The Federal Maritime Commission (FMC) last week published an Advance Notice of Proposed Rule regarding Ocean Transportation Intermediaries (OTI) in the Federal Register, potentially changing the way OTIs are licensed and financially regulated.
The proposed rule, first put forward in mid-May, also requires foreign non-vessel-operating common carriers (NVOs) to establish U.S. offices.
The notice in the Federal Register, published May 31, starts a 60-day notice and comment period, during which affected or interested parties, including U.S. and foreign-based NVOs and U.S.-based freight forwarders, can provide feedback, objections and other commentary on the proposed rule.
The trade law firm Venable called the proposed rewrite of the OTI rules “the first substantive revisit of regulatory requirements for forwarders and NVOCCs since the late 1990s, when the FMC implemented the statutory changes ushered in by the Ocean Shipping Reform Act of 1998.”
In a notice to clients, Venable outlined the potential impacts to OTIs of the new rule:
- OTI licenses will now expire every two years and must be renewed. The renewal application will be due 60 days prior to the expiration date of the license. The FMC is seeking comments on the process that should be used to renew the approximately 4,500 existing OTI licenses that have no expiration dates.
- Each qualifying individual must be 21 or older, responsible for general supervision of the licensee’s OTI operations, and have gained three years’ worth of “diverse and relevant” experience with a licensed, bonded or registered OTI.
- OTIs will no longer be required to procure and maintain additional financial responsibility to cover an OTI’s unincorporated branch offices.
- All license applications and registration forms must be filed electronically unless the FMC grants a waiver to file on paper.
Meanwhile, the proposed rule would also raise the financial responsibilities of OTIs to $25,000 for freight forwarders and licensed NVOs, and $50,000 for foreign-based registered NVOs. Foreign-based NVOs, aside from being required to establish U.S. offices, would also have to use licensed OTIs as agents, and they would be subject to the same two-year renewal process as domestic OTIs.
Venable said another change included in the proposed rule would eliminate full evidentiary hearings to appeal FMC decisions. Instead, OTIs would submit written arguments to a hearing officer.
The notice and comment period closes on July 31. After reviewing the comments submitted, the FMC will issue a revised Final Rule, as well as an effective date for all changes and new requirements. – Eric Johnson