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Signals™ Headlines - February 5, 2002

Bush Nominates New FMC Chairman: Steven Blust of the Port of Tampa, Florida

President George W. Bush has announced his intention to nominate Steven Robert Blust of Tampa, Florida to serve as Commissioner and Designate Chairman of the Federal Maritime Commission. Blust will be nominated to serve the remainder of a five-year term expiring June 30, 2006. The current FMC Chairman, Hal Creel, will presumably continue to serve as a Commissioner; Creel was initially appointed by President Clinton in 1994, his current term expires June 30, 2004. The opportunity for President Bush to nominate Blust was created by the resignation of Commissioner Antony Merck of South Carolina on December 31, 2001.

Appointments to the Federal Maritime Commission require confirmation by the US Senate. When Blust is confirmed and takes office the Commission will again have a full house, with two Republicans, Steve Blust of Florida and John Moran of Virginia, and three Democrats, Hal Creel of South Carolina, Delmond Won of Hawaii, and Joseph Brennan, the former Governor of Maine. Steve Blust will be the first Commissioner appointed by President Bush; all the other Commissioners currently serving were appointed by President Clinton.

Steve Blust brings a level of expertise in maritime operations and management not seen at the FMC for many years. He is currently President and CEO of Tampa Bay International Terminals (TBIT), the operating company for the Tampa Port Authority. TBIT provides terminal services for general and container cargoes. It operates three terminals that provide over 300,000 square feet of dockside storage, and 57 paved acres adjacent to 4800 feet of deep-water berths. Prior to joining TBIT Blust worked for Lykes Brothers Steamship Company from 1987 to 1996, where he served as Vice President from 1991 to 1996.. Blust also worked for the Jacksonville Port Authority from 1985 to 1987. He earned a BS degree from the U.S. Merchant Marine Academy at Kings Point, NY in 1971, and holds an MBA from Tulane University.

FMC Fines NVOCC $1,237,500: Docket No. 00-10, Universal Logistic Forwarding Co., Ltd.

The Federal Maritime Commission has ordered Universal Logistic Forwarding Co., Ltd. (Universal); an NVOCC based in Taipei, Taiwan to pay a civil penalty of $1,237,500 for violations of the Shipping Act. Universal was also ordered to cease and desist from operating as an NVOCC serving the USA. According to FMC Docket 00-10, Universal obtained ocean transportation at less than the applicable rates through accessing a service contract to which it was not a signatory or affiliate. These violations occurred on at least 22 shipments during 1998. Universal was also found in violation of the Shipping Act for charging less than the rates and charges shown in its tariff. Universal did not appear at hearings during the proceeding. It is presumably out of business; however, the $50,000 surety bond filed on its behalf will be used to satisfy part of the civil penalty.

In their final decision in this proceeding the FMC Commissioners removed part of an earlier order made by Administrative Law Judge Norman D. Kline. In his initial decision Judge Kline noted Universal’s tariff contained only “three virtually meaningless N.O.S. rates,” and ordered Universal to publish a tariff with “realistic commodity rates.” FMC Chairman Hal Creel noted the Commission has no authority to determine freight rates for any common carrier. The Shipping Act simply requires carriers, including NVOCCs, to adhere to the rates and charges properly published in their tariffs. Failure to do so is violation of Section 10(b) of the Shipping Act.

FMC Considers New Rules to Protect Cruise Ship Passengers

The Federal Maritime Commission has decided its current bonding and insurance requirements for passenger vessel operators
serving the USA are not meeting the needs of the cruising public. Over the past 14 months five cruise operators have
declared Chapter 11 bankruptcy. Many cruise passengers have contacted the FMC to complain of problems and delays in
obtaining refunds of deposits and prepayments from bankrupt cruise lines. At a
public meeting held on January 30, 2002 the FMC
Commissioners reviewed the passenger vessel operator financial responsibility program and directed the FMC
staff to make significant changes. A new rule making proposal to increase financial responsibility requirements
for passenger vessel operators is expected shortly.

The payment of claims and refunds to consumers who purchased tickets for cancelled cruises is not the responsibility of the FMC. To obtain refunds for cancelled cruises consumers must submit claims to attorneys representing the bankrupt cruise lines, or to the Sureties who filed bonds or financial guarantees with the FMC on behalf of the cruise lines. This process has not worked well for some consumers, and has led to numerous complaints. Consumers have been surprised to learn the FMC’s current regulations do not provide for 100 percent coverage for passenger deposits and prepayments in the event of nonperformance, i.e. cruise cancellations or missed port calls. At the Jan. 30th meeting concerns were raised about the continuing adequacy of self-insurance for cruise operators. Self-insurance is allowed under current FMC regulations issued in 46-CFR-Part 540.

American Classic Voyages Co. filed for Chapter 11 bankruptcy in October 2001. American Classic Voyages Co. is the parent of American Hawaii Cruises, United States Lines, Delta Queen Steamboat Company and Delta Queen Coastal Voyages, all of which have suspended their cruise operations. The FMC recently approved an escrow agreement proposed by the Delta Queen Steamboat Company which will allow the vessels Delta Queen and Mississippi Queen to resume operations. In December 2000 New Commodore Cruise Lines Limited suspended operations and filed for Chapter 11 bankruptcy. At that time, Commodore participated in the FMC’s Public Law 89-777 program, and had been issued Performance Certificates for its vessels serving US ports.

In response to this situation, the FMC is preparing a new rule making proposal to discontinue self-insurance as acceptable evidence of financial responsibility for nonperformance, and to increase coverage requirements to provide for 100% coverage of deposits and prepayments. In addition, the FMC staff will notify the cruising public about the impact that ticket contract limitations can have on the refunds for cancelled cruises. The FMC will also ask Congress to increase current limits on casualty coverage requirements for cruise vessel operators.

Canaveral Port Authority Investigated by FMC: Formal Docket Expected Shortly

The FMC has decided to institute a formal proceeding to determine if the Canaveral Port Authority is in violation of the Shipping Act. This is action is a response to the information developed by former Commissioner Antony Merck in his Fact Finding Investigation into Exclusive Tug Arrangements in Florida Ports. In this proceeding an FMC Administrative Law Judge will determine whether the exclusive tug arrangements of the Canaveral Port Authority with Seabulk International violate Section 10(d)(1) and 10(d)(4) of the Shipping Act and, if so, whether penalties should be assessed. The FMC will also institute a separate proceeding requiring the Canaveral Port to show cause why its refusal to consider a pending application by another tug operator (Tugz International) does not constitute a refusal to deal or negotiate within the meaning of the Shipping Act.

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