FMC Could be Ready to Advance Modifications to OTI Regulations

Friday, October 16, 2015

A year after substantially revising a proposal to overhaul its regulations on ocean transportation intermediaries, the Federal Maritime Commission may be preparing to issue a final rule. The Commission is scheduled to hold a partially open meeting Oct. 21 at which this rulemaking will be discussed. Also on the agenda are briefings on FMC information technology modernization, the Commission’s continuity of operations plan, and maritime discussions with Japan.

In May 2013 the FMC outlined changes to its rules governing the licensing, financial responsibility requirements and duties of OTIs that were designed to reflect changing industry conditions, improve regulatory effectiveness and transparency, streamline processes and reduce regulatory burdens. However, a largely negative response from industry prompted the FMC to revamp its approach in an October 2014 proposed rule. Among the provisions in that proposal were the following.

– OTIs would have to register and renew their licenses every three years.

– Common carriers would have to verify OTI licenses, registrations, tariff publication and financial responsibility provided such verifications could be made at a single location on the FMC’s website.

– The definitions of “freight forwarding services” and “non-vessel-operating common carrier services” would be revised to ensure that these services cover preparation of the documents pursuant to which cargo is transported, whether or not they are equivalent to ocean bills of lading.

– The requirement that only licensed intermediaries in the U.S. may perform OTI services on behalf of an unlicensed OTI (i.e., foreign-based NVOCC) would be replaced with a requirement for registered NVOCCs to use licensed OTIs as agents in the U.S. with respect to OTI services performed in the U.S.

– The regulatory burden associated with procuring and maintaining additional financial responsibility to cover an OTI’s unincorporated branch offices would be removed.

– The FMC would be able to consider all information relevant to the determination of whether an applicant has the necessary character to render OTI services.

– A license application would become invalid, and approval rescinded, if the required proof of financial responsibility is not filed within 120 days of notification of license approval.

– All OTIs would have to promptly respond to requests for all records and books of accounts made by authorized FMC representatives.

A complete description of the proposed rule can be found here.

©2015, Sandler, Travis & Rosenberg, P.A. Originally published in the October 16, 2015 issue of the Sandler, Travis & Rosenberg Trade Report, a daily e-newsletter covering the international trade agreements and global laws, regulations, policies and procedures that affect imports and exports worldwide. Reprinted by permission. Click here for a free subscription.