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FMC seeking public comment on proposed ‘unreasonable refusal to deal’ rule

The US Federal Maritime Commission (FMC) is seeking public comments in response to a notice of proposed rulemaking (NPRM) issued yesterday implementing a requirement of the Ocean Shipping Reform Act of 2022 (OSRA) to define “unreasonable refusal to deal or negotiate” with respect to vessel space accommodation provided by an ocean common carrier.

One provision of OSRA requires that an ocean common carrier shall not unreasonably refuse to deal or negotiate with respect to vessel space accommodation. The NPRM outlines the elements that would be necessary to establish a violation and the criteria the FMC would consider in assessing reasonableness.

It would also shift the burden of proving the refusal to deal was reasonable from shippers to ocean common carriers.

The new rule would apply to both import and export shipments.

Interested parties will have 30 days to submit comments to the FMC once the NPRM is published in the Federal Register. Because the law requires the Commission to publish a final rule within six months of OSRA’s enactment, comments should be submitted by the deadline.

The FMC proposes a non-exhaustive list of factors it will consider when deciding whether a refusal to deal was unreasonable. Some factors the NPRM proposes the Commission consider include whether the ocean common carrier followed a documented export strategy, engaged in good faith negotiations, and articulated legitimate transportation factors.

As the phrase “vessel space accommodations” has never been defined in legislation, or interpreted by the FMC, the NPRM proposes to define this term.

As the circumstances of each shipment are unique, the Commission acknowledges it is impossible to regulate for every possible scenario and, accordingly, cases alleging a violation will be factually driven and considered on a case-by-case basis.

This NPRM is the latest initiative taken by the FMC to implement OSRA, signed into law by President Biden on June 16.

Kim Biggar

Kim Biggar started writing in the supply chain sector in 2000, when she joined the Canadian Association of Supply Chain & Logistics Management. In 2004/2005, she was project manager for the Government of Canada-funded Canadian Logistics Skills Committee, which led to her 13-year role as communications manager of the Canadian Supply Chain Sector Council. A longtime freelance writer, Kim has contributed to publications including The Forwarder, 3PL Americas, The Shipper Advocate and Supply Chain Canada.
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