FEDERAL MARITIME COMMISSION

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(S E R V E

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NOVEMBER 3, 2015

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(FEDERAL MARITIME COMMISSION)

FEDERAL MARITIME COMMISSION 46 CFR Part 515

DOCKET NO. 13-05 RIN 3072-AC44

Ocean Transportation Intermediary Licensing and Financial Responsibility Requirements, and General Duties

AGENCY: Federal Maritime Commission

ACTION: Final rule

SUMMARY: The Federal Maritime Commission amends its rules governing the licensing, financial responsibility requirements and duties of Ocean Transportation Intermediaries. The rule adapts to changing industry conditions, improves regulatory effectiveness, improves transparency, streamlines processes and reduces regulatory burdens.

DATES:

This rule is effective December 9, 2015, except for the amendments to ? 515.14(c) and (d), which are effective December 9, 2016.

FOR FURTHER INFORMATION CONTACT:

Karen V. Gregory, Secretary Federal Maritime Commission 800 North Capitol Street, N.W. Washington, D.C. 20573-0001 Tel.: (202)523-5725 Email: secretary@

SUPPLEMENTARY INFORMATION: On October 10, 2014, the Federal Maritime Commission (FMC or Commission) published a Notice of Proposed Rulemaking, 79 FR 61544 (October 10, 2014) significantly amending its regulations governing Ocean Transportation Intermediaries (OTIs) for the first time since it promulgated implementing regulations under the Ocean Shipping Reform Act of 1998, Public Law 105-258, 112 Stat. 1902 (OSRA). The proposed rule was published following an Advance Notice of Proposed Rulemaking (ANPR) published in May 2013. 78 FR 32946 (May 31, 2013). The Commission dropped a number of rulemaking proposals in response to earlier ANPR comments.

Changes proposed to the Commission's current rules include: adding requirements to renew OTI licenses every three years; providing for simple on-line renewals at the Commission's web site; providing a single on-line location where the status of an NVOCC's compliance with the Commission's regulations can be quickly verified; and establishing an expedited hearing process for license denials, revocations or suspensions while continuing to provide applicants and licensees due process and the ability to appeal adverse decisions to the full Commission.

The Commission received 25 comments (including three late-filed comments) on the proposed rule from North American Logistics, Inc. (North American); Trans-World Shipping Service, Inc. (Trans-World); J.W. Allen & Co. Inc. (J.W. Allen); Customs Clearance Int. Inc. (Customs Clearance); Kuehne & Nagel Inc. (K&N); John S. Connor, Inc. (John S. Connor); New Direx, Inc. (New Direx); National Customs Brokers & Forwarders Association of America, Inc. (NCBFAA); W.R. Zanes & Co. of La., Inc. (W.R.

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Zanes); Transportation Intermediaries Association (TIA); Pride International, Inc. (Pride); World Shipping Council (WSC); John S. James Co.; Pacific Coast Council of Brokers & Freight Forwarders Association, Inc. (PCC)1; Roanoke Trade (the surety bond division of Roanoke Insurance Group Inc.) (Roanoke); Sefco Export Management Company, Inc. and Quinn Corporate Services, Inc. (Sefco); UPS Freight Services, Inc., UPS Europe SPRL and UPS Asia Group Pte. Ltd. and UPS Supply Chain Solutions, Inc. (collectively UPS); New York New Jersey Foreign Freight Forwarders and Brokers Association, Inc. (NYNJFFF&BA); C J International, Inc. (CJ International); Federazione Nazionale delle Imprese di Spedizioni Internazionali (Fedespedi)2; Cargo-Link International (Cargo-Link); Mohawk Global Logistics (Mohawk); Vanguard Logistics Services (USA), Inc. (Vanguard); Thunderbolt Global Logistics, LLC (Thunderbolt); and the International Federation of Freight Forwarders Associations (FIATA)3.

Subpart A ? General Section 515.2 ? Definitions. The proposed rule removes several definitions that are no longer relevant to the Commission's regulatory activities, including "ocean freight broker" (? 515.2(n)), "brokerage" (? 515.2(d)) and "small shipment" (? 515.2(u)). NCBFAA and NYNJFFF&BA agree that these terms are no longer necessary. Section 515.2(n) modifies the definition of "person" to conform to the definition of "person" in 1 U.S.C. 1, but also specifically includes "limited liability companies." The

1 PCC supported the comments of NCBFAA in their entirety. 2 Fedespedi supported the comments of TIA. 3 FIATA supported the comments of TIA.

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Commission retains the current language that entities covered are those "existing under or authorized by the laws of the United States or of a foreign country." NCBFAA acknowledges the expansion of the definition to cover new forms of corporate structure to be a beneficial change.

NCBFAA, TIA, NYNJFFF&BA and UPS are concerned that the revision of the term "principal" in ? 515.2(o) renders it capable of a much broader application than the current definition, imposing duties on Ocean Freight Forwarders (OFFs) to entities with whom such forwarders have no contractual relationship. This concern arises even though the Commission indicated that the revised definition is not intended to change its meaning or scope.

The current definition provides, in pertinent part, that the term "refers to the shipper, consignee, seller, or purchaser of property, who employs the services of a licensed freight forwarder to facilitate the ocean transportation of such property." UPS asserts that the words "who employs the services of" makes it clear that OFFs are the agents of those that employ them and not agents to those that do not. The revised definition would have eliminated clarifying text that OFF principals are limited to those who employ licensed forwarders. The Commission finds these concerns have merit and revises the definition to substantially restore the current definition as follows:

Principal refers to the shipper, consignee, seller, or purchaser of property, and to anyone acting on behalf of such shipper, consignee, seller, or purchaser of property, who employs the services of a licensed freight forwarder to facilitate the ocean transportation of such property.

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As redrawn, only the introductory phrase "except as used in Surety Bond Form FMC-48, and Group Bond Form FMC-69" is deleted from the current definition. The use of "principal" in financial responsibility forms is made clear in each form and need not be further distinguished in the ? 515.2(o) definition.

The definitions of "freight forwarding services" (? 515.2(h)) and "non-vesseloperating common carrier services" (? 515.2(k)) are revised to better reflect OTIs' current practices and terminology. For example, "freight forwarding services" are revised to include preparation of "export documents, including required `electronic export information,'" rather than the legacy paper-based shipper export declarations (? 515.2(h)(2)). OFF and NVOCC services are both revised to include preparation of ocean common carrier and NVOCC bills of lading "or other shipping documents" (?? 515.2(h)(5) and 515.2(k)(4)). The change acknowledges that OTI services cover preparation of various forms of documents pursuant to which cargo is transported, whether or not they are "equivalent" to ocean bills of lading.

NCBFAA favorably opines that the revisions to "freight forwarding services" and "non-vessel-operating common carrier services" make the definitions more consistent with the services that OTIs currently provide. However, it also indicates that the definitions could be expanded further to include "the filing of shipment manifest data with relevant government agencies." Inasmuch as these definitions provide that services "may include, but are not limited to" those listed, it would appear that the addition of NCBFAA's suggested text is not necessary.

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