January 4, 2002 Volume 6, Number 1 Oakland, California

SIGNALS™ provides detailed information on the regulations and activities of the US Federal Maritime Commission (FMC), and related developments in the ocean freight industry. For past issues, please consult our index.

Docket 01-12:   Cargo Carriers Ltd., Commonwealth Shipping Ltd., Martyn C. Merritt, et. al.

The Federal Maritime Commission has begun a formal proceeding to cancel the tariffs and license of two companies associated with Martyn C. Merritt. According to Docket 01-12 the FMC plans to cancel the tariffs published by Cargo Carriers Ltd. and Commonwealth Shipping Ltd., and order both companies to cease and desist from violations of the Shipping Acts. Both companies are based in Cheektowaga, New York. Commonwealth Shipping Ltd. is registered with the FMC as a vessel operating common carrier. Cargo Carriers Ltd. is licensed as an OTI-NVOCC. Mr. Merritt and other companies under his control were the focus of an extensive FMC investigation and proceeding in 1990-1995 for possible violations of the Shipping Act of 1984.

In the case of Cargo Carriers Ltd., the FMC alleges the ocean transportation intermediary license held by this company should be cancelled for providing materially false or misleading statements to the Commission in its license application. Specifically, the answers to questions regarding the sharing of office space and/or expenses are alleged to be false. Without a license, the FMC must order the cancellation of the tariff of Cargo Carriers Ltd. Commonwealth Shipping Ltd. is registered with the FMC as a vessel-operating common carrier, however, the FMC believes the company does not operate any vessels calling at US ports. Therefore, it appears that Commonwealth Shipping's tariff contains false information, and this is a violation of the Shipping Act.

Docket 01-12 also includes an order to show cause why the Commission should not order Cargo Carriers Ltd., Commonwealth Shipping Ltd., Martyn C. Merritt and Mary Anne Merritt to cease and desist from future violations of the Shipping Acts. Filings in this case, including requests for hearings, are due by March 18, 2002. A final decision is expected by December 2002.

FMC Files Brief in Supreme Court Case:    FMC v. South Carolina State Ports Authority

The Federal Maritime Commission has released a copy of the 60 page brief it recently filed with the U.S. Supreme Court in the case of FMC v. South Carolina State Ports Authority. This case involves the FMC’s jurisdiction over the activities of state owned ports. The key question presented in the case is whether state owned ports can use the Eleventh Amendment to the U.S. Constitution to prevent the FMC from adjudicating a private person's complaint that the state-run port has violated the Shipping Act of 1984.

The FMC contends the Shipping Act gives it the authority to hear administrative complaints against ports, whether they are state-run marine terminals or privately run marine terminals. FMC Chairman Hal Creel has called this "crucial to effective and evenhanded regulation under the Shipping Act." The South Carolina State Ports Authority contends that the FMC does not have jurisdiction in this matter because as a state-owned agency it is immune from suits of this kind filed with federal agencies. The U.S. Court of Appeals for the Fourth Circuit agreed; the FMC is seeking to reverse this decision. This case began with the filing of a complaint with FMC by South Carolina Maritime Services, Inc. in October 1999. Maritime Services asserted that the South Carolina States Ports Authority violated the Shipping Act by unfairly refusing to give berthing space at Charleston to its vessel which permitted gambling activities in international waters. The case is entitled Federal Maritime Commission v. South Carolina State Ports Authority, Supreme Court Docket No. 01-46.

FMC Terminates Licenses of 42 OTI-Freight Forwarders and NVOCCs

The FMC has recently terminated the licenses of 42 Ocean Transportation Intermediaries (OTIs). Licenses were terminated due to failure to maintain valid surety bonds, or surrendered voluntarily. FMC license numbers ending with the letter "F" are issued to OTI-Freight Forwarders; license numbers ending with "N" are for OTI-NVOCCs.

Volume 6   Number 1      January 4, 2002

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