FMC, Cargill settle lower Mississippi River tug franchise dispute

FMC, Cargill settle lower Mississippi River tug franchise dispute    The U.S. Federal Maritime Commission and Cargill have reached a settlement agreement to suspend litigation involving the grain giant’s exclusive tug franchise for its terminals on the Lower Mississippi River.
   The case, which began on June 11, 2001, involved 12 marine terminals that allegedly engaged in the exclusive contracts with particular tug companies. This activity is considered an “unreasonable” practice under the 1984 Shipping Act.
   The FMC’s administrative law judge Norman D. Kline endorsed the settlement agreement reached between the agency and Cargill. Kline said the settlement would allow Cargill to enter a new practice for tug operations and “continue its marine terminal operations without a continuing cloud of litigation hanging over its head.”
   For Cargill, the investigation involved three dry land terminals and its floating rig, served through the company’s exclusive tug provider E.N. Bisso.
   Kline described the agreement in statement as “a middle position between the total elimination of the current exclusive contracting system with a return to the previous system of ‘ad hoc’ selection of tug boat companies by carriers under apparently negotiated rates and the current system whereby carriers have no choice in selecting which tug boat company will service their ship.”
   The judge said the parties also addressed the commission’s concern that under the current system Cargill could increase tug-assist charges beyond reasonable levels.
   “The new arrangement thus preserves competition and respects the interests and rights of carriers, as well as marine terminal operators to obtain providers necessary services so that the terminal operators and carriers can carry out their respective duties under law,” Kline said.
   Cargill’s current three-year contract with E.N. Bisso is soon subject to renewal and the grain company will invite bidding from all tug companies serving the lower Mississippi.
   The FMC’s investigation into exclusive tug franchises on the lower Mississippi now excludes Cargill and St. James Stevedoring Co. (dismissed from proceeding on Sept. 29, 2003).