Due December 31, 1996
FMC Increases Civil Penalties - Docket No. 96-17
Bureau of Enforcement Activity, Nov '96 - Jan '97 - 2 items this issue
FMC Personnel News - Bob Bourgoin and Newton Frank retire

Surface Transportation Board To Update Tariff Filing Requirements
Japanese Carriers Threatened with FMC Fines
- Docket 96-20
FMC Stalls TSA Petition to Reactivate Asia-USA Capacity Management Plan
Shanghai Shipping Exchange Requires Tariff Filing
105th US Congress Convenes, Transportation Committees Formed

Anti-Rebating Certifications for 1997/1998 - Due December 31, 1996/

The Shipping Act of 1984 requires the Chief Executive Officer of each carrier and forwarder subject to the FMC's jurisdiction to certify his or her firm's compliance with the Act's prohibition on rebating. The FMC enforces this requirement strictly. Carriers who fail to file it timely risk tariff cancellation. Any ocean freight forwarder who fails to file it timely risks cancellation of its FMC license.

If your company has not completed the Certification, please do so immediately. DPI clients should fax their Certifications to us here at DPI, then mail the notarized original to us. We will present it to the FMC under our cover letter. If your organization is not a DPI client, we will still be happy to fax you a copy of the Certification form, and answer any questions about how to complete the Certification. The penalties for failure to file Certifications on Rebating are tariff cancellation and a fine. During February the FMC will begin the legal process to enforce these penalties.

FMC Increases Civil Penalties - Docket No. 96-17

By this docket the FMC increased by 10% the dollar amounts of fines it assesses against carriers and other parties who after due process of law are found in violation of the Shipping Act of 1984, Merchant Marine Act of 1920, or other related statues. The Federal Civil Penalties Inflation Act of 1990, as amended by the Debt Collection Act of 1996, requires the inflation adjustment of civil monetary penalties (e.g. fines) to ensure that they continue to maintain their deterrent value.

The FMC fine for violations of the Shipping Act of 1984 is now $5,500. per violation, unless the violation is proven to have been "knowing and willful," in which case the fine is now $27,500. Carrier's found operating after tariff suspension are now subject to a fine of $55,000. The fine for failure to file the required Anti-Rebating Certification is now $5,500. The penalty for creating "conditions unfavorable to the trade" is now set at $1,100,000.
Bureau of Enforcement Activity, Nov'96 - Jan'97 - 2 items this issue

The FMC Bureau of Enforcement's Fact Finding Investigation No. 22 continues to result in docketed proceedings, settlements and orders. This investigation focuses on the practices of common carriers and other persons with respect to untariffed transportation activity and the possible payment of rebates and any other devices or means of providing, or allowing persons to obtain, transportation at less or different compensation than the rates and charges shown in applicable tariffs and service contracts.

Item 1 - Five Consolidators Agree to Settlements Totaling $97,500.

In a press release on January 10, 1997, the FMC announced it reached negotiated cash settlements with five (5) ocean cargo consolidators. Galaxy Trading Inc. and Overcom Trade Inc., both of Miami, FL, agreed to settlements of $15,000. and $20,000., respectively. Schenker International Inc., of Freeport, NY settled for $20,000. The FMC alleged these firms shipped automobiles to South America under service contracts which did not apply to automobiles. Additionally, FMC announced a settlement of $22,500. with Blue Eagle Consolidation Services GmbH of Mainz, Germany, in a case where FMC alleged Blue Eagle collected rates and charges in excess of those on file in its FMC tariff. Ocean Concord USA Inc. of Long Beach, CA agreed to pay FMC $20,000. to settle a case involving cargoes FMC alleged were improperly described on bills of lading. In agreeing to the settlements, none of the above companies admitted violating US shipping law.

Item 2 - Docket No. 96-19, Comm-Sino Ltd. - Possible Violations of the Shipping Act of 1984

Evidence obtained by the FMC Bureau of Enforcement revealed Comm-Sino Ltd., a Hong Kong based NVOCC, with the assistance of its affiliate Goldline Ltd., intentionally misdescribed commodities on at least 13 shipments from Hong Kong to Miami and other locations in Florida. Shipments were carried by Maersk Line and Sea-Land Service between December 1995 and April 1996. Additionally, the rates assessed and collected by Comm-Sino and its U.S. agents for shipments where it acted as an NVOCC did not reflect the rates set forth in Comm-Sino's FMC tariff. Under Docket 96-19, a formal investigation and public hearing was ordered to determine whether Comm-Sino violated the Shipping Act. In the event such violations are found, the Commission will determine penalties to be assessed, and determine if the tariff of Comm-Sino should be suspended. The decision of the FMC Administrative Law Judge shall be issued by Oct. 27, 1997.

FMC Personnel News - Bob Bourgoin and Newton Frank retire

Robert D. Bourgoin, long time General Counsel at the Federal Maritime Commission, retired earlier this month after 32 years of service in FMC various posts. He has been replaced by Thomas Panebianco. FMC Chairman Harold Creel said "Bob Bourgoin's departure is a great loss for the FMC. We will sorely miss his expertise and insights, his legal acumen and sound judgement." The new General Counsel, Tom Panebianco, is former criminal prosecutor. Since joining the FMC in 1978 he has served as counsel to a number of FMC Commissions, and was the senior attorney in the Office of General Counsel. Chairman Creel called Panebianco "an excellent lawyer and administrator."

Without the fanfare accorded other retirees, Newton Frank, Deputy Chief of the FMC's Office of Tariffs quietly retired on January 3, 1997. Mr. Frank served the Commission for over 30 years. No replacement has been announced. Newton Frank was regarded by many as the most reasonable and sensible manager on the staff of the Office of Tariffs. He will be missed by Distribution-Publications, and by other tariff publishers and filers who always found him a pleasure to work with.

FMC Stalls TSA Petition to Reactivate Asia-USA Capacity Management Plan

The FMC has advised the TransPacific Stabilization Agreement (TSA) its members must provide more and better information before it will approve the TSA's request to reactivate its capacity management program. The program, which allows the 15 TSA member carriers to withhold container vessel space from the market in the eastbound Asia-USA trade, was suspended in mid-1995. TSA members sought to reinstate the program in order to prevent further reductions of freight rates in the trade. Rates have dropped between 20% and 50% over the past year. TSA members, which include all members of the Asia North America Rate Agreement (ANERA) and leading outsiders, hold a combined market share of about 85% in the trade. The US Shipping Act allows TSA members to meet and discuss freight rates, and reach voluntary agreements on rates, charges and services. FMC Chairman Harold Creel said he has "very serious concerns about the adding capacity controls to TSA's already potent mix of rate authority and high market share." If the TSA can satisfy FMC's information requirements it will have to wait an additional 45 days before it can reinstate capacity controls.

Japanese Carriers Threatened with FMC Fines - Docket 96-20

After a year long investigation into port restrictions and requirements in the US/Japan trade the FMC issued Docket 96-20 on November 6, 1996. This controversial docket alleges the Government of Japan has created conditions unfavorable to shipping in the trade, by discriminating against US carriers who wish to obtain licenses to operate stevedoring and terminal operations, and by sanctioning the "prior consultation" requirements of the Japan Harbor Transportation Association (JHTA).

In response to these apparent unfavorable conditions, the FMC has proposed the imposition of countervailing sanctions, pursuant to section 19(1) (b) of the Merchant Marine Act of 1920. Unless the Government of Japan affords US carriers relief by allowing them to obtain licenses to establish stevedoring and terminal operating services, as Japanese carriers are permitted to do in the United States, the FMC plans to impose fines on the three (3) largest Japanese container vessel operators, NYK Line, K-Line and Mitsui OSK Lines, $100,000. each time one of their vessels enters a US port from any foreign port.

At this writing, the comment period for this docket is completed, and the FMC could impose the sanctions as any time. Comments urging the FMC to delay or abandon its plans to fine the Japanese carriers were received from the Port of Portland, Oregon, the National Industrial Traffic League, the American Association of Exporters and Importers, and the Japanese carriers, who argued that the port practices are beyond their control. American President Lines and Sea-Land Service strongly support the proposed sanctions. Discussions between the FMC and representatives of Japan's Maritime Transport Bureau took place in Washington January 6-7, but did not reach a resolution. In a published report, FMC Chairman Harold Creel said "I was hopeful there would be more progress than there was." Chairman Creel also noted "we're rethinking the level of the sanctions." The FMC has the legal authority to limit sailings, suspend tariffs and/or agreements, and impose fines of upto $1 million per voyage.

Surface Transportation Board To Update Tariff Filing Requirements

The Surface Transportation Board (STB) of the Department of Transportation (DOT), which regulates water carriers in the US domestic off-shore trades, has issued a proposed rule making which will update its tariff filing regulations. Many regulations inherited by the STB from the Interstate Commerce Commission (ICC) need updating. These include the tariff filing regulations found in 49 CFR part 1312. The STB proposes to remove provisions no longer applicable, and "to expand part 1312 to embrace tariffs for port-to-port water movements in the non-contiguous domestic trade." The STB has accepted port-to-port and intermodal tariffs filed through the FMC's ATFI system since October 1996.
Shanghai Shipping Exchange Requires Tariff Filing

Regulations issued in late 1996 by the Transport Ministry of the People's Republic of China which require ocean carriers operating liner services between Chinese Ports and Worldwide Ports to file tariffs in hard copy format with the Shanghai Shipping Exchange are now in effect. At the present time, cargoes moving to and from the USA are exempt from the tariff filing requirement. The purpose of the filing requirement is to enable the Transport Ministry to more closely monitor freight rates. The Ministry has expressed concern about declining freight rates. The new Chinese regulations empower it to accept or reject tariff filings, however, there are as yet no reports of any rejections.

105th US Congress Convenes, Transportation Committees Formed

New faces in the US Congress have changed the make-up of the committees which oversee legislation on maritime affairs, and the FMC's annual budget. The House sub-committee on Coast Guard and Maritime Transport is now chaired by Rep. Wayne Gilchrest (R-MD), who replaces Rep. Howard Coble (R-NC). Rep. Coble left his post for an assignment on the House Judiciary Committee. The full House committee on Transportation and Infrastructure of the 105th Congress is comprised of 36 Republican and 30 Democratic members. Representative Bud Shuster (R-PA) is again Chairman. Rep. James Oberstar (D-MN) is the ranking Democrat on the full House committee.

In the US Senate, the defeat of Senator Larry Pressler (R-SD) in the November 1996 elections elevated Sen. John McCain (R-AZ) to the chairmanship of the important Senate Commerce, Science and Transportation Committee. He is joined by 10 Republican and 9 Democratic members, including Senate Majority Leader Trent Lott (R-MS), and ranking minority member Ernest Hollings (D-SC). Senators from several port states hold committee posts, including Sen. John Breaux (D-LA), Sen. Kay Bailey Hutchison (R-TX), Sen. Ted Stevens (R-AK), Sen. Slade Gorton (R-WA), Sen. Ron Wyden (D- OR), and Sen. Daniel Inouye (D-HI).

Will one or more of the above legislators introduce an Ocean Shipping Reform Act of 1997 or 1998, similar to those which failed to win approval in the 104th Congress? Senator McCain has been an advocate of deregulation for other industries, but his views on maritime affairs are unknown. Senator Lott has shown a keen interest in maritime affairs, and was responsive to the concerns of opponents of the failed Ocean Shipping Reform Act of 1995. We will keep you posted on legislative developments.

SIGNALS™ is provided as a service to its customers by Distribution-Publications, Inc. © 1999. All rights reserved.

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The information contained herein is obtained from reliable sources. It is subject to change at any time, however, depending on changes in laws and regulations. While we continually attempt to monitor this information, we do not guarantee its accuracy and are not responsible for any damages suffered by any party in reliance on it.

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SIGNALS™ the newsletter of Distribution-Publications, Inc.
Vol. 1, No. 2, January 24, 1997 ODY>