The Federal Maritime Commission (FMC) this week voted a proposed reformation of the rules governing ocean transportation intermediaries (OTIs), both domestic and foreign.
Under the proposed rule, licensed OTIs, which include non-vessel-operating common carriers (NVOs) and freight forwarders, would have to renew their licenses every two years. Currently, OTIs have no requirement to renew once they have been granted a license. They only need a qualifying individual (QI) for the licensee. If one leaves the company, the OTI needs to replace that person to maintain the license.
Another provision of the proposed rule requires foreign-based NVOs to have a U.S. presence that is staffed full-time.
“Qualifying individuals will have to be at least 21 years of age and have three years of ‘relevant and diverse’ OTI experience, including general supervision responsibilities,” said an item in a newsletter from the law firm Venable. “Also under the proposed rule, this experience cannot be gained with an unlicensed OTI. In addition, the FMC will be empowered to review a qualifying individual’s character at any time. The proposed rule adds character criteria by which an individual can be disqualified, including violations of shipping laws, operating while unlicensed, or suspension of a Transportation Worker Identification Credential (TWIC)."
There are also proposed changes to the claim priority regulations by which parties seek payment from an OTI’s bond, insurance or surety. They include a “notice and trigger” mechanism, by which carriers and marine terminal operators must submit notices to the FMC of claims that may result in court action and judgments. The FMC will then post these notices on its website with the disclaimer that not all posted claims have merit.
The commission voted 3-2 in favor of the proposed reforms. The advanced notice of proposed rulemaking will be published in the Federal Register, starting a 60-day notice and comment period preceding the final rule publication.
Commissioners Rebecca Dye and Michael Khouri voted against moving forward with the OTI reforms as proposed, according to Venable, citing increased compliance costs in the absence of a clearly defined harm. Dye advocated harmonizing the OTI rules, rather, with the MAP-21 transportation bill, which regulates motor carriers and brokers of transportation services. MAP-21 requires brokers to renew their registration every five years and requires $75,000 proof of financial responsibility.
The majority stressed that the proposed rules are simply an advanced notice of proposed rulemaking, and that industry input during the notice and comment period will be critical. After the notice and comment period, the FMC will issue a revised and final rule, as well as an effective date.
“Most likely, enforcement of the new regulations will be phased in over a transitional period,” Venable said. - Eric Johnson