The Federal Maritime Commission (FMC) is proposing the most significant changes since 1998 to its regulations governing the licensing and regulation of Ocean Transportation Intermediaries (OTIs). Under U.S. law, OTIs are third party intermediaries that arrange for or provide international ocean transportation services, but they do not provide the actual physical transportation services. The FMC is responsible under the Shipping Act for the licensing and regulation of these companies as either export ocean freight forwarders or Non-Vessel-Operating Common Carriers (NVOCCs).
Among the proposed changes to the licensing and regulation of NVOCCs and ocean freight forwarders in the FMC’s 118-page Advanced Notice of Proposed Rulemaking (ANPR) are:
- Revisions to the procedures for licensing OTIs.
- A proposal that OTI licenses only be valid for two years, with the requirement that a renewal application be filed to maintain the validity of the license.
- A proposal that clarifies the specific experience and general operational responsibilities that Qualifying Individuals (QIs) must have before they are eligible to qualify an NVOCC or ocean freight forwarder for a license.
- Revised regulations specifying the types of character criteria and background scrutiny that the Commission will look at in evaluating OTI applicants.
- Increases in the bonding and financial security amounts required of NVOCCs and ocean freight forwarders.
- Changes in the procedures by which claims against OTI bonds are asserted, including new claims payment priorities; a new procedure for publishing potential claims against OTI bonds; and new requirements that OTI licensees replenish bonds that have been used to pay OTI claims.
- Revisions to and clarification of the Commission’s regulations governing the licensing of OTI branch offices.
- Revisions to and clarification of the Commission’s regulations governing the relationship between NVOCCs, ocean freight forwarders, and their agents.
- New regulations governing OTI advertising.
- Revisions to and clarification of the licensing requirements for non-U.S. NVOCCs that choose to operate as licensed NVOCCs in the United States trades.
- New regulations requiring the registration of foreign NVOCCs operating in the U.S. trades that choose not to be licensed by the FMC, including a requirement that non-U.S. NVOCCs register with the FMC every two years and provide specific entity and contact information to the Commission.
In releasing its proposal, the FMC stated that its proposed “significant changes” to its OTI regulations are intended to address changes in industry conditions, streamline internal processes, improve transparency, and remove unwarranted regulatory burdens. While the majority of Commissioners voted to proceed with publishing the FMC proposals, the Commission’s action was not without dissent. For example, FMC Commissioner Dye expressed her written reservations that the new regulations will result in more, not less, regulation of NVOCCs and ocean freight forwarders.
This is certainly true of the Commission’s proposed new registration requirements for non-U.S. NVOCCs. Up until now, foreign NVOCCs have been subject to some regulatory filing requirements with the Commission, including the posting of a bond or financial security and notice regarding the NVOCC’s published tariff. However, the Commission’s proposed new regulations would expand these requirements to require the filing of more specific information about the NVOCC with the FMC.
The Commission is seeking public comments on its proposed OTI regulatory changes by July 31, 2013. The proceeding is FMC, Docket No. 13-05, Amendments to Regulations Governing Ocean Transportation Intermediary Licensing and Financial Responsibility Requirements and General Duties, 78 Fed. Reg. 32946 (May 31, 2013).
Grove, Jaskiewicz and Cobert LLP has prepared a detailed analysis of the FMC’s proposed changes to its OTI regulations. Interested parties may receive a copy by contacting either Ronald Cobert or Andrew Danas.