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FEDERAL MARITIME COMMISSION

Western Area Power Administration

CFR Citation: 46 CFR Parts 501 and 535

Docket ID: [Docket No. 03-15]

RIN ID: RIN 3072-AC28

NOTICE: Part II

DOCUMENT ACTION: Notice of proposed rulemaking.

SUBJECT CATEGORY: Ocean Common Carrier and Marine Terminal Operator Agreements Subject to the Shipping Act of 1984

DATES: Submit an original and 15 copies of comments (paper), or e-mail comments as an attachment in WordPerfect 10, Microsoft Word 2000, or earlier versions of these applications, no later than January 30, 2004. Requests for meetings to make oral presentations to individual Commissioners must be received, and the meetings completed, by this date as well.

DOCUMENT SUMMARY: The Federal Maritime Commission proposes to amend its regulations governing agreements among ocean common carriers and marine terminal operators in response to changes in the shipping industry since the enactment of the Ocean Shipping Reform Act of 1998 (``OSRA''), which amended the Shipping Act of 1984 (``Shipping Act''). The Commission proposes to delegate additional authority to the Director of the Commission's Bureau of Trade Analysis (46 CFR part 501). The Commission also proposes to update its rules relating to standards and exceptions for information that a filed agreement must contain and to revise its regulations pertaining to transshipment agreements (46 CFR part 535). Further, the Commission proposes to modify its Information Form and Monitoring Reports regulations and appendices (46 CFR part 535) to reflect changes in the amount and kind of data the Commission deems necessary to monitor carriers' use of their antitrust immunity for filed agreements. Finally, the Commission proposes to revise its regulations regarding the filing of agreement minutes (46 CFR part 535). The revision would reduce inadequate inclusion or coverage of substantive issues and insufficient levels of detail to describe carrier discussions, clarify regulations on meetings for which minutes are required to be filed, and identify and provide for timely Commission access to materials used or discussed in such meetings.

SUMMARY: Federal Maritime Commission,

SUPPLEMENTAL INFORMATION

Outline
I. Delegations to the Director, Bureau of Trade Analysis, 46 CFR 501.26.
II. The Content of Ocean Common Carrier and Marine Terminal Operator Agreements Subject to the Shipping Act of 1984, 46 CFR part 535, subparts A, B, C, and D.

A. BackgroundDocket No. 9913

1. Introduction

2. Summary of the Comments

B. The Proposed Rule

1. Proposed Changes to Address Concerns for Certainty

2. Proposed Changes to Address Concerns for Future Commercial Flexibility

a. Requirement to File Every Agreement

b. Modifications to Effective Agreements

c. Exemptions

i. Low Market Share Exemption and Definition of Capacity Rationalization

ii. Revision of the Present Exemptions for Nonsubstantive Agreements and Amendments, Miscellaneous Modifications (proposed Sec. Sec. 535.302 and 535.309), and Public Notice of Filings (proposed Sec. 535.602)

iii. Transshipment Agreements

3. Confidentiality of Sensitive Commercial Information in Filed Agreements
III. Information Forms and Monitoring Reports, 46 CFR part 535, subparts E and G.

A. Introduction

B. Background

1. The Current Regulations

2. Changes in Carrier Agreements since OSRA

C. The Proposed Rule

1. Information Form Regulations

2. Information Form a. Section I b. Section II c. Section III d.

Section IV

i. Market Share

ii. Total Average Revenue

iii. Cargo Volume and Revenue Results for the Top 10 Agreement Wide Commodities

iv. Vessel Capacity and Utilization

v. Port Service

e. Section V

3. Monitoring Report Regulations

4. Monitoring Report

a. Section I

b. Section II

c. Section III

D. Implementation of the Proposed Information Form and Monitoring Report Regulations
IV. Minutes, 46 CFR part 535, subpart G.

A. Introduction

B. Discussion of the components of the current minutes rules and the proposed changes

1. Agreements Required to File Minutes

2. Definition of Meeting

3. Content of Minutes

4. Serial Numbers

5. Filing Deadlines
V. Miscellaneous Changes to 46 CFR part 535
VI. Oral Presentations
VII. Statutory Reviews and Request for Comments
I. Delegations to the Director, Bureau of Trade Analysis, 46 CFR 501.26

The proposed rule amends Sec. 501.26 to account for modifications in the delegations of the Commission's authority to the Director, Bureau of Trade Analysis (``BTA'') in connection with the proposed modifications in 46 CFR part 535. Specifically, sections 501.26(c) and (d) are being revised to match the recoded section numbers for applications for waivers to the reporting requirements for carrier agreements in part 535 of the proposed rule. Sections 501.26(o) and (p) are being added to provide new delegations of authority to the Director of BTA pertaining to the proposed Monitoring Report regulations for carrier agreements in part 535 of the proposed rule.
II. The Content of Ocean Common Carrier and Marine Terminal Operator Agreements Subject to the Shipping Act of 1984, 46 CFR Part 535, Subparts A, B, C, and D
A. BackgroundDocket No. 9913

1. Introduction

The Shipping Act of 1984, 46 U.S.C. app. Sec. Sec. 17011719 (``Shipping Act''), requires, at section 5(a), the filing of certain types of commercial agreements by and among ocean common carriers and marine terminal operators with the Federal Maritime Commission (``Commission'' or ``FMC''). 46 U.S.C. app. Sec. 1704(a). The Commission's current regulations implementing this provision were first adopted by the Commission in that same year. Docket Nos. 8426 and 84 32, Rules Governing Agreements by Ocean Common Carriers and Other Persons Subject to the Shipping Act of 1984, 22 S.R.R. 1453, 49 FR 45320 (final rule) (November 15, 1984) (``Docket Nos. 8426 and 8432 (final rule)''). The Commission most recently amended its agreement rules in 1999, in response to changes made to the Shipping Act by the Ocean Shipping Reform Act of 1998, Public Law No.
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105258 (``OSRA''). Docket No. 9826, Ocean Common Carrier and Marine Terminal Operator Agreements Subject to the Shipping Act of 1984, 64 FR 11236, March 8, 1999, (``Docket No. 9826'').

Pursuant to changes mandated by OSRA, Docket No. 9826 eliminated most of the ``form and manner'' rules describing the procedural rules for filing these agreements, but left unchanged the substantive ``content'' requirements, which were not affected by OSRA. 64 FR 11238. Comments submitted in the course of Docket No. 9826 revealed concerns and uncertainties about the Commission's substantive requirements for agreements, and requested further clarifications, enhancements or new rules on agreements. In response to these concerns, the Commission initiated Docket No. 9913, The Content of Ocean Common Carrier and Marine Terminal Operator Agreements Subject to the Shipping Act of 1984, by the publication of a Notice of Inquiry (``NOI'') on August 3, 1999, requesting comment on the specific manner in which the Commission's agreement content rules should be updated or refined. 64 FR 42057.\1\ The Commission asked commenters to include concrete examples and to quantify their answers in response to the NOI. Id. \1\ Docket No. 9913, The Content of Ocean Common Carrier and Marine Terminal Operators Agreements Subject to the Shipping Act of 1984, has been discontinued by separate order. The instant proceeding, Docket No. 0315, Ocean Common Carrier and Marine Terminal Operator Agreements Subject to the Shipping Act of 1984, encompasses former Docket No. 9913 and expands it to cover additional matters. As indicated below, the five comments submitted to the Commission in Docket No. 9913 are incorporated by reference into the record of the instant proceeding and have been considered by the Commission.

The Commission received five comments in response to the NOI, all of which requested that the Commission's rules on content standards for agreement filings be updated or refined in a further rulemaking and identified three main concerns: certainty, flexibility, and confidentiality. These comments are summarized below.

2. Summary of the Comments

The Commission received comments from the National Industrial Transportation League (``NITL''), the Council of European & Japanese National Shipowners'' Associations (``CENSA''), the International Longshoreman's Association (``ILA'') P&O Nedlloyd, Ltd. (``PONL''), and the Ocean Carrier Working Group Agreement (``OCWGA'').\2\
\2\ Members of OCWGA at the time of this submission were: the Latin America Agreement; Israel Trade Conference; TransAtlantic Conference Agreement; Transpacific Stabilization Agreement; United States/AustraliaNew Zealand Association; United States/South Europe Conference; United States/Southern Africa Conference; Westbound Transpacific Stabilization Agreement; MediterraneanNorth Pacific Coast Freight Conference; A.P. MollerMaersk Line; Contship Containerlines, Ltd.; Crowley American Transport, Inc; Evergreen Marine Corporation (Taiwan) Ltd.; King Ocean Service de Venezuela, S.A.; SeaLand Service, Inc.; Star Shipping A/S; Tropical Shipping & Construction Company, Ltd.; Wallenius Wilhelmsen Lines AS; Zim Israel Navigation Company; and HapagLloyd Container Linie GmbH.

In addition to responses directed at particular questions posed by the Commission in the NOI, summarized below, there were some general comments in response to the Commission's initial inquiry. OCWGA recommends that the Commission revise the rules by affirmatively defining what must be included in the filed agreement, rather than enumerating what need not be filed. OCWGA at 11. It states that this approach would allow for incremental adjustments to the regulations and clarify any uncertainty in the rule. Id. at 1112.

OCWGA and PONL both assert that the Commission should determine the level of specificity it requires for such filings to be meaningful, and balance that need against the burden on filers. OCWGA at 19; PONL at 8. OCWGA suggests that the Commission seek to alleviate commercial harm arising from the disclosure of sensitive business information and the administrative costs associated with filing agreements so specific that they require constant amendments which also must be filed. OCWGA at 19.

A summary of comments addressed to the specific questions contained in the NOI follows. (a) The Commission asked whether the current filing exemption for routine operational or administrative matters should be eliminated, retained in its current form, or modified (NOI Question 1). Although the current regulations provide that filed agreements be ``the complete agreement among the parties and * * * specify in detail the substance of the understanding of the parties'' (46 CFR 535.407(a)), as summarized below, several comments generally remark that there are exceptions to this requirement. The comments cite the Commission's rules allowing ``permissive authority'' at 46 CFR 535.407(b) \3\ and the exemption from additional filing for interstitial implementation of routine operational or administrative matters at 46 CFR 407(c). OCWGA contends that the Commission has never required the parties to a filed agreement to actually exercise all the authority in an agreement. It also alleges that the Commission's proceedings in Docket No. 9707, Possible Unfiled Agreement between Hyundai Merchant Marine Co., Ltd. and Mediterranean Shipping Co., S.A., 28 S.R.R. 1428 (2000) and Docket No. 9708, Possible Unfiled Agreement Among A.P. MollerMaersk Line, P&O Nedlloyd Limited and SeaLand Service, Inc., 28 S.R.R. 1431 (2000) (``Docket No. 9708''), deviate from that position. OCWGA at 1213. OCWGA asserts that allowing permissive authority benefits both the Commission and the carriers because it allows the Commission to consider both the immediate and potential future effects of the agreement, while providing carriers essential operational and commercial flexibility. Id. at 13. OCWGA suggests that not allowing such permissive authority would be impossibly burdensome for both carriers and the Commission. Id.

\3\ That provision states:

Except as provided in paragraph (c) of this section, agreement clauses which contemplate a further agreement or give the parties authority to discuss and/or negotiate a further agreement, the terms of which are not fully set forth in the enabling agreement, will be permitted only if the enabling agreement indicates that any such further agreement cannot go into effect unless filed and effective under the Shipping Act and that interstitial implementation of routine operational or administrative matters is permitted without requiring further filings.

OCWGA gives four instances in which permissive authority could promote flexibility. Id. at 1417. First, with regard to the requirement that an agreement provide information as to the number of vessels and vessel capacity/slots it intends to utilize, OCWGA asserts it would be useful for the Commission to formalize the current policy that an agreement may set forth a maximum number (or range) of vessels and capacity, or maximum number of slots, that may be used without amendment to the agreement. Id. at 14.

Second, OCWGA states that the Commission's practice allowing agreements to describe their geographic scope in terms of port ranges rather than the specific ports served is beneficial because operational and commercial considerations may require diversions on short notice. Id. at 15. OCWGA further asserts that there is no regulatory purpose in requiring that an agreement name the specific ports it intends to serve rather than port ranges, because such information is provided to the Commission in the information forms and monitoring reports, and typically is also provided to the public through published sailing schedules. Id.

Third, OCWGA recommends that agreements continue to have the ability to contain permissive authority for their members to discuss and agree on joining
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other agreements, as the Commission would have notice of any action taken under such authority through a subsequent filing. Id. at 1516. OCWGA objects to any requirement that an amendment to the original agreement also be filed when the parties exercise permissive authority. It asserts that such a requirement would serve no legitimate regulatory purpose and would be duplicative. It notes that there are 25 effective agreements currently on file with the Commission which contain this authority. Id. at 16. Finally, OCWGA recommends that the Commission allow permissive authority to include operational agreements, such as slot or space charters.\4\
\4\ OCWGA's position on operational agreements generally is discussed below.

PONL and CENSA contend that the term, ``routine operational or administrative matters'' used in section 535.407(c), lacks clarity. PONL at 6; CENSA at 1. CENSA suggests that the Commission identify and define those aspects of agreements which are relevant to its initial review and subsequent monitoring responsibilities, and establish specific rules with respect to them. CENSA at 2. OCWGA, however, recommends that the existing exemption for ``routine operational or administrative matters'' be retained in its current form. OCWGA at 10.

PONL contends that the Commission's interpretations of the term ``interstitial implementation'' \5\ in Docket No. 9708 and Docket No. 9614, Compania Sud Americana de Vapores, S.A. v. InterAmerican Freight Conference, 28 S.R.R. 137 (1998) (``CSAV''), have made that term very unclear. PONL asserts that its attempts to use the term ``interstitial'' in agreements have met with objection from the Commission's Bureau of Trade Analysis Office of Agreements. PONL at 5. \5\ The terms ``interstitial implementation'' and ``routine operational or administrative matters'' are found in 46 CFR 535.407(c), which provides that:
[f]urther specific agreements or understandings which are established pursuant to express enabling authority in an agreement are considered interstitial implementation and are permitted without further filing under section 5 of the Act only if the further agreement concerns routine operational or administrative matters, including the establishment of tariff rates, rules and regulations.

PONL asserts that if the Commission considers a conference's implementation of its tariff rate agreement authority an ``interstitial implementation,'' as indicated in the example in 535.407(c), then it should similarly consider implementation of authority to agree on a joint approach to joining a conference to be a routine administrative matter and an interstitial implementation of such authority. Id. PONL further asserts that the implementation of rates, terms, and conditions by an agreement with space charter authority should also be considered interstitial. Id. PONL suggests that an agreement that, for example, includes the authority for its members to enter into space charters, as well as other authorities, can enter into a space charter without any additional filings, as contemplated by 46 CFR 535.407(b). PONL asserts that little purpose would be served by requiring the public filing of agreements that involve interstitial implementation of express enabling authority contained in a filed and effective agreement. Id. at 8. (b) The Commission posed the question, ``if parties were required to file every arrangement or understanding that came within the scope of section 4, would they be subject to commercial harm or burden?'' (NOI Question 2). Section 5(a) of the Shipping Act requires the filing of a ``true copy of every agreement.'' 46 U.S.C. app. Sec. 1704(a). The Commission's regulations currently require that the filed agreement be true, complete, detailed and specific. 46 CFR 535.103(g), 535.401(a)(1), 535.407(a). PONL, CENSA and OCWGA all assert that the Commission's requirement that the ``complete'' agreement be filed cannot be interpreted literally. PONL asserts that a literal reading would create an internal conflict between the Shipping Act's 45day waiting period imposed on agreements before they become effective, and the fact that tariff rate reductions may become effective immediately. PONL at 7. Similarly, OCWGA believes that the 45day waiting provision indicates that Congress did not intend to require every detail of coordinated carrier activity to be filed. OCWGA maintains that the Shipping Act's use of the phrase ``every agreement'' should not be construed literally or else it would be impossible to file every detail of joint or group arrangements. OCWGA at 8, 19. OCWGA asserts that imposing such a requirement on service contracting agreements would subject them to an enormous and repetitive filing burden (because the service contracts themselves are filed) and, in the case of contracts with confidentiality clauses, might violate the terms of the service contract itself and the Shipping Act. Id. at 21. OCWGA believes that at some level of specificity, ``agreements'' cease to have any relevance to the Commission's statutory duties. Id.

CENSA contends that the term ``complete'' is of little guidance to the industry. CENSA at 1. PONL objects to the current regulation's requirement that a ``true and complete'' agreement be filed, stating that the statutory requirement is only that a ``true copy'' of the agreement be filed. PONL at 2 (comparing section 5(a) of the Shipping Act with 46 CFR 535.407(a)). It notes that the Commission's jurisdiction may not cover the ``complete'' agreement if, for example, it involves trade between foreign ports; and states that based on the Commission's regulations, ``complete'' does not include ``routine operational or administrative matters.'' Id. at 23 (citing 46 CFR 535.407(c)).

PONL asserts that certain agreements, for example, cross space charters, vessel sharing, and alliance agreements, that are on their face subject to additional understandings have been accepted for filing and allowed to go into effect by the Commission. Id. at 3. It further asserts that, therefore, the Commission's jurisdictional limitations, its current regulations, and its past practice of not objecting to the filing of agreements using permissive authority phrases indicate that the term ``complete'' does not literally mean complete. Id. at 4.

NITL urges that only those carrier agreements which are likely to have a significant impact on competition in a given market continue to require ``complete'' filing with the Commission. NITL at 4. NITL asserts that the Commission and the public need to have the ability to read and understand the scope and terms of agreements that are likely to result in a reduction in competition or otherwise artificially influence the supply of and demand for ocean transportation service. Id. at 34. NITL opines that detailed and complete information filed by the carrier parties to such agreements is required. However, NITL cautions that the requirement for the filing of a complete agreement should not be interpreted so as to restrict useful operational flexibility, particularly in nonconference type settings such as space/slot charter and sailing agreements. Id.
(c) The Commission asked whether it should adopt different standards for agreement content for different types of agreements. (NOI Question 3). OCWGA points out that the Commission already distinguishes between conference and other types of agreements in 46 CFR 535.404, but warns that developing further general standards for different types of agreements may create more confusion. OCWGA at 22. With respect to alliances and space/vessel sharing agreements, which do not easily fit into fixed categories however, OCWGA suggests that the Commission clarify the filing requirements through guidance stated in functional terms, as opposed to
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the rules' current use of classification terms. Id. at 22. OCWGA suggests as an example, that the Commission's rules direct that each ``agreement that provides for the sharing of vessels or space on vessels shall state the maximum number and capacity of vessels that may be so employed.'' Id.

NITL believes that the level of detail for filings related to agreements that would not significantly alter competitive conditions in a given market should be relaxed. NITL at 5. CENSA simply urges that the Commission avoid unnecessary and burdensome requirements and provide carriers with a reasonable amount of operational flexibility. CENSA at 2.
(d) The Commission asked whether commenters could identify types of agreements currently filed which would be appropriate for exemption from filing under section 16 of the Shipping Act.\6\ (NOI Question 4). OCWGA, PONL and CENSA maintain that agreements with little or no competitive effect, agreements concerning operations, and slot charter agreements should all be exempt from the filing requirements of the Shipping Act. OCWGA asserts that agreements which typically have little or no competitive effect (such as those that do not authorize discussion or agreement on rates, vessel operating costs, shared vessel usage, service contracts, or capacity) should be completely exempt from the filing requirements of the Shipping Act. OCWGA at 23. OCWGA contends that this exemption would serve the dual purposes of defining the applicability of the term ``cooperative working arrangement'' found in section 4(a)(5) of the Shipping Act \7\ and providing certainty regarding the filing requirements. Id. It urges the Commission to retain the other existing exemptions. Id.
\6\ Section 16 provides, inter alia, that the Commission ``may exempt for the future any class of agreements * * * if it finds that the exemption will not result in substantial reduction in
competition or be detrimental to commerce.'' 46 U.S.C. app. Sec. 1715.
\7\ Section 4(a)(5) of the Shipping Act reads, ``This Act applies to agreements by or among ocean common carriers to(5) engage in exclusive, preferential, or cooperative working
arrangements among themselves or with one or more marine terminal operators * * * .'' 46 U.S.C. app. Sec. 1703(a)(5). The
Commission's regulations define a ``cooperative working
arrangement'' as an agreement which establishes exclusive, preferential, or cooperative working relationships which are subject to the Shipping Act of 1984, but which do not fall precisely within the arrangements of any specifically defined agreement. 46 CFR 535.104(i).

NITL suggests that the Commission consider further exemptions for other types of agreements that do not significantly affect competition. NITL at 6. NITL approves of the existing exemption from filing for interstitial implementation of routine operational or administrative matters found in section 535.407(c). Where full exemption for a certain type of agreement is not warranted, NITL believes that the Commission should consider a relaxation of other procedural requirements, such as the waiting period requirement. Id.

OCWGA observes that in late 1996 and early 1997, Commission staff began informally requiring space charter, slot charter, sailing and other forms of cooperative agreements among carriers (collectively referred to as ``slot charter agreements'') to contain a greater degree of detail than had been required at any time since 1984. OCWGA at 45. OCWGA contends that there is now considerable uncertainty stemming from recent Commission proceedings as to what must be set forth in such agreements. Id.

PONL suggests that the Commission adopt an exemption for simple space charter agreements where one carrier charters space to another, stating that this enhances, not reduces competition. PONL at 9. OCWGA opines that most slot charter agreements ``resemble a joint venture or partnership in which ongoing and extensive operational coordination is necessary to provide an efficient, competitive, and coordinated service.'' OCWGA at 56. OCWGA urges that the Commission resolve this uncertainty in the proposed rules bearing in mind such things as the purpose of agreement filing, what information is practical to include, the procedural requirements of the Shipping Act, and flexibility for the Commission and carriers to process amendments to agreements. Id. at 6.

OCWGA contends that the Shipping Act's replacement of the ``public interest'' standard (which required an affirmative showing of public benefit before an agreement could be approved) with the presumption that agreements are permissible, changed the Commission's need for certain information. Id. at 7. OCWGA states that, therefore, the information necessary to analyze whether an agreement is likely to result in an unreasonable increase in rates or unreasonable reduction in services is identifiable and limited to the nature of the coordinated activities, the identity and number of parties involved, and the trades in which the agreement will operate. Id. Beyond these basic points of information, OCWGA contends, there is a dispute over what should be filed. Id. at 78.

OCWGA further contends that operational arrangements arising from slot charter agreements that detail how the parties put into effect the authority set forth in the filed agreement should be exempted from filing, arguing the documents are ``nonstandard'' and not ``created to fulfill a regulatory purpose.'' Id. at 17. OCWGA also opines that filing operational arrangements arising from slot charter agreements would be unworkable, because of their excessive specificity, and impractical, because including such details would require the frequent filing of amendments. Id.
(e) The Commission asked whether the rates charged by one carrier to another for use of space and/or vessels should be exempt from filing or withheld from public disclosure. (NOI Question 5). PONL and OCWGA contend that for the last 15 years there has been a de facto exemption to the Shipping Act's filing requirements for slot charter costs. PONL at 9; OCWGA at 24. PONL states that requiring the filing and subsequent public disclosure of that information would harm carriers because other carriers would insist on getting the same rates, and competing carriers and shippers could use the price information in any further pricing and rate negotiation. PONL at 9. PONL believes that there would be no regulatory benefit to requiring that such rates be made public. Id. Similarly, OCWGA believes that these rates should be confidential and that the public has no legitimate interest in them. OCWGA at 24. OCWGA also maintains that such disclosure would be anticompetitive because it would ``circumscribe the ability of carriers to negotiate different rates with different carriers.'' Id.

CENSA also asserts that the ``industry needs some degree of confidentiality with respect to the commercial terms of their operational agreements.'' CENSA at 2. It claims that requiring carriers to disclose the amounts they pay for vessel space ``could prove to be anticompetitive and contrary to the objectives of OSRA.'' Id. (f) The Commission requested comments on whether public disclosure of filed agreements is useful to shippers, intermediaries, labor, non party carriers, marine terminal operators or other interested persons. (NOI Question 6). PONL and OCWGA state that beneficial shippers and ocean transportation intermediaries (``OTIs'') have shown little interest in filed agreements. PONL at 10; OCWGA at 24. OCWGA opines that on the rare occasions that shippers or OTIs do express such interest they usually request the information directly from the carrier or from the agreement rather than from the Commission.
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OCWGA at 24. PONL suggests that the Commission answer this question by reviewing its records pertaining to requests for copies of agreements and comments on filed agreements. PONL at 10.

ILA would like certain matters in agreement filings to be made public and for agreements filed with the Commission (and noticed in the Federal Register) to document the origins, destinations, and points of entry and departure of cargo accurately and in an easily understandable manner that will not handicap it in administering and enforcing the provisions of its own collective bargaining agreements. ILA at 1. ILA argues that not making such information publicly available would hamper its ability to detect the movements of containers destined for a designated port area but offloaded at different port. Id. at 12. ILA states that it requires access to the carriers' electronic systems, and that it is concerned by some carriers' practice of making certain information public but masking it in digitized codes. Id. at 2. ILA maintains that it is not seeking to have the Commission require disclosure of competitive rates of carriers, their surrogates or allies. Id. Although ILA asserts that its labor contracts apply regardless of whether the filed agreement is classified as a ``rate agreement'' or an ``operational agreement,'' ILA wants the ``ability to anticipate and locate the shipments which its contracts entitle its [l]ongshorepersons to handle and which are subject to charges as defined under those agreements.'' Id.
(g) The Commission asked whether it can implement measures to protect commercially sensitive information contained in filed agreements. (NOI Question 7). Some commenters assert that there may be sensitive commercial information in filed agreements that the parties may legitimately need to protect. OCWGA notes that while section 6(a) requires publication in the Federal Register, section 6(j) appears to specify a different treatment for section 5 agreements than for ``documentary material'' submitted under sections 5 and 6. OCWGA at 24 25. It maintains that this may place some procedural restrictions on how the Commission implements its authority to protect such information from disclosure and urges that, ``[s]pecifically, in order for information to be unambiguously protected from disclosure, such information must not be required to be included in the agreement required to be filed under section 5.'' Id. PONL opines that the Commission has already implemented measures to protect commercially sensitive information because it does not require conferences to publicly file minutes and notes that the Commission's exemption authority can shield such information. PONL at 10.

NITL believes that the Commission should not shield from disclosure information that would enable shippers to gain a thorough and complete understanding of the scope of a filed agreement likely to have a substantial impact on competition, such as conference or discussion agreements. NITL at 7. However, NITL asserts that information of a purely operational nature, and not relating to competition may be appropriately protected from public disclosure and should be determined on a casebycase basis. Id.

ILA believes that the Commission should require that agreements filed with it contain provisions which, while neither exposing rates nor other truly confidential data, would allow labor interests to track the movements of containerized cargoes subject to collective bargaining agreements. ILA at 2.
(h) The Commission requested commenters to provide information on how competing concerns of completeness, burden and confidentiality are resolved in the filing requirements of other regulatory agencies. (NOI Question 8). OCWGA notes that no other agency operates under a statutory provision identical to section 6(j) of the Shipping Act but cites some comparable provisions used by other agencies. OCWGA at 26. These include provisions by the Department of Transportation (``DOT'') for air carrier agreements, the Surface Transportation Board (``STB'') for agreements among railroads, the Federal Trade Commission (``FTC'') for general premerger notifications and the Securities and Exchange Commission (``SEC'') for registration statements for securities. OCWGA notes that under 49 U.S.C. 41308 and 49 U.S.C. 41309(a) the Secretary of Transportation has the authority to exempt from antitrust laws cooperative air carrier agreements filed with it and that to obtain this exemption, an air carrier must file ``a true copy * * * and complete memorandum of an agreement.'' Id. OCWGA further notes that DOT has implemented regulations to protect the confidentiality of this information (14 CFR 302.39(b)) which provide a procedure by which a carrier may mark as confidential portions of an agreement and may move to withhold such portion from public disclosure.\8\ Id.

\8\ The rule reads, in pertinent part:

Any person who objects to the public disclosure of any information in any paper filed in any proceeding * * * shall segregate, or request the segregation of, such information into a separate paper and shall file it * * * separately in a sealed envelope, bearing the caption of the enclosed paper, and the notation ``Classified or Confidential Treatment Requested Under Sec. 302.39.''

14 CFR 302.39(b).

OCWGA also cites to 49 U.S.C. 10502 which grants the STB authority to exempt rail carriers from the antitrust laws and directs it to approve and monitor those agreements pursuant to 49 U.S.C. 10704 and 10705. OCWGA urges that 49 CFR 1313.7 and 1313.16 be used as examples for the confidential treatment of agreement information. Id. Finally, OCWGA notes that the FTC receives premerger notification filings for companies under its jurisdiction and that 15 U.S.C. 18a(h) exempts from disclosure any information filed pursuant to the premerger notification requirement, unless relevant to any administrative or judicial action or proceeding. Id.

Similarly, PONL notes that the Antitrust Division of the Department of Justice (``DOJ'') receives premerger filings as well as requests for Business Review Letters and that DOJ may ask filers for more information and prevent disclosure of confidential information. PONL at 10.

PONL and OCWGA observe that the SEC receives securities registrations as authorized by its controlling statute which enumerates all information required to be submitted in the registration, but that SEC regulations allow filers to request confidential treatment by separating the confidential portion from the regulation statement and filing it separately. 17 CFR 230.406(2). PONL at 10; OCGWA at 26. B. The Proposed Rule

In accommodating the concerns expressed in the comments, the Commission must reconcile what may appear to be conflicting missions of the agencyon the one hand, to exercise the meaningful oversight of agreements to check any abuses arising from antitrust immunity required by section 6 of the Shipping Act, and on the other, to minimize regulatory intrusions and burdens, as required by section 1. Therefore, the Commission proposes the following regulations, which are intended to permit it to exercise effective oversight consistent with the Commission's statutory responsibilities without imposing undue regulatory burdens.
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1. Proposed Changes To Address Concerns for Certainty

Section 5(a) of the Shipping Act requires that a true copy of every agreement entered into with respect to an activity described in section 4(a) or (b) of this Act shall be filed with the Commission, except agreements related to transportation to be performed within or between foreign countries and agreements among common carriers to establish, operate, or maintain a marine terminal in the United States. 46 U.S.C. app. Sec. 1704.

Many commenters assert that it is simply not reasonable to require the filing of a true copy of every agreement because there are some details which cannot reasonably be expected to be specifically reflected, and also for the following reasons:
[sbull] Doing so would subject sensitive commercial information to disclosure, due to the notice requirement of section 6(a) of the Shipping Act;
[sbull] The parties need more flexibility than the 45day waiting period would provide;
[sbull] There are details which have not yet been agreed upon when the agreement is filed;
[sbull] Some details have no anticompetitive potential; and/or [sbull] The details are not reflected in standardized documents, so drafting them would be burdensome for the filer and reviewing them would be burdensome for the Commission.
Therefore, they argue that the text of the Shipping Act cannot be interpreted to literally mean a copy of the commercial agreement.

The present text of the Commission's policy, stated at section 535.103(g), was originally added in rulemakings in 1984.\9\ It represented a codification of the Commission's thenexisting policy. Early on in its administration of the Shipping Act, the Commission had received agreements with unacceptably vague, incomplete or indefinite statements of authority. See, Docket Nos. 8426 and 8432 (final rule). Therefore, the Commission created this rule to ensure that ``a complete agreement is filed in sufficient detail to conduct a meaningful review.'' Id.

\9\ 46 CFR 535.103(g) states:

An agreement filed under the Act must be clear and definite in its terms, must embody the complete understanding of the parties, and must set forth the specific authorities and conditions under which the parties to the agreement will conduct their present operations and regulate the relationships among the agreement members.

Such review, based on the requirements of section 6 of the Shipping Act, includes: (1) A preliminary review of the section 5 requirements; (2) a review for section 6(g) compliance; and (3) a general review of the agreement to ensure that it does not facially contravene other sections of the Shipping Act (e.g., acts prohibited by section 10). Section 535.103(g) reflects the Commission's need for specificity in order that it may: (1) Evaluate the probable impact of an agreement; (2) conduct ongoing monitoring of agreement operations (especially for section 10(a)(2) and (3) prohibitions); and (3) avoid ambiguities concerning antitrust immunity granted to agreements.\10\
\10\ In Docket Nos. 8426 and 8432 (final rule), the Commission stated, ``agreements should be sufficiently precise and definite to determine whether a particular activity is within the scope of the antitrust immunity conferred upon them by section 7 of the [Shipping] Act.'' 49 FR at 45332.

The policy presently stated at section 535.103(g) is carried out through section 535.407(a)\11\ which requires an agreement to ``reflect the full and complete present understanding of the parties as to its essential terms.'' Docket No. 8432, Rules Governing Agreements by Ocean Common Carriers and Other Persons, 49 FR 36371 (Interim Rule and Request for Comments) (``1984 Interim Agreement Rule''). The 1984 Interim Agreement Rule also described the reach of section 535.407(a) as follows:
\11\ Section 535.407(a) provides:
(a) Any agreement required to be filed by the Act and this part shall be the complete agreement among the parties and shall specify in detail the substance of the understanding of the parties.

The rule does not contemplate that every activity be enumerated in detail. However, general grants of authority which do not specify the activities under the agreement are not favored. For example, an agreement which, as its authority, merely recited the language of section 4(a)(1)(7) of the Act would require some further
clarification. Otherwise, review of such an agreement would be virtually meaningless. Such general statements of authority, even where clarified by subsequent refinement, should be avoided. Id. at 36372.

Some commenters claim that the industry does not have a clear understanding of the significance of the term ``true and complete,'' and argue that the phrase cannot be interpreted literally if it is read concurrently with the exemption allowing routine operational or administrative matters interstitial to a filed agreement without further filing. Some commenters also point out that matters which may be part of the commercial arrangement but which are outside the scope of the Commission's jurisdiction necessarily must not be included in the filed agreement.

The Commission's rules (as well as past Commission case law) are not more extensive than its jurisdiction: section 535.103(g) refers to an ``agreement filed under the Act'' and section 535.407(a) refers to ``any agreement required to be filed by the Act.'' These jurisdictional limitations, also discussed in Transpacific Westbound Rate Agreement, 951 F.2d 950 (9th Cir. 1991) (``TWRA''), provide boundaries to the information required in a filed agreement. Nevertheless, these concerns appear to be addressed to the limits of the Commission's subject matter jurisdiction over agreements, as opposed to the completeness with which matters within that jurisdiction must be reflected.

The Commission has consistently interpreted 46 U.S.C. app. Sec. 1704(a) to require filed agreements to be complete, specific, detailed reflections of the present understanding of the parties. 46 CFR 535.103(g) and 535.407(a). The commenters point to no legislative history to demonstrate that the subject matter jurisdictional limitations of the Shipping Act indicate that its drafters did not intend the phrase ``true copy'' to be interpreted literally. A general definition of the term indicates ``[a] true copy does not mean an absolute exact copy but means that the copy shall be so true that anybody can understand it.'' Black's Law Dictionary (1995 ed.).\12\ For oral agreements, the Shipping Act requires that ``a complete memorandum specifying in detail the substance of the agreement'' be filed. 46 U.S.C. app. Sec. 1704(a). The Commission finds no indication that Congress intended the Commission to subject oral agreements to greater requirements than those which are written. Therefore, we disagree with the commenters' assertion that the text of the Shipping Act cannot be interpreted literally.
\12\ See also, AssociatedBanning Co. v. Matson Nav. Co., 5 F.M.B. 336, 342 (1957), interpreting the ``true and complete'' standard under the 1916 Act(``when parties file an agreement for approval they must include all understandings and arrangements of the character covered by section 15 which exist between them at the time.'')

Nevertheless, we recognize that there may be some legitimate confusion as to what the Commission expects a filed agreement to contain. This confusion may have arisen from the Commission's historical usage of suggested language for form and manner, especially for filed agreements' ``authority'' clauses. We believe confusion may also arise when the policy reflected in sections 535.103(g) and 535.407(a) is read in tandem with the allowances of sections 535.407(b) and (c) for further agreements on certain routine matters. However, we find no precedent to support the proposition that the term ``true and complete'' means only those
[[Page 67516]]
details which the Commission had positively required to be filed in its prior form and manner regulations.

For the sake of clarity, the Commission now proposes to remove current sections 535.103(g) and 535.407(a) and replace them with a newly created section 535.402 to serve as one concise and clearly controlling rule. The new section is intended to reassert the Commission's original interpretation requiring the filing of the commercial document as agreed to by the parties, in contrast to the filing of a document drafted solely to meet U.S. regulatory requirements.
2. Proposed Changes to Address Concerns for Future Commercial Flexibility

a. Requirement to File Every Agreement (46 CFR 535.402)

In promulgating what is now section 535.407(a), the Commission asserted that the statute and the new rule required that an agreement ``reflect the * * * present understanding of the parties as to its essential terms.''\13\ 1984 Interim Agreements Rule at 36372. Thus, the Shipping Act does not require or allow for the filing of proposed, draft or preliminary agreements. In addition, the Commission's rules positively prohibit clauses in agreements which contemplate a further agreement, sometimes called ``agreements to agree.'' 46 CFR 535.407(b).\14\ Allowing vague authority clauses to be filed in agreements appears to conflict somewhat with the Commission's policy requiring that the agreement ``set forth the specific authorities and conditions under which the parties to the agreement will conduct their present operations' (46 CFR 535.103(g)). However, forwardlooking clauses have been permitted when there is an indication that any further contemplated agreements will not be carried out unless and until filed and effective under the Shipping Act. 46 CFR 407(b). \13\ See also, Isbrandtsen Co. v. States Marine, 6 F.M.B. 422, 434 (1961)(``There is no filing requirement until there is an agreement or a meeting of minds * * * regarding activities described in Sec. 15.''). The issue in this case concerned unacceptably vague authority statements in agreements that were being filed at the time.
\14\ This prohibition might appear to be inconsistent with the Shipping Act's specific provision for agreements ``to discuss and agree on any matter related to service contracts.'' 46 U.S.C. app. Sec. 1703(a)(7). However, we believe the statute provides consistent treatment by providing that any resulting agreement with respect to service contracts be reflected in confidentially filed ``voluntary guidelines.'' 46 U.S.C. app. Sec. 1704(c)(3).

In order to address parties' needs to maintain future flexibility in agreements describing their collaborative arrangements, the Commission generally has permitted the filing of agreements containing statements of authority which must be amended when the parties have reached the details of their agreement. The Commission has also crafted an exemption for certain daytoday details, thereby removing the filing requirement for ``interstitial implementation of routine operational and administrative matters.'' 46 CFR 535.407(c). However, the comments appear to suggest that this approach has proved unsatisfactory.

In suggesting that the statute be read broadly enough to accommodate the future needs of parties, the commenters use a term that appears neither in the Shipping Act nor in the Commission's regulations: ``permissive authority.'' This term apparently refers to: (1) Authority that may never actually be exercised (e.g., ``the parties may discuss rates'' or ``the parties are authorized to discuss rates''); (2) broad statements of authority (e.g., ``the parties are authorized to exchange slots on such terms as they may from time to time agree''); or (3) an agreement to act ``within a range,'' for example, of capacity or ports served. Such forwardlooking statements frequently appear in filed agreements. Indeed, the Commission itself may have encouraged their use by referring in its rules to agreement ``authority,'' a term that itself implies future implementing agreements.

Moreover, we recognize that parties may not wish to file details of their collaboration for at least two reasons. For example, this may be because: (1) agreement on the details has not yet been reached and the parties are still in negotiation, but wish to file and thereby commence the 45day waiting period; or (2) the parties have reached a final and specific agreement, but anticipate changes to those understandings and wish to build flexibility into the document they file. No commenter has cited nor has the Commission found any legislative history of the Shipping Act which would support the suggestion that Congress intended that parties may file a ``preliminary draft'' of an agreement, which would commence the running of the 45day review period. Therefore, the proposed regulations clarify that the Commission will not accept any such ``preliminary draft'' agreements.

This determination is reflected in the revised section 535.402, which retains the Commission's core interpretation of the Shipping Act's requirement that a ``true copy of every agreement'' be filed. The proposed rule also clarifies this by rephrasing it as a positive requirement in section 535.402 rather than as a policy statement. b. Modifications to Effective Agreements (46 CFR 535.407)

While the Commission interprets the Shipping Act to generally require that parties file their final, detailed agreement, rather than a general agreement to collaborate, the Commission has also historically recognized certain exceptions to that general standard. The first of these exceptions is explicit in the Shipping Act: section 4 necessarily contemplates certain agreements which cannot contain implementing details because they are by their very nature agreements to discuss future collaboration. These are the rate agreements authorized by section 4(a)(1), 4(a)(7) and 4(b)(1). 46 U.S.C. app. Sec. Sec. 1703(a)(1), (a)(7), (b)(1).

We believe that the most logical interpretation of section 4 is that certain matters may not be discussed in detail unless and until the parties have a filed and effective agreement. Therefore, the parties cannot be required to file a detailed, complete or specific agreement for those types of agreements. We believe this view is supported by the Commission's historical treatment of conference and other ratesetting agreements in its rulemakings.

The use of authority that might (or might not) be exercised pursuant to a filed agreement but would not require further filings, was first recognized by the Commission in ``suggested agreement language'' published in Docket No. 6755 (General Order 24), Filing of Agreements Between Common Carriers of Freight by Water in the Foreign Commerce of the United States, 33 FR 11655 (1968). Those rules were intended to ``establish guidelines for the filing, format and content of agreements'' to ``encourage uniformity of agreements'' and expedite their review by the Commission. 46 CFR 522.1 (1968). To that end, the regulations suggested language to be used by conference and rate agreements.\15\ Although the 1968 ``guidelines'' for agreements included some suggested language for agreements other than conference and rate agreements, the suggested terms did not include ``authority'' clauses.\16\
\15\ For conference agreements, the Commission's rules included the following suggested language:
\16\ Pooling, joint service, sailing, transshipment and cooperative working agreements did not include the ``authority'' provisions which were suggested for conference and rate agreements. 46 CFR 521.6(c)(g)(1970).

Authority Under This Agreement

Subject to applicable provisions of law, the Conference is authorized to:

1. Agree upon and establish rates and charges for the carriage of cargo and rules and regulations governing the application thereof and defining the service to be rendered therefor;

2. Declare rates for specified commodities to be ``open'' with or without agreed minimum, and thereafter declare the rates for such commodities to be ``closed'';

3. Agree upon and establish tariffs, tariff amendments, and supplements;

4. Make rules and regulations for the handling and carriage of cargo;

5. Provide for use of a contract/noncontract rate system for filing with the Commission for approval pursuant to section 14b of the Shipping Act, 1916;

6. Agree on amounts of brokerage and/or compensation to forwarders and the conditions for the payment thereof as permitted by applicable law;

7. Keep such records and statistics as may be required by the parties or deemed helpful to their interests.

46 CFR 522.6(a)(1968)(emphasis added).

Similar ``authority'' provisions were also suggested for non conference rate agreements. 46 CFR 522.6(b)(196

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On their face, therefore, such agreements were, in fact, ``agreements to agree.'' The two sets of guidelines for agreement language (both intended for agreements with ratemaking activity) were the only such Commissionprovided examples for agreements containing such openended authority. It appears that over the years, the ``suggested authority'' language has been adopted for use in nonrate making agreements (also called ``operational agreements'') as well.

The Commission subsequently recognized and addressed the need for some openended authority in agreements through current section 535.407(b). This provision permits ``agreement clauses which contemplate a further agreement or give the parties authority to discuss and/or negotiate a further agreement, the terms of which are not fully set forth in the enabling agreement'' to be included in filed agreements only if ``the enabling agreement indicates that any such further agreement cannot go into effect unless filed and effective under the Act.'' The 1984 Interim Agreements Rule's supplementary information described the Commission's reasons for requiring that provisions in agreements that contemplate further agreements not become operative until filed and effective under the Shipping Act: [a] problem of openended authority arises where an agreement allows for future substantive modification of an agreement without specifically requiring filing under section 5. Such general authority to make future modifications without filing with the Commission would subvert the Commission's ability to review and monitor an agreement. 49 FR 36372.

The Commission's 1984 Agreements Rules offered a further degree of commercial flexibility to agreement parties through another provision: the exception from filing for the ``interstitial implementation of routine operational and administrative matters'' under section 535.407(c).\17\ The Commission explained in the 1984 Interim Agreements Rule that the provision was originally intended to ``allow[] flexibility to make changes for tariff matters or routine operational and administrative matters having no anticompetitive effect.'' 49 FR 36372. The Commission asserted that this section ``provide[s] that activities which may reasonably be viewed as interstitial to a stated agreement authority need not be expressly stated.'' Id. The Interim Rule gave only the following two examples: (1) authority to establish ``overland common point'' rates would be interstitial to general ratemaking authority, but establishing a tariffed contract rate system would not; and (2) changes in the terms and conditions of a charter party (contract) underlying a space charter agreement would generally be interstitial, but changes in the number of vessels (or range of number of vessels) and definition of vessel capacity (or range of capacities) dedicated in a joint service or space charter agreement would not. Id.\18\
\17\ Section 535.407(c) reads:
``Further specific agreements or understandings which are established pursuant to express enabling authority in an agreement are considered interstitial implementation and are permitted without further filing under section 5 of the Act only if the further agreement concerns routine operational or administrative matters, including the establishment of tariff rates, rules, and
regulations.''
\18\ The Commission also gave the following guidance:
``[A]n agreement which merely stated that the parties are authorized ``to operate a joint service,'' without indicating the number, or range of vessels, committed to the service would not be deemed to reflect the full understanding of the parties. Such a deficiency would defeat any meaningful Commission review. Similarly, a statement in a joint service agreement which authorized the parties to ``acquire substitute or additional tonnage'' would result in a situation where the Commission would be unable to evaluate the economic impact of the agreement on the trade under section 6(g). Finally, a filed agreement which referred to or was governed by another agreement not filed with the Commission would be
incomplete.''

Id.

Until recently, conferences (and other rate) agreements were those with which the Commission had the most concern. The Commission's current rules on agreements were adopted at a time when conferences were the principal method by which ocean common carriers exercised their antitrust immunity to achieve price discipline and rate stabilization. Now, however, there has been a precipitous decline in the number and role of traditional conferences, and their influence has been supplanted by discussion agreements on pricing. This development, concurrent with the appearance of global strategic alliances, has resulted in agreements which may be more effective than conferences ever were at stabilizing rates by controlling capacity.

As a result of the abovediscussed history, the commenters assert that ``permissive authority'' has come to be invoked for matters much broader than simply the implementation of raterelated authority, i.e. tariffs and service contracts. In addition, the exemption from filing for ``interstitial implementation of routine operational and administrative matters'' under section 535.407(c) has been a prime source of confusion. Some commenters assert that ``interstitial implementation of routine operational or administrative matters'' could be indicated by the use of phrases such as, ``the parties agree to according to terms, rates and conditions as the parties may from time to time agree.'' Thus, with respect to ``permissive authority,'' responses to the NOI generally proffer two types of future actions taken pursuant to an agreement: (1) those allowed by grants of authority which might (or might not) be exercised, but which do not anticipate subsequent filing if exercised; and (2) those allowed without further filing due to their categorization as ``interstitial implementation of routine operational or administrative matters.'' There also appears to be another type of ``permissive authority'': that which outlines a range (for example of capacity, ports, etc.) in which the agreement may operate. The following discussion addresses each of these interpretations.

In promulgating the exception for ``interstitial implementation of routine operational and administrative matters,'' the Commission explained that section 535.407(c) would be interpreted on an ad hoc basis. Id. The comments received in the NOI demonstrate that this ad hoc approach may have created some confusion. Recently, the Commission found a violation of section 10(a)(2) of the Shipping Act \19\ where a conference failed to file its understanding as to the winding up of its affairs. The respondent conference argued that such a matter was ``routine operational or administrative'' and therefore exempt from the filing requirements. Compania
[[Page 67518]]
Sud Americana De Vapores S.A. v. InterAmerican Freight Conference (``CSAV''), 28 S.R.R. 141, 141142 (1998). The Commission found that the winding up was not ``routine operational,'' but extraordinary and, therefore, not falling within the exemption of section 535.407(c). \19\ Section 10(a)(2) reads, ``No person may . . . operate under an agreement required to be filed under section 5 of this Act that has not become effective under section 6, or that has been rejected, disapproved or canceled.''

In CSAV, the Commission provided further guidance as to matters it would consider ``routine operational or administrative,'' namely, the establishment of individual tariff rates; \20\ the scheduling of individual meetings; the securing of office space or supplies; and the circulation of particular reports or memoranda to members. These are matters which require daytoday operational flexibility.CSAV, 28 S.R.R. at 142.
\20\ The establishment of individual tariff rates are
specifically enumerated as exempt in the text of the rule. 46 CFR 535.407(c).

As discussed above, the Commission's general rule has been that all agreements must be true, complete, detailed and specific and represent the present understanding of the parties. With the exception of agreement clauses which anticipate a further agreement to be filed that are permitted under section 535.407(b), only two types of ``further agreements'' may be acted upon without further filing: agreements which fall under section 535.407(c), or which are otherwise exempt from filing under an explicit exemption found in subpart C of this part.

OCWGA suggests that the Commission recognize four additional types of ``further agreements'' as ``interstitial implementation of routine operational or administrative matters'': (1) Changes to the number of vessels/slots (or changes within a quantified range); (2) changes in port calls; (3) decisions on operation within another filed agreement; and (4) ``operational'' agreements generally. OCWGA at 1417. While we rejected the first three suggestions in our previous rulemaking on ``routine operational or administrative matters,'' we now reconsider these suggestions in light of the comments and recent changes in the industry.

It has been the Commission's approach since the passage of the Shipping Act to determine on an ad hoc basis what it considers ``routine operational and administrative matters'' to be implemented without further filing. However, we believe the comments indicate the public's desire that the better approach is to list specifically operational matters that are exempted and revise the current regulations accordingly.

OCWGA's suggestion that the Commission enumerate what must be contained (a positive list), rather than what need not be contained (a negative list or exemptions) appears impractical. The Commission chooses to follow the latter approach. While it is true that the Commission may anticipate some developments in the industry, we do not have the ability to predict them all, nor should we seek to stifle innovation or dictate what must be contemplated in an agreement. We can, however, determine what activities, as they are presently employed by agreements, are most likely not to raise concerns about competition.

The Commission, therefore, proposes to remove the current terms ``interstitial implementation'' and ``routine operational and administrative'' altogether from its rules, and add a list of specific exemptions for certain types of operations. Under section 16 of the Shipping Act, the Commission has the discretion to grant exemptions it finds will neither cause substantial reduction in competition nor be detrimental to commerce. 46 U.S.C. app. Sec. 1715. The Commission has determined to propose several new specific exemptions to replace the current exemptions for ``routine operational and administrative matters'' and other operational matters which it finds have met the criteria for exemptions under section 16.

The initial proposals for a list begin with the activities already determined by the Commission to be ``routine operational and administrative matters,'' such as those enumerated in CSAV. Additionally, the Commission proposes to include the following matters previously treated as ``interstitial implementation of routine operational and administrative matters'' not requiring further filing: [sbull] charter parties arising out of filed agreements (such as those pursuant to a space, slot or vessel sharing agreement); [sbull] specific monetary amounts for compensation for space; booking and documentation procedures;
[sbull] insurance;
[sbull] procedures for resolution of disputes relating to loss and/ or damage to cargo;
[sbull] maintenance of books and records;
[sbull] force majeure clauses;
[sbull] common terminal and stevedoring arrangements;
[sbull] procedures for allocating space and forecasting demand; and [sbull] schedule adjustments.\21\
\21\ We recognize that most if not all of these commercially essential matters are likely determined before an agreement can be implemented and are unlikely to require frequent changes in the course of carrying out the agreement. We are skeptical that these need the sort of daytoday flexibility the current exemption contemplates. Nevertheless, as a practical matter, we also recognize that these details of agreement implementation may be the most commercially sensitive and their absence appears to be unlikely to impair the Commission's ability to assess the relationship among the parties.

With regard to the suggestion that changes to the number of vessels or slots to be operated (i.e., capacity) be implemented without amendment to an agreement, we find that it may be acceptable to change these terms without further filing if the

FOR FURTHER INFORMATION CONTACT Carol J. Neustadt, Acting General Counsel, Federal Maritime Commission, 800 North Capitol Street, NW., Room 1018, Washington, DC 205730001, (202) 5235740, Email: GeneralCounsel@fmc.gov. Florence A. Carr, Director, Bureau of Trade Analysis, Federal Maritime Commission, 800 North Capitol Street, NW., Room 940, Washington, DC 205730001, (202) 5235796, Email: tradeanalysis@fmc.gov.