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Signals™ Headlines - June 7, 2001

FMC to Investigate Exclusive Tug Arrangments in Florida: FFI No. 24

The Federal Maritime Commission has expanded its investigation into exclusive tug franchises at marine terminals located on the Lower Mississippi River to include ports in Florida. FMC’s Fact Finding Investigation No. 24 (FFI No. 24) now includes Port Canaveral and Port Everglades. This investigation began in August 2000 when the FMC ordered about 60 ocean carriers to furnish detailed information about exclusive tug franchises at ports on the Lower Mississippi. The purpose of this investigation is to determine if these exclusive franchises violate the Shipping Acts. In the course of this investigation the FMC gained new information about exclusive tug arrangements at Florida ports. The status of this investigation was reviewed during the part of the FMC meeting on May 10, 2001 that was closed to the public.

According to FFI No. 24, Port Canaveral and Port Everglades have allegedly been served by a single tug company, Seabulk International, Inc., formerly known as Hvide Shipping, Inc. for more than 40 years. The FMC is now investigating allegations that no other major United States port has a similar franchise system resulting in service by only one tug company. Recently, the Commissioners of both ports denied applications for franchises submitted by tug operators seeking to compete with Seabulk International. These actions may be violations of the Shipping Acts, and could result in enforcement action by the FMC.

Pursuant to the Shipping Act of 1984, the FMC is responsible for regulating the activities of marine terminal operators (MTOs) as that term is defined by section 3(14) of the Shipping Act. The Canaveral Port Authority is the governmental body with jurisdiction over Port Canaveral. The Port Everglades Department, a department of Broward County, operates Port Everglades. Both the Canaveral Port Authority and the Broward County Board of County Commissioners would appear to meet the definition of MTO and, in fact, have registered as MTOs with the FMC and published public tariffs.

Section 10(d) of the Shipping Act of 1984 provides, in pertinent part:

(1) No common carrier, ocean transportation intermediary, or marine terminal operator may fail to establish, observe and enforce just and reasonable regulations and practices relating to or connected with receiving, handling, storing, or delivering property.

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(4) No marine terminal operator may give any undue or unreasonable preference or advantage or impose any undue or unreasonable prejudice or disadvantage with respect to any person.

In its Order of Investigation the FMC noted that on at least two prior occasions it has found that the Canaveral Port Authority met the definition of MTO, and that some the Port’s practices with respect to tug franchises were unjust and unreasonable. On May 24, 2001 Commissioner Antony M. Merck was named Investigative Officer in this matter. Commissioner Merck is responsible for gathering information on the exclusive tug arrangements Port Canaveral and Port Everglades. He will be assisted by FMC staff members and will have authority to hold public meetings, to issue subpoenas, and require reports from all parties involved in this matter. A report of findings and recommendations is due on August 31, 2001.

Docket 01 -05:New Rules for Alternative Dispute Resolution (ADR) Proposed by FMC

The Federal Maritime Commission has proposed new regulations to implement the Administrative Dispute Resolution Act. These new regulations would expand the Commission’s Alternative Dispute Resolution (ADR) services, addressing guidelines and procedures for arbitration and providing for mediation and other ADR services. These proposed rules would replace large parts of current FMC rules published in 46 CFR Part 502, sub-part U, and update other related rules.

In Docket 01-05, the FMC noted that one of the primary goals of the Commission’s reorganization in early 2000 was a plan to develop a refined ADR program. The intent was to involve the agency more deeply in ADR and other mediation activities in order to find ways to settle disputes without having them processed via costly and time-consuming formal adjudications. Since then, Commission staff has been developing the ADR process and pursuing training and developmental activities.

The Commission’s Dispute Resolution Specialist is a certified mediator and has made his services available to parties in formal complaint proceedings. Recently, those mediation services were instrumental in the parties to such a proceeding reaching an agreement that resolved not only the formal proceeding pending at the Commission, but also a pending suit before a state court.

Also within the scope of the FMC’s Dispute Resolution Services are the ombuds services provided by its Office of Consumer Complaints (OCC) within the Bureau of Consumer Complaints and Licensing. During the past year, this office has handled numerous complaints from shippers and freight forwarders regarding the activities of NVOCCs, including NVOCCs allegedly operating without valid licenses, tariffs or bonds. In addition, recent failures of cruise lines have generated a substantial number of complaints. For the most recent fiscal year, the Commission’s ombuds services responded to more than 2900 inquiries and complaints, and the efforts of OCC yielded over $193,000 in recoveries for those making complaints.

The proposed new ADR rules would implement an enhanced, comprehensive ADR program. These rules would emphasize requiring ADR consideration at early stages of proceedings and would provide for arbitration of matters at the Commission. The Commission will endeavor to provide mediation and other assisted negotiation procedures, and the rules provide for such services. Section 502.61 would be modified to make it mandatory for parties to consider ADR at an early stage of every proceeding in such a manner as the presiding Administrative Law Judge shall direct. Section 502.62 would be modified to require complainants to address the use of ADR when filing a complaint. Section 502.91 is revised to expand the means of ADR available in proceedings before Administrative Law Judges and to require the parties to consider ADR in all proceedings. Section 502.94 is modified to require consideration of ADR at pre-hearing conferences. Also, the current $10,000 limitation for informal docket proceedings in 502.301 would be raised to $50,000.

Comments on the proposed new ADR rules are due by June 21, 2001. The new rules are expected to take effect later this year.

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