Amendments to Regulations Governing Ocean Transportation Intermediary Licensing and Financial Responsibility Requirements, and

2014-09-25 08:37
On May 31, 2013, the U.S. Federal Maritime Commission (FMC) approved to reform the Ocean Transportation Intermediaries (OTIs) rules governing the licensing, financial responsibility requirements and duties of OTIs, regulating domestic and foreign Non-Vessel-Operating Common Carriers (NVOCCs) and freight forwarders. FMC proposed new rules to adapt to changing industry conditions, improve regulatory effectiveness, improve transparency, streamline processes and reduce regulatory burdens.

Eligibility and Procedure for Licensing

New rules require that OTI licenses be issued for an initial two year period and renewed every two year. Licensees must submit a license renewal application form 60 days prior to the expiration date of their license. Renewal will require licensed OTIs to update their QIs’ identification and contact information along with changes in business or organization, trade names, tariff publication information, physical address, and electronic contact data.

The Licensee’s Qualifying Individual (QI) must have three years of relevant and diverse experience in performing OTI activities; relevant and diverse OTI experience must be obtained working for licensed or registered OTIs, foreign based OTIs, Vessel Operating Common Carriers (VOCCs), or as an employee of a cargo owner.

Revocation or Suspension of License

Failure to renew a license may result in revocation or suspension of the license.

Failure to file a Form FMC-1 within 120 days of being notified that its license application had been approved or maintain a Form FMC-1 and a published tariff may result in revocation or suspension of an NVOCC’s license.

Foreign based NVOCCs

Foreign based NVOCCs that opt to obtain a license rather than register are required to establish a presence in the US by opening an unincorporated office that is operated by a bona fide employee and qualifies to do business where it becomes resident.

In addition to current requirements such as evidence of financial responsibility, tariff publication, and Form FMC-1 filing, Foreign based NVOCCs that choose to operate as registered NVOCCs, rather than obtaining a license are required to submit a registration form with additional information, including their legal name, trade names, principal business address, telephone and fax numbers, contact person with email address and US resident legal agent contact and address. The registration must be renewed every two years.

Financial Responsibility Requirements

Current financial responsibility levels are as below:

• Ocean Freight Forwarders: financial responsibility in the amount of$50,000 plus $10,000 for each unincorporated branch office in the United States performing ocean freight forwarder services
• NVOCCs: financial responsibility in the amount of $75,000 plus $10,000 for each unincorporated branch office in the United States performing NVOCC services
• Registered foreign-based NVOCC: financial responsibility in the amount of $150,000

FMC proposed to increase OTI financial responsibility levels.

• Ocean Freight Forwarders :from $50,000 to $75,000
• NVOCC s: from 75,000 to 100,000
• Registered foreign based NVOCCs: from 150,000 to 200,000

NVOCC’s registration will not be effective until the registrant has filed evidence of financial responsibility with FMC within 120 days of notification of license approval, filed a From FMC-1 and published a tariff.

Claims against OTIs

Claims against OTI bonds are prioritized in the following order;

1) Claims by shippers and consignees
2) Claims by common carriers or other third party creditors
3) Claims for civil penalties by the Commission
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