Adjustment of the Amount for the Optional Bond Rider for Proof of NVOCC Financial Responsibility for Trade With the People's Republic of China, 51935-51939 [2012-21095]

Download as PDF Federal Register / Vol. 77, No. 167 / Tuesday, August 28, 2012 / Rules and Regulations that these investigative files will not be disclosed inappropriately [59 FR 36717 (July 19, 1994)]. Likewise, NIH believes that exempting the new system, ‘‘NIH Records Related to Research Misconduct Proceedings, HHS/NIH,’’ from the Privacy Act provisions is essential to ensure that material in NIH’s files related to research misconduct proceedings is not disclosed inappropriately. Except for information that would reveal the identity of a source who was expressly promised confidentiality, the access exemption will not prohibit HHS/NIH from granting respondents’ access requests consistent with the PHS Policies on Research Misconduct (42 CFR Part 93), including in those cases in which a finding of research misconduct has become final and an administrative action has been imposed. sroberts on DSK5SPTVN1PROD with RULES Analysis of Impacts HHS/NIH has examined the impacts of the final rule under Executive Order 12866 and the Regulatory Flexibility Act (5 U.S.C. 601–612), and the Unfunded Mandates Reform Act of 1995 (Pub. L. 104–4). Executive Order 12866 directs agencies to assess all costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity). The agency believes that this final rule is not a significant regulatory action under the Executive Order. The Regulatory Flexibility Act requires agencies to analyze regulatory options that would minimize any significant impact of a rule on small entities. Because the final rule imposes no duties or obligations on small entities, the agency certifies that the final rule will not have a significant economic impact on a substantial number of small entities. Section 202(a) of the Unfunded Mandates Reform Act of 1995 requires that agencies prepare a written statement, which includes an assessment of anticipated costs and benefits, before proposing ‘‘any rule that includes any Federal mandate that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more (adjusted annually for inflation) in any one year.’’ The current threshold after adjustment for inflation is $136 million, using the most current (2010) Implicit Price Deflator for the Gross Domestic Product. NIH does not expect this final rule to result in any 1-year VerDate Mar<15>2010 16:13 Aug 27, 2012 Jkt 226001 expenditure that would meet or exceed this amount. List of Subjects in 45 CFR Part 5b Privacy. For the reasons set out in the preamble, the Department’s Privacy Act Regulations, Part 5b of 45 CFR Subtitle A, are amended as follows: PART 5b—PRIVACY ACT REGULATIONS 1. The authority citation for Part 5b continues to read as follows: ■ Authority: 5 U.S.C. 301, 5 U.S.C. 552a 2. In § 5b.11, add paragraph (b)(2)(vii)(D) to read as follows: ■ § 5b.11 Exempt systems. * * * * * (b) * * * (2) * * * (vii) * * * (D) NIH Records Related to Research Misconduct Proceedings, HHS/NIH, 09– 25–0223. * * * * * Dated: July 20, 2012. Kathleen Sebelius, Secretary, Department of Health and Human Services. [FR Doc. 2012–20886 Filed 8–27–12; 8:45 am] BILLING CODE 4140–01–P FEDERAL MARITIME COMMISSION 46 CFR Part 515 [Docket No. 11–09] RIN 3072–AC46 Adjustment of the Amount for the Optional Bond Rider for Proof of NVOCC Financial Responsibility for Trade With the People’s Republic of China Federal Maritime Commission. Final rule. AGENCY: ACTION: The Federal Maritime Commission amends its rules regarding the amount of bond coverage on the optional China Bond Rider for NonVessel-Operating Common Carriers (NVOCCs). The final rule is intended to provide NVOCCs with the ability to post a bond with the Commission that satisfies the equivalent of 800,000 Chinese Renminbi, for which the equivalent U.S. Dollar amount has fluctuated since the regulation was first adopted by the Commission. DATES: The final rule is effective November 23, 2012. FOR FURTHER INFORMATION CONTACT: Karen V. Gregory, Secretary, Federal SUMMARY: PO 00000 Frm 00069 Fmt 4700 Sfmt 4700 51935 Maritime Commission, 800 North Capitol Street NW., Washington, DC 20573–0001, Phone: (202) 523–5725; Rebecca A. Fenneman, General Counsel, Federal Maritime Commission, 800 North Capitol Street NW., Washington, DC 20573–0001, Phone: (202) 523–5740, secretary@fmc.gov. SUPPLEMENTARY INFORMATION: Background Under a Memorandum of Consultations pursuant to the 2003 bilateral Maritime Agreement between the United States and the People’s Republic of China (China or the PRC), the PRC does not require U.S. NonVessel-Operating Common Carriers (NVOCCs) to make a cash deposit in a Chinese bank as would otherwise be required by Chinese regulations, so long as the NVOCC: (1) Is a legal person registered by U.S. authorities; (2) obtains an FMC license as an NVOCC; and (3) provides evidence of financial responsibility in the total amount of Chinese Renminbi (RMB) 800,000 or U.S. $96,000. An FMC-licensed U.S. NVOCC that voluntarily provides an additional surety bond in the amount of $21,000 (denominated in U.S. Dollars or Chinese Renminbi), which by its conditions is available for potential claims of the Ministry of Transport (MOT) of the PRC (as well as other Chinese agencies) for violations of the Chinese Regulations on International Maritime Transportation, may register in the PRC without paying the cash deposit otherwise required by Chinese law and regulation. In 2004, the Commission issued a Notice of Proposed Rulemaking (NPR) to explore mechanisms for NVOCCs to file proof of such additional financial responsibility. See 69 FR 4271 (January 29, 2004). On April 1, 2004, the Commission issued a final rule that amended its regulations governing proof of financial responsibility for ocean transportation intermediaries to allow an optional bond rider to be filed with a licensed NVOCC’s proof of financial responsibility to provide additional proof of financial responsibility for such carriers serving the U.S. oceanborne trade with the PRC. Docket No. 04–02, Optional Rider for Proof of Additional NVOCC Financial Responsibility, 30 S.R.R. 179 (2004). On April 15, 2011, the Commission received a communication from the Maritime Administration of the U.S. Department of Transportation, transmitting a request from the MOT to revise the Commission’s regulations at Appendix E to Subpart C of Part 515— E:\FR\FM\28AUR1.SGM 28AUR1 51936 Federal Register / Vol. 77, No. 167 / Tuesday, August 28, 2012 / Rules and Regulations Optional Rider for Additional NVOCC Financial Responsibility (Optional Rider to Form FMC 48) [Form 48A] (China Bond Rider). MOT requested that the Commission review its regulations set forth in 46 CFR Part 515. MOT asserted that the exchange rate between the U.S. Dollar ($) and the Renminbi (RMB) has risen from 1:8.276 in 2003 to 1:6.536 at present, an increase of approximately 21.02%. Consequently, MOT asserted, the amount of $96,000 is inadequate to meet 800,000 RMB at the current exchange rate. Specifically, MOT requested that the regulation be revised to include a provision that would allow for adjustments to the U.S. Dollar amount required in a NVOCC optional Bond Rider covering transportation activities in the U.S./China trades when the U.S. Dollar and the Renminbi exchange rate fluctuates 20% higher or lower than that of the last adjustment. MOT also proposed that the adjustment be jointly approved by the U.S. and the PRC at the bilateral maritime consultative meeting of the same year. Finally, if this proposal is adopted, the MOT also proposed that the existing total required bond amount of U.S. $96,000 be increased to U.S. $122,000, which, MOT asserted, is the equivalent amount of 800,000 RMB at the present exchange rate. Comments in Response to the Notice of Inquiry The Commission issued a Notice of Inquiry (NOI) soliciting public commentary on the proposal on June 10, 2011. The NOI sought general comments on the optional China Bond Rider, and also presented three questions for particular study: sroberts on DSK5SPTVN1PROD with RULES 1. Describe how, and to what extent, the optional rider to the required NVOCC bond has impacted your company’s business operations? Does this make for more certainty in your business operation? Has the optional rider to the required NVOCC bond impacted your overall business costs? If so, how? 2. What do you see as the advantages and disadvantages of an adjustment to the current optional rider to the required NVOCC bond? 3. Please explain whether, and if so, how significantly your business costs/operations would be affected by a provision that allows for adjustments to the U.S. Dollar amount required in a NVOCC optional China bond rider when the USD (U.S. Dollar) and the RMB (Renminbi) exchange rate fluctuates 20% higher or lower. The Commission received three comments, summarized below. Econocaribe Consolidators: John Abisch, the President of Econocaribe, did not appear to oppose the suggestion that the China Bond Rider be increased to cover currency valuations. Instead, the comment focused on the effect of the VerDate Mar<15>2010 16:13 Aug 27, 2012 Jkt 226001 China Bond Rider and other rider requirements imposed on bondholders, such as the requirement that NVOCC’s obtain an additional $10,000 in bond coverage for each branch office. Econocaribe noted that if a bondholder has five additional branch offices, the total coverage would be $125,000 ($75,000 base plus $50,000 for five branch offices). Econocaribe stated that ‘‘[i]f the FMC can get the [Chinese Government] to ‘count’ the entire bond currently posted, including the amount of the bond posted for the branch offices, even with the [Chinese Government] increasing the bond requirement, this would actually have a slight reduction in the cost of the bond[.]’’ Mohawk Global Logistics: Richard J. Roche submitted comments on behalf of Mohawk Global Logistics. Mohawk believes that the optional rider method of conducting business is ‘‘a fair and equitable’’ solution to the alternative of posting a cash bond in China. Mohawk prefers bond coverage to cash deposit because it allows Mohawk to ‘‘expand [its] offering in China without having to make a significant investment of cash.’’ Similarly, Mohawk understands currency fluctuations, and ‘‘agree[s] that an increase in demonstrated bond coverage is warranted due to the lower value of the U.S. dollar today.’’ Mohawk did not identify disadvantages to the increase, other than the minor administrative burden of possibly prorating bonds in effect, addressing different bond premium dates, and the incremental increase in the cost of the China Bond Rider coverage. These disadvantages would be multiplied if the Commission added an automatic trigger based on a currency fluctuation of a defined percentage. If currencies fluctuated rapidly or drastically, it could cause additional administrative burdens on bondholders. Mohawk did not see this outcome as likely, and believed that an automatic trigger for additional coverage could prove workable. Mohawk also agreed with Econocaribe that many bondholders already demonstrate 800,000 RMB worth of coverage if one includes the aggregate amount posted for branch offices. In Mohawk’s view: A more reasonable approach might be for China to determine the exchange value to be assigned in a given 12 month period, and allow NVOCC’s to offset the bond coverage based on total bond value, adding any additional coverage as might be required to make up any shortfall not already covered by multiple branch offices. This would limit the bond transactions significantly, while providing simplicity and stability for all involved. PO 00000 Frm 00070 Fmt 4700 Sfmt 4700 National Customs Brokers and Forwarders Association (NCBFAA): The NCBFAA notes in its comments the history of the China Bond rider provision, and the role that the NCBFAA played in Docket No. 04–02, Optional Bond Rider for Proof of Additional NVOCC Financial Responsibility. Like Mohawk, the NCBFAA believes that the China Bond Rider has been ‘‘extremely successful,’’ and has allowed U.S. companies to provide services in China that might otherwise be difficult if the companies were required to post cash with the Chinese Government. Though U.S.licensed NVOCCs must register in China in order to conduct business, NCBFAA indicates that the process ‘‘has not been unduly onerous,’’ and ‘‘has not heretofore unduly increased operating costs.’’ The NCBFAA also accepts that the respective currencies have fluctuated, and some justification exists for the Chinese Government’s request to increase the amount of the optional Bond Rider. Additionally, although the NCBFAA does not object to the Commission’s consideration of an optional Bond Rider adjustment any time the currency values fluctuate more than 20%, it does not believe that an automatic adjustment ‘‘is necessary or appropriate.’’ The NCBFAA also echoes the beliefs of Mohawk and Econocaribe that many NVOCCs already have an aggregate coverage of greater than $125,000 (which would surpass the adjusted optional China Bond Rider amount of $122,000). If the Chinese Government assented, NCBFAA posits that allowing the NVOCCs to count all bond coverage might actually decrease the cost for many U.S.-licensed NVOCCs who do business in China. The NCBFAA looks to the Annex to the 2003 Bilateral Maritime Agreement for support, noting that it did not require a Bond Rider of a certain amount, but instead required evidence of financial responsibility of a certain total amount ($96,000). The Agreement left open how that total may be satisfied. The NCBFAA thus suggests that the Commission seek the Chinese Government’s assent to accepting a total bond amount in addition to a Bond Rider in satisfying the $122,000 amount. Each NVOCC could thus determine whether it was more cost effective to procure a Bond Rider, or simply rely on its aggregate coverage amount that exceeded $122,000. This would reduce operating costs for some NVOCCs, but would still maintain adequate coverage. E:\FR\FM\28AUR1.SGM 28AUR1 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 77, No. 167 / Tuesday, August 28, 2012 / Rules and Regulations Comments in Response to the Notice of Proposed Rulemaking The Commission also issued a Notice of Proposed Rulemaking (NPR) soliciting public commentary on the proposal on January 5, 2012. The NPR sought general comments on the optional China Bond Rider and on the proposed rulemaking. The proposed rule amended Appendix F to Subpart C of Part 515 (group bonds) to increase the amount specified from $21,000 to $50,000. In response to the comments the Commission received from the Notice of Inquiry from June 10, 2012, the proposed rule amended Appendix E to Subpart C of Part 515 (individual NVOCC bonds) to remove pre-specified rider amounts to account for variances in NVOCCs’ combined total surety levels maintained to meet the Commission’s other financial responsibility requirements, including $10,000 in bond coverage that NVOCCs maintain for each of their branch offices pursuant to 46 CFR 515.21(a)(4). This recognition means that NVOCCs with branch offices may have rider amounts that vary to satisfy the level of coverage requested by the PRC, so long as their total coverage equals $125,000. The Commission sought comments particularly on the feasibility of these proposed revisions. Carla Leung: Leung submitted a brief comment expressing significant concern as a small business owner affected by the regulation change. Her comments addressed the increased costs the proposed rulemaking might impose on small businesses in the industry and the ability to stay in business during these difficult financial times. Leung expressed concern that her business may not be able to sustain the increased costs. Roanoke Trade: Matthew L. Zehner, Vice President of Surety Information & Communication for Roanoke Trade Services, Inc. (Roanoke), submitted comment as an insurance broker who provides surety bond products, such as the Chinese Bond Rider, to Ocean Transportation Intermediaries (OTIs). Zehner expressed Roanoke’s support for the proposed changes as they represented the continuation of a regime that allows OTIs to ‘‘relatively easily’’ satisfy ‘‘certain financial responsibilities and obligations required’’ by the People’s Republic of China. Support was also registered for leaving blank spaces in the rider form in order to allow flexibility for varying business structures. Zehner did express concern regarding the timing of implementation as riders can generally only be altered or added VerDate Mar<15>2010 16:13 Aug 27, 2012 Jkt 226001 in accord with ‘‘the underlying bond’s anniversary cycle.’’ Roanoke proposes a 12-month phase-in period in order to limit the impact of immediate compliance on the industry and FMC resources. Alternatively, Roanoke would request at least 90 days notice prior to the regulation taking effect as to allow time for proper processing of bonding alterations. Roanoke also sought ‘‘additional clarity or guidance’’ regarding how to represent bond amounts in paragraphs 1.a. and 1.c. of FMC Form 48A when bonded U.S. office locations are involved. FedEx Trade Networks Transport & Brokerage, Inc.: As a ‘‘large freight forwarder and non-vessel operating common carrier licensed by the FMC,’’ FedEx Trade Networks Transport & Brokerage, Inc. (Fedex Trade Networks) registered support for the proposed rulemaking modification. Fedex Trade Networks finds the increased bond requirement a reasonable request by the Chinese Ministry. The comment highlighted the benefit to U.S. NVOCCs of using bonds to satisfy Chinese regulations rather than necessarily operating directly with a Chinese bank. Likewise, the comment ‘‘strongly endorses’’ FMC proposals to allow bond amounts to be aggregated. Fedex Trade Networks explains: ‘‘Allowing NVOCCs to meet the increased bond requirement by maintaining a bond of at least $125,000.00 would both fully satisfy the terms of the U.S.-China agreement and be more cost effective and efficient.’’ Final Rule In the 2003 Memorandum of Consultations between the U.S. and China, it was agreed that U.S. NVOCCs operating in the China trade would provide ‘‘evidence of financial responsibility in the total amount of Chinese Renminbi (RMB) 800,000 or U.S. $96,000.’’ The Memorandum of Consultations specifies amounts in both Chinese and United States currency, and did not provide for adjustment in exchange rates. Nevertheless, in recognition of the recent slight improvement in the value of the RMB against the U.S. Dollar (and in a spirit of comity and in conformity with Executive Order 13609, Promoting International Regulatory Cooperation) the Commission adjusts its optional China Bond Rider so that total NVOCC financial responsibility will equal 800,000 RMB under current exchange rates. The Commission acknowledges that the majority of the submitted comments see value in maintaining the optional China Bond Rider in contrast to any alternative, and recognizes the PO 00000 Frm 00071 Fmt 4700 Sfmt 4700 51937 PRC’s justification for adjusting the value based on exchange rate changes that have taken place since 2004. Therefore, based on the generally favorable comments, the Commission now amends its regulations in 46 CFR Part 515 to adjust the amount of surety available in the optional China Bond Rider provided in Appendices E and F to Subpart C of Part 515 (Form FMC– 48A, OMB No. 3072–0018), and provide a method for NVOCCs to demonstrate financial responsibility by aggregating the total bond coverage for all bonds. The rule amends Appendix F to Subpart C of Part 515 (group bonds) to increase the amount specified from $21,000 to $50,000. In response to the comments the Commission received, the rule amends Appendix E to Subpart C of Part 515 (individual NVOCC bonds) to remove pre-specified rider amounts to account for variances in NVOCCs’ combined total surety levels maintained to meet the Commission’s other financial responsibility requirements, including $10,000 in bond coverage that NVOCCs maintain for each of their branch offices pursuant to 46 CFR 515.21(a)(4). This recognition means that NVOCCs with branch offices may have rider amounts that vary to satisfy the level of coverage requested by the PRC, so long as their total coverage equals $125,000. The Commission intends to review the value of the total coverage provided by the optional China Bond Rider periodically. Small Business Regulatory Flexibility Threshold Analysis Pursuant to 5 U.S.C. 605(b), and in response to comments regarding small businesses affected by this optional China Bond Rider, a Regulatory Flexibility Threshold Analysis has been performed; it has been determined that the final rule will not have a significant economic impact on a substantial number of small entities. The small entities affected are ocean transportation intermediaries (OTIs). In determining whether a significant economic impact would occur under the new rule, the first estimate costs of the bond rider coverage were assessed. The economic impact of the optional China Bond Rider has been estimated to be less than $20 for every $1,000 of bond rider coverage, with most estimates being under $15 for every $1,000 of bond rider coverage. To that end, $21,000 of bond rider coverage would cost approximately $420.00 under this analysis. Given this information, it is determined that these first estimate costs are not significant to small entities. Uncertainty remains on the E:\FR\FM\28AUR1.SGM 28AUR1 51938 Federal Register / Vol. 77, No. 167 / Tuesday, August 28, 2012 / Rules and Regulations sroberts on DSK5SPTVN1PROD with RULES exact amount the optional China Bond Rider coverage would cost; however, this uncertainty is minimized given the fact that over seven bond rider coverage estimates were collected from agents in the market. To determine whether a substantial number of small entities would be affected, the OTI licensing statistics were reviewed. There are approximately 3,500 licensed U.S. OTIs that could file for the optional China Bond Rider; currently, only 350 OTIs have filed for the available optional China Bond Rider. This amounts to less than 10% of the entire market that may reasonably participate in the optional bond rider program. Based on this data, it is determined that a substantial number of small entities will not be affected by this rule. It is important to note that the optional China Bond Rider is not an FMC-required bond; rather it is an alternative instrument crafted by the United States and China to relieve U.S. NVOCCs from the People’s Republic of China’s cash deposit requirement. The rule will not have a significant economic impact on a substantial number of small entities as outlined by the Regulatory Flexibility Threshold Act. Certifications and Statutory Reviews The Commission certifies this rulemaking because the proposed changes establish an optional provision for U.S. licensed NVOCCs, which may be used at their discretion. While some of these businesses qualify as small entities under the guidelines of the Small Business Administration, the rule provides a more cost-effective alternative than would otherwise be available to assist U.S. licensed NVOCCs with their business endeavors in the PRC. As such, the rule helps to promote U.S. business interests in the PRC and facilitate U.S. foreign commerce. The Chairman of the Commission certifies, pursuant to section 605(b) of the Regulatory Flexibility Act, 5 U.S.C. 601 et seq., that the rule will not, if promulgated, have a significant economic impact on a substantial number of small entities. The Commission recognizes that the majority of businesses that would be affected by this rule qualify as small entities under the guidelines of the Small Business Administration. The rule, however, would encompass an optional provision for U.S. licensed NVOCCs, which may be used at their discretion. The rule would not pose an economic detriment to all NVOCCs regulated by the Commission. It would VerDate Mar<15>2010 16:13 Aug 27, 2012 Jkt 226001 only impact those NVOCCs who choose to exercise the option, at this date approximately 10% of the entire pool of all NVOCCs. Instead of applying to all NVOCCs (a majority of which are small entities), it adjusts the favored method of demonstrating financial responsibility for those NVOCCs who choose to use it. This method of demonstrating financial responsibility implements an agreement with the PRC that allows U.S. NVOCCs to avoid having to make a large cash deposit in a Chinese bank. As such, the rule would help continue to promote U.S. business interests in the PRC and facilitate U.S. foreign commerce. This rule is not a ‘‘major rule’’ under 5 U.S.C. 804(2). The collection of information requirements contained in this rule have been submitted to the Office of Management and Budget for review under section 3504(h) of the Paperwork Reduction Act of 1980, as amended. Public reporting burden for this collection of information was estimated to be 1.25 hours per response, including time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. List of Subjects in 46 CFR Part 515 Freight, Maritime carriers, Nonvessel-operating common carriers. For the reasons stated in the supplementary information, the Federal Maritime Commission amends 46 CFR Part 515 as follows. PART 515—LICENSING, FINANCIAL RESPONSIBILITY REQUIREMENTS, AND GENERAL DUTIES FOR OCEAN TRANSPORTATION INTERMEDIARIES 1. The authority citation for part 515 continues to read as follows: ■ Authority: 5 U.S.C. 553; 31 U.S.C. 9701; 46 U.S.C. 305, 40102, 40104, 40501–40503, 40901–40904, 41101–41109, 41301–41302, 41305–41307; Pub. L. 105–383, 112 Stat. 3411; 21 U.S.C. 862. 2. Revise Appendix E to Subpart C of Part 515 to read as follows: ■ PO 00000 Frm 00072 Fmt 4700 Sfmt 4700 APPENDIX E TO SUBPART C OF PART 515—OPTIONAL RIDER FOR ADDITIONAL NVOCC FINANCIAL RESPONSIBILITY (OPTIONAL RIDER TO FORM FMC–48) [FORM 48A] FMC–48A, OMB No. [3072–0018, (04/06/04)] Optional Rider for Additional NVOCC Financial Responsibility [Optional Rider to Form FMC–48] RIDER The undersigned [______], as Principal and [______], as Surety do hereby agree that the existing Bond No. [____] to the United States of America and filed with the Federal Maritime Commission pursuant to section 19 of the Shipping Act of 1984 is modified as follows: 1. The following condition is added to this Bond: a. An additional condition of this Bond is that $_____ (payable in U.S. Dollars or Renminbi Yuan at the option of the Surety) shall be available to pay any fines and penalties for activities in the U.S.-China trades imposed by the Ministry of Communications of the People’s Republic of China (‘‘MOC’’) or its authorized competent communications department of the people’s government of the province, autonomous region or municipality directly under the Central Government or the State Administration of Industry and Commerce pursuant to the Regulations of the People’s Republic of China on International Maritime Transportation and the Implementing Rules of the Regulations of the PRC on International Maritime Transportation promulgated by MOC Decree No. 1, January 20, 2003. b. The liability of the Surety shall not be discharged by any payment or succession of payments pursuant to section 1 of this Rider, unless and until the payment or payments shall aggregate the amount set forth in section 1a of this Rider. In no event shall the Surety’s obligation under this Rider exceed the amount set forth in section 1a regardless of the number of claims. c. The total amount of coverage available under this Bond and all of its riders, available pursuant to the terms of section 1(a.) of this rider, equals $____. The total amount of aggregate coverage equals or exceeds $125,000. d. This Rider is effective the [____] day of [______], 20 [______], and shall continue in effect until discharged, terminated as herein provided, or upon termination of the Bond in accordance with the sixth paragraph of the Bond. The Principal or the Surety may at any time terminate this Rider by written notice to the Federal Maritime Commission at its offices in Washington, DC, accompanied by proof of transmission of notice to MOC. Such termination shall become effective thirty (30) days after receipt of said notice and proof of transmission by the Federal Maritime Commission. The Surety shall not be liable for fines or penalties imposed on the Principal after the expiration of the 30-day period but such termination shall not affect the liability of the Principal and Surety for any fine or penalty imposed prior to the date when said termination becomes effective. E:\FR\FM\28AUR1.SGM 28AUR1 Federal Register / Vol. 77, No. 167 / Tuesday, August 28, 2012 / Rules and Regulations 2. This Bond remains in full force and effect according to its terms except as modified above. In witness whereof we have hereunto set our hands and seals on this [____] day of [______], 20 [____], [Principal], By: [Surety], By: DEPARTMENT OF COMMERCE 3. Revise paragraph 1.a. of Appendix F to Subpart C of Part 515 to read as follows: Temporary Rule To Establish Management Measures for the Limited Harvest and Possession of South Atlantic Red Snapper in 2012 ■ APPENDIX F TO SUBPART C OF PART 515—OPTIONAL RIDER FOR ADDITIONAL NVOCC FINANCIAL RESPONSIBILITY FOR GROUP BONDS [OPTIONAL RIDER TO FORM FMC–69] * * * * * 1. * * * a. An additional condition of this Bond is that $ [____](payable in U.S. Dollars or Renminbi Yuan at the option of the Surety) shall be available to any NVOCC enumerated in an Appendix to this Rider to pay any fines and penalties for activities in the U.S.-China trades imposed by the Ministry of Communications of the People’s Republic of China (‘‘MOC’’) or its authorized competent communications department of the people’s government of the province, autonomous region or municipality directly under the Central Government or the State Administration of Industry and Commerce pursuant to the Regulations of the People’s Republic of China on International Maritime Transportation and the Implementing Rules of the Regulations of the PRC on International Maritime Transportation promulgated by MOC Decree No. 1, January 20, 2003. Such amount is separate and distinct from the bond amount set forth in the first paragraph of this Bond. Payment under this Rider shall not reduce the bond amount in the first paragraph of this Bond or affect its availability. The Surety shall indicate that $50,000 is available to pay such fines and penalties for each NVOCC listed on appendix A to this Rider wishing to exercise this option. * * * * * By the Commission. Karen V. Gregory, Secretary. [FR Doc. 2012–21095 Filed 8–27–12; 8:45 am] sroberts on DSK5SPTVN1PROD with RULES BILLING CODE 6730–01–P VerDate Mar<15>2010 16:13 Aug 27, 2012 Jkt 226001 National Oceanic and Atmospheric Administration 50 CFR Part 622 [Docket No. 120709225–2365–01] RIN 0648–BC32 National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce. ACTION: Temporary rule; emergency action. AGENCY: NMFS issues this final temporary rule to establish management measures to allow for the limited harvest and possession of red snapper in or from the South Atlantic exclusive economic zone (EEZ) in 2012, as requested by the South Atlantic Fishery Management Council (Council). This rule also announces the opening and closing dates of the 2012 commercial and recreational fishing seasons for red snapper. The intended effect of this temporary rule is to preserve a significant economic opportunity in the South Atlantic snapper-grouper fishery that otherwise might be foregone. Furthermore, limited commercial and recreational harvest of red snapper in 2012 will provide an opportunity to collect fishery-dependent data that could be useful for the 2014 red snapper stock assessment. DATES: This temporary rule is effective August 28, 2012 through December 31, 2012. The recreational red snapper season opens at 12:01 a.m., local time, on September 14, 2012, and closes at 12:01 a.m., local time, on September 17, 2012; then reopens at 12:01 a.m., local time, on September 21, 2012, and closes at 12:01 a.m., local time, on September 24, 2012. The commercial red snapper season opens at 12:01 a.m., local time, on September 17, 2012, and closes at 12:01 a.m., local time, on September 24, 2012. ADDRESSES: Electronic copies of the documents in support of this temporary rule, which include an environmental assessment, may be obtained from the Southeast Regional Office Web site at https://sero.nmfs.noaa.gov/sf/ SASnapperGrouperHomepage.htm. FOR FURTHER INFORMATION CONTACT: Rick DeVictor, Southeast Regional Office, NMFS, telephone: 727–824–5305, email: rick.devictor@noaa.gov. SUMMARY: PO 00000 Frm 00073 Fmt 4700 Sfmt 4700 51939 NMFS and the Council manage South Atlantic snapper-grouper including red snapper under the Fishery Management Plan for the Snapper-Grouper Fishery of the South Atlantic Region (FMP). The Council prepared the FMP and NMFS implements the FMP through regulations at 50 CFR part 622 under the authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act). The Magnuson-Stevens Act provides the legal authority for the promulgation of emergency regulations under section 305(c) (16 U.S.C. 1855(c)). SUPPLEMENTARY INFORMATION: Background Red snapper are overfished and undergoing overfishing. The harvest and possession of red snapper has been prohibited since January 4, 2010, initially through temporary rules (74 FR 63673, December 4, 2009 and 75 FR 27658, May 18, 2010), and then through the final rule to implement Amendment 17A to the FMP (75 FR 76874, December 9, 2010). Amendment 17A continued the prohibition on a permanent basis by implementing an annual catch limit (ACL) for red snapper of zero (landings only). Amendment 17A also implemented a rebuilding plan for red snapper, which specifies that red snapper biomass must increase to the target rebuilt level in 35 years, starting from 2010. The final rule implementing Amendment 17A also included a large area closure for most snapper-grouper species, however, this area closure did not become effective because it was determined not to be necessary to end the overfishing of red snapper (76 FR 23728, April 28, 2011). At its June 2012 meeting, the Council received new information regarding discard estimates for red snapper. Using this data, the Council and NMFS determined that a limited season for red snapper would be possible in 2012. Therefore, the Council voted, and NMFS is implementing, emergency rulemaking to allow for the limited harvest and possession of red snapper in or from the South Atlantic EEZ in 2012. Status of the Stock The most recent Southeast Data, Assessment, and Review (SEDAR) benchmark stock assessment for red snapper, SEDAR 24, was completed in October 2010. Much like the stock assessment completed in 2008, this assessment showed red snapper to be overfished and undergoing overfishing, but also showed that red snapper were undergoing overfishing at a lower rate than found in the 2008 stock assessment. The next benchmark stock E:\FR\FM\28AUR1.SGM 28AUR1

Agencies

[Federal Register Volume 77, Number 167 (Tuesday, August 28, 2012)]
[Rules and Regulations]
[Pages 51935-51939]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-21095]


=======================================================================
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FEDERAL MARITIME COMMISSION

46 CFR Part 515

[Docket No. 11-09]
RIN 3072-AC46


Adjustment of the Amount for the Optional Bond Rider for Proof of 
NVOCC Financial Responsibility for Trade With the People's Republic of 
China

AGENCY: Federal Maritime Commission.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Federal Maritime Commission amends its rules regarding the 
amount of bond coverage on the optional China Bond Rider for Non-
Vessel-Operating Common Carriers (NVOCCs). The final rule is intended 
to provide NVOCCs with the ability to post a bond with the Commission 
that satisfies the equivalent of 800,000 Chinese Renminbi, for which 
the equivalent U.S. Dollar amount has fluctuated since the regulation 
was first adopted by the Commission.

DATES: The final rule is effective November 23, 2012.

FOR FURTHER INFORMATION CONTACT: Karen V. Gregory, Secretary, Federal 
Maritime Commission, 800 North Capitol Street NW., Washington, DC 
20573-0001, Phone: (202) 523-5725; Rebecca A. Fenneman, General 
Counsel, Federal Maritime Commission, 800 North Capitol Street NW., 
Washington, DC 20573-0001, Phone: (202) 523-5740, secretary@fmc.gov.

SUPPLEMENTARY INFORMATION:

Background

    Under a Memorandum of Consultations pursuant to the 2003 bilateral 
Maritime Agreement between the United States and the People's Republic 
of China (China or the PRC), the PRC does not require U.S. Non-Vessel-
Operating Common Carriers (NVOCCs) to make a cash deposit in a Chinese 
bank as would otherwise be required by Chinese regulations, so long as 
the NVOCC:
    (1) Is a legal person registered by U.S. authorities;
    (2) obtains an FMC license as an NVOCC; and
    (3) provides evidence of financial responsibility in the total 
amount of Chinese Renminbi (RMB) 800,000 or U.S. $96,000.
    An FMC-licensed U.S. NVOCC that voluntarily provides an additional 
surety bond in the amount of $21,000 (denominated in U.S. Dollars or 
Chinese Renminbi), which by its conditions is available for potential 
claims of the Ministry of Transport (MOT) of the PRC (as well as other 
Chinese agencies) for violations of the Chinese Regulations on 
International Maritime Transportation, may register in the PRC without 
paying the cash deposit otherwise required by Chinese law and 
regulation.
    In 2004, the Commission issued a Notice of Proposed Rulemaking 
(NPR) to explore mechanisms for NVOCCs to file proof of such additional 
financial responsibility. See 69 FR 4271 (January 29, 2004). On April 
1, 2004, the Commission issued a final rule that amended its 
regulations governing proof of financial responsibility for ocean 
transportation intermediaries to allow an optional bond rider to be 
filed with a licensed NVOCC's proof of financial responsibility to 
provide additional proof of financial responsibility for such carriers 
serving the U.S. oceanborne trade with the PRC. Docket No. 04-02, 
Optional Rider for Proof of Additional NVOCC Financial Responsibility, 
30 S.R.R. 179 (2004).
    On April 15, 2011, the Commission received a communication from the 
Maritime Administration of the U.S. Department of Transportation, 
transmitting a request from the MOT to revise the Commission's 
regulations at Appendix E to Subpart C of Part 515--

[[Page 51936]]

Optional Rider for Additional NVOCC Financial Responsibility (Optional 
Rider to Form FMC 48) [Form 48A] (China Bond Rider). MOT requested that 
the Commission review its regulations set forth in 46 CFR Part 515. MOT 
asserted that the exchange rate between the U.S. Dollar ($) and the 
Renminbi (RMB) has risen from 1:8.276 in 2003 to 1:6.536 at present, an 
increase of approximately 21.02%. Consequently, MOT asserted, the 
amount of $96,000 is inadequate to meet 800,000 RMB at the current 
exchange rate. Specifically, MOT requested that the regulation be 
revised to include a provision that would allow for adjustments to the 
U.S. Dollar amount required in a NVOCC optional Bond Rider covering 
transportation activities in the U.S./China trades when the U.S. Dollar 
and the Renminbi exchange rate fluctuates 20% higher or lower than that 
of the last adjustment. MOT also proposed that the adjustment be 
jointly approved by the U.S. and the PRC at the bilateral maritime 
consultative meeting of the same year. Finally, if this proposal is 
adopted, the MOT also proposed that the existing total required bond 
amount of U.S. $96,000 be increased to U.S. $122,000, which, MOT 
asserted, is the equivalent amount of 800,000 RMB at the present 
exchange rate.

Comments in Response to the Notice of Inquiry

    The Commission issued a Notice of Inquiry (NOI) soliciting public 
commentary on the proposal on June 10, 2011. The NOI sought general 
comments on the optional China Bond Rider, and also presented three 
questions for particular study:

    1. Describe how, and to what extent, the optional rider to the 
required NVOCC bond has impacted your company's business operations? 
Does this make for more certainty in your business operation? Has 
the optional rider to the required NVOCC bond impacted your overall 
business costs? If so, how?
    2. What do you see as the advantages and disadvantages of an 
adjustment to the current optional rider to the required NVOCC bond?
    3. Please explain whether, and if so, how significantly your 
business costs/operations would be affected by a provision that 
allows for adjustments to the U.S. Dollar amount required in a NVOCC 
optional China bond rider when the USD (U.S. Dollar) and the RMB 
(Renminbi) exchange rate fluctuates 20% higher or lower.

The Commission received three comments, summarized below.
    Econocaribe Consolidators: John Abisch, the President of 
Econocaribe, did not appear to oppose the suggestion that the China 
Bond Rider be increased to cover currency valuations. Instead, the 
comment focused on the effect of the China Bond Rider and other rider 
requirements imposed on bondholders, such as the requirement that 
NVOCC's obtain an additional $10,000 in bond coverage for each branch 
office. Econocaribe noted that if a bondholder has five additional 
branch offices, the total coverage would be $125,000 ($75,000 base plus 
$50,000 for five branch offices). Econocaribe stated that ``[i]f the 
FMC can get the [Chinese Government] to `count' the entire bond 
currently posted, including the amount of the bond posted for the 
branch offices, even with the [Chinese Government] increasing the bond 
requirement, this would actually have a slight reduction in the cost of 
the bond[.]''
    Mohawk Global Logistics: Richard J. Roche submitted comments on 
behalf of Mohawk Global Logistics. Mohawk believes that the optional 
rider method of conducting business is ``a fair and equitable'' 
solution to the alternative of posting a cash bond in China. Mohawk 
prefers bond coverage to cash deposit because it allows Mohawk to 
``expand [its] offering in China without having to make a significant 
investment of cash.'' Similarly, Mohawk understands currency 
fluctuations, and ``agree[s] that an increase in demonstrated bond 
coverage is warranted due to the lower value of the U.S. dollar 
today.'' Mohawk did not identify disadvantages to the increase, other 
than the minor administrative burden of possibly prorating bonds in 
effect, addressing different bond premium dates, and the incremental 
increase in the cost of the China Bond Rider coverage. These 
disadvantages would be multiplied if the Commission added an automatic 
trigger based on a currency fluctuation of a defined percentage. If 
currencies fluctuated rapidly or drastically, it could cause additional 
administrative burdens on bondholders. Mohawk did not see this outcome 
as likely, and believed that an automatic trigger for additional 
coverage could prove workable. Mohawk also agreed with Econocaribe that 
many bondholders already demonstrate 800,000 RMB worth of coverage if 
one includes the aggregate amount posted for branch offices. In 
Mohawk's view:

    A more reasonable approach might be for China to determine the 
exchange value to be assigned in a given 12 month period, and allow 
NVOCC's to offset the bond coverage based on total bond value, 
adding any additional coverage as might be required to make up any 
shortfall not already covered by multiple branch offices. This would 
limit the bond transactions significantly, while providing 
simplicity and stability for all involved.

    National Customs Brokers and Forwarders Association (NCBFAA): The 
NCBFAA notes in its comments the history of the China Bond rider 
provision, and the role that the NCBFAA played in Docket No. 04-02, 
Optional Bond Rider for Proof of Additional NVOCC Financial 
Responsibility. Like Mohawk, the NCBFAA believes that the China Bond 
Rider has been ``extremely successful,'' and has allowed U.S. companies 
to provide services in China that might otherwise be difficult if the 
companies were required to post cash with the Chinese Government. 
Though U.S.-licensed NVOCCs must register in China in order to conduct 
business, NCBFAA indicates that the process ``has not been unduly 
onerous,'' and ``has not heretofore unduly increased operating costs.''
    The NCBFAA also accepts that the respective currencies have 
fluctuated, and some justification exists for the Chinese Government's 
request to increase the amount of the optional Bond Rider. 
Additionally, although the NCBFAA does not object to the Commission's 
consideration of an optional Bond Rider adjustment any time the 
currency values fluctuate more than 20%, it does not believe that an 
automatic adjustment ``is necessary or appropriate.'' The NCBFAA also 
echoes the beliefs of Mohawk and Econocaribe that many NVOCCs already 
have an aggregate coverage of greater than $125,000 (which would 
surpass the adjusted optional China Bond Rider amount of $122,000). If 
the Chinese Government assented, NCBFAA posits that allowing the NVOCCs 
to count all bond coverage might actually decrease the cost for many 
U.S.-licensed NVOCCs who do business in China. The NCBFAA looks to the 
Annex to the 2003 Bilateral Maritime Agreement for support, noting that 
it did not require a Bond Rider of a certain amount, but instead 
required evidence of financial responsibility of a certain total amount 
($96,000). The Agreement left open how that total may be satisfied. The 
NCBFAA thus suggests that the Commission seek the Chinese Government's 
assent to accepting a total bond amount in addition to a Bond Rider in 
satisfying the $122,000 amount. Each NVOCC could thus determine whether 
it was more cost effective to procure a Bond Rider, or simply rely on 
its aggregate coverage amount that exceeded $122,000. This would reduce 
operating costs for some NVOCCs, but would still maintain adequate 
coverage.

[[Page 51937]]

Comments in Response to the Notice of Proposed Rulemaking

    The Commission also issued a Notice of Proposed Rulemaking (NPR) 
soliciting public commentary on the proposal on January 5, 2012. The 
NPR sought general comments on the optional China Bond Rider and on the 
proposed rulemaking. The proposed rule amended Appendix F to Subpart C 
of Part 515 (group bonds) to increase the amount specified from $21,000 
to $50,000. In response to the comments the Commission received from 
the Notice of Inquiry from June 10, 2012, the proposed rule amended 
Appendix E to Subpart C of Part 515 (individual NVOCC bonds) to remove 
pre-specified rider amounts to account for variances in NVOCCs' 
combined total surety levels maintained to meet the Commission's other 
financial responsibility requirements, including $10,000 in bond 
coverage that NVOCCs maintain for each of their branch offices pursuant 
to 46 CFR 515.21(a)(4). This recognition means that NVOCCs with branch 
offices may have rider amounts that vary to satisfy the level of 
coverage requested by the PRC, so long as their total coverage equals 
$125,000. The Commission sought comments particularly on the 
feasibility of these proposed revisions.
    Carla Leung: Leung submitted a brief comment expressing significant 
concern as a small business owner affected by the regulation change. 
Her comments addressed the increased costs the proposed rulemaking 
might impose on small businesses in the industry and the ability to 
stay in business during these difficult financial times. Leung 
expressed concern that her business may not be able to sustain the 
increased costs.
    Roanoke Trade: Matthew L. Zehner, Vice President of Surety 
Information & Communication for Roanoke Trade Services, Inc. (Roanoke), 
submitted comment as an insurance broker who provides surety bond 
products, such as the Chinese Bond Rider, to Ocean Transportation 
Intermediaries (OTIs). Zehner expressed Roanoke's support for the 
proposed changes as they represented the continuation of a regime that 
allows OTIs to ``relatively easily'' satisfy ``certain financial 
responsibilities and obligations required'' by the People's Republic of 
China. Support was also registered for leaving blank spaces in the 
rider form in order to allow flexibility for varying business 
structures.
    Zehner did express concern regarding the timing of implementation 
as riders can generally only be altered or added in accord with ``the 
underlying bond's anniversary cycle.'' Roanoke proposes a 12-month 
phase-in period in order to limit the impact of immediate compliance on 
the industry and FMC resources. Alternatively, Roanoke would request at 
least 90 days notice prior to the regulation taking effect as to allow 
time for proper processing of bonding alterations.
    Roanoke also sought ``additional clarity or guidance'' regarding 
how to represent bond amounts in paragraphs 1.a. and 1.c. of FMC Form 
48A when bonded U.S. office locations are involved.
    FedEx Trade Networks Transport & Brokerage, Inc.: As a ``large 
freight forwarder and non-vessel operating common carrier licensed by 
the FMC,'' FedEx Trade Networks Transport & Brokerage, Inc. (Fedex 
Trade Networks) registered support for the proposed rulemaking 
modification. Fedex Trade Networks finds the increased bond requirement 
a reasonable request by the Chinese Ministry. The comment highlighted 
the benefit to U.S. NVOCCs of using bonds to satisfy Chinese 
regulations rather than necessarily operating directly with a Chinese 
bank.
    Likewise, the comment ``strongly endorses'' FMC proposals to allow 
bond amounts to be aggregated. Fedex Trade Networks explains: 
``Allowing NVOCCs to meet the increased bond requirement by maintaining 
a bond of at least $125,000.00 would both fully satisfy the terms of 
the U.S.-China agreement and be more cost effective and efficient.''

Final Rule

    In the 2003 Memorandum of Consultations between the U.S. and China, 
it was agreed that U.S. NVOCCs operating in the China trade would 
provide ``evidence of financial responsibility in the total amount of 
Chinese Renminbi (RMB) 800,000 or U.S. $96,000.'' The Memorandum of 
Consultations specifies amounts in both Chinese and United States 
currency, and did not provide for adjustment in exchange rates. 
Nevertheless, in recognition of the recent slight improvement in the 
value of the RMB against the U.S. Dollar (and in a spirit of comity and 
in conformity with Executive Order 13609, Promoting International 
Regulatory Cooperation) the Commission adjusts its optional China Bond 
Rider so that total NVOCC financial responsibility will equal 800,000 
RMB under current exchange rates. The Commission acknowledges that the 
majority of the submitted comments see value in maintaining the 
optional China Bond Rider in contrast to any alternative, and 
recognizes the PRC's justification for adjusting the value based on 
exchange rate changes that have taken place since 2004. Therefore, 
based on the generally favorable comments, the Commission now amends 
its regulations in 46 CFR Part 515 to adjust the amount of surety 
available in the optional China Bond Rider provided in Appendices E and 
F to Subpart C of Part 515 (Form FMC-48A, OMB No. 3072-0018), and 
provide a method for NVOCCs to demonstrate financial responsibility by 
aggregating the total bond coverage for all bonds.
    The rule amends Appendix F to Subpart C of Part 515 (group bonds) 
to increase the amount specified from $21,000 to $50,000. In response 
to the comments the Commission received, the rule amends Appendix E to 
Subpart C of Part 515 (individual NVOCC bonds) to remove pre-specified 
rider amounts to account for variances in NVOCCs' combined total surety 
levels maintained to meet the Commission's other financial 
responsibility requirements, including $10,000 in bond coverage that 
NVOCCs maintain for each of their branch offices pursuant to 46 CFR 
515.21(a)(4). This recognition means that NVOCCs with branch offices 
may have rider amounts that vary to satisfy the level of coverage 
requested by the PRC, so long as their total coverage equals $125,000.
    The Commission intends to review the value of the total coverage 
provided by the optional China Bond Rider periodically.

Small Business Regulatory Flexibility Threshold Analysis

    Pursuant to 5 U.S.C. 605(b), and in response to comments regarding 
small businesses affected by this optional China Bond Rider, a 
Regulatory Flexibility Threshold Analysis has been performed; it has 
been determined that the final rule will not have a significant 
economic impact on a substantial number of small entities.
    The small entities affected are ocean transportation intermediaries 
(OTIs). In determining whether a significant economic impact would 
occur under the new rule, the first estimate costs of the bond rider 
coverage were assessed. The economic impact of the optional China Bond 
Rider has been estimated to be less than $20 for every $1,000 of bond 
rider coverage, with most estimates being under $15 for every $1,000 of 
bond rider coverage. To that end, $21,000 of bond rider coverage would 
cost approximately $420.00 under this analysis. Given this information, 
it is determined that these first estimate costs are not significant to 
small entities. Uncertainty remains on the

[[Page 51938]]

exact amount the optional China Bond Rider coverage would cost; 
however, this uncertainty is minimized given the fact that over seven 
bond rider coverage estimates were collected from agents in the market.
    To determine whether a substantial number of small entities would 
be affected, the OTI licensing statistics were reviewed. There are 
approximately 3,500 licensed U.S. OTIs that could file for the optional 
China Bond Rider; currently, only 350 OTIs have filed for the available 
optional China Bond Rider. This amounts to less than 10% of the entire 
market that may reasonably participate in the optional bond rider 
program. Based on this data, it is determined that a substantial number 
of small entities will not be affected by this rule.
    It is important to note that the optional China Bond Rider is not 
an FMC-required bond; rather it is an alternative instrument crafted by 
the United States and China to relieve U.S. NVOCCs from the People's 
Republic of China's cash deposit requirement. The rule will not have a 
significant economic impact on a substantial number of small entities 
as outlined by the Regulatory Flexibility Threshold Act.

Certifications and Statutory Reviews

    The Commission certifies this rulemaking because the proposed 
changes establish an optional provision for U.S. licensed NVOCCs, which 
may be used at their discretion. While some of these businesses qualify 
as small entities under the guidelines of the Small Business 
Administration, the rule provides a more cost-effective alternative 
than would otherwise be available to assist U.S. licensed NVOCCs with 
their business endeavors in the PRC. As such, the rule helps to promote 
U.S. business interests in the PRC and facilitate U.S. foreign 
commerce.
    The Chairman of the Commission certifies, pursuant to section 
605(b) of the Regulatory Flexibility Act, 5 U.S.C. 601 et seq., that 
the rule will not, if promulgated, have a significant economic impact 
on a substantial number of small entities. The Commission recognizes 
that the majority of businesses that would be affected by this rule 
qualify as small entities under the guidelines of the Small Business 
Administration. The rule, however, would encompass an optional 
provision for U.S. licensed NVOCCs, which may be used at their 
discretion. The rule would not pose an economic detriment to all NVOCCs 
regulated by the Commission. It would only impact those NVOCCs who 
choose to exercise the option, at this date approximately 10% of the 
entire pool of all NVOCCs. Instead of applying to all NVOCCs (a 
majority of which are small entities), it adjusts the favored method of 
demonstrating financial responsibility for those NVOCCs who choose to 
use it. This method of demonstrating financial responsibility 
implements an agreement with the PRC that allows U.S. NVOCCs to avoid 
having to make a large cash deposit in a Chinese bank. As such, the 
rule would help continue to promote U.S. business interests in the PRC 
and facilitate U.S. foreign commerce.
    This rule is not a ``major rule'' under 5 U.S.C. 804(2).
    The collection of information requirements contained in this rule 
have been submitted to the Office of Management and Budget for review 
under section 3504(h) of the Paperwork Reduction Act of 1980, as 
amended. Public reporting burden for this collection of information was 
estimated to be 1.25 hours per response, including time for reviewing 
instructions, searching existing data sources, gathering and 
maintaining the data needed, and completing and reviewing the 
collection of information.

List of Subjects in 46 CFR Part 515

    Freight, Maritime carriers, Non-vessel-operating common carriers.

    For the reasons stated in the supplementary information, the 
Federal Maritime Commission amends 46 CFR Part 515 as follows.

PART 515--LICENSING, FINANCIAL RESPONSIBILITY REQUIREMENTS, AND 
GENERAL DUTIES FOR OCEAN TRANSPORTATION INTERMEDIARIES

0
1. The authority citation for part 515 continues to read as follows:

    Authority:  5 U.S.C. 553; 31 U.S.C. 9701; 46 U.S.C. 305, 40102, 
40104, 40501-40503, 40901-40904, 41101-41109, 41301-41302, 41305-
41307; Pub. L. 105-383, 112 Stat. 3411; 21 U.S.C. 862.


0
2. Revise Appendix E to Subpart C of Part 515 to read as follows:

APPENDIX E TO SUBPART C OF PART 515--OPTIONAL RIDER FOR ADDITIONAL 
NVOCC FINANCIAL RESPONSIBILITY (OPTIONAL RIDER TO FORM FMC-48) [FORM 
48A]

FMC-48A, OMB No. [3072-0018, (04/06/04)]

Optional Rider for Additional NVOCC Financial Responsibility [Optional 
Rider to Form FMC-48]

RIDER

    The undersigned [------------], as Principal and [------------], 
as Surety do hereby agree that the existing Bond No. [--------] to 
the United States of America and filed with the Federal Maritime 
Commission pursuant to section 19 of the Shipping Act of 1984 is 
modified as follows:
    1. The following condition is added to this Bond:
    a. An additional condition of this Bond is that $---------- 
(payable in U.S. Dollars or Renminbi Yuan at the option of the 
Surety) shall be available to pay any fines and penalties for 
activities in the U.S.-China trades imposed by the Ministry of 
Communications of the People's Republic of China (``MOC'') or its 
authorized competent communications department of the people's 
government of the province, autonomous region or municipality 
directly under the Central Government or the State Administration of 
Industry and Commerce pursuant to the Regulations of the People's 
Republic of China on International Maritime Transportation and the 
Implementing Rules of the Regulations of the PRC on International 
Maritime Transportation promulgated by MOC Decree No. 1, January 20, 
2003.
    b. The liability of the Surety shall not be discharged by any 
payment or succession of payments pursuant to section 1 of this 
Rider, unless and until the payment or payments shall aggregate the 
amount set forth in section 1a of this Rider. In no event shall the 
Surety's obligation under this Rider exceed the amount set forth in 
section 1a regardless of the number of claims.
    c. The total amount of coverage available under this Bond and 
all of its riders, available pursuant to the terms of section 1(a.) 
of this rider, equals $--------. The total amount of aggregate 
coverage equals or exceeds $125,000.
    d. This Rider is effective the [--------] day of [------------], 
20 [------------], and shall continue in effect until discharged, 
terminated as herein provided, or upon termination of the Bond in 
accordance with the sixth paragraph of the Bond. The Principal or 
the Surety may at any time terminate this Rider by written notice to 
the Federal Maritime Commission at its offices in Washington, DC, 
accompanied by proof of transmission of notice to MOC. Such 
termination shall become effective thirty (30) days after receipt of 
said notice and proof of transmission by the Federal Maritime 
Commission. The Surety shall not be liable for fines or penalties 
imposed on the Principal after the expiration of the 30-day period 
but such termination shall not affect the liability of the Principal 
and Surety for any fine or penalty imposed prior to the date when 
said termination becomes effective.

[[Page 51939]]

    2. This Bond remains in full force and effect according to its 
terms except as modified above.
    In witness whereof we have hereunto set our hands and seals on 
this [--------] day of [------------], 20 [--------],

[Principal], By:

[Surety], By:


0
3. Revise paragraph 1.a. of Appendix F to Subpart C of Part 515 to read 
as follows:

APPENDIX F TO SUBPART C OF PART 515--OPTIONAL RIDER FOR ADDITIONAL 
NVOCC FINANCIAL RESPONSIBILITY FOR GROUP BONDS [OPTIONAL RIDER TO FORM 
FMC-69]

* * * * *
    1. * * *
    a. An additional condition of this Bond is that $ [--------
](payable in U.S. Dollars or Renminbi Yuan at the option of the 
Surety) shall be available to any NVOCC enumerated in an Appendix to 
this Rider to pay any fines and penalties for activities in the 
U.S.-China trades imposed by the Ministry of Communications of the 
People's Republic of China (``MOC'') or its authorized competent 
communications department of the people's government of the 
province, autonomous region or municipality directly under the 
Central Government or the State Administration of Industry and 
Commerce pursuant to the Regulations of the People's Republic of 
China on International Maritime Transportation and the Implementing 
Rules of the Regulations of the PRC on International Maritime 
Transportation promulgated by MOC Decree No. 1, January 20, 2003. 
Such amount is separate and distinct from the bond amount set forth 
in the first paragraph of this Bond. Payment under this Rider shall 
not reduce the bond amount in the first paragraph of this Bond or 
affect its availability. The Surety shall indicate that $50,000 is 
available to pay such fines and penalties for each NVOCC listed on 
appendix A to this Rider wishing to exercise this option.
* * * * *

    By the Commission.
Karen V. Gregory,
Secretary.
[FR Doc. 2012-21095 Filed 8-27-12; 8:45 am]
BILLING CODE 6730-01-P
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