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Ocean Transportation Intermediary Regulations to be Further Amended

Wednesday, December 19, 2018
Sandler, Travis & Rosenberg Trade Report

The Federal Maritime Commission is proposing to amend its rules governing licensing, financial responsibility requirements, and general duties for ocean transportation intermediaries. Comments on the proposed changes, which the FMC states are mainly administrative and procedural, are due by Jan. 18.

There are two types of OTIs that serve as transportation middlemen for cargo moving in the U.S.-foreign oceanborne trades: non-vessel-operating common carriers and ocean freight forwarders. All NVOCCs and OFFs located in the U.S. must be licensed by the FMC and establish financial responsibility. Foreign NVOCCs may choose to become FMC-licensed but are not required to do so; however, they must register with the FMC and establish financial responsibility if they are not licensed.

In November 2015 the FMC made significant amendments to its regulations governing OTIs, including adding requirements to renew OTI licenses every three years, providing for simple on-line renewals, eliminating the $10,000 financial responsibility coverage requirement for each unincorporated branch office, and establishing an expedited hearing process for license denials, revocations, and suspensions.

Based on its experience implementing the revised regulations, the FMC is proposing the following changes to clarify provisions and further reduce the burden on regulated entities.

- clarifying that licensed OTIs used by foreign-based registered NVOCCs as agents to provide NVOCC services in the U.S. can be either OFFs or NVOCCs

- removing the optional paper application process for OTI licenses

- adding language to clarify that an officer of a general partner entity can be the qualifying individual in partnerships between entities other than individuals

- adding a requirement that NVOCCs submit their Form FMC-1 prior to being issued a license

- improving and clarifying the license renewal process; e.g., spreading renewals out across the entire year and allowing OTIs additional time to complete the renewal process

- expanding the types of applications subject to direct FMC review to include applicants employing any of the same officers, managers, or members as an OTI whose license was revoked or denied within the previous three years because the FMC determined that the OTI was not qualified to provide OTI services

- clarifying that denial of an OTI license application is final and not subject to hearing procedures

- clarifying that a change in a licensee’s name includes adding or deleting a trade name relating to its OTI services and that OTIs must seek prior FMC approval before making such changes

- clarifying that in addition to the principal’s name, trade name, and address, the financial responsibility instrument must clearly identify the principal’s state of incorporation or formation and the printed name and title of the signatory

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