On April 27, 2020, the Federal Maritime Commission (FMC) issued a press release of immediate interest to the international transportation community granting temporary relief from certain service contract requirements. The FMC’s mission is to ensure a competitive and reliable international ocean transportation supply system that supports the U.S. economy and protects the public from unfair and deceptive practices.  The FMC has determined that an increasing number of business have been working remotely as result of social distancing guidance and stay-at-home orders. The Commission understand that for some entities this situation, combined with other COVID-19-related disruptions to commercial operations, has made compliance with service contract filing requirements difficult.

The FMC regulations, in particular 46 C.F.R. Section 530.8(a)(1), require that carriers file original service contracts (as opposed to amendments) with the Commission “before any cargo moves pursuant to that service contract.” In addition, Section 530.8(b) requires that each original contract include, among other terms, an effective date that is no earlier than the filing date. See Sections 530.3(i) (defining “effective date” for original service contracts and amendments); 530.8(b)(8)(i) (requiring every service contract to include its effective date). Similarly, Section 530.14(a) provides that “[p]erformance under an original service contract may not begin before the day it is effective and filed with the Commission.”

In contrast, the Commission’s regulations provide more flexibility to service contract amendments, which can be filed within thirty (30) days after the amendment’s effective date. See Sections 530.3(i), 530.8(a)(2), 530.8(b)(8)(i) and 530.14(a).

The Commission stated that a temporary blanket exemption extending the current filing flexibilities for service contract amendments to original service contracts will allow parties time to adapt to the increased pressures that have been placed upon them by COVID-19 and minimize disruptions to the contracting process. Exemptions from the requirements of Part 530 are governed by 46 C.F.R. Section 530.13(b). Under this authority, the Commission may exempt any specified activity of persons subject to the Shipping Act from the requirements of Part 530 if the Commission finds that the exemption will not result in substantial reduction in competition or be detrimental to commerce. See Section 530.13(b) (incorporating 46 U.S.C. Section 40103(a) and 46 C.F.R. Sections 502.10 and 502.92).

The Commission concluded that a temporary exemption from certain requirements for original service contracts in Sections 530.3, 530.8 and 530.14, subject to certain conditions, will reduce the filing burdens on the industry and will not result in a substantial reduction in competition or be detrimental to commerce. This exemption is subject to the condition that original service contracts continue to be filed with the Commission. As is the case for service contract amendments, however, that filing may now be delayed up to 30 days after the effective date. This exemption is also temporary and will remain in effect only until December 31, 2020. The Commission has determined that these conditions will minimize any potential negative effects on competition or commerce.

If you have any questions relating to the FMC regulations and requirements, or other international trade-related issues, please contact Peggy Chaplin Louie (peggy@millerproctorlaw.com) at Miller Proctor Law PLLC (https://millerproctorlaw.com ).