Ocean Transportation Intermediary Licensing and Financial Responsibility Requirements, and General Duties, 68721-68742 [2015-27914]

Download as PDF Vol. 80 Thursday, No. 214 November 5, 2015 Part III Federal Maritime Commission tkelley on DSK3SPTVN1PROD with RULES3 46 CFR Part 515 Ocean Transportation Intermediary Licensing and Financial Responsibility Requirements, and General Duties; Final Rule VerDate Sep<11>2014 18:44 Nov 04, 2015 Jkt 238001 PO 00000 Frm 00001 Fmt 4717 Sfmt 4717 E:\FR\FM\05NOR3.SGM 05NOR3 68722 Federal Register / Vol. 80, No. 214 / Thursday, November 5, 2015 / Rules and Regulations 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 Federal Maritime Commission. Final rule. AGENCY: ACTION: 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. SUMMARY: 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 NW., Washington, DC 20573–0001, Tel.: (202) 523–5725, Email: secretary@fmc.gov. 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 tkelley on DSK3SPTVN1PROD with RULES3 DATES: VerDate Sep<11>2014 18:44 Nov 04, 2015 Jkt 238001 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. 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 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 1 PCC supported the comments of NCBFAA in their entirety. 2 Fedespedi supported the comments of TIA. 3 FIATA supported the comments of TIA. PO 00000 Frm 00002 Fmt 4701 Sfmt 4700 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. 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 E:\FR\FM\05NOR3.SGM 05NOR3 tkelley on DSK3SPTVN1PROD with RULES3 Federal Register / Vol. 80, No. 214 / Thursday, November 5, 2015 / Rules and Regulations 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. The term ‘‘qualifying individual’’ (QI) is added and defines QI as an individual who meets the Shipping Act’s experience and character requirements. The QI must meet those requirements at the time a license is issued and must thereafter maintain the necessary character. The OTI must timely replace the QI, as provided by the Commission’s rules, when the designated QI ceases to act as the QI, whether by resignation, retirement or death. Commenting on the definition, NCBFAA opines that the Commission’s review process does not adequately address a qualifying individual’s competence. NCBFAA asserts that QIs need to have skill sets to comply with Shipping Act, United States export/ import requirements and other statutes that apply to international shipping. NCBFAA suggests that the Commission consider adding affirmative competency requirements for QIs as NCBFAA has done with respect to its Certified Export Specialist program. The QI’s three years of OTI experience in the U.S. oceanborne foreign trades provides a foundation for ensuring that QIs are exposed to and gain working knowledge of the Shipping Act and Commission regulations, as well as with other regulations and statutes that apply in the U.S. trades. The NCBFAA’s comment that the competence of QIs is not as high as the association would prefer has serious implications for the nation’s security and transport policy objectives. Its suggestions for improvements are welcome, however, they are well beyond the scope of the current proposed rulemaking proceeding. The details, procedures, cost to the agency and associated fees to the OTI applicants must be more fully developed by NCBFAA, and made subject to full and open public comment in order to be further considered by the Commission. VerDate Sep<11>2014 18:44 Nov 04, 2015 Jkt 238001 Section 515.3—License; When Required The requirement that ‘‘separately incorporated branch offices’’ must be licensed as an OTI is deleted as unnecessary. All separately incorporated entities that perform OTI services for which they assume responsibility for the transportation remain subject to the requirements that they be licensed and otherwise comply with the financial responsibility obligations of part 515. The Commission also revises § 515.3 to provide that a ‘‘registered NVOCC’’ (terminology replacing the use of ‘‘unlicensed NVOCC’’) must use licensed OTIs as their agents in the United States with respect to OTI services performed in the U.S. The section is also conformed to provide that only licensed OTIs may provide OTI services in the United States to registered NVOCCs. NCBFAA comments that these are positive changes as they better reflect the compliance obligations of the parties. TIA, however, expresses a concern that the Commission attempts to regulate the activities of OTI agents contrary to the decision in Landstar Express America Inc. v. Federal Maritime Commission, 569 F.3d 493 (D.C. Cir. 2009). TIA asserts that the provision in § 515.3 whereby only licensed OTIs may provide OTI services in the United States for registered NVOCCs in effect regulates the OTI agent. TIA also comments that there is no corresponding definition of ‘‘OTI services’’ in the regulations that would delineate the § 515.3 requirement. TIA questions the Commission’s authority to require registered NVOCCs to use only licensed OTIs in the United States. Section 19 of the Shipping Act of 1984 provides that ‘‘[a] person in the United States may not act as an ocean transportation intermediary unless the person holds an ocean transportation intermediary’s license issued by the Federal Maritime Commission.’’ 46 U.S.C. 40901. This section imposes the licensing requirement on NVOCCs ‘‘in the United States’’ but not on foreignbased NVOCCs that are not in ‘‘in the United States.’’ The Commission addressed its authority to regulate unlicensed foreignbased NVOCCs’ operations ‘‘in the United States’’ in 1999 as a necessary element of its rulemaking implementing OSRA. The Commission stated: OSRA requires that all OTIs in the United States be licensed by the Commission. The legislative history of OSRA directs the Commission to determine ‘‘when foreignbased entities conducting business in the PO 00000 Frm 00003 Fmt 4701 Sfmt 4700 68723 United States are to be considered persons in the United States’’ for purposes of the licensing requirements of section 19 of the 1984 Act. S. Rep. No. 105–61, 105th Cong., 1st Sess., at 31 (1997). FMC Docket No. 98–28, Licensing, Financial Responsibility Requirements, and General Duties for Ocean Transportation Intermediaries, 28 SRR 629–54 (March 8, 1999). (Docket No. 98–28 Final Rule). In that rulemaking, after considering the comments on approaches to meet Congress’ instructions (including comments from NCBFAA and American International Freight Association and Transportation Intermediaries Association (AIFA/TIA)), the Commission adopted the current language found in § 515.3, which provides in pertinent part: For purposes of this part, a person is considered to be ‘‘in the United States’’ if such person is resident in, or incorporated or established under, the laws of the United States. Only persons licensed under this part may furnish or contract to furnish ocean transportation intermediary services in the United States on behalf of an unlicensed ocean transportation intermediary. The Commission explained its reasoning in adopting the current rule language: We believe it is a good step towards leveling the playing field between OTIs in the United States who are within the Commission’s jurisdictional reach and those who are outside of that reach. Moreover, this definition will increase competition, consistent with the intent of OSRA. Docket No. 98–28 Final Rule, supra at 28 SRR 638. The Commission expressed its view that the rule presented foreign-based NVOCCs with the option of obtaining a license (and obtaining a bond at the level applicable to NVOCCs in the U.S.) or operating through independently licensed OTI agents after obtaining a bond in the higher amount established for such foreign-based NVOCCs. Id. The Commission exercised the discretion that Congress envisioned and promulgated a rule that recognized that all foreign-based NVOCCs would not obtain a license but ensured that unlicensed NVOCCs that were not ‘‘in the United States’’ would not conduct business as if they were resident without first meeting the requirements for a license. The requirement that unlicensed foreign-based NVOCCs use licensed OTIs as their agents in the United States is necessary to make sure that the distinction created by Congress would not be thwarted. Consistent with the court’s proscription in Landstar, only OTI principals are regulated thereby. Moreover, the rule as proposed E:\FR\FM\05NOR3.SGM 05NOR3 68724 Federal Register / Vol. 80, No. 214 / Thursday, November 5, 2015 / Rules and Regulations does not substantively change the rule that has long been in effect. tkelley on DSK3SPTVN1PROD with RULES3 Section 515.4—License; When Not Required Section 515.4(b)—Branch Offices. The rule eliminates the regulatory burden associated with procuring and maintaining additional financial responsibility to cover an OTI’s unincorporated branch offices by deleting the reference to obtaining additional financial responsibility currently set out in § 515.4(b)(ii). A corresponding change is made to § 515.21, deleting the current text of paragraph 515.21(a)(4). The rule also deletes § 515.4(d), which refers to ocean freight brokers, as it is no longer needed. Comments by OTIs and the associations were uniformly in support of the elimination of the additional $10,000 bonding requirements for each unincorporated branch office. The NYNJFFF&BA opposes the provision in § 515.4(b) that an OTI ‘‘shall be fully responsible for the acts and omissions of any of its employees and agents that are performed in connection with the conduct of such licensee’s business.’’ NYNJFFF&BA is concerned that the provision will expose OTIs to all manners of liability for acts of their agents, including gross negligence and personal injury. The most significant change in this provision from that adopted in 1999, is the substitution of ‘‘shall be fully responsible’’ in place of ‘‘shall be held strictly responsible.’’ The change is intended to clarify that the provision places full responsibility on OTIs for the acts and omissions of their employees and agents for actions that violate the Shipping Act or Commission regulations. The current rule’s reference to strict responsibility is imprecise and its elimination avoids any inference that a statutory or regulatory regime relating to strict liability applies. The Commission considers the provision as clarified does not open OTIs to liability beyond the scope of the Shipping Act and, accordingly, no change to the rule as proposed is necessary. Section 515.5—Forms and Fees Section 515.5(b) is modified to provide that all license applications and registration forms, including renewal forms, must be filed with the Commission electronically unless a waiver request to file on paper is granted by the Director of the Bureau of Certification and Licensing. Electronic filing anticipates the implementation of on-line filing and processing of all applications and forms. OTIs will also be able to view their on-line VerDate Sep<11>2014 18:44 Nov 04, 2015 Jkt 238001 applications, reflecting the changes that they make to the application, including license renewal changes, by logging into the Commission’s system. Section 515.5(c)(1) has been added and requires OTIs to pay applicable fees within ten (10) business days of the time of submission of such applications and forms. The Commission has developed the ability to receive on-line payments by credit or debit cards via Pay.gov and the Automated Clearing House system. These developments enable OTIs to pay fees in a timely and convenient manner, consistent within the 10 day window. Section 515.5(c)(2) is added to make it easier for OTI applicants and licensees to quickly find the fees that apply to filings they make, by setting out all fees applicable under part 515 (e.g., fees for filing of license applications and registrations) in one place. Section 515.5(c)(2) directs OTIs to the substantive sections in Part 515 that give rise to the fees. NCBFAA supports the changes to § 515.5 providing for the electronic filing of applications and the relocation of all fee amounts. It notes that electronic filing of applications should be no burden to prospective OTIs as virtually all data is already submitted electronically to carriers, banks and government agencies. NYNJFFF&BA also supports the electronic filing provisions and the requirement that fees be paid within 10 days of submission of an application. NYNJFFF&BA also suggested that the OTI be able to check its profile on-line. As indicated above OTIs will be able to check their profile at any time by logging on via the Commission’s Web site. Subpart B—Eligibility and Procedure for Licensing; Procedure for Registration Section 515.11—Basic Requirements for Licensing; Eligibility Except for the addition of a sentence clarifying the experience required of a foreign-based NVOCC that elects to become licensed, § 515.11(a)(1) remains unchanged inasmuch as revisions put forward in the ANPR have been deleted. Foreign-based NVOCCs seeking to become licensed must acquire the requisite experience with respect to shipments transported in the United States oceanborne foreign commerce, but may acquire that experience while resident in a foreign country with respect to shipments moving in the U.S. trades. The added sentence reflects the standard that has been applied by the Commission since 1999. While NCBFAA recognizes the Commission’s inclusion of the agency’s PO 00000 Frm 00004 Fmt 4701 Sfmt 4700 standard that has been applied to foreign-based NVOCC experience over the years, it would like the Commission to explain its rationale for doing so. NCBFAA largely restates its view that the vetting of QIs does not presently determine the QI’s ‘‘knowledge of or competency with the Shipping Act, the Commission’s regulations or the myriad of export control and other regulations that affect the function of any OTI and questions whether the requisite three years’ U.S. experience differs substantively from OTI working experience gained in non-U.S. trades. As indicated with respect to NCBFAA’s comments on the definition of qualifying individual, the Commission considers that the OTI experience acquired by QIs in the U.S. trades provides them with exposure to and working knowledge of U.S. laws, regulations, and practices, including those of the Shipping Act and Commission regulations. The QIs of foreign-based OTIs also gain experience with U.S. laws and regulations as a result of working on shipments in the U.S. trades. In 1999, the Commission made it possible for foreign-based OTIs to seek OTI licenses by promulgating its current rules permitting the necessary U.S. trade experience to be acquired abroad. The Commission will continue to require U.S. trade experience for QIs of foreign-based OTIs that apply for licenses. The new content in § 515.11(a)(2) makes it clear that the Commission may consider all information relevant to the determination of whether the applicant has the necessary character to render OTI services. Types of information that may be considered include, but are not limited to: Violations of any shipping laws or statutes relating to the import, export or transport of merchandise in international trade; operating as an OTI without a license or registration; state and federal felonies and misdemeanors; voluntary and non-voluntary bankruptcies not discharged; outstanding tax liens; court and administrative judgments and proceedings; non-compliance with immigration status requirements; and denial, revocation, or suspension of a Transportation Worker Identification Credential or of a customs broker’s license. The types of information with respect to character, now set out in § 515.11(a)(2), reflect the information that the Commission’s Bureau of Certification and Licensing (BCL) has considered and applied during the 15 years since the current regulations went into effect. This section better informs applicants of potential issues that should be addressed in filing their E:\FR\FM\05NOR3.SGM 05NOR3 Federal Register / Vol. 80, No. 214 / Thursday, November 5, 2015 / Rules and Regulations applications so as not to unnecessarily delay processing of their applications. NYNJFFF&BA expresses its concern that the information that may be considered by the Commission in assessing an applicant’s character could lead to the denial of a license in circumstances that have nothing to do with character. As examples, the association points to the possibility of erroneously filed tax liens and questions the relevance of a suspension or revocation of a TWIC card or customs broker license. As noted, the factors set out in § 515.11(a)(2) are the types of information that have been considered for years in Commission licensing determinations. The scope of information considered by the Commission does not negatively affect an applicant’s character assessment unless there arises a serious and relevant concern for licensing as evidenced by the information obtained. The Commission will continue to refer to the types of information listed but, as it has in the past, will not peremptorily commence the process for denying, revoking or suspending a license without first seeking clarification and an opportunity for response from the applicant. In sum, the listing will result in greater transparency, both facilitating applicants’ preparation of their applications and the Commission’s consideration of them. tkelley on DSK3SPTVN1PROD with RULES3 Section 515.12—Application for License Section 515.12(c) memorializes a process pursuant to which BCL shall close applications where applicants fail to timely provide information or documents needed for review. The date for submission of such information will be provided by BCL to the applicant. The Commission will apply § 515.12(c) reasonably and flexibly. Once the date has been established for a response by BCL, the applicant should keep BCL fully informed as to the reasons for any response delays in order to avoid closure of its application. Applicants whose applications are closed may reapply at any time. NCBFAA comments favorably on the inclusion, in § 515.12(c), of the application closure process that will be followed by the Commission with respect to applicants that do not timely provide information or documents. NCBFAA indicates its favorable experience with the practice of the BCL flexibly extending deadlines for submission of application information and documents. VerDate Sep<11>2014 18:44 Nov 04, 2015 Jkt 238001 Section 515.14—Issuance, Renewal, and Use of License Section 515.14(c) requires licenses to be renewed every three (3) years. New OTI licenses will be issued for an initial three-year period and renewed every three years thereafter. Existing licenses will be phased-in over a three-year period in order to facilitate smooth and timely processing by Commission staff. Moreover, the renewal requirement will be implemented only when the necessary programming of the Commission’s computer systems has been completed and tested so that online processing can be reliably activated. To this end, the renewal requirements of § 515.14(c) and (d) will become effective, and implementation of the online renewal process will commence, December 9, 2016. All other provisions of the final rule adopted in this rulemaking proceeding become effective December 9, 2015. The Commission will issue a notice on its Web site of the schedule by which currently licensed OTIs will have to renew their licenses. It is anticipated that current licensees will be grouped for renewal by ranges of license numbers in order to facilitate smooth processing. OTIs and the OTI associations that filed comments to the proposed rule object generally to the requirement that licenses be renewed every three years. The comments assert that license renewals are not needed to obtain up-todate information because the Commission’s regulations already require that certain changes in a licensee’s organization be submitted to the Commission for prior approval (§ 515.20(a)) and certain other changes in material facts be submitted within 30 days of such changes (§ 515.20(e)). As an alternative, NCBFAA suggests that the Commission vigorously enforce its existing rules by assessing penalties against OTIs that fail to update their information. NYNJFFF&BA suggests that the data the Commission presented in the proposed rule regarding failures of OTIs to update information under the current requirements is insufficient to support the need for a license renewal requirement applicable to all OTIs. NYNJFFF&BA suggests that the Commission issue a one-time request to all OTIs for the essential corporate information that the proposed rule’s renewal process seeks on a triennial basis in order to determine the current level of unreported non-compliance. NCBFAA also comments that there is no indication in the Notice of Proposed Rulemaking that a vast majority of OTIs PO 00000 Frm 00005 Fmt 4701 Sfmt 4700 68725 fail to comply with the current regulations. As described in the proposed rule, BCL has 30 to 40 inquiries concerning the identity of a licensee’s QI, officers, owners, or business affiliations at any given time, notwithstanding current requirements that such information be updated within 30 days of a change. Both BCL and the Commission’s Bureau of Enforcement have experienced frequent failures over a two year period to timely report: changes of business address, QI retirements/resignations, failure to notify/increase OTI’s surety bond, and operations under new trade names. This data included NVOCCs and Ocean Freight Forwarders (OFFs), large and small. As indicated in the NOPR, the incidence of noncompliance by OTIs in timely reporting changes material to their license and bond revealed while dealing with the Commission on other matters has ranged between 14 and 24 percent. At the low end, that would translate into over 1,000 OTIs not having complied with the Commission’s current updating requirements. Without implementing the renewal requirement, the Commission simply cannot adequately know which OTIs are not complying at any given time, nor adequately meet its statutory obligations to maintain effective oversight of the conduct and financial responsibility of the OTI industry, both in the U.S. and abroad. The need for the renewal process provided for in the rule is a reflection of the Commission’s experience since 1999. The suggestion that the Commission should instead pursue enforcement proceedings against offenders misses the fact that the Commission has worked diligently to bring the OTI industry into compliance without such proceedings and seeks to continue doing so once the renewal process is in place. It is unnecessary to abandon the Commission’s current process in favor of one where enforcement proceedings seeking penalties are commenced each time the Commission discovers a failure to update information. Neither will the renewal process, as configured, place a great burden on the OTI industry. This is borne out by the Commission’s impact analysis required by the Regulatory Flexibility Act. Renewal does not involve OTIs having to re-qualify to continue its license to operate, nor does the process result in the expiration of a license beyond which date an OTI cannot operate. NCBFAA, North American, J.W. Allen, John S. Connor, New Direx, Pride, C J International, Cargo-Link, Vanguard, Mohawk and Thunderbolt E:\FR\FM\05NOR3.SGM 05NOR3 tkelley on DSK3SPTVN1PROD with RULES3 68726 Federal Register / Vol. 80, No. 214 / Thursday, November 5, 2015 / Rules and Regulations expressed concerns that the renewal process may jeopardize their license where, for example, there are carrier or shipper claims against the OTI causing the Commission to withhold issuance of a renewed license. These parties fear that the OTI license would become ineffective in the interim, and the OTI left unable to operate. Along the same lines, NYNJFFF&BA objects to reference in 515.14(d)(3) indicating that information provided by an OTI or another source may be reviewed by the Commission at any time, including at the time of renewal. The association expresses the reasonable concern that any OTI scrutinized by the Commission be given opportunity to respond and refute information that could jeopardize its license. Even where the renewal process identifies changes in the licensee’s information necessitating separate Commission approval, the NOPR makes clear the licensee may continue to operate during such review, 515.14(d)(2). Indeed, a license may be revoked or suspended only after the Commission gives notice and provides a hearing pursuant to § 515.16 (Revocation or suspension of license) and § 515.17 (Hearing procedures governing denial, revocation, suspension of OTI license). Among the reasons for revocation set out in § 515.16 is that the licensee is no longer qualified to render ocean transportation intermediary services. This would include where the licensee was found to no longer possess the character required by the Shipping Act. The Commission emphasizes that § 515.14(d)(3) creates no new right or power of review of a licensee’s character. Such reviews have historically been a function of credible information coming to the attention of the Commission irrespective of any timing relative to license renewal. Section 515.14(d)(3) simply alerts OTIs to that circumstance. In any event, the receipt of information potentially implicating a licensee’s character will normally result in Commission staff first contacting the licensee regarding the information. The OTI and the association commenters suggest that only a simple report, one that is submitted electronically, should be implemented in the event that the Commission goes forward with a requirement that all OTIs update information every three years. NCBFAA suggests a process consistent with the five-year registration renewal requirement included by in the Moving Ahead for Progress in the 21st Century Act, Public Law 112–141, 126 Stat. 405 VerDate Sep<11>2014 18:44 Nov 04, 2015 Jkt 238001 (MAP–21) or with the triennial broker report to CBP. TIA in turn refers to the MAP–21 renewal and to the Federal Motor Carrier Safety Administration’s requirement that domestic transportation intermediaries renew their information every two years. TIA points out that the FMCSA biennial renewal can be completed on-line in less than an hour, and adds that the Commission and the FMCSA should work to harmonize their proposals so as to streamline regulations as between land-based domestic transport intermediaries and OTIs under the Shipping Act. Responsive to comments by NCBFAA, NYNJFFF&BA and TIA, the Commission again states its intention that the renewal process will be on-line, user friendly and free. The Commission’s objective is that licensed OTIs will verify on-line information such as the QI’s identification and contact information, changes in business or organization, trade names, tariff publication information, physical address, and electronic contact data for purposes of notification. Only information that is no longer accurate must be updated. The process will result in a renewed license which specifies the date by which the next renewal is to be completed. An OTI license will not simply expire. In short, the process is less complicated than the status reports submitted to CBP by customs brokers. The consequences of late filing likewise are less onerous in that failure to submit the CBP broker report by the end of February of the reporting year results in a license suspension on March 1, by operation of law. If the status report is not filed within 60 days of the suspension notice, the license is revoked. The renewal process required by MAP–21 appears similar to the renewal process established by this rule. While registration must be renewed on-line every five years, FMCSA’s Unified Registration System (URS) requires updates within 30 days of a change in a registrant’s legal name, form of business, or address, and transfers of operating authority. Docket No. FMCSA–1997–2349, Unified Registration System, 78 FR 52608 (2013). The registration form also requires an entity’s principal address, mailing address, phone number, principal contact and email address, among other information specific to the type of the registrant’s operating authority. Also, an update to a registration prompted by, for example, a change in business organization, does not alter the requirement for a registrant PO 00000 Frm 00006 Fmt 4701 Sfmt 4700 to meet the FMCSA’s update schedule applicable to the registrant. UPS expresses a concern that renewed licenses will expire on the date indicated on its license. UPS sees a danger that a license will not be renewed before it expires due to circumstances beyond an OTI’s control or, perhaps, beyond the Commission’s control, leading to its inability to lawfully accept bookings. In such circumstances, UPS suggests that the Commission’s rule provide that the expiration date be automatically extended by ten days. A failure to renew by the renewal date does not terminate the effectiveness of an OTI’s license. Where an OTI has failed to renew, BCL will contact the OTI and remind it of their obligation, urge the OTI to complete the process promptly and offer such assistance as practicable. In the unusual instance where an OTI continually ignored or rebuffed the Commission’s efforts to bring it into compliance, (and where such OTI’s financial responsibility remains in effect), an enforcement proceeding for suspension or revocation of the OTI license will remain as options for the Commission’s consideration. Even in such circumstances, the license remains in effect until revoked or suspended following notice and opportunity for a hearing as provided by the Commission’s regulations. UPS suggests that an update to an OTI’s FMC–18 result in the OTI’s renewal date being extended to three years from that update. The Commission considers that renewal dates fixed pursuant to § 515.14(d) (1) provides a more stable timeline for OTIs and the Commission. That section provides that a new license bear a renewal date on the same day and month as the date on which the license was originally issued, with the renewal day and month remaining the same for successive renewals. Also, the renewal date remains the same regardless of the date a renewal form is submitted or the date a renewed license is issued. Extending the date as suggested by UPS would require additional resources to accurately track data entry dates in order to establish a renewal date. It is foreseeable that in some instances multiple replacement licenses would have to be produced where there are multiple updates between renewals. In contrast, the rule will provide OTIs and the Commission with ongoing certainty as to the OTI’s renewal date. NCBFAA comments that the Commission should explain its authority to implement a renewal process as neither the specific authority E:\FR\FM\05NOR3.SGM 05NOR3 tkelley on DSK3SPTVN1PROD with RULES3 Federal Register / Vol. 80, No. 214 / Thursday, November 5, 2015 / Rules and Regulations in MAP–21 for the FMCSA to ‘‘renew’’ their registrations nor CBP’s status reporting provide a basis. Section 17 of the Shipping Act, 46 U.S.C. 305, provides broad authority to the Commission to ‘‘prescribe regulations to carry out its duties and powers,’’ which encompasses the authority to require OTIs to update information that is essential to the Commission’s oversight of OTIs. The triennial license renewal requirement in this rule is an extension of its current rules that require OTIs to inform the Commission of changes in information for prior Commission approval for certain changes (e.g., change in QI) or within 30 days after certain changes have occurred. Since 1961, the Commission has had the responsibility for licensing independent ocean freight forwarders and, from the outset, included regulations requiring forwarders to update information supplied in its application, for example, 46 CFR 510.5(c) (1965). Upon passage of OSRA, the Commission implemented its statutory requirements by extending the prior approval and notification requirements to NVOCC licensees as well as to OFFs. Based upon the Commission’s experience that OTIs too often do not update the required information, and the present inability to identify OTIs which should have reported changes under the current rules but have not, the Commission finds it necessary to require OTIs to update that information every three years, using today’s technology to enable an on-line renewal process. The shared need of the public and the Commission for current, accurate and reliable information is best served by ensuring the Commission’s OTI data base is updated by all licensees every three years to display current licensee information, rather than relying solely on the current requirements. The Commission is mindful that there are approximately 4,700 OTIs that are currently licensed that have no expiration date. As a result the Commission will advise the public of the timetable and process that will be used to implement renewals for those licensees. That notice will be issued well in advance of the date by which any current licensees will need to renew their licenses. The process will allow current licensees to renew without being unreasonably burdened and should avoid processing delays by the Commission that could occur where too many renewals are submitted within a short time. The total number of current licensed OTIs may, for example, be divided up so that one third of licensees are notified to renew in the first year VerDate Sep<11>2014 18:44 Nov 04, 2015 Jkt 238001 and one third for each of the following two years, and any renewal dates likewise scheduled on a monthly basis across the course of a given year. A phased schedule is necessary in order to make the workload achievable for Commission staff, without imposing undue or unnecessarily rigid deadlines for the OTI industry. Section 515.17—Hearing Procedures Governing: Denial, Revocation, or Suspension of OTI Licenses This section streamlines appeal procedures for denial of OTI license applications, and for revocation or suspension of OTI licenses. Currently, such appeals are conducted under the Commission’s Rules of Practice and Procedure, published at 46 CFR part 502, and provide procedures ill-suited to reducing the burden, expense and delay attendant to such licensing determinations. Upon being advised by the hearing officer that a hearing request has been made, BCL will deliver to the hearing officer a copy of the notice of intent given to the applicant/licensee along with materials supporting the notice under § 515.15 (license denials) or 515.16 (license revocations and suspensions). The hearing officer will provide the OTI or applicant with a copy of BCL’s notice of intent and the materials, along with a written notice advising the party of its right to submit its written arguments, affidavits of fact, and documents within 30 days. BCL then would submit its response within 20 days of the OTI’s submission. These records and submissions constitute the entire record for the hearing officer’s decision. The hearing officer’s decision must be issued within 40 days of the record being closed. Section 515.17(d) provides that, for all revocation, termination or suspension proceedings that seek findings of Shipping Act violations, formal proceedings before an Administrative Law Judge are still required. The Commission’s formal discovery rules are available in such instances. NCBFAA expresses concern that revision of the hearing process for denials, suspensions and revocations deny a full evidentiary hearing. NYNJFFF&BA, UPS and Vanguard also suggest that the change in hearing process denies OTIs due process. UPS suggests that the new procedure be used only where an OTI does not appear or comply with the Commission’s part 502 (Rules of Practice and Procedure). As the comments indicate, this streamlined procedure will be of significant benefit where an OTI fails to appear, as such proceedings will PO 00000 Frm 00007 Fmt 4701 Sfmt 4700 68727 consume significantly less time than typical show cause proceedings. The new procedure will take approximately 115 days. In contrast, in Docket No. 14– 01, Revocation of Ocean Transportation Intermediary License No. 022025— Cargologic USA LLC, the matter was decided by the Commission over the course of approximately 170 days (initiated by Show Cause Order served February 18, 2014, 33 SRR 299, and resolved by its decision revoking Cargologic’s license, served August 8, 2014, 33 SRR 666). While revocation proceedings remain infrequent, uncontested proceedings comprise by far the majority of such cases. The new procedure will also serve to shorten denial, suspension and revocation proceedings where the OTI formally appears through counsel, thereby reducing the burden and expense even as to contested proceedings. At the outset of any proceedings, OTIs will receive a far broader disclosure of BCL’s case in chief than that required for proceedings conducted under the procedures in part 502. See 46 CFR 502.201. Counsel for the OTI will be able to assess the factual basis of BCL’s decision, participate fully in the hearing, and emerge readily equipped to seek Commission review in the event of an adverse decision. OTIs are not disadvantaged by the new procedure as it protects OTIs’ due process rights at all stages. Section 515.17(c) provides that OTIs and applicants may seek Commission review of the hearing officer’s adverse decision pursuant to 46 CFR 502.227 (applicable to the filing of exceptions). Such requests may include a request for further hearing under part 502 (Rules of Practice and Procedure), including appointment of an Administrative Law Judge. The Commission also may, on its own motion, require a part 502 hearing to review an adverse decision. Finally, § 515.17(d) provides that, for all revocation, termination or suspension proceedings that seek assessment of civil penalties for Shipping Act violations, formal proceedings before an Administrative Law Judge are still required. The Commission’s formal discovery rules remain available in such instances. Section 515.19 (g)(1) also provides for the hearing process contained in § 515.17 with respect to terminations or suspensions of the effectiveness of foreign-based NVOCC registrations. The streamlined process similarly accords registered NVOCCs the due process required. E:\FR\FM\05NOR3.SGM 05NOR3 68728 Federal Register / Vol. 80, No. 214 / Thursday, November 5, 2015 / Rules and Regulations tkelley on DSK3SPTVN1PROD with RULES3 Subpart C—Financial Responsibility Requirements; Claims Against Ocean Transportation Intermediaries Section 515.23—Claims Against an Ocean Transportation Intermediary Section 515.23(c) requires financial responsibility providers to file with the Commission notices of each ‘‘claim, court action, or court judgment against the financial responsibility and each claim paid (including the amount [thereof]) by the [financial responsibility] provider.’’ Section 515.23(c) provides that such notices be submitted only to the Commission. NCBFAA, TIA, NYNJFFF&BA, North American, J.W. Allen, Customs Clearance, K&N, John S. Connor, New Direx, W.R. Zanes, Pride, John S. James, C J International, Cargo-Link, Vanguard, Mohawk and Thunderbolt object to the provision requiring financial responsibility providers having to file with the Commission notices of claims and claims paid against a financial responsibility. Although claim information is filed only with the Commission and not published, they assert such information could be damaging to an OTI as claims are often without merit. NYNJFFF&BA asserts that the additional requirement in § 515.23(c)(3) that reporting of the claimant’s name, the court, court case number, the OTI’s name and license number may create an impression that such OTIs were irresponsible and cause the Commission to use the information against the OTI. The association suggests that if the Commission is interested in gathering data to better understand the claim experience of financial responsibility, it could request aggregate data without reference to specific claimants and OTIs. NCBFAA and TIA also question the relevance of such information to the fitness of an OTI, and seek assurances it will be kept confidential. Financial responsibility providers have been required for many years to provide claim information to the Commission. While this requirement has long been a key component in the financial responsibility forms that providers must use in establishing the OTI’s financial responsibility under the current regulations, the NOPR brings such requirements forward into its rules. The NOPR also revises the wording of the form’s contractual requirements with regard to providing such claim information in order to make the wording more uniform across all four of the financial responsibility forms received by the Commission. The Commission seeks this fuller claims information as a function of its VerDate Sep<11>2014 18:44 Nov 04, 2015 Jkt 238001 oversight of OTI financial responsibility coverage. These changes will improve the detail and accuracy of claims information received, the regularity of its receipt from surety providers, and the timeliness by which the Commission may respond in the event the financial responsibility instrument is cancelled, becomes ineffective or is extinguished upon payment of one or more valid claims. NYNJFFF&BA comments that it is unfair to require such information from OTIs and not from vessel operating carriers or terminal operators. The Commission does not seek this information from vessel operators or terminal operators because such entities are not required by the Shipping Act to obtain financial responsibility. The Commission collects the information for its internal use only and it will be protected to the extent provided by law. Roanoke supports the inclusion in § 515.23(c) of requirements for financial responsibility providers to notify the Commission of claims and claim payments. Roanoke comments that it would prefer that § 515.23(c)(2) be modified so that notices could be reported within 45 days rather than reported ‘‘promptly’’ as provided in the rule. The Commission does not see a need to drop the word ‘‘promptly’’ and will retain § 515.23(c)(2) as proposed. However, the Commission considers it reasonable for financial responsibility providers to compile claims and claim payment information on a periodic basis and then promptly submit the information to the Commission, e.g., monthly or more frequently. Roanoke also suggests that the changes made to the financial responsibility forms that provide that such information be provided ‘‘immediately’’ be changed to refer to ‘‘promptly.’’ In light of the Commission’s decision with respect to § 515.23(c)(2), the Commission will revise the financial responsibility forms to substitute ‘‘promptly’’ for ‘‘immediately.’’ Roanoke also refers to the need in Form FMC–48 (Bond Form) to change the two references to ‘‘Insured’’ to ‘‘Principal.’’ The Commission agrees and will make the substitution. With respect to Bond Form FMC–48, Roanoke believes that the proviso in the second ‘‘Whereas’’ clause (that a group bond will pay-out claims only to the extent not covered by another surety bond) is unnecessary as it serves no purpose. This same proviso also appears in the Insurance and Guarantee forms. Roanoke asserts that the proviso is appropriately included only in Group Bond Form FMC–69, where it provides PO 00000 Frm 00008 Fmt 4701 Sfmt 4700 that a group bond pays against claims only after other surety bonds, insurance or guaranties have been exhausted. The Commission concurs that the proviso is unnecessary and will delete it from Forms FMC–48, FMC–67 and FMC–68. Roanoke also proposes that the Commission provide guidance as to the schedule for incorporating the claim reporting changes to the financial responsibility forms and how to quickly make the rule effective in current financial responsibility contracts. Roanoke suggests that the changes be permitted, in the short term, by riders to current bonds. Roanoke also suggests the Commission give OTIs and financial responsibility providers twelve months after the proposed rule becomes effective for new bonds to be fully updated and executed. Under OSRA, the Commission authorized use of riders so that OTIs and financial responsibility providers could more easily meet the new statutory requirements. This process worked well under OSRA and the Commission agrees that the use of riders here is also appropriate. The Commission also concurs that 12 months would be a reasonable period over which current financial responsibility contracts can be reworked and replaced using the new forms. The Commission will closely monitor this process and work with financial responsibility providers and OTIs following effectiveness of the proposed rule. Section 515.27—Proof of Compliance— NVOCC. Section 515.27(a) makes it clear that no common carrier shall ‘‘knowingly and willfully’’ transport cargo for an NVOCC unless the common carrier has determined that the NVOCC has: A license or registration; published a tariff; and provided proof of financial responsibility. Section 515.27(b)(2) sets forth the Commission’s web address as the single-source location that common carriers can consult to verify an NVOCC’s status. The Commission is working to ensure that common carriers can readily make the required verifications at a single, convenient location on the Commission’s Web site. The World Shipping Council suggests that the Commission also make a change to § 515.27(d) that would harmonize it with paragraph (b)(1) by using the same reference to ‘‘applicable licensing, registration, tariff and financial responsibility requirements’’ throughout this section. The Commission agrees that these conforming changes improve the section and revises § 515.27(d) to read as follows: E:\FR\FM\05NOR3.SGM 05NOR3 Federal Register / Vol. 80, No. 214 / Thursday, November 5, 2015 / Rules and Regulations (d) The Commission will publish at its Web site, www.fmc.gov, a list of the locations of all carrier and conference tariffs, and a list of ocean transportation intermediaries who have met their applicable licensing, registration, tariff and financial responsibility requirements, current as of the last date on which the list is updated. The Commission will update this list on a periodic basis. tkelley on DSK3SPTVN1PROD with RULES3 Subpart D—Duties and Responsibilities of Ocean Transportation Intermediaries; Reports to Commission Section 515.31—General Duties Section 515.31(g) places an obligation on all OTIs to promptly respond to requests for all records and books of accounts made by authorized Commission representatives. In addition, § 515.31(g) now clarifies that OTI principals are responsible for requiring that their agents promptly respond to requests directed to such OTI’s agents. NYNJFFF&BA comments that OTIs are not in a position to ensure that their agents make their corporate records available as those records are not legally the OTI’s. The association also indicates that, if the agents resist requests by the OTI, the OTI should not experience the regulatory consequences. Section 515.31(g) makes OTIs responsible to make available all records relating to ocean transportation intermediary service provided by or for the OTI. The Commission agrees with NYNJFFF&BA that the law of agency and contract govern the OTI’s relationship with its agents. Accordingly, the regulation requires OTIs to obligate its agents to provide all records relating to its OTI principal’s activities. The Commission’s rule anticipates OTIs will be readily able to include provisions in their agency agreements so as to ensure compliance by their agents. Section 515.31(j) embodies the Commission’s decision in Docket No. 06–01, Worldwide Relocations, Inc., et. al—Possible Violations, 32 SRR 495, 503 (FMC 2012), in which the Commission found that persons or entities may hold themselves out to act as an NVOCC ‘‘by the establishment and maintenance of tariffs, by advertisement and solicitation, and otherwise.’’ Section 515.31(j) applies to OFFs, as well as NVOCCs, insofar as they hold out to perform ocean freight forwarding services via advertising and solicitation. TIA, NCBFAA, NYNJFFF&BA, North American, J.W. Allen, Customs Clearance, K&N, John S. Connor, New Direx, W.R. Zanes, Pride, John S. James, C J International, Cargo-Link, Mohawk, Vanguard, Thunderbolt express their concern that § 515.31(j) can be read to VerDate Sep<11>2014 18:44 Nov 04, 2015 Jkt 238001 apply to agents that might advertise to perform an OTI service, as agent, for an OTI. TIA indicates that the use of ‘‘OTI services’’ in the rule is confusing because such services are not defined in the proposed rule. As a consequence, these commenters view § 515.31(j) as problematic. The Commission agrees that the section as proposed is imprecise and is revised as follows: No person may advertise or hold out to act as an OTI unless that person holds a valid OTI license or is registered under this part. The reference to ‘‘OTI services’’ is deleted and the words ‘‘to act as an OTI’’ are inserted to make it clear that only those advertising or holding out to act as an OTI are subject to the rule. Subpart E—Freight Forwarding Fees and Compensation Section 515.41—Forwarder and Principal; Fees The current content of § 515.41(c) with respect to special contracts of ocean freight forwarders is deleted. The Commission has determined it is no longer needed. NCBFAA supports the elimination of the current content of § 515.41(c) as not relevant in light of the enactment of OSRA and the importance of individually negotiated rates. Section 515.42—Forwarder and Carrier; Compensation Section 515.42(c) is revised to specifically authorize electronic certifications by forwarders to carriers that forwarding services have been provided. Such electronic certifications (e.g., an automated forwarder database) must identify the shipments for which compensation is made and provide for the forwarder’s confirmation that the services for which forwarder compensation is to be paid have been provided. This provision will ensure, for example, that the forwarder will confirm that the carrier’s list of shipments is correct, and, if not, the forwarder will advise the carrier of shipments that should be added or deleted. Certifications must be retained for a period of 5 years by the common carrier. NCBFAA supports the authorization in section 515.42(c) of electronic certifications that forwarder services have been provided. However, it proposes that there is no need for any certification because vessel operating common carriers have largely eliminated forwarder compensation, in that compensation is only paid where forwarders bring substantial cargo to the carrier and provide significant services. J.W. Allen and W.R. Zanes support elimination of certifications. PO 00000 Frm 00009 Fmt 4701 Sfmt 4700 68729 NYNJFFF&BA also urges that certifications by forwarders and by vessel operators be dropped based on the paucity of compensation being paid by vessel operators. The association also expresses a concern that carriers may create their own systems requiring OFFs to provide verification of carrier lists. No comments were received from vessel operators or their associations on the change to § 515.42(c). Vanguard suggests the Commission should allow for a one-time blanket certification by the OFF that services have been rendered on all future shipments, or eliminate certifications entirely. Vanguard questions why a vessel operator certification is necessary. The Commission appreciates that the number of shipments on which forwarder compensation is paid have greatly diminished. However, the reasons for certification remain—to ensure that forwarder compensation is only paid and received for services actually rendered in accordance with vessel operators’ service contracts and tariffs. It would appear that the provision of electronic certification exchanges, verified periodically by the forwarder and the vessel operator, together with the greatly reduced volume of compensation paid will reduce correspondingly the number of certifications required. Regulatory Flexibility Act—Threshold Analysis and Chairman’s Certification of No Significant Economic Impact When an agency issues a rulemaking proposal, the Regulatory Flexibility Act (RFA) requires the agency to ‘‘prepare and make available for public comment an initial regulatory flexibility analysis’’ which will describe the impact of the proposed rule on small entities. (5 U.S.C. 603(a)). Section 605 of the RFA allows an agency to certify a rule, in lieu of preparing an analysis, if the proposed rulemaking is not expected to have a significant economic impact on a substantial number of small entities. In the NPRM, the Commission advised the public that the proposed rule directly affects all U.S. licensed OTIs, of which there were 4,648. The FMC estimated that approximately 97 percent of these OTIs are small entities. Therefore, the Commission determined that this proposed rule will affect a substantial number of small entities. At that time, the Commission determined that the economic impact on entities affected by the proposed rule would not be significant. Most of the proposed changes were found to have either no economic impact or beneficial economic impacts. Concerning the one E:\FR\FM\05NOR3.SGM 05NOR3 tkelley on DSK3SPTVN1PROD with RULES3 68730 Federal Register / Vol. 80, No. 214 / Thursday, November 5, 2015 / Rules and Regulations change with the potential to generate economic disbenefit, i.e., the license renewal requirement, the dollar magnitude of the economic impact was estimated to be less than one-tenth of one percent of average annual revenue for even the smallest of small entities. The Commission invited comment from members of the public who believe the rule will have a significant economic impact on the U.S.-based OTIs. The NCBFAA comments asserted that the license renewal requirement would have a significant economic impact on a substantial number of small entities. Inasmuch as NCBFAA provided no data regarding the potential economic burden associated with this requirement, their assertion remains unsubstantiated. On the other hand, with respect to the rule’s elimination of the $10,000 bonding requirement for each unincorporated branch office, a number of OTIs and associations stated that the elimination of that requirement would ease their regulatory burden, reduce their cost of operations and make their companies more competitive in the market for OTI services. These commenters offered no data to quantify their assertions. NCBFAA asserts that the Commission likewise ignores the cost implications of small entities having to respond to follow-up requests or the need for such entities to defend against any action that might challenge the renewal of a license. As outlined, the on-line renewal process will be free, user-friendly and focused upon verifying factual issues material to the licensee’s current status. Only information that is no longer accurate need be updated. The Commission may revoke a license where an OTI no longer has the experience or character to act as an OTI. OTIs are in control of whether they meet those standards and, correspondingly, in control of whether they have engaged in activities that might lead to a revocation proceeding. The occurrence of such litigation is highly speculative and ultimately in the hands of the OTI. Similarly, the incidence of OTIs needing to respond to follow-up requests by the Commission staff is also speculative as the OTI is expected to provide accurate information in the first instance. Accordingly, the Chairman of the FMC hereby certifies that this rule will not have a significant economic impact on a substantial number of small entities. The FMC’s certification and supporting statement of factual basis will be provided to the Chief Counsel for Advocacy of the Small Business Administration (SBA) for review under 5 U.S.C. 605(b). VerDate Sep<11>2014 18:44 Nov 04, 2015 Jkt 238001 This rule is not a ‘‘major rule’’ under 5 U.S.C. 804(2). List of Subjects in 46 CFR Part 515 Freight, Freight forwarders, Maritime carriers, Reporting and recordkeeping requirements. 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. Subpart A—General 2. In § 515.1, revise paragraph (b) to read as follows: ■ § 515.1 Scope. * * * * * (b) Information obtained under this part is used to determine the qualifications of ocean transportation intermediaries and their compliance with shipping statutes and regulations. Failure to follow the provisions of this part may result in denial, revocation or suspension of an ocean transportation intermediary license or registration. Persons operating without the proper license or registration may be subject to civil penalties not to exceed $9,000 for each such violation, unless the violation is willfully and knowingly committed, in which case the amount of the civil penalty may not exceed $45,000 for each violation; for other violations of the provisions of this part, the civil penalties range from $9,000 to $45,000 for each violation (46 U.S.C. 41107– 41109). Each day of a continuing violation shall constitute a separate violation. ■ 3. Revise § 515.2 to read as follows: § 515.2 Definitions. The terms used in this part are defined as follows: (a) Act or Shipping Act means the Shipping Act of 1984, as amended. 46 U.S.C. 40101–41309. (b) Beneficial interest includes a lien or interest in or right to use, enjoy, profit, benefit, or receive any advantage, either proprietary or financial, from the whole or any part of a shipment of cargo where such interest arises from the financing of the shipment or by PO 00000 Frm 00010 Fmt 4701 Sfmt 4700 operation of law, or by agreement, express or implied. The term ‘‘beneficial interest’’ shall not include any obligation in favor of an ocean transportation intermediary arising solely by reason of the advance of outof-pocket expenses incurred in dispatching a shipment. (c) Branch office means any office in the United States established by or maintained by or under the control of a licensee for the purpose of rendering intermediary services, which office is located at an address different from that of the licensee’s designated home office. (d) Commission means the Federal Maritime Commission. (e) Common carrier means any person holding itself out to the general public to provide transportation by water of passengers or cargo between the United States and a foreign country for compensation that: (1) Assumes responsibility for the transportation from the port or point of receipt to the port or point of destination, and (2) Utilizes, for all or part of that transportation, a vessel operating on the high seas or the Great Lakes between a port in the United States and a port in a foreign country, except that the term does not include a common carrier engaged in ocean transportation by ferry boat, ocean tramp, chemical parcel tanker, or by a vessel when primarily engaged in the carriage of perishable agricultural commodities: (i) If the common carrier and the owner of those commodities are whollyowned, directly or indirectly, by a person primarily engaged in the marketing and distribution of those commodities, and (ii) Only with respect to those commodities. (f) Compensation means payment by a common carrier to a freight forwarder for the performance of services as specified in § 515.2(h). (g) Freight forwarding fee means charges billed by an ocean freight forwarder to a shipper, consignee, seller, purchaser, or any agent thereof, for the performance of freight forwarding services. (h) Freight forwarding services refers to the dispatching of shipments on behalf of others, in order to facilitate shipment by a common carrier, which may include, but are not limited to, the following: (1) Ordering cargo to port; (2) Preparing and/or processing export documents, including the required ‘electronic export information’; (3) Booking, arranging for or confirming cargo space; E:\FR\FM\05NOR3.SGM 05NOR3 tkelley on DSK3SPTVN1PROD with RULES3 Federal Register / Vol. 80, No. 214 / Thursday, November 5, 2015 / Rules and Regulations (4) Preparing or processing delivery orders or dock receipts; (5) Preparing and/or processing common carrier bills of lading or other shipping documents; (6) Preparing or processing consular documents or arranging for their certification; (7) Arranging for warehouse storage; (8) Arranging for cargo insurance; (9) Assisting with clearing shipments in accordance with United States Government export regulations; (10) Preparing and/or sending advance notifications of shipments or other documents to banks, shippers, or consignees, as required; (11) Handling freight or other monies advanced by shippers, or remitting or advancing freight or other monies or credit in connection with the dispatching of shipments; (12) Coordinating the movement of shipments from origin to vessel; and (13) Giving expert advice to exporters concerning letters of credit, other documents, licenses or inspections, or on problems germane to the cargoes’ dispatch. (i) From the United States means oceanborne export commerce from the United States, its territories, or possessions, to foreign countries. (j) Licensee is any person licensed by the Federal Maritime Commission as an ocean transportation intermediary. (k) Non-vessel-operating common carrier services refers to the provision of transportation by water of cargo between the United States and a foreign country for compensation without operating the vessels by which the transportation is provided, and may include, but are not limited to, the following: (1) Purchasing transportation services from a common carrier and offering such services for resale to other persons; (2) Payment of port-to-port or multimodal transportation charges; (3) Entering into affreightment agreements with underlying shippers; (4) Issuing bills of lading or other shipping documents; (5) Assisting with clearing shipments in accordance with U.S. government regulations; (6) Arranging for inland transportation and paying for inland freight charges on through transportation movements; (7) Paying lawful compensation to ocean freight forwarders; (8) Coordinating the movement of shipments between origin or destination and vessel; (9) Leasing containers; (10) Entering into arrangements with origin or destination agents; VerDate Sep<11>2014 18:44 Nov 04, 2015 Jkt 238001 (11) Collecting freight monies from shippers and paying common carriers as a shipper on NVOCC’s own behalf. (l) Ocean common carrier means a common carrier that operates, for all or part of its common carrier service, a vessel on the high seas or the Great Lakes between a port in the United States and a port in a foreign country, except that the term does not include a common carrier engaged in ocean transportation by ferry boat, ocean tramp, or chemical parcel-tanker. (m) Ocean transportation intermediary (OTI) means an ocean freight forwarder or a non-vesseloperating common carrier. For the purposes of this part, the term: (1) Ocean freight forwarder (OFF) means a person that— (i) In the United States, dispatches shipments from the United States via a common carrier and books or otherwise arranges space for those shipments on behalf of shippers; and (ii) Processes the documentation or performs related activities incident to those shipments; and (2) Non-vessel-operating common carrier (NVOCC) means a common carrier that does not operate the vessels by which the ocean transportation is provided, and is a shipper in its relationship with an ocean common carrier. (n) Person means individuals, corporations, companies, including limited liability companies, associations, firms, partnerships, societies and joint stock companies existing under or authorized by the laws of the United States or of a foreign country. (o) 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. (p) Qualifying individual (QI) means an individual who meets the experience and character requirements of section 19 of the Shipping Act (46 U.S.C. 40901– 40904) and this part. (q) Reduced forwarding fees means charges to a principal for forwarding services that are below the licensed ocean freight forwarder’s usual charges for such services. (r) Registered non-vessel-operating common carrier (registered NVOCC) means an NVOCC whose primary place of business is located outside the United States and who elects not to become licensed as an NVOCC, but to register with the Commission as provided in § 515.19, post a bond or other surety in PO 00000 Frm 00011 Fmt 4701 Sfmt 4700 68731 the required amount, and publish a tariff as required by 46 CFR part 520. (s) Shipment means all of the cargo carried under the terms of a single bill of lading. (t) Shipper means: (1) A cargo owner; (2) The person for whose account the ocean transportation is provided; (3) The person to whom delivery is to be made; (4) A shippers’ association; or (5) A non-vessel-operating common carrier that accepts responsibility for payment of all charges applicable under the tariff or service contract. (u) Special contract is a contract for ocean freight forwarding services which provides for a periodic lump sum fee. (v) Transportation-related activities which are covered by the financial responsibility obtained pursuant to this part include, to the extent involved in the foreign commerce of the United States, any activity performed by an ocean transportation intermediary that is necessary or customary in the provision of transportation services to a customer, but are not limited to the following: (1) For an ocean transportation intermediary operating as an ocean freight forwarder, the freight forwarding services enumerated in paragraph (h) of this section, and (2) For an ocean transportation intermediary operating as a non-vesseloperating common carrier, the nonvessel-operating common carrier services enumerated in § 515.2(k). (w) United States includes the several States, the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Marianas, and all other United States territories and possessions. ■ 4. Revise § 515.3 to read as follows: § 515.3 License; when required. Except as otherwise provided in this part, no person in the United States may act as an ocean transportation intermediary unless that person holds a valid license issued by the Commission. For purposes of this part, a person is considered to be ‘‘in the United States’’ if such person is resident in, or incorporated or established under, the laws of the United States. Registered NVOCCs must utilize only licensed ocean transportation intermediaries to provide NVOCC services in the United States. In the United States, only licensed OTIs may act as agents to provide OTI services for registered NVOCCs. ■ 5. Revise § 515.4 to read as follows: E:\FR\FM\05NOR3.SGM 05NOR3 68732 § 515.4 Federal Register / Vol. 80, No. 214 / Thursday, November 5, 2015 / Rules and Regulations License; when not required. A license is not required in the following circumstances: (a) Shippers. Any person whose primary business is the sale of merchandise may, without a license, dispatch and perform freight forwarding services on behalf of its own shipments, or on behalf of shipments or consolidated shipments of a parent, subsidiary, affiliate, or associated company. Such person shall not receive compensation from the common carrier for any services rendered in connection with such shipments. (b) Agents, employees, or branch offices of a licensed ocean transportation intermediary. An agent, individual employee, or branch office of a licensed ocean transportation intermediary is not required to be licensed in order to act on behalf of and in the name of such licensee; however, branch offices must be reported to the Commission in Form FMC–18 or pursuant to § 515.20(e). A licensed ocean transportation intermediary shall be fully responsible for the acts and omissions of any of its employees and agents that are performed in connection with the conduct of such licensee’s business. (c) Common carriers. A common carrier, or agent thereof, may perform ocean freight forwarding services without a license only with respect to cargo carried under such carrier’s own bill of lading. Charges for such forwarding services shall be assessed in conformance with the carrier’s published tariffs. (d) Federal military and civilian household goods. Any person which exclusively transports used household goods and personal effects for the account of the Department of Defense, or for the account of the federal civilian executive agencies shipping under the International Household Goods Program administered by the General Services Administration, or both, is not subject to the requirements of subpart B of this part, but may be subject to other requirements, such as alternative surety bonding, imposed by the Department of Defense, or the General Services Administration. ■ 6. Revise § 515.5 to read as follows: tkelley on DSK3SPTVN1PROD with RULES3 § 515.5 Forms and fees. (a) Forms. License Application Form FMC–18 Rev., Application for Renewal of Ocean Transportation Intermediary License Form–ll, and Foreign-based Unlicensed NVOCC Registration/ Renewal Form FMC–65, are found at the Commission’s Web site www.fmc.gov for completion on-line by applicants, licensees, and registrants. Financial VerDate Sep<11>2014 18:44 Nov 04, 2015 Jkt 238001 responsibility Forms FMC–48, FMC–67, FMC–68, FMC–69 may be obtained from the Commission’s Web site at www.fmc.gov, from the Director, Bureau of Certification and Licensing, Federal Maritime Commission, Washington, DC 20573, or from any of the Commission’s Area Representatives. (b) Filing of license applications and registration forms. All applications and forms are to be filed electronically unless a waiver is granted to file in paper form. A waiver request must be submitted in writing to the Director, Bureau of Certification and Licensing, 800 North Capitol Street NW., Washington, DC 20573, and must demonstrate that electronic filing imposes an undue burden on the applicant or registrant. The director, or a designee, will render a decision on the request and notify the requestor within two (2) business days of receiving the request. If a waiver request is granted, the approval will provide instructions for submitting a paper application or registration. If the waiver request is denied, a statement of reasons for the denial will be provided. (c) Fees. (1)(i) All fees shall be paid by: (A) Money order, certified, cashier’s, or personal check payable to the order of the ‘‘Federal Maritime Commission;’’ (B) Pay.gov; (C) The Automated Clearing House system; or (D) By other means authorized by the Director of the Commission’s Office of Budget and Finance. (ii) Applications or registrations shall be rejected unless the applicable fee and any bank charges assessed against the Commission are received by the Commission within ten (10) business days after submission of the application or registration. In any instance where an application has been processed in whole or in part, the fee will not be refunded. (2) Fees under this part 515 shall be as follows: (i) Application for new OTI license as required by § 515.12(a): Automated filing $250; paper filing pursuant to waiver $825. (ii) Application for change to OTI license or license transfer as required by § 515.20(a) and (b): Automated filing $125; paper filing pursuant to waiver $525. Subpart B—Eligibility and Procedure for Licensing and Registration 7. Revise the heading for subpart B to read as set forth above. ■ 8. Revise § 515.11 to read as follows: ■ PO 00000 Frm 00012 Fmt 4701 Sfmt 4700 § 515.11 Basic requirements for licensing; eligibility. (a) Necessary qualifications. To be eligible for an ocean transportation intermediary license, the applicant must demonstrate to the Commission that: (1) It possesses the necessary experience, that is, its qualifying individual has a minimum of three (3) years’ experience in ocean transportation intermediary activities in the United States, and the necessary character to render ocean transportation intermediary services. A foreign NVOCC seeking to be licensed under this part must demonstrate that its qualifying individual has a minimum 3 years’ experience in ocean transportation intermediary activities, and the necessary character to render ocean transportation intermediary services. The required OTI experience of the QI of a foreign-based NVOCC seeking to become licensed under this part (foreign-based licensed NVOCC) may be experience acquired in the U.S. or a foreign country with respect to shipments in the United States oceanborne foreign commerce. (2) In addition to information provided by the applicant and its references, the Commission may consider all information relevant to determining whether an applicant has the necessary character to render ocean transportation intermediary services, including but not limited to, information regarding: Violations of any shipping laws, or statutes relating to the import, export, or transport of merchandise in international trade; operating as an OTI without a license or registration; state and federal felonies and misdemeanors; voluntary and nonvoluntary bankruptcies not discharged; outstanding tax liens and other court and administrative judgments and proceedings; compliance with immigration status requirements described in 49 CFR 1572.105; denial, revocation, or suspension of a Transportation Worker Identification Credential under 49 CFR 1572; and the denial, revocation, or suspension of a customs broker’s license under 19 CFR subpart B, section 111. The required OTI experience of the QI of a foreignbased NVOCC seeking to become licensed under this part (foreign-based licensed NVOCC) may be acquired in the U.S. or a foreign country with respect to shipments in the United States oceanborne foreign commerce. (b) Qualifying individual. The following individuals must qualify the applicant for a license: (1) Sole proprietorship. The applicant sole proprietor. E:\FR\FM\05NOR3.SGM 05NOR3 Federal Register / Vol. 80, No. 214 / Thursday, November 5, 2015 / Rules and Regulations (2) Partnership. At least one of the active managing partners. (3) Corporation. At least one of the active corporate officers. (4) Limited liability company. One of the members or managers, or an individual in an equivalent position in the LLC as expressly set forth in the LLC operating agreement. (c) Affiliates of intermediaries. An independently qualified applicant may be granted a separate license to carry on the business of providing ocean transportation intermediary services even though it is associated with, under common control with, or otherwise related to another ocean transportation intermediary through stock ownership or common directors or officers, if such applicant submits: A separate application and fee, and a valid instrument of financial responsibility in the form and amount prescribed under § 515.21. The qualifying individual of one active licensee shall not also be designated as the qualifying individual of an applicant for another ocean transportation intermediary license, unless both entities are commonly owned or where one directly controls the other. (d) Common carrier. A common carrier or agent thereof which meets the requirements of this part may be licensed as an ocean freight forwarder to dispatch shipments moving on other than such carrier’s own bills of lading subject to the provisions of § 515.42(g). (e) Foreign-based licensed NVOCC. A foreign-based NVOCC that elects to obtain a license must establish a presence in the United States by opening an unincorporated office that is resident in the United States and is qualified to do business where it is located. ■ 9. Revise § 515.12 to read as follows: tkelley on DSK3SPTVN1PROD with RULES3 § 515.12 Application for license. (a) Application and forms. (1) Any person who wishes to obtain a license to operate as an ocean transportation intermediary shall submit electronically (absent a waiver pursuant to § 515.5(b)) a completed application Form FMC–18 Rev. (Application for a License as an Ocean Transportation Intermediary) in accordance with the automated FMC–18 filing system and corresponding instructions. A filing fee shall be paid, as required under § 515.5(c). Notice of filing of each application shall be published on the Commission’s Web site www.fmc.gov and shall state the name and address of the applicant and the name of the QI. If the applicant is a corporation or partnership, the names of the officers or partners thereof may be published. For an LLC, the names of the VerDate Sep<11>2014 18:44 Nov 04, 2015 Jkt 238001 managers, members or officers, as applicable, may be published. (2) An individual who is applying for a license as a sole proprietor must complete the following certification: I, ll (Name)ll, certify under penalty of perjury under the laws of the United States, that I have not been convicted, after September 1, 1989, of any Federal or state offense involving the distribution or possession of a controlled substance, or that if I have been so convicted, I am not ineligible to receive Federal benefits, either by court order or operation of law, pursuant to 21 U.S.C. 862. (b) Rejection. Any application which appears upon its face to be incomplete or to indicate that the applicant fails to meet the licensing requirements of the Act, or the Commission’s regulations, may be rejected and a notice shall be sent to the applicant, together with an explanation of the reasons for rejection, and the filing fee shall be refunded in full. Persons who have had their applications rejected may submit a new Form FMC–18 at any time, together with the required filing fee. (c) Failure to provide necessary information and documents. In the event an applicant fails to provide documents or information necessary to complete processing of its application, notice will be sent to the applicant identifying the necessary information and documents and establishing a date for submission by the applicant. Failure of the applicant to submit the identified materials by the established date will result in the closing of its application without further processing. In the event an application is closed as a result of the applicant’s failure to provide information or documents necessary to complete processing, the filing fee will not be returned. Persons who have had their applications closed under this section may reapply at any time by submitting a new application with the required filing fee. (d) Investigation. Each applicant shall be investigated in accordance with § 515.13. (e) Changes in fact. Each applicant shall promptly advise the Commission of any material changes in the facts submitted in the application. Any unreported change may delay the processing and investigation of the application and result in rejection, closing, or denial of the application. 10. In § 515.14, revise the section heading and paragraph (b) and add paragraphs (c) and (d) to read as follows: ■ PO 00000 Frm 00013 Fmt 4701 Sfmt 4700 § 515.14 license. 68733 Issuance, renewal, and use of * * * * * (b) To whom issued. The Commission will issue a license only in the name of the applicant, whether the applicant is a sole proprietorship, a partnership, a corporation, or limited liability company. A license issued to a sole proprietor doing business under a trade name shall be in the name of the sole proprietor, indicating the trade name under which the licensee will be conducting business. Only one license shall be issued to any applicant regardless of the number of names under which such applicant may be doing business, and except as otherwise provided in this part, such license is limited exclusively to use by the named licensee and shall not be transferred without prior Commission approval to another person. (c) Duration of license. Licenses shall be issued for an initial period of three (3) years. Thereafter, licenses will be renewed for sequential three year periods upon successful completion of the renewal process in paragraph (d) of this section. (d) License renewal process. (1) The licensee shall submit electronically to the Director of the Bureau of Certification and Licensing (BCL) a completed Form FMC-ll (Application for Renewal of Ocean Transportation Intermediary License) no later than sixty (60) days prior to the renewal date set forth on its license. Upon successful completion of the renewal process, the Commission shall issue a new license bearing a renewal date three (3) years later on the same day and month on which the license was originally issued. The renewal date will remain the same for subsequent renewals irrespective of the date on which the license renewal is submitted or when the renewed license is issued by the Commission, unless another renewal date is assigned by the Commission. (2) Where information provided in an OTI’s renewal form, Form FMC-ll, is changed from that set out in its current Form FMC–18 and requires Commission approval pursuant to § 515.20, the licensee must promptly submit a request for such approval on Form FMC–18 together with the required filing fee. The licensee may continue to operate as an ocean transportation intermediary during the pendency of the Commission’s approval process. (3) Though the foregoing license renewal process is not intended to result in a re-evaluation of a licensee’s character, the Commission may review a licensee’s character at any time, including at the time of renewal, based E:\FR\FM\05NOR3.SGM 05NOR3 68734 Federal Register / Vol. 80, No. 214 / Thursday, November 5, 2015 / Rules and Regulations upon information received from the licensee or other sources. ■ 11. In § 515.15, revise paragraph (c) to read as follows: § 515.15 Denial of license. * * * * * (c) Has made any materially false or misleading statement to the Commission in connection with its application; then, a notice of intent to deny the application shall be sent to the applicant stating the reason(s) why the Commission intends to deny the application. The notice of intent to deny the application will provide, in detail, a statement of the facts supporting denial. An applicant may request a hearing on the proposed denial by submitting to the Secretary, Federal Maritime Commission, Washington, DC 20573, within twenty (20) days of the date of the notice, a statement of reasons why the application should not be denied. Such hearing shall be provided pursuant to the procedures contained in § 515.17. Otherwise, the denial of the application will become effective and the applicant shall be so notified. ■ 12. Revise § 515.16 to read as follows: tkelley on DSK3SPTVN1PROD with RULES3 § 515.16 license. Revocation or suspension of (a) Grounds. Except for the automatic revocation for termination of proof of financial responsibility under § 515.26, a license may be revoked or suspended after notice and an opportunity for a hearing under the procedures of § 515.17. The notice of revocation or suspension will provide, in detail, a statement of the facts supporting the action. The licensee may request a hearing on the proposed revocation or suspension by submitting to the Commission’s Secretary, within twenty (20) days of the date of the notice, a statement of reasons why the license should not be revoked or suspended. Such hearing shall be provided pursuant to the procedures contained in § 515.17. Otherwise, the action regarding the license will become effective. A license may be revoked or suspended for any of the following reasons: (1) Violation of any provision of the Act, or any other statute or Commission order or regulation related to carrying on the business of an ocean transportation intermediary; (2) Failure to respond to any lawful order or inquiry by the Commission; (3) Making a materially false or misleading statement to the Commission in connection with an application for a license or an amendment to an existing license; VerDate Sep<11>2014 18:44 Nov 04, 2015 Jkt 238001 (4) A Commission determination that the licensee is not qualified to render intermediary services; or (5) Failure to honor the licensee’s financial obligations to the Commission. (b) Notice. The Commission shall publish on the Commission’s Web site www.fmc.gov notice of each revocation and suspension. ■ 13. Revise § 515.17 to read as follows: § 515.17 Hearing procedures governing denial, revocation, or suspension of OTI license. (a) Hearing requests. All hearing requests under §§ 515.15 and 515.16 shall be submitted to the Commission’s Secretary. The Secretary will designate a hearing officer for review and decision under the procedures established in this section. Upon receipt of a request for hearing, the hearing officer shall notify BCL, and BCL will provide to the hearing officer and applicant or licensee a copy of the notice given to the applicant or licensee and a copy of BCL materials supporting the notice. The hearing officer will then issue a notice advising the applicant or, in the case of a revocation or suspension of the license, the licensee of the right to submit information and documents, including affidavits of fact and written argument, in support of an OTI application or continuation of a current OTI license. (b) Notice. The notice shall establish a date no later than thirty (30) days from the date of the notice for submission of all supporting materials by the applicant or licensee. The notice shall also provide that BCL may submit responsive materials no later than twenty (20) days from the date the applicant or licensee submitted its materials. BCL’s notice and materials supporting its notice, the submission of the applicant or licensee, and the responsive submission of BCL shall constitute the entire record upon which the hearing officer’s decision will be based. The hearing officer’s decision must be issued within forty (40) days after the closing of the record. (c) Review by Commission. An applicant or licensee may seek review of the hearing officer’s decision by filing exceptions pursuant to 46 CFR 502.227, and within the time provided by 46 CFR 502.227(a)(1). Upon receipt of the exceptions, the Commission may conduct a hearing under Part 502. (d) Commission-initiated enforcement proceedings. In proceedings for assessment of civil penalties for violations of the Shipping Act or Commission regulations, a license may be revoked or suspended after notice and an opportunity for hearing under PO 00000 Frm 00014 Fmt 4701 Sfmt 4700 Part 502 (Rules of Practice and Procedure). § 515.18 ■ [Redesignated as § 515.20] 14. Redesignate § 515.18 as § 515.20. § 515.17 [Redesignated as § 515.18] 15. Redesignate § 515.17 as § 515.18. ■ 16. In § 515.19 add paragraph (g)(2) to read as follows: ■ § 515.19 Registration of foreign-based non-vessel-operating common carriers. * * * * * (g) * * * (2) Hearing procedure. Registrants may request a hearing for terminations or suspensions of the effectiveness of their registrations following the same procedures set forth in § 515.17 (governing hearing requests for denials, revocations and suspensions of licenses). * * * * * ■ 17. Revise newly redesignated § 515.20 to read as follows: § 515.20 Changes in organization. (a) Licenses. The following changes in an existing licensee’s organization require prior approval of the Commission, and application for such status change or license transfer shall be made on Form FMC–18, filed with the Commission’s Bureau of Certification and Licensing, and accompanied by the fee required under § 515.5(c): (1) Transfer of a corporate license to another person; (2) Change in ownership of a sole proprietorship; (3) Any change in the business structure of a licensee from or to a sole proprietorship, partnership, limited liability company, or corporation, whether or not such change involves a change in ownership; (4) Any change in a licensee’s name; or (5) Change in the identity or status of the designated QI, except as described in paragraphs (b) and (c) of this section. (b) Operation after death of sole proprietor. In the event that the owner of a licensed sole proprietorship dies, the licensee’s executor, administrator, heir(s), or assign(s) may continue operation of such proprietorship solely with respect to shipments for which the deceased sole proprietor had undertaken to act as an ocean transportation intermediary pursuant to the existing license, if the death is reported within 30 days to the Commission and to all principals and shippers for whom services on such shipments are to be rendered. The acceptance or solicitation of any other shipments is expressly prohibited until E:\FR\FM\05NOR3.SGM 05NOR3 tkelley on DSK3SPTVN1PROD with RULES3 Federal Register / Vol. 80, No. 214 / Thursday, November 5, 2015 / Rules and Regulations a new license has been issued. Applications for a new license by the executor, administrator, heir(s), or assign(s) shall be made on Form FMC– 18, and shall be accompanied by the fee required under § 515.5(c). (c) Operation after retirement, resignation, or death of QI. When a partnership, LLC, or corporation has been licensed on the basis of the qualifications of one or more of the partners, members, managers or officers thereof, and the QI no longer serves as a full-time employee with the OTI or is no longer responsible for the licensee’s OTI activities, the licensee shall report such change to the Commission within thirty (30) days. Within the same 30-day period, the licensee shall furnish to the Commission the name(s) and detailed intermediary experience of any other active partner(s), member(s), manager(s) or officer(s) who may qualify the licensee. Such QI(s) must meet the applicable requirements set forth in § 515.11(a) through (c). The licensee may continue to operate as an ocean transportation intermediary while the Commission investigates the qualifications of the newly designated partner, member, manager, or officer. (d) Acquisition of one or more additional licensees. In the event a licensee acquires one or more additional licensees, for the purpose of merger, consolidation, or control, the acquiring licensee shall advise the Commission of such acquisition, including any change in ownership, within 30 days after such change occurs by submitting an amended Form FMC–18. No application fee is required when reporting this change. (e) Other changes. Other changes in material fact of a licensee shall be reported within thirty (30) days of such changes, in writing by mail or email (bcl@fmc.gov) to the Director, Bureau of Certification and Licensing, Federal Maritime Commission, Washington, DC 20573. Material changes include, but are not limited to: Changes in business address; any criminal indictment or conviction of a licensee, QI, or officer; any voluntary or involuntary bankruptcy filed by or naming a licensee, QI, or officer; changes of five (5) percent or more of the common equity ownership or voting securities of the OTI; or, the addition or reduction of one or more partners of a licensed partnership, one or more members or managers of a Limited Liability Company, or one or more branch offices. No fee shall be charged for reporting such changes. VerDate Sep<11>2014 19:20 Nov 04, 2015 Jkt 238001 Subpart C—Financial Responsibility Requirements; Claims Against Ocean Transportation Intermediaries 18. In § 515.21, revise paragraphs (a)(1) through (3), remove paragraph (a)(4), and revise paragraph (b). The revisions read as follows: ■ § 515.21 Financial responsibility requirements. (a) * * * (1) Any person operating in the United States as an ocean freight forwarder as defined in § 515.2(m)(1) shall furnish evidence of financial responsibility in the amount of $50,000. (2) Any person operating in the United States as an NVOCC as defined in § 515.2(m)(2) shall furnish evidence of financial responsibility in the amount of $75,000. (3) Any registered NVOCC, as defined in § 515.2(r), shall furnish evidence of financial responsibility in the amount of $150,000. Such registered NVOCC shall be strictly responsible for the acts and omissions of its employees and agents, wherever they are located. (b) Group financial responsibility. When a group or association of ocean transportation intermediaries accepts liability for an ocean transportation intermediary’s financial responsibility for such ocean transportation intermediary’s transportation-related activities under the Act, the group or association of ocean transportation intermediaries shall file a group bond form, insurance form or guaranty form, clearly identifying each ocean transportation intermediary covered, before a covered ocean transportation intermediary may provide ocean transportation intermediary services. In such cases, a group or association must establish financial responsibility in an amount equal to the lesser of the amount required by paragraph (a) of this section for each member, or $3,000,000 in aggregate. A group or association of ocean transportation intermediaries may also file an optional bond rider as provided in § 515.25(b). * * * * * ■ 19. Revise § 515.23 to read as follows: § 515.23 Claims against an ocean transportation intermediary. (a) Who may seek payment. Shippers, common carriers, and other affected persons may seek payment from the bond, insurance, or other surety maintained by an ocean transportation intermediary for damages arising out of its ocean transportation-related activities. The Commission may also seek payment of civil penalties assessed PO 00000 Frm 00015 Fmt 4701 Sfmt 4700 68735 under section 13 of the Shipping Act (46 U.S.C. 41107–41109). (b) Payment pursuant to a claim. (1) If a person does not file a complaint with the Commission pursuant to section 11 of the Shipping Act (46 U.S.C. 41301–41302, 41305–41307(a)), but otherwise seeks to pursue a claim against an ocean transportation intermediary bond, insurance, or other surety for damages arising from its transportation-related activities, it shall attempt to resolve its claim with the financial responsibility provider prior to seeking payment on any judgment for damages obtained. When a claimant seeks payment under this section, it simultaneously shall notify both the financial responsibility provider and the ocean transportation intermediary of the claim by mail or courier service. The bond, insurance, or other surety may be available to pay such claim if: (i) The ocean transportation intermediary consents to payment, subject to review by the financial responsibility provider; or (ii) The ocean transportation intermediary fails to respond within forty-five (45) days from the date of the notice of the claim to address the validity of the claim, and the financial responsibility provider deems the claim valid. (2) If the parties fail to reach an agreement in accordance with paragraph (b)(1) of this section within ninety (90) days of the date of the initial notification of the claim, the bond, insurance, or other surety shall be available to pay any final judgment for reparations ordered by the Commission or damages obtained from an appropriate court. The financial responsibility provider shall pay such judgment for damages only to the extent they arise from the transportationrelated activities of the ocean transportation intermediary, ordinarily within thirty (30) days, without requiring further evidence related to the validity of the claim; it may, however, inquire into the extent to which the judgment for damages arises from the ocean transportation intermediary’s transportation-related activities. (c) Notices of court and other claims against OTIs by financial responsibility providers. (1) As provided in each financial responsibility instrument between an OTI and its financial responsibility provider(s), the issuing financial responsibility provider shall submit a notice to the Commission of each claim, court action, or court judgment against the financial responsibility and each claim paid (including the amount) by the provider. E:\FR\FM\05NOR3.SGM 05NOR3 68736 Federal Register / Vol. 80, No. 214 / Thursday, November 5, 2015 / Rules and Regulations (2) Notices described in paragraph (c)(1) of this section shall be promptly submitted in writing by mail or email (bcl@fmc.gov) to the Director, Bureau of Certification and Licensing, Federal Maritime Commission, Washington, DC 20573. (3) Notices required by this section shall include the name of the claimant, name of the court and case number assigned, and the name and license number of the OTI involved. Such notices may include or attach other information relevant to the claim. (d) The Federal Maritime Commission shall not serve as depository or distributor to third parties of bond, guaranty, or insurance funds in the event of any claim, judgment, or order for reparation. (e) Optional bond riders. The Federal Maritime Commission shall not serve as a depository or distributor to third parties of funds payable pursuant to optional bond riders described in § 515.25(b). ■ 20. Revise § 515.25 to read as follows: tkelley on DSK3SPTVN1PROD with RULES3 § 515.25 Filing of proof of financial responsibility. (a) Filing of proof of financial responsibility—(1) Licenses. Upon notification by the Commission that an applicant has been approved for licensing, the applicant shall file with the Director of the Commission’s Bureau of Certification and Licensing, proof of financial responsibility in the form and amount prescribed in § 515.21. No license will be issued until the Commission is in receipt of valid proof of financial responsibility from the applicant. If, within 120 days of notification of approval for licensing by the Commission, the applicant does not file proof that its financial responsibility is in effect, the application will be invalid. Applicants whose applications have become invalid may submit a new Form FMC–18, together with the required filing fee, at any time. (2) Registrations. A registration shall not become effective until the applicant has furnished proof of financial responsibility pursuant to § 515.21, has submitted a Form FMC–1, and its published tariff becomes effective pursuant to 46 CFR part 520. (b) Optional bond rider. Any NVOCC as defined in § 515.2(m)(2), in addition to a bond meeting the requirements of § 515.21(a)(2) or (3), may obtain and file with the Commission proof of an optional bond rider, as provided in Appendix E or Appendix F of this part. ■ 21. Revise § 515.26 to read as follows: VerDate Sep<11>2014 18:44 Nov 04, 2015 Jkt 238001 § 515.26 Termination of financial responsibility. No license or registration shall remain in effect unless valid proof of a financial responsibility instrument is maintained on file with the Commission. Upon receipt of notice of termination of such financial responsibility, the Commission shall notify the concerned licensee, registrant, or registrant’s legal agent in the United States, by mail, courier, or other method reasonably calculated to provide actual notice, at its last known address, that the Commission shall, without hearing or other proceeding, revoke the license or terminate the registration as of the termination date of the financial responsibility instrument, unless the licensee or registrant shall have submitted valid replacement proof of financial responsibility before such termination date. Replacement financial responsibility must bear an effective date no later than the termination date of the expiring financial responsibility instrument. ■ 22. Revise § 515.27 to read as follows: § 515.27 Proof of compliance—NVOCC. (a) No common carrier shall knowingly and willfully transport cargo for the account of an NVOCC unless the carrier has determined that the NVOCC has a license or registration, a tariff, and financial responsibility as required by sections 8 (46 U.S.C. 40501–40503) and 19 (46 U.S.C. 40901–40904) of the Shipping Act and this part. (b) A common carrier can obtain proof of an NVOCC’s compliance with the OTI licensing, registration, tariff and financial responsibility requirements by: (1) Consulting the Commission’s Web site www.fmc.gov as provided in paragraph (d) below, to verify that the NVOCC has complied with the applicable licensing, registration, tariff, and financial responsibility requirements; or (2) Any other appropriate procedure, provided that such procedure is set forth in the carrier’s tariff. (c) A common carrier that has employed the procedure prescribed in paragraph (b)(1) of this section shall be deemed to have met its obligations under section 10(b)(11) of the Act (46 U.S.C. 41104(11)), unless the common carrier knew that such NVOCC was not in compliance with the applicable licensing, registration, tariff, and financial responsibility requirements. (d) The Commission will publish at its Web site, www.fmc.gov, a list of the locations of all carrier and conference tariffs, and a list of ocean transportation intermediaries (including a separate list for NVOCCs) who have met all of their applicable licensing, registration, tariff PO 00000 Frm 00016 Fmt 4701 Sfmt 4700 and financial responsibility requirements, current as of the last date on which the list is updated. The Commission will update this list on a periodic basis. Appendices A–F [Removed] 23. Remove appendices A through F to subpart C. ■ Subpart D—Duties and Responsibilities of Ocean Transportation Intermediaries; Reports to Commission ■ 24. Revise § 515.31 to read as follows: § 515.31 General duties. (a) Licensees and registrants; names and numbers. Each licensee and registrant shall carry on its business only under the name in which it was licensed or registered and only under its license or registration number as assigned by the Commission. When the licensee’s or registrant’s name appears on shipping documents, its Commission license or registration number shall also be included. (b) Stationery and billing forms. The name and license or registration number of each OTI shall be permanently imprinted on the licensee’s or registrant’s office stationery and billing forms. (c) Use of license or registration by others; prohibition. No OTI shall permit its name, license, license number, registration, or registration number to be used by any person who is not an employee or an agent of the OTI. An entity that also provides OTI services in its own name and not on behalf of a licensed or registered OTI must be separately licensed under this part and must provide proof of its own financial responsibility and publish a tariff, if applicable. A branch office of an OTI may use the license of the OTI, provided that the address of the branch office has been reported to the Commission in Form FMC–18 or pursuant to § 515.20(e). (d) Arrangements with ocean transportation intermediaries whose licenses have been revoked. Unless prior written approval from the Commission has been obtained, no OTI shall, directly or indirectly: (1) Agree to perform ocean transportation intermediary services on shipments as an associate, correspondent, officer, employee, agent, or sub-agent of any person whose license has been revoked or suspended pursuant to § 515.16, or registration terminated or suspended pursuant to § 515.19(g); (2) Assist in the furtherance of any ocean transportation intermediary E:\FR\FM\05NOR3.SGM 05NOR3 tkelley on DSK3SPTVN1PROD with RULES3 Federal Register / Vol. 80, No. 214 / Thursday, November 5, 2015 / Rules and Regulations business of an OTI whose license has been revoked; (3) Share forwarding fees or freight compensation with any such person; or (4) Permit any such person, directly or indirectly, to participate, through ownership or otherwise, in the control or direction of the ocean transportation intermediary business of the licensee or registrant. (e) False or fraudulent claims, false information. No OTI shall prepare or file or assist in the preparation or filing of any claim, affidavit, letter of indemnity, or other paper or document concerning an ocean transportation intermediary transaction which it has reason to believe is false or fraudulent, nor shall any such OTI knowingly impart to a principal, shipper, common carrier or other person, false information relative to any ocean transportation intermediary transaction. (f) Errors and omissions of the principal or shipper. An OTI who has reason to believe that its principal or shipper has not, with respect to a shipment to be handled by such OTI, complied with the laws of the United States, or has made any error or misrepresentation in, or omission from, any export declaration, bill of lading, affidavit, or other document which the principal or shipper executes in connection with such shipment, shall advise its principal or shipper promptly of the suspected noncompliance, error, misrepresentation or omission, and shall decline to participate in any transaction involving such document until the matter is properly and lawfully resolved. (g) Response to requests of Commission. Upon the request of any authorized representative of the Commission, an OTI shall make available promptly for inspection or reproduction all records and books of account in connection with its ocean transportation intermediary business, and shall respond promptly to any lawful inquiries by such representative. All OTIs are responsible for requiring that, upon the request of any authorized Commission representative, their agents make available all records and books of account relating to ocean transportation intermediary service provided by or for their principals, and respond promptly to any lawful inquiries by such representative. (h) Express written authority. No OTI shall endorse or negotiate any draft, check, or warrant drawn to the order of its OTI principal or shipper without the express written authority of such OTI principal or shipper. (i) Accounting to principal or shipper. An OTI shall account to its principal(s) VerDate Sep<11>2014 18:44 Nov 04, 2015 Jkt 238001 or shipper(s) for overpayments, adjustments of charges, reductions in rates, insurance refunds, insurance monies received for claims, proceeds of C.O.D. shipments, drafts, letters of credit, and any other sums due such principal(s) or shipper(s). (j) Prohibition. No person may advertise or hold out to act as an OTI unless that person holds a valid OTI license or is registered under this part. § 515.32 [Amended] 25. In § 515.32, in paragraph (b), in the first sentence, remove the word ‘‘sales’’. ■ 26. In § 515.33, revise the introductory text and paragraph (d) to read as follows: ■ § 515.33 Records required to be kept. Each licensed or registered NVOCC and each licensed ocean freight forwarder shall maintain in an orderly and systematic manner, and keep current and correct, all records and books of account in connection with its OTI business. The licensed or registered NVOCC and each licensed freight forwarder may maintain these records in either paper or electronic form, which shall be readily available in usable form to the Commission; the electronically maintained records shall be no less accessible than if they were maintained in paper form. These recordkeeping requirements are independent of the retention requirements of other federal agencies. In addition, each licensed freight forwarder must maintain the following records for a period of five years: * * * * * (d) Special contracts. A true copy, or if oral, a true and complete memorandum, of every special arrangement or contract between a licensed freight forwarder and a principal, or modification or cancellation thereof. § 515.32 [Amended] 27. Amend § 515.34 by removing the reference ‘‘$108’’ and adding the reference ‘‘the fee set forth in § 515.5(c)’’ in its place. ■ Subpart E—Freight Forwarding Fees and Compensation 28. Amend § 515.41 as follows: a. Remove paragraph (c); b. Redesignate paragraphs (d) and (e) as paragraphs (c) and (d); and ■ c. Revise newly redesignated paragraph (d). The revision reads as follows: ■ ■ ■ § 515.41 * PO 00000 * Forwarder and principal; fees. * Frm 00017 * Fmt 4701 * Sfmt 4700 68737 (d) In-plant arrangements. A licensed freight forwarder may place an employee or employees on the premises of its principal as part of the services rendered to such principal, provided: (1) The in-plant forwarder arrangement is reduced to writing and identifies all services provided by either party (whether or not constituting a freight forwarding service); states the amount of compensation to be received by either party for such services; sets forth all details concerning the procurement, maintenance or sharing of office facilities, personnel, furnishings, equipment and supplies; describes all powers of supervision or oversight of the licensee’s employee(s) to be exercised by the principal; and details all procedures for the administration or management of in-plant arrangements between the parties; and (2) The arrangement is not an artifice for a payment or other unlawful benefit to the principal. ■ 29. In § 515.42, revise paragraphs (a), (b), (c), and (f) to read as follows: § 515.42 Forwarder and carrier compensation; fees. (a) Disclosure of principal. The identity of the shipper must always be disclosed in the shipper identification box on the bill of lading. The licensed freight forwarder’s name may appear with the name of the shipper, but the forwarder must be identified as the shipper’s agent. (b) Certification required for compensation. A common carrier may pay compensation to a licensed freight forwarder only pursuant to such common carrier’s tariff provisions. When a common carrier’s tariff provides for the payment of compensation, such compensation shall be paid on any shipment forwarded on behalf of others where the forwarder has provided a certification as prescribed in paragraph (c) of this section and the shipper has been disclosed on the bill of lading as provided for in paragraph (a) of this section. The common carrier shall be entitled to rely on such certification unless it knows that the certification is incorrect. The common carrier shall retain such certifications for a period of five (5) years. (c) Form of certification. When a licensed freight forwarder is entitled to compensation, the forwarder shall provide the common carrier with a certification which indicates that the forwarder has performed the required services that entitle it to compensation. The required certification may be provided electronically by the forwarder or may be placed on one copy of the relevant bill of lading, a summary E:\FR\FM\05NOR3.SGM 05NOR3 68738 Federal Register / Vol. 80, No. 214 / Thursday, November 5, 2015 / Rules and Regulations statement from the forwarder, the forwarder’s compensation invoice, or as an endorsement on the carrier’s compensation check. Electronic certification must contain confirmations by the forwarder and the carrier identifying the shipments upon which forwarding compensation may be paid. Each forwarder shall retain evidence in its shipment files that the forwarder, in fact, has performed the required services enumerated on the certification. The certification shall read as follows: The undersigned hereby certifies that neither it nor any holding company, subsidiary, affiliate, officer, director, agent or executive of the undersigned has a beneficial interest in this shipment; that it is the holder of valid FMC License No. 2, issued by the Federal Maritime Commission and has performed the following services: (1) Engaged, booked, secured, reserved, or contracted directly with the carrier or its agent for space aboard a vessel or confirmed the availability of that space; and (2) Prepared and processed the ocean bill of lading, dock receipt, or other similar document with respect to the shipment. * * * * * (f) Compensation; services performed by underlying carrier; exemptions. No licensed freight forwarder shall charge or collect compensation in the event the underlying common carrier, or its agent, has, at the request of such forwarder, performed any of the forwarding services set forth in § 515.2(h), unless such carrier or agent is also a licensed freight forwarder, or unless no other licensed freight forwarder is willing and able to perform such services. * * * * * ■ 30. Add appendices A, B, C, D, E, and F to part 515 to read as follows: tkelley on DSK3SPTVN1PROD with RULES3 Appendix A to Part 515—Ocean Transportation Intermediary (OTI) Bond Form [Form 48] Form FMC–48 Federal Maritime Commission Ocean Transportation Intermediary (OTI) Bond (Section 19, Shipping Act of 1984 (46 U.S.C. 40901–40904)) ll [indicate whether NVOCC or Freight Forwarder], as Principal (hereinafter ‘‘Principal’’), and ll, as Surety (hereinafter ‘‘Surety’’) are held and firmly bound unto the United States of America in the sum of $ll for the payment of which sum we bind ourselves, our heirs, executors, administrators, successors and assigns, jointly and severally. Whereas, Principal operates as an OTI in the waterborne foreign commerce of the United States in accordance with the Shipping Act of 1984, 46 U.S.C. 40101– 41309, and, if necessary, has a valid tariff VerDate Sep<11>2014 18:44 Nov 04, 2015 Jkt 238001 published pursuant to 46 CFR part 515 and 520, and pursuant to section 19 of the Shipping Act (46 U.S.C. 40901–40904), files this bond with the Commission; Whereas, this bond is written to ensure compliance by the Principal with section 19 of the Shipping Act (46 U.S.C. 40901–40904), and the rules and regulations of the Federal Maritime Commission relating to evidence of financial responsibility for OTIs (46 CFR part 515), this bond shall be available to pay any judgment obtained or any settlement made pursuant to a claim under 46 CFR 515.23 for damages against the Principal arising from the Principal’s transportation-related activities under the Shipping Act, or order for reparations issued pursuant to section 11 of the Shipping Act (46 U.S.C. 41301–41302, 41305–41307(a)), or any penalty assessed against the Principal pursuant to section 13 of the Shipping Act (46 U.S.C. 41107–41109). Now, Therefore, The condition of this obligation is that the penalty amount of this bond shall be available to pay any judgment or any settlement made pursuant to a claim under 46 CFR 515.23 for damages against the Principal arising from the Principal’s transportation-related activities or order for reparations issued pursuant to section 11 of the Shipping Act (46 U.S.C. 41301–41302, 41305–41307(a)), or any penalty assessed against the Principal pursuant to section 13 of the Shipping Act (46 U.S.C. 41107–41109). This bond shall inure to the benefit of any and all persons who have obtained a judgment or a settlement made pursuant to a claim under 46 CFR § 515.23 for damages against the Principal arising from its transportation-related activities or order of reparation issued pursuant to section 11 of the Shipping Act (46 U.S.C. 41301–41302, 41305–41307(a)), and to the benefit of the Federal Maritime Commission for any penalty assessed against the Principal pursuant to section 13 of the Shipping Act (46 U.S.C. 41107–41109). However, the bond shall not apply to shipments of used household goods and personal effects for the account of the Department of Defense or the account of federal civilian executive agencies shipping under the International Household Goods Program administered by the General Services Administration. The liability of the Surety shall not be discharged by any payment or succession of payments hereunder, unless and until such payment or payments shall aggregate the penalty amount of this bond, and in no event shall the Surety’s total obligation hereunder exceed said penalty amount, regardless of the number of claims or claimants. This bond is effective the ll day of ll, ll and shall continue in effect until discharged or terminated as herein provided. The Principal or the Surety may at any time terminate this bond by mail or email (bcl@ fmc.gov) written notice to the Director, Bureau of Certification and Licensing, Federal Maritime Commission, Washington, DC 20573. Such termination shall become effective thirty (30) days after receipt of said notice by the Commission. The Surety shall not be liable for any transportation-related activities of the Principal after the expiration of the 30-day period but such termination shall not affect the liability of the Principal PO 00000 Frm 00018 Fmt 4701 Sfmt 4700 and Surety for any event occurring prior to the date when said termination becomes effective. The Surety consents to be sued directly in respect of any bona fide claim owed by Principal for damages, reparations or penalties arising from the transportationrelated activities under the Shipping Act of Principal in the event that such legal liability has not been discharged by the Principal or Surety after a claimant has obtained a final judgment (after appeal, if any) against the Principal from a United States Federal or State Court of competent jurisdiction and has complied with the procedures for collecting on such a judgment pursuant to 46 CFR 515.23, the Federal Maritime Commission, or where all parties and claimants otherwise mutually consent, from a foreign court, or where such claimant has become entitled to payment of a specified sum by virtue of a compromise settlement agreement made with the Principal and/or Surety pursuant to 46 CFR 515.23, whereby, upon payment of the agreed sum, the Surety is to be fully, irrevocably and unconditionally discharged from all further liability to such claimant; provided, however, that Surety’s total obligation hereunder shall not exceed the amount set forth in 46 CFR 515.21, as applicable. The underwriting Surety will promptly notify the Director, Bureau of Certification and Licensing, Federal Maritime Commission, Washington, DC 20573, in writing by mail or email (bcl@fmc.gov), of all claims made, lawsuits filed, judgments rendered, and payments made against this bond. Signed and sealed this ll day of ll, ll. (Please type name of signer under each signature.) lllllllllllllllllllll Individual Principal or Partner lllllllllllllllllllll Business Address lllllllllllllllllllll Individual Principal or Partner lllllllllllllllllllll Business Address lllllllllllllllllllll Individual Principal or Partner lllllllllllllllllllll Business Address lllllllllllllllllllll Trade Name, If Any lllllllllllllllllllll Corporate Principal lllllllllllllllllllll State of Incorporation lllllllllllllllllllll Trade Name, If Any lllllllllllllllllllll Business Address lllllllllllllllllllll By lllllllllllllllllllll Title lllllllllllllllllllll (Affix Corporate Seal) lllllllllllllllllllll Corporate Surety lllllllllllllllllllll E:\FR\FM\05NOR3.SGM 05NOR3 Federal Register / Vol. 80, No. 214 / Thursday, November 5, 2015 / Rules and Regulations Business Address lllllllllllllllllllll By lllllllllllllllllllll Title (Affix Corporate Seal) tkelley on DSK3SPTVN1PROD with RULES3 Appendix B to Part 515—Ocean Transportation Intermediary (OTI) Insurance Form [Form 67] Form FMC–67 Federal Maritime Commission Ocean Transportation Intermediary (OTI) Insurance Form Furnished as Evidence of Financial Responsibility Under 46 U.S.C. 40901–40904 This is to certify, that the (Name of Insurance Company), (hereinafter ‘‘Insurer’’) of (Home Office Address of Company) has issued to (OTI or Group or Association of OTIs [indicate whether NVOCC(s) or Freight Forwarder(s)]) (hereinafter ‘‘Insured’’) of (Address of OTI or Group or Association of OTIs) a policy or policies of insurance for purposes of complying with the provisions of Section 19 of the Shipping Act of 1984 (46 U.S.C. 40901–40904) and the rules and regulations, as amended, of the Federal Maritime Commission, which provide compensation for damages, reparations or penalties arising from the transportationrelated activities of Insured, and made pursuant to the Shipping Act of 1984 (46 U.S.C. 40101–41309) (Shipping Act). Whereas, the Insured is or may become an OTI subject to the Shipping Act and the rules and regulations of the Federal Maritime Commission, or is or may become a group or association of OTIs, and desires to establish financial responsibility in accordance with section 19 of the Shipping Act (46 U.S.C. 40901–40904), files with the Commission this Insurance Form as evidence of its financial responsibility and evidence of a financial rating for the Insurer of Class V or higher under the Financial Size Categories of A.M. Best & Company or equivalent from an acceptable international rating organization on such organization’s letterhead or designated form, or, in the case of insurance provided by Underwriters at Lloyd’s, documentation verifying membership in Lloyd’s, or, in the case of surplus lines insurers, documentation verifying inclusion on a current ‘‘white list’’ issued by the NonAdmitted Insurers’ Information Office of the National Association of Insurance Commissioners. Whereas, the Insurance is written to assure compliance by the Insured with section 19 of the Shipping Act (46 U.S.C. 40901–40904), and the rules and regulations of the Federal Maritime Commission relating to evidence of financial responsibility for OTIs, this Insurance shall be available to pay any judgment obtained or any settlement made pursuant to a claim under 46 CFR 515.23 for damages against the Insured arising from the Insured’s transportation-related activities under the Shipping Act, or order for reparations issued pursuant to section 11 of the Shipping Act (46 U.S.C. 41301–41302, 41305–41307(a)), or any penalty assessed against the Insured pursuant to section 13 of the Shipping Act (46 U.S.C. 41107–41109). VerDate Sep<11>2014 18:44 Nov 04, 2015 Jkt 238001 Whereas, the Insurer certifies that it has sufficient and acceptable assets located in the United States to cover all liabilities of Insured herein described, this Insurance shall inure to the benefit of any and all persons who have a bona fide claim against the Insured pursuant to 46 CFR 515.23 arising from its transportation-related activities under the Shipping Act, or order of reparation issued pursuant to section 11 of the Shipping Act (46 U.S.C. 41301–41302, 41305–41307(a)), and to the benefit of the Federal Maritime Commission for any penalty assessed against the Insured pursuant to section 13 of the Shipping Act (46 U.S.C. 41107–41109). The Insurer consents to be sued directly in respect of any bona fide claim owed by Insured for damages, reparations or penalties arising from the transportation-related activities under the Shipping Act, of Insured in the event that such legal liability has not been discharged by the Insured or Insurer after a claimant has obtained a final judgment (after appeal, if any) against the Insured from a United States Federal or State Court of competent jurisdiction and has complied with the procedures for collecting on such a judgment pursuant to 46 CFR 515.23, the Federal Maritime Commission, or where all parties and claimants otherwise mutually consent, from a foreign court, or where such claimant has become entitled to payment of a specified sum by virtue of a compromise settlement agreement made with the Insured and/or Insurer pursuant to 46 CFR 515.23, whereby, upon payment of the agreed sum, the Insurer is to be fully, irrevocably and unconditionally discharged from all further liability to such claimant; provided, however, that Insurer’s total obligation hereunder shall not exceed the amount per OTI set forth in 46 CFR 515.21 or the amount per group or association of OTIs set forth in 46 CFR 515.21. The liability of the Insurer shall not be discharged by any payment or succession of payments hereunder, unless and until such payment or payments shall aggregate the penalty of the Insurance in the amount per member OTI set forth in 46 CFR 515.21, or the amount per group or association of OTIs set forth in 46 CFR 515.21, regardless of the financial responsibility or lack thereof, or the solvency or bankruptcy, of Insured. The insurance evidenced by this undertaking shall be applicable only in relation to incidents occurring on or after the effective date and before the date termination of this undertaking becomes effective. The effective date of this undertaking shall be ll day of ll, ll, and shall continue in effect until discharged or terminated as herein provided. The Insured or the Insurer may at any time terminate the Insurance by mail or email (bcl@fmc.gov) written notice to the Director, Bureau of Certification and Licensing, Federal Maritime Commission, Washington, DC 20573. Such termination shall become effective thirty (30) days after receipt of said notice by the Commission. The Insurer shall not be liable for any transportation-related activities under the Shipping Act of the Insured after the expiration of the 30-day period but such termination shall not affect the liability of the Insured and Insurer for PO 00000 Frm 00019 Fmt 4701 Sfmt 4700 68739 such activities occurring prior to the date when said termination becomes effective. (Name of Agent) ll domiciled in the United States, with offices located in the United States, at ll is hereby designated as the Insurer’s agent for service of process for the purposes of enforcing the Insurance certified to herein. If more than one insurer joins in executing this document, that action constitutes joint and several liability on the part of the insurers. The Insurer will promptly notify the Director, Bureau of Certification and Licensing, Federal Maritime Commission, Washington, DC 20573, in writing by mail or email (bcl@fmc.gov), of all claims made, lawsuits filed, judgments rendered, and payments made against the Insurance. Signed and sealed this ll day of ll, ll. lllllllllllllllllllll Signature of Official signing on behalf of Insurer lllllllllllllllllllll Type Name and Title of signer This Insurance Form has been filed with the Federal Maritime Commission. Appendix C to Part 515—Ocean Transportation Intermediary (OTI) Guaranty Form [Form 68] Form FMC–68 Federal Maritime Commission Guaranty in Respect of Ocean Transportation Intermediary (OTI) Liability for Damages, Reparations or Penalties Arising from Transportation-Related Activities Under the Shipping Act of 1984 (46 U.S.C. 40101– 41309) (Shipping Act). 1. Whereas ll (Name of Applicant [indicate whether NVOCC or Freight Forwarder]) (hereinafter ‘‘Applicant’’) is or may become an Ocean Transportation Intermediary (‘‘OTI’’) subject to the Shipping Act of 1984 (46 U.S.C. 40101–41309) and the rules and regulations of the Federal Maritime Commission (FMC), or is or may become a group or association of OTIs, and desires to establish its financial responsibility in accordance with section 19 of the Shipping Act (46 U.S.C. 41107–41109), then, provided that the FMC shall have accepted, as sufficient for that purpose, the Applicant’s application, supported by evidence of a financial rating for the Guarantor of Class V or higher under the Financial Size Categories of A.M. Best & Company or equivalent from an acceptable international rating organization on such rating organization’s letterhead or designated form, or, in the case of Guaranty provided by Underwriters at Lloyd’s, documentation verifying membership in Lloyd’s, or, in the case of surplus lines insurers, documentation verifying inclusion on a current ‘‘white list’’ issued by the Non-Admitted Insurers’ Information Office of the National Association of Insurance Commissioners, the undersigned Guarantor certifies that it has sufficient and acceptable assets located in the United States to cover all damages arising from the transportation-related activities of the covered OTI as specified under the Shipping Act. E:\FR\FM\05NOR3.SGM 05NOR3 tkelley on DSK3SPTVN1PROD with RULES3 68740 Federal Register / Vol. 80, No. 214 / Thursday, November 5, 2015 / Rules and Regulations 2. Whereas, this Guaranty is written to ensure compliance by the Applicant with section 19 of the Shipping Act (46 U.S.C. 40901–40904), and the rules and regulations of the Federal Maritime Commission relating to evidence of financial responsibility for OTIs (46 CFR part 515), this guaranty shall be available to pay any judgment obtained or any settlement made pursuant to a claim under 46 CFR 515.23 for damages against the Applicant arising from the Applicant’s transportation-related activities under the Shipping Act, or order for reparations issued pursuant to section 11 of the Shipping Act (46 U.S.C. 41301–41302, 41305–41307(a)), or any penalty assessed against the Applicant pursuant to section 13 of the Shipping Act (46 U.S.C. 41107–41109). 3. Now, Therefore, The condition of this obligation is that the penalty amount of this Guaranty shall be available to pay any judgment obtained or any settlement made pursuant to a claim under 46 CFR 515.23 for damages against the Applicant arising from the Applicant’s transportation-related activities or order for reparations issued pursuant to section 11 of the Shipping Act (46 U.S.C. 41301–41302, 41305–41307(a)), or any penalty assessed against the Principal pursuant to section 13 of the Shipping Act (46 U.S.C. 41107–41109). 4. The undersigned Guarantor hereby consents to be sued directly in respect of any bona fide claim owed by Applicant for damages, reparations or penalties arising from Applicant’s transportation-related activities under the Shipping Act, in the event that such legal liability has not been discharged by the Applicant after any such claimant has obtained a final judgment (after appeal, if any) against the Applicant from a United States Federal or State Court of competent jurisdiction and has complied with the procedures for collecting on such a judgment pursuant to 46 CFR 515.23, the FMC, or where all parties and claimants otherwise mutually consent, from a foreign court, or where such claimant has become entitled to payment of a specified sum by virtue of a compromise settlement agreement made with the Applicant and/or Guarantor pursuant to 46 CFR 515.23, whereby, upon payment of the agreed sum, the Guarantor is to be fully, irrevocably and unconditionally discharged from all further liability to such claimant. In the case of a guaranty covering the liability of a group or association of OTIs, Guarantor’s obligation extends only to such damages, reparations or penalties described herein as are not covered by another insurance policy, guaranty or surety bond held by the OTI(s) against which a claim or final judgment has been brought. 5. The Guarantor’s liability under this Guaranty in respect to any claimant shall not exceed the amount of the guaranty; and the aggregate amount of the Guarantor’s liability under this Guaranty shall not exceed the amount per OTI set forth in 46 CFR 515.21, or the amount per group or association of OTIs set forth in 46 CFR 515.21 in aggregate. 6. The Guarantor’s liability under this Guaranty shall attach only in respect of such activities giving rise to a cause of action against the Applicant, in respect of any of its transportation-related activities under the VerDate Sep<11>2014 18:44 Nov 04, 2015 Jkt 238001 Shipping Act, occurring after the Guaranty has become effective, and before the expiration date of this Guaranty, which shall be the date thirty (30) days after the date of receipt of mail or email (bcl@fmc.gov) written notice to the Director, Bureau of Certification and Licensing, Federal Maritime Commission, Washington, DC 20573, that either Applicant or the Guarantor has elected to terminate this Guaranty. The Guarantor and/or Applicant specifically agree to file such written notice of cancellation. 7. Guarantor shall not be liable for payments of any of the damages, reparations or penalties hereinbefore described which arise as the result of any transportationrelated activities of Applicant after the cancellation of the Guaranty, as herein provided, but such cancellation shall not affect the liability of the Guarantor for the payment of any such damages, reparations or penalties prior to the date such cancellation becomes effective. 8. Guarantor shall pay, subject to the limit of the amount per OTI set forth in 46 CFR 515.21, directly to a claimant any sum or sums which Guarantor, in good faith, determines that the Applicant has failed to pay and would be held legally liable by reason of Applicant’s transportation-related activities, or its legal responsibilities under the Shipping Act and the rules and regulations of the FMC, made by Applicant while this agreement is in effect, regardless of the financial responsibility or lack thereof, or the solvency or bankruptcy, of Applicant. 9. The Applicant or Guarantor will promptly notify the Director, Bureau of Certification and Licensing, Federal Maritime Commission, Washington, DC 20573, in writing by mail or email (bcl@fmc.gov), of all claims made, lawsuits filed, judgments rendered, and payments made under the Guaranty. 10. Applicant and Guarantor agree to handle the processing and adjudication of claims by claimants under the Guaranty established herein in the United States, unless by mutual consent of all parties and claimants another country is agreed upon. Guarantor agrees to appoint an agent for service of process in the United States. 11. This Guaranty shall be governed by the laws in the State of ll to the extent not inconsistent with the rules and regulations of the FMC. 12. This Guaranty is effective the day of ll, ll, ll 12:01 a.m., standard time at the address of the Guarantor as stated herein and shall continue in force until terminated as herein provided. 13. The Guarantor hereby designates as the Guarantor’s legal agent for service of process domiciled in the United States ll, with offices located in the United States at ll, for the purposes of enforcing the Guaranty described herein. lllllllllllllllllllll (Place and Date of Execution) lllllllllllllllllllll (Type Name of Guarantor) lllllllllllllllllllll (Type Address of Guarantor) lllllllllllllllllllll By PO 00000 Frm 00020 Fmt 4701 Sfmt 4700 lllllllllllllllllllll (Signature and Title) Appendix D to Part 515—Ocean Transportation Intermediary (OTI) Group Bond Form [FMC–69] Form FMC–69 Federal Maritime Commission Ocean Transportation Intermediary (OTI) Group Supplemental Coverage Bond Form (Shipping Act of 1984 (46 U.S.C. 40101– 41309)) (Shipping Act). ll [indicate whether NVOCC or Freight Forwarder], as Principal (hereinafter ‘‘Principal’’), and ll as Surety (hereinafter ‘‘Surety’’) are held and firmly bound unto the United States of America in the sum of $ll for the payment of which sum we bind ourselves, our heirs, executors, administrators, successors and assigns, jointly and severally. Whereas, (Principal) ll operates as a group or association of OTIs in the waterborne foreign commerce of the United States and pursuant to section 19 of the Shipping Act of 1984 (46 U.S.C. 40901– 40904), files this bond with the Federal Maritime Commission; Whereas, this group bond is written to ensure compliance by the OTIs, enumerated in Appendix A of this bond, with section 19 of the Shipping Act (46 U.S.C. 40901–40904), and the rules and regulations of the Federal Maritime Commission relating to evidence of financial responsibility for OTIs (46 CFR part 515), this group bond shall be available to pay any judgment obtained or any settlement made pursuant to a claim under 46 CFR 515.23 for damages against such OTIs arising from OTI transportation-related activities under the Shipping Act, or order for reparations issued pursuant to section 11 of the Shipping Act (46 U.S.C. 41301–41302, 41305–41307(a)), or any penalty assessed against one or more OTI members pursuant to section 13 of the Shipping Act (46 U.S.C. 41107–41109); provided, however, that the Surety’s obligation for a group or association of OTIs shall extend only to such damages, reparations or penalties described herein as are not covered by another surety bond, insurance policy or guaranty held by the OTI(s) against which a claim or final judgment has been brought and that Surety’s total obligation hereunder shall not exceed the amount per OTI provided for in 46 CFR 515.21 or the amount per group or association of OTIs provided for in 46 CFR 515.21 in aggregate. Now, therefore, the conditions of this obligation are that the penalty amount of this bond shall be available to pay any judgment obtained or any settlement made pursuant to a claim under 46 CFR 515.23 against the OTIs enumerated in Appendix A of this bond for damages arising from any or all of the identified OTIs’ transportation-related activities under the Shipping Act (46 U.S.C. 40101–41309), or order for reparations issued pursuant to section 11 of the Shipping Act (46 U.S.C. 41301–41302, 41305–41307(a)), or any penalty assessed pursuant to section 13 of the Shipping Act (46 U.S.C. 41107–41109), that are not covered by the identified OTIs’ individual insurance policy(ies), guaranty(ies) or surety bond(s). E:\FR\FM\05NOR3.SGM 05NOR3 tkelley on DSK3SPTVN1PROD with RULES3 Federal Register / Vol. 80, No. 214 / Thursday, November 5, 2015 / Rules and Regulations This group bond shall inure to the benefit of any and all persons who have obtained a judgment or made a settlement pursuant to a claim under 46 CFR 515.23 for damages against any or all of the OTIs identified in Appendix A not covered by said OTIs’ insurance policy(ies), guaranty(ies) or surety bond(s) arising from said OTIs’ transportation-related activities under the Shipping Act, or order for reparation issued pursuant to section 11 of the Shipping Act, and to the benefit of the Federal Maritime Commission for any penalty assessed against said OTIs pursuant to section 13 of the Shipping Act (46 U.S.C. 41107–41109). However, the bond shall not apply to shipments of used household goods and personal effects for the account of the Department of Defense or the account of federal civilian executive agencies shipping under the International Household Goods Program administered by the General Services Administration. The Surety consents to be sued directly in respect of any bona fide claim owed by any or all of the OTIs identified in Appendix A for damages, reparations or penalties arising from the transportation-related activities under the Shipping Act of the OTIs in the event that such legal liability has not been discharged by the OTIs or Surety after a claimant has obtained a final judgment (after appeal, if any) against the OTIs from a United States Federal or State Court of competent jurisdiction and has complied with the procedures for collecting on such a judgment pursuant to 46 CFR 515.23, the Federal Maritime Commission, or where all parties and claimants otherwise mutually consent, from a foreign court, or where such claimant has become entitled to payment of a specified sum by virtue of a compromise settlement agreement made with the OTI(s) and/or Surety pursuant to 46 CFR 515.23, whereby, upon payment of the agreed sum, the Surety is to be fully, irrevocably and unconditionally discharged from all further liability to such claimant(s). The liability of the Surety shall not be discharged by any payment or succession of payments hereunder, unless and until such payment or payments shall aggregate the penalty of this bond, and in no event shall the Surety’s total obligation hereunder exceed the amount per member OTI set forth in 46 CFR 515.21, identified in Appendix A, or the amount per group or association of OTIs set forth in 46 CFR 515.21, regardless of the number of OTIs, claims or claimants. This bond is effective the ll, day of l l, and shall continue in effect until discharged or terminated as herein provided. The Principal or the Surety may at any time terminate this bond by mail or email (bcl@.fmc.gov) written notice to the Director, Bureau of Certification and Licensing, Federal Maritime Commission, Washington, DC 20573. Such termination shall become effective thirty (30) days after receipt of said notice by the Commission. The Surety shall not be liable for any transportation-related activities of the OTIs identified in Appendix A as covered by 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 transportation- VerDate Sep<11>2014 18:44 Nov 04, 2015 Jkt 238001 related activities occurring prior to the date when said termination becomes effective. The Principal or financial responsibility provider will promptly notify the underwriting Surety in writing and the Director, Bureau of Certification and Licensing, Federal Maritime Commission, Washington, DC 20573, by mail or email (bcl@fmc.gov), of any additions, deletions or changes to the OTIs enumerated in Appendix A. In the event of additions to Appendix A, coverage will be effective upon receipt of such notice, in writing, by the Commission at its office in Washington, DC. In the event of deletions to Appendix A, termination of coverage for such OTI(s) shall become effective 30 days after receipt of written notice by the Commission. Neither the Principal nor the Surety shall be liable for any transportation-related activities of the OTI(s) deleted from Appendix A that occur after the expiration of the 30-day period, but such termination shall not affect the liability of the Principal and Surety for any transportation-related activities of said OTI(s) occurring prior to the date when said termination becomes effective. The underwriting Surety will promptly notify the Director, Bureau of Certification and Licensing, Federal Maritime Commission, Washington, DC 20573, in writing by mail or email (bcl@fmc.gov), of all claims made, lawsuits filed, judgments rendered, and payments made against this group bond. Signed and sealed this ll day of ll, (Please type name of signer under each signature). lllllllllllllllllllll Individual Principal or Partner lllllllllllllllllllll Business Address lllllllllllllllllllll Individual Principal or Partner lllllllllllllllllllll Business Address lllllllllllllllllllll Individual Principal or Partner lllllllllllllllllllll Business Address lllllllllllllllllllll Trade Name, if Any lllllllllllllllllllll Corporate Principal lllllllllllllllllllll Place of Incorporation lllllllllllllllllllll Trade Name, if Any lllllllllllllllllllll Business Address (Affix Corporate Seal) lllllllllllllllllllll By lllllllllllllllllllll Title lllllllllllllllllllll Principal’s Agent for Service of Process (Required if Principal is not a U.S. Corporation) lllllllllllllllllllll Agent’s Address lllllllllllllllllllll Corporate Surety lllllllllllllllllllll PO 00000 Frm 00021 Fmt 4701 Sfmt 4700 68741 Business Address (Affix Corporate Seal) lllllllllllllllllllll By lllllllllllllllllllll Title lllllllllllllllllllll Appendix E to 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 ll, as Principal and ll, as Surety do hereby agree that the existing Bond No. ll 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 __d day of __, 20__, and shall continue in effect until discharged, terminated as herein E:\FR\FM\05NOR3.SGM 05NOR3 68742 Federal Register / Vol. 80, No. 214 / Thursday, November 5, 2015 / Rules and Regulations 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 mail or email (bcl@ fmc.gov) written notice to the Director, Bureau of Certification and Licensing, Federal Maritime Commission, Washington, DC 20573, 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. 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: _____________________________ Appendix F to Part 515—Optional Rider for Additional NVOCC Financial Responsibility for Group Bonds [Optional Rider to Form FMC–69] FMC–69A, OMB No. 3072–0018 (04/06/04) Optional Rider for Additional NVOCC Financial Responsibility for Group Bonds [Optional Rider to Form FMC–69] tkelley on DSK3SPTVN1PROD with RULES3 RIDER The undersigned __, as Principal and __, as Surety do hereby agree that the existing Bond No. __t 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: VerDate Sep<11>2014 18:44 Nov 04, 2015 Jkt 238001 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. 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. This Rider is effective the __d 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 mail or email (bcl@ fmc.gov) written notice to the Director, Bureau of Certification and Licensing, Federal Maritime Commission, Washington, DC 20573, 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 PO 00000 Frm 00022 Fmt 4701 Sfmt 9990 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. 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: ________________________________ Privacy Act and Paperwork Reduction Act Notice The collection of this information is authorized generally by Section 19 of the Shipping Act of 1984 (46 U.S.C. 40901– 40904). This is an optional form. Submission is completely voluntary. Failure to submit this form will in no way impact the Federal Maritime Commission’s assessment of your firm’s financial responsibility. You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form displays a valid OMB control number. Copies of this form will be maintained until the corresponding license has been revoked. The time needed to complete and file this form will vary depending on individual circumstances. The estimated average time is: Recordkeeping, 20 minutes; Learning about the form, 20 minutes; Preparing and sending the form to the FMC, 20 minutes. If you have comments concerning the accuracy of these time estimates or suggestions for making this form simpler, we would be happy to hear from you. You can write to the Secretary, Federal Maritime Commission, 800 North Capitol Street NW., Washington, DC 20573–0001 or email: secretary@fmc.gov. By the Commission. Karen V. Gregory, Secretary. [FR Doc. 2015–27914 Filed 11–4–15; 8:45 am] BILLING CODE 6731–AA–P E:\FR\FM\05NOR3.SGM 05NOR3

Agencies

Federal Maritime Commission

[Federal Register Volume 80, Number 214 (Thursday, November 5, 2015)]
[Rules and Regulations]
[Pages 68721-68742]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-27914]



[[Page 68721]]

Vol. 80

Thursday,

No. 214

November 5, 2015

Part III





 Federal Maritime Commission





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46 CFR Part 515





Ocean Transportation Intermediary Licensing and Financial 
Responsibility Requirements, and General Duties; Final Rule

Federal Register / Vol. 80 , No. 214 / Thursday, November 5, 2015 / 
Rules and Regulations

[[Page 68722]]


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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.

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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 Sec.  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 NW., Washington, DC 
20573-0001, Tel.: (202) 523-5725, Email: secretary@fmc.gov.

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. 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\
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    \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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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'' (Sec.  515.2(n)), ``brokerage'' (Sec.  515.2(d)) and 
``small shipment'' (Sec.  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 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 Sec.  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.

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 Sec.  515.2(o) definition.
    The definitions of ``freight forwarding services'' (Sec.  515.2(h)) 
and ``non-vessel-operating common carrier services'' (Sec.  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 (Sec.  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'' (Sec. Sec.  515.2(h)(5) 
and 515.2(k)(4)). The change acknowledges that OTI services cover 
preparation of various forms of

[[Page 68723]]

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.
    The term ``qualifying individual'' (QI) is added and defines QI as 
an individual who meets the Shipping Act's experience and character 
requirements. The QI must meet those requirements at the time a license 
is issued and must thereafter maintain the necessary character. The OTI 
must timely replace the QI, as provided by the Commission's rules, when 
the designated QI ceases to act as the QI, whether by resignation, 
retirement or death.
    Commenting on the definition, NCBFAA opines that the Commission's 
review process does not adequately address a qualifying individual's 
competence. NCBFAA asserts that QIs need to have skill sets to comply 
with Shipping Act, United States export/import requirements and other 
statutes that apply to international shipping. NCBFAA suggests that the 
Commission consider adding affirmative competency requirements for QIs 
as NCBFAA has done with respect to its Certified Export Specialist 
program.
    The QI's three years of OTI experience in the U.S. oceanborne 
foreign trades provides a foundation for ensuring that QIs are exposed 
to and gain working knowledge of the Shipping Act and Commission 
regulations, as well as with other regulations and statutes that apply 
in the U.S. trades. The NCBFAA's comment that the competence of QIs is 
not as high as the association would prefer has serious implications 
for the nation's security and transport policy objectives. Its 
suggestions for improvements are welcome, however, they are well beyond 
the scope of the current proposed rulemaking proceeding. The details, 
procedures, cost to the agency and associated fees to the OTI 
applicants must be more fully developed by NCBFAA, and made subject to 
full and open public comment in order to be further considered by the 
Commission.

Section 515.3--License; When Required

    The requirement that ``separately incorporated branch offices'' 
must be licensed as an OTI is deleted as unnecessary. All separately 
incorporated entities that perform OTI services for which they assume 
responsibility for the transportation remain subject to the 
requirements that they be licensed and otherwise comply with the 
financial responsibility obligations of part 515.
    The Commission also revises Sec.  515.3 to provide that a 
``registered NVOCC'' (terminology replacing the use of ``unlicensed 
NVOCC'') must use licensed OTIs as their agents in the United States 
with respect to OTI services performed in the U.S. The section is also 
conformed to provide that only licensed OTIs may provide OTI services 
in the United States to registered NVOCCs.
    NCBFAA comments that these are positive changes as they better 
reflect the compliance obligations of the parties. TIA, however, 
expresses a concern that the Commission attempts to regulate the 
activities of OTI agents contrary to the decision in Landstar Express 
America Inc. v. Federal Maritime Commission, 569 F.3d 493 (D.C. Cir. 
2009).
    TIA asserts that the provision in Sec.  515.3 whereby only licensed 
OTIs may provide OTI services in the United States for registered 
NVOCCs in effect regulates the OTI agent. TIA also comments that there 
is no corresponding definition of ``OTI services'' in the regulations 
that would delineate the Sec.  515.3 requirement. TIA questions the 
Commission's authority to require registered NVOCCs to use only 
licensed OTIs in the United States.
    Section 19 of the Shipping Act of 1984 provides that ``[a] person 
in the United States may not act as an ocean transportation 
intermediary unless the person holds an ocean transportation 
intermediary's license issued by the Federal Maritime Commission.'' 46 
U.S.C. 40901. This section imposes the licensing requirement on NVOCCs 
``in the United States'' but not on foreign-based NVOCCs that are not 
in ``in the United States.''
    The Commission addressed its authority to regulate unlicensed 
foreign-based NVOCCs' operations ``in the United States'' in 1999 as a 
necessary element of its rulemaking implementing OSRA. The Commission 
stated:

OSRA requires that all OTIs in the United States be licensed by the 
Commission. The legislative history of OSRA directs the Commission 
to determine ``when foreign-based entities conducting business in 
the United States are to be considered persons in the United 
States'' for purposes of the licensing requirements of section 19 of 
the 1984 Act. S. Rep. No. 105-61, 105th Cong., 1st Sess., at 31 
(1997).

FMC Docket No. 98-28, Licensing, Financial Responsibility Requirements, 
and General Duties for Ocean Transportation Intermediaries, 28 SRR 629-
54 (March 8, 1999). (Docket No. 98-28 Final Rule).
    In that rulemaking, after considering the comments on approaches to 
meet Congress' instructions (including comments from NCBFAA and 
American International Freight Association and Transportation 
Intermediaries Association (AIFA/TIA)), the Commission adopted the 
current language found in Sec.  515.3, which provides in pertinent 
part:

For purposes of this part, a person is considered to be ``in the 
United States'' if such person is resident in, or incorporated or 
established under, the laws of the United States. Only persons 
licensed under this part may furnish or contract to furnish ocean 
transportation intermediary services in the United States on behalf 
of an unlicensed ocean transportation intermediary.

The Commission explained its reasoning in adopting the current rule 
language:

We believe it is a good step towards leveling the playing field 
between OTIs in the United States who are within the Commission's 
jurisdictional reach and those who are outside of that reach. 
Moreover, this definition will increase competition, consistent with 
the intent of OSRA.
Docket No. 98-28 Final Rule, supra at 28 SRR 638.

    The Commission expressed its view that the rule presented foreign-
based NVOCCs with the option of obtaining a license (and obtaining a 
bond at the level applicable to NVOCCs in the U.S.) or operating 
through independently licensed OTI agents after obtaining a bond in the 
higher amount established for such foreign-based NVOCCs. Id.
    The Commission exercised the discretion that Congress envisioned 
and promulgated a rule that recognized that all foreign-based NVOCCs 
would not obtain a license but ensured that unlicensed NVOCCs that were 
not ``in the United States'' would not conduct business as if they were 
resident without first meeting the requirements for a license. The 
requirement that unlicensed foreign-based NVOCCs use licensed OTIs as 
their agents in the United States is necessary to make sure that the 
distinction created by Congress would not be thwarted. Consistent with 
the court's proscription in Landstar, only OTI principals are regulated 
thereby. Moreover, the rule as proposed

[[Page 68724]]

does not substantively change the rule that has long been in effect.

Section 515.4--License; When Not Required

    Section 515.4(b)--Branch Offices. The rule eliminates the 
regulatory burden associated with procuring and maintaining additional 
financial responsibility to cover an OTI's unincorporated branch 
offices by deleting the reference to obtaining additional financial 
responsibility currently set out in Sec.  515.4(b)(ii). A corresponding 
change is made to Sec.  515.21, deleting the current text of paragraph 
515.21(a)(4). The rule also deletes Sec.  515.4(d), which refers to 
ocean freight brokers, as it is no longer needed. Comments by OTIs and 
the associations were uniformly in support of the elimination of the 
additional $10,000 bonding requirements for each unincorporated branch 
office.
    The NYNJFFF&BA opposes the provision in Sec.  515.4(b) that an OTI 
``shall be fully responsible for the acts and omissions of any of its 
employees and agents that are performed in connection with the conduct 
of such licensee's business.'' NYNJFFF&BA is concerned that the 
provision will expose OTIs to all manners of liability for acts of 
their agents, including gross negligence and personal injury.
    The most significant change in this provision from that adopted in 
1999, is the substitution of ``shall be fully responsible'' in place of 
``shall be held strictly responsible.'' The change is intended to 
clarify that the provision places full responsibility on OTIs for the 
acts and omissions of their employees and agents for actions that 
violate the Shipping Act or Commission regulations. The current rule's 
reference to strict responsibility is imprecise and its elimination 
avoids any inference that a statutory or regulatory regime relating to 
strict liability applies. The Commission considers the provision as 
clarified does not open OTIs to liability beyond the scope of the 
Shipping Act and, accordingly, no change to the rule as proposed is 
necessary.

 Section 515.5--Forms and Fees

    Section 515.5(b) is modified to provide that all license 
applications and registration forms, including renewal forms, must be 
filed with the Commission electronically unless a waiver request to 
file on paper is granted by the Director of the Bureau of Certification 
and Licensing. Electronic filing anticipates the implementation of on-
line filing and processing of all applications and forms. OTIs will 
also be able to view their on-line applications, reflecting the changes 
that they make to the application, including license renewal changes, 
by logging into the Commission's system.
    Section 515.5(c)(1) has been added and requires OTIs to pay 
applicable fees within ten (10) business days of the time of submission 
of such applications and forms. The Commission has developed the 
ability to receive on-line payments by credit or debit cards via 
Pay.gov and the Automated Clearing House system. These developments 
enable OTIs to pay fees in a timely and convenient manner, consistent 
within the 10 day window.
    Section 515.5(c)(2) is added to make it easier for OTI applicants 
and licensees to quickly find the fees that apply to filings they make, 
by setting out all fees applicable under part 515 (e.g., fees for 
filing of license applications and registrations) in one place. Section 
515.5(c)(2) directs OTIs to the substantive sections in Part 515 that 
give rise to the fees.
    NCBFAA supports the changes to Sec.  515.5 providing for the 
electronic filing of applications and the relocation of all fee 
amounts. It notes that electronic filing of applications should be no 
burden to prospective OTIs as virtually all data is already submitted 
electronically to carriers, banks and government agencies. NYNJFFF&BA 
also supports the electronic filing provisions and the requirement that 
fees be paid within 10 days of submission of an application. NYNJFFF&BA 
also suggested that the OTI be able to check its profile on-line. As 
indicated above OTIs will be able to check their profile at any time by 
logging on via the Commission's Web site.

Subpart B--Eligibility and Procedure for Licensing; Procedure for 
Registration

Section 515.11--Basic Requirements for Licensing; Eligibility

    Except for the addition of a sentence clarifying the experience 
required of a foreign-based NVOCC that elects to become licensed, Sec.  
515.11(a)(1) remains unchanged inasmuch as revisions put forward in the 
ANPR have been deleted. Foreign-based NVOCCs seeking to become licensed 
must acquire the requisite experience with respect to shipments 
transported in the United States oceanborne foreign commerce, but may 
acquire that experience while resident in a foreign country with 
respect to shipments moving in the U.S. trades. The added sentence 
reflects the standard that has been applied by the Commission since 
1999.
    While NCBFAA recognizes the Commission's inclusion of the agency's 
standard that has been applied to foreign-based NVOCC experience over 
the years, it would like the Commission to explain its rationale for 
doing so. NCBFAA largely restates its view that the vetting of QIs does 
not presently determine the QI's ``knowledge of or competency with the 
Shipping Act, the Commission's regulations or the myriad of export 
control and other regulations that affect the function of any OTI and 
questions whether the requisite three years' U.S. experience differs 
substantively from OTI working experience gained in non-U.S. trades.
    As indicated with respect to NCBFAA's comments on the definition of 
qualifying individual, the Commission considers that the OTI experience 
acquired by QIs in the U.S. trades provides them with exposure to and 
working knowledge of U.S. laws, regulations, and practices, including 
those of the Shipping Act and Commission regulations. The QIs of 
foreign-based OTIs also gain experience with U.S. laws and regulations 
as a result of working on shipments in the U.S. trades. In 1999, the 
Commission made it possible for foreign-based OTIs to seek OTI licenses 
by promulgating its current rules permitting the necessary U.S. trade 
experience to be acquired abroad. The Commission will continue to 
require U.S. trade experience for QIs of foreign-based OTIs that apply 
for licenses.
    The new content in Sec.  515.11(a)(2) makes it clear that the 
Commission may consider all information relevant to the determination 
of whether the applicant has the necessary character to render OTI 
services. Types of information that may be considered include, but are 
not limited to: Violations of any shipping laws or statutes relating to 
the import, export or transport of merchandise in international trade; 
operating as an OTI without a license or registration; state and 
federal felonies and misdemeanors; voluntary and non-voluntary 
bankruptcies not discharged; outstanding tax liens; court and 
administrative judgments and proceedings; non-compliance with 
immigration status requirements; and denial, revocation, or suspension 
of a Transportation Worker Identification Credential or of a customs 
broker's license. The types of information with respect to character, 
now set out in Sec.  515.11(a)(2), reflect the information that the 
Commission's Bureau of Certification and Licensing (BCL) has considered 
and applied during the 15 years since the current regulations went into 
effect. This section better informs applicants of potential issues that 
should be addressed in filing their

[[Page 68725]]

applications so as not to unnecessarily delay processing of their 
applications.
    NYNJFFF&BA expresses its concern that the information that may be 
considered by the Commission in assessing an applicant's character 
could lead to the denial of a license in circumstances that have 
nothing to do with character. As examples, the association points to 
the possibility of erroneously filed tax liens and questions the 
relevance of a suspension or revocation of a TWIC card or customs 
broker license.
    As noted, the factors set out in Sec.  515.11(a)(2) are the types 
of information that have been considered for years in Commission 
licensing determinations. The scope of information considered by the 
Commission does not negatively affect an applicant's character 
assessment unless there arises a serious and relevant concern for 
licensing as evidenced by the information obtained. The Commission will 
continue to refer to the types of information listed but, as it has in 
the past, will not peremptorily commence the process for denying, 
revoking or suspending a license without first seeking clarification 
and an opportunity for response from the applicant. In sum, the listing 
will result in greater transparency, both facilitating applicants' 
preparation of their applications and the Commission's consideration of 
them.

Section 515.12--Application for License

    Section 515.12(c) memorializes a process pursuant to which BCL 
shall close applications where applicants fail to timely provide 
information or documents needed for review. The date for submission of 
such information will be provided by BCL to the applicant. The 
Commission will apply Sec.  515.12(c) reasonably and flexibly. Once the 
date has been established for a response by BCL, the applicant should 
keep BCL fully informed as to the reasons for any response delays in 
order to avoid closure of its application. Applicants whose 
applications are closed may reapply at any time.
    NCBFAA comments favorably on the inclusion, in Sec.  515.12(c), of 
the application closure process that will be followed by the Commission 
with respect to applicants that do not timely provide information or 
documents. NCBFAA indicates its favorable experience with the practice 
of the BCL flexibly extending deadlines for submission of application 
information and documents.

Section 515.14--Issuance, Renewal, and Use of License

    Section 515.14(c) requires licenses to be renewed every three (3) 
years. New OTI licenses will be issued for an initial three-year period 
and renewed every three years thereafter. Existing licenses will be 
phased-in over a three-year period in order to facilitate smooth and 
timely processing by Commission staff. Moreover, the renewal 
requirement will be implemented only when the necessary programming of 
the Commission's computer systems has been completed and tested so that 
on-line processing can be reliably activated. To this end, the renewal 
requirements of Sec.  515.14(c) and (d) will become effective, and 
implementation of the on-line renewal process will commence, December 
9, 2016. All other provisions of the final rule adopted in this 
rulemaking proceeding become effective December 9, 2015.
    The Commission will issue a notice on its Web site of the schedule 
by which currently licensed OTIs will have to renew their licenses. It 
is anticipated that current licensees will be grouped for renewal by 
ranges of license numbers in order to facilitate smooth processing.
    OTIs and the OTI associations that filed comments to the proposed 
rule object generally to the requirement that licenses be renewed every 
three years. The comments assert that license renewals are not needed 
to obtain up-to-date information because the Commission's regulations 
already require that certain changes in a licensee's organization be 
submitted to the Commission for prior approval (Sec.  515.20(a)) and 
certain other changes in material facts be submitted within 30 days of 
such changes (Sec.  515.20(e)). As an alternative, NCBFAA suggests that 
the Commission vigorously enforce its existing rules by assessing 
penalties against OTIs that fail to update their information. 
NYNJFFF&BA suggests that the data the Commission presented in the 
proposed rule regarding failures of OTIs to update information under 
the current requirements is insufficient to support the need for a 
license renewal requirement applicable to all OTIs. NYNJFFF&BA suggests 
that the Commission issue a one-time request to all OTIs for the 
essential corporate information that the proposed rule's renewal 
process seeks on a triennial basis in order to determine the current 
level of unreported non-compliance. NCBFAA also comments that there is 
no indication in the Notice of Proposed Rulemaking that a vast majority 
of OTIs fail to comply with the current regulations.
    As described in the proposed rule, BCL has 30 to 40 inquiries 
concerning the identity of a licensee's QI, officers, owners, or 
business affiliations at any given time, notwithstanding current 
requirements that such information be updated within 30 days of a 
change. Both BCL and the Commission's Bureau of Enforcement have 
experienced frequent failures over a two year period to timely report: 
changes of business address, QI retirements/resignations, failure to 
notify/increase OTI's surety bond, and operations under new trade 
names. This data included NVOCCs and Ocean Freight Forwarders (OFFs), 
large and small.
    As indicated in the NOPR, the incidence of noncompliance by OTIs in 
timely reporting changes material to their license and bond revealed 
while dealing with the Commission on other matters has ranged between 
14 and 24 percent. At the low end, that would translate into over 1,000 
OTIs not having complied with the Commission's current updating 
requirements. Without implementing the renewal requirement, the 
Commission simply cannot adequately know which OTIs are not complying 
at any given time, nor adequately meet its statutory obligations to 
maintain effective oversight of the conduct and financial 
responsibility of the OTI industry, both in the U.S. and abroad. The 
need for the renewal process provided for in the rule is a reflection 
of the Commission's experience since 1999.
    The suggestion that the Commission should instead pursue 
enforcement proceedings against offenders misses the fact that the 
Commission has worked diligently to bring the OTI industry into 
compliance without such proceedings and seeks to continue doing so once 
the renewal process is in place. It is unnecessary to abandon the 
Commission's current process in favor of one where enforcement 
proceedings seeking penalties are commenced each time the Commission 
discovers a failure to update information.
    Neither will the renewal process, as configured, place a great 
burden on the OTI industry. This is borne out by the Commission's 
impact analysis required by the Regulatory Flexibility Act. Renewal 
does not involve OTIs having to re-qualify to continue its license to 
operate, nor does the process result in the expiration of a license 
beyond which date an OTI cannot operate.
    NCBFAA, North American, J.W. Allen, John S. Connor, New Direx, 
Pride, C J International, Cargo-Link, Vanguard, Mohawk and Thunderbolt

[[Page 68726]]

expressed concerns that the renewal process may jeopardize their 
license where, for example, there are carrier or shipper claims against 
the OTI causing the Commission to withhold issuance of a renewed 
license. These parties fear that the OTI license would become 
ineffective in the interim, and the OTI left unable to operate.
    Along the same lines, NYNJFFF&BA objects to reference in 
515.14(d)(3) indicating that information provided by an OTI or another 
source may be reviewed by the Commission at any time, including at the 
time of renewal. The association expresses the reasonable concern that 
any OTI scrutinized by the Commission be given opportunity to respond 
and refute information that could jeopardize its license.
    Even where the renewal process identifies changes in the licensee's 
information necessitating separate Commission approval, the NOPR makes 
clear the licensee may continue to operate during such review, 
515.14(d)(2). Indeed, a license may be revoked or suspended only after 
the Commission gives notice and provides a hearing pursuant to Sec.  
515.16 (Revocation or suspension of license) and Sec.  515.17 (Hearing 
procedures governing denial, revocation, suspension of OTI license). 
Among the reasons for revocation set out in Sec.  515.16 is that the 
licensee is no longer qualified to render ocean transportation 
intermediary services. This would include where the licensee was found 
to no longer possess the character required by the Shipping Act.
    The Commission emphasizes that Sec.  515.14(d)(3) creates no new 
right or power of review of a licensee's character. Such reviews have 
historically been a function of credible information coming to the 
attention of the Commission irrespective of any timing relative to 
license renewal. Section 515.14(d)(3) simply alerts OTIs to that 
circumstance. In any event, the receipt of information potentially 
implicating a licensee's character will normally result in Commission 
staff first contacting the licensee regarding the information.
    The OTI and the association commenters suggest that only a simple 
report, one that is submitted electronically, should be implemented in 
the event that the Commission goes forward with a requirement that all 
OTIs update information every three years. NCBFAA suggests a process 
consistent with the five-year registration renewal requirement included 
by in the Moving Ahead for Progress in the 21st Century Act, Public Law 
112-141, 126 Stat. 405 (MAP-21) or with the triennial broker report to 
CBP. TIA in turn refers to the MAP-21 renewal and to the Federal Motor 
Carrier Safety Administration's requirement that domestic 
transportation intermediaries renew their information every two years. 
TIA points out that the FMCSA biennial renewal can be completed on-line 
in less than an hour, and adds that the Commission and the FMCSA should 
work to harmonize their proposals so as to streamline regulations as 
between land-based domestic transport intermediaries and OTIs under the 
Shipping Act.
    Responsive to comments by NCBFAA, NYNJFFF&BA and TIA, the 
Commission again states its intention that the renewal process will be 
on-line, user friendly and free. The Commission's objective is that 
licensed OTIs will verify on-line information such as the QI's 
identification and contact information, changes in business or 
organization, trade names, tariff publication information, physical 
address, and electronic contact data for purposes of notification. Only 
information that is no longer accurate must be updated. The process 
will result in a renewed license which specifies the date by which the 
next renewal is to be completed. An OTI license will not simply expire. 
In short, the process is less complicated than the status reports 
submitted to CBP by customs brokers. The consequences of late filing 
likewise are less onerous in that failure to submit the CBP broker 
report by the end of February of the reporting year results in a 
license suspension on March 1, by operation of law. If the status 
report is not filed within 60 days of the suspension notice, the 
license is revoked.
    The renewal process required by MAP-21 appears similar to the 
renewal process established by this rule. While registration must be 
renewed on-line every five years, FMCSA's Unified Registration System 
(URS) requires updates within 30 days of a change in a registrant's 
legal name, form of business, or address, and transfers of operating 
authority. Docket No. FMCSA-1997-2349, Unified Registration System, 78 
FR 52608 (2013). The registration form also requires an entity's 
principal address, mailing address, phone number, principal contact and 
email address, among other information specific to the type of the 
registrant's operating authority. Also, an update to a registration 
prompted by, for example, a change in business organization, does not 
alter the requirement for a registrant to meet the FMCSA's update 
schedule applicable to the registrant.
    UPS expresses a concern that renewed licenses will expire on the 
date indicated on its license. UPS sees a danger that a license will 
not be renewed before it expires due to circumstances beyond an OTI's 
control or, perhaps, beyond the Commission's control, leading to its 
inability to lawfully accept bookings. In such circumstances, UPS 
suggests that the Commission's rule provide that the expiration date be 
automatically extended by ten days.
    A failure to renew by the renewal date does not terminate the 
effectiveness of an OTI's license. Where an OTI has failed to renew, 
BCL will contact the OTI and remind it of their obligation, urge the 
OTI to complete the process promptly and offer such assistance as 
practicable. In the unusual instance where an OTI continually ignored 
or rebuffed the Commission's efforts to bring it into compliance, (and 
where such OTI's financial responsibility remains in effect), an 
enforcement proceeding for suspension or revocation of the OTI license 
will remain as options for the Commission's consideration. Even in such 
circumstances, the license remains in effect until revoked or suspended 
following notice and opportunity for a hearing as provided by the 
Commission's regulations.
    UPS suggests that an update to an OTI's FMC-18 result in the OTI's 
renewal date being extended to three years from that update. The 
Commission considers that renewal dates fixed pursuant to Sec.  
515.14(d) (1) provides a more stable timeline for OTIs and the 
Commission. That section provides that a new license bear a renewal 
date on the same day and month as the date on which the license was 
originally issued, with the renewal day and month remaining the same 
for successive renewals. Also, the renewal date remains the same 
regardless of the date a renewal form is submitted or the date a 
renewed license is issued. Extending the date as suggested by UPS would 
require additional resources to accurately track data entry dates in 
order to establish a renewal date. It is foreseeable that in some 
instances multiple replacement licenses would have to be produced where 
there are multiple updates between renewals. In contrast, the rule will 
provide OTIs and the Commission with ongoing certainty as to the OTI's 
renewal date.
    NCBFAA comments that the Commission should explain its authority to 
implement a renewal process as neither the specific authority

[[Page 68727]]

in MAP-21 for the FMCSA to ``renew'' their registrations nor CBP's 
status reporting provide a basis. Section 17 of the Shipping Act, 46 
U.S.C. 305, provides broad authority to the Commission to ``prescribe 
regulations to carry out its duties and powers,'' which encompasses the 
authority to require OTIs to update information that is essential to 
the Commission's oversight of OTIs. The triennial license renewal 
requirement in this rule is an extension of its current rules that 
require OTIs to inform the Commission of changes in information for 
prior Commission approval for certain changes (e.g., change in QI) or 
within 30 days after certain changes have occurred.
    Since 1961, the Commission has had the responsibility for licensing 
independent ocean freight forwarders and, from the outset, included 
regulations requiring forwarders to update information supplied in its 
application, for example, 46 CFR 510.5(c) (1965). Upon passage of OSRA, 
the Commission implemented its statutory requirements by extending the 
prior approval and notification requirements to NVOCC licensees as well 
as to OFFs. Based upon the Commission's experience that OTIs too often 
do not update the required information, and the present inability to 
identify OTIs which should have reported changes under the current 
rules but have not, the Commission finds it necessary to require OTIs 
to update that information every three years, using today's technology 
to enable an on-line renewal process. The shared need of the public and 
the Commission for current, accurate and reliable information is best 
served by ensuring the Commission's OTI data base is updated by all 
licensees every three years to display current licensee information, 
rather than relying solely on the current requirements.
    The Commission is mindful that there are approximately 4,700 OTIs 
that are currently licensed that have no expiration date. As a result 
the Commission will advise the public of the timetable and process that 
will be used to implement renewals for those licensees. That notice 
will be issued well in advance of the date by which any current 
licensees will need to renew their licenses. The process will allow 
current licensees to renew without being unreasonably burdened and 
should avoid processing delays by the Commission that could occur where 
too many renewals are submitted within a short time. The total number 
of current licensed OTIs may, for example, be divided up so that one 
third of licensees are notified to renew in the first year and one 
third for each of the following two years, and any renewal dates 
likewise scheduled on a monthly basis across the course of a given 
year. A phased schedule is necessary in order to make the workload 
achievable for Commission staff, without imposing undue or 
unnecessarily rigid deadlines for the OTI industry.

Section 515.17--Hearing Procedures Governing: Denial, Revocation, or 
Suspension of OTI Licenses

    This section streamlines appeal procedures for denial of OTI 
license applications, and for revocation or suspension of OTI licenses. 
Currently, such appeals are conducted under the Commission's Rules of 
Practice and Procedure, published at 46 CFR part 502, and provide 
procedures ill-suited to reducing the burden, expense and delay 
attendant to such licensing determinations.
    Upon being advised by the hearing officer that a hearing request 
has been made, BCL will deliver to the hearing officer a copy of the 
notice of intent given to the applicant/licensee along with materials 
supporting the notice under Sec.  515.15 (license denials) or 515.16 
(license revocations and suspensions). The hearing officer will provide 
the OTI or applicant with a copy of BCL's notice of intent and the 
materials, along with a written notice advising the party of its right 
to submit its written arguments, affidavits of fact, and documents 
within 30 days. BCL then would submit its response within 20 days of 
the OTI's submission. These records and submissions constitute the 
entire record for the hearing officer's decision. The hearing officer's 
decision must be issued within 40 days of the record being closed.
    Section 515.17(d) provides that, for all revocation, termination or 
suspension proceedings that seek findings of Shipping Act violations, 
formal proceedings before an Administrative Law Judge are still 
required. The Commission's formal discovery rules are available in such 
instances.
    NCBFAA expresses concern that revision of the hearing process for 
denials, suspensions and revocations deny a full evidentiary hearing. 
NYNJFFF&BA, UPS and Vanguard also suggest that the change in hearing 
process denies OTIs due process. UPS suggests that the new procedure be 
used only where an OTI does not appear or comply with the Commission's 
part 502 (Rules of Practice and Procedure).
    As the comments indicate, this streamlined procedure will be of 
significant benefit where an OTI fails to appear, as such proceedings 
will consume significantly less time than typical show cause 
proceedings. The new procedure will take approximately 115 days. In 
contrast, in Docket No. 14-01, Revocation of Ocean Transportation 
Intermediary License No. 022025--Cargologic USA LLC, the matter was 
decided by the Commission over the course of approximately 170 days 
(initiated by Show Cause Order served February 18, 2014, 33 SRR 299, 
and resolved by its decision revoking Cargologic's license, served 
August 8, 2014, 33 SRR 666). While revocation proceedings remain 
infrequent, uncontested proceedings comprise by far the majority of 
such cases.
    The new procedure will also serve to shorten denial, suspension and 
revocation proceedings where the OTI formally appears through counsel, 
thereby reducing the burden and expense even as to contested 
proceedings. At the outset of any proceedings, OTIs will receive a far 
broader disclosure of BCL's case in chief than that required for 
proceedings conducted under the procedures in part 502. See 46 CFR 
502.201. Counsel for the OTI will be able to assess the factual basis 
of BCL's decision, participate fully in the hearing, and emerge readily 
equipped to seek Commission review in the event of an adverse decision. 
OTIs are not disadvantaged by the new procedure as it protects OTIs' 
due process rights at all stages. Section 515.17(c) provides that OTIs 
and applicants may seek Commission review of the hearing officer's 
adverse decision pursuant to 46 CFR 502.227 (applicable to the filing 
of exceptions). Such requests may include a request for further hearing 
under part 502 (Rules of Practice and Procedure), including appointment 
of an Administrative Law Judge. The Commission also may, on its own 
motion, require a part 502 hearing to review an adverse decision.
    Finally, Sec.  515.17(d) provides that, for all revocation, 
termination or suspension proceedings that seek assessment of civil 
penalties for Shipping Act violations, formal proceedings before an 
Administrative Law Judge are still required. The Commission's formal 
discovery rules remain available in such instances.
    Section 515.19 (g)(1) also provides for the hearing process 
contained in Sec.  515.17 with respect to terminations or suspensions 
of the effectiveness of foreign-based NVOCC registrations. The 
streamlined process similarly accords registered NVOCCs the due process 
required.

[[Page 68728]]

Subpart C--Financial Responsibility Requirements; Claims Against Ocean 
Transportation Intermediaries

Section 515.23--Claims Against an Ocean Transportation Intermediary

    Section 515.23(c) requires financial responsibility providers to 
file with the Commission notices of each ``claim, court action, or 
court judgment against the financial responsibility and each claim paid 
(including the amount [thereof]) by the [financial responsibility] 
provider.'' Section 515.23(c) provides that such notices be submitted 
only to the Commission.
    NCBFAA, TIA, NYNJFFF&BA, North American, J.W. Allen, Customs 
Clearance, K&N, John S. Connor, New Direx, W.R. Zanes, Pride, John S. 
James, C J International, Cargo-Link, Vanguard, Mohawk and Thunderbolt 
object to the provision requiring financial responsibility providers 
having to file with the Commission notices of claims and claims paid 
against a financial responsibility. Although claim information is filed 
only with the Commission and not published, they assert such 
information could be damaging to an OTI as claims are often without 
merit.
    NYNJFFF&BA asserts that the additional requirement in Sec.  
515.23(c)(3) that reporting of the claimant's name, the court, court 
case number, the OTI's name and license number may create an impression 
that such OTIs were irresponsible and cause the Commission to use the 
information against the OTI. The association suggests that if the 
Commission is interested in gathering data to better understand the 
claim experience of financial responsibility, it could request 
aggregate data without reference to specific claimants and OTIs. NCBFAA 
and TIA also question the relevance of such information to the fitness 
of an OTI, and seek assurances it will be kept confidential.
    Financial responsibility providers have been required for many 
years to provide claim information to the Commission. While this 
requirement has long been a key component in the financial 
responsibility forms that providers must use in establishing the OTI's 
financial responsibility under the current regulations, the NOPR brings 
such requirements forward into its rules. The NOPR also revises the 
wording of the form's contractual requirements with regard to providing 
such claim information in order to make the wording more uniform across 
all four of the financial responsibility forms received by the 
Commission.
    The Commission seeks this fuller claims information as a function 
of its oversight of OTI financial responsibility coverage. These 
changes will improve the detail and accuracy of claims information 
received, the regularity of its receipt from surety providers, and the 
timeliness by which the Commission may respond in the event the 
financial responsibility instrument is cancelled, becomes ineffective 
or is extinguished upon payment of one or more valid claims.
    NYNJFFF&BA comments that it is unfair to require such information 
from OTIs and not from vessel operating carriers or terminal operators. 
The Commission does not seek this information from vessel operators or 
terminal operators because such entities are not required by the 
Shipping Act to obtain financial responsibility. The Commission 
collects the information for its internal use only and it will be 
protected to the extent provided by law.
    Roanoke supports the inclusion in Sec.  515.23(c) of requirements 
for financial responsibility providers to notify the Commission of 
claims and claim payments. Roanoke comments that it would prefer that 
Sec.  515.23(c)(2) be modified so that notices could be reported within 
45 days rather than reported ``promptly'' as provided in the rule. The 
Commission does not see a need to drop the word ``promptly'' and will 
retain Sec.  515.23(c)(2) as proposed. However, the Commission 
considers it reasonable for financial responsibility providers to 
compile claims and claim payment information on a periodic basis and 
then promptly submit the information to the Commission, e.g., monthly 
or more frequently.
    Roanoke also suggests that the changes made to the financial 
responsibility forms that provide that such information be provided 
``immediately'' be changed to refer to ``promptly.'' In light of the 
Commission's decision with respect to Sec.  515.23(c)(2), the 
Commission will revise the financial responsibility forms to substitute 
``promptly'' for ``immediately.'' Roanoke also refers to the need in 
Form FMC-48 (Bond Form) to change the two references to ``Insured'' to 
``Principal.'' The Commission agrees and will make the substitution.
    With respect to Bond Form FMC-48, Roanoke believes that the proviso 
in the second ``Whereas'' clause (that a group bond will pay-out claims 
only to the extent not covered by another surety bond) is unnecessary 
as it serves no purpose. This same proviso also appears in the 
Insurance and Guarantee forms. Roanoke asserts that the proviso is 
appropriately included only in Group Bond Form FMC-69, where it 
provides that a group bond pays against claims only after other surety 
bonds, insurance or guaranties have been exhausted. The Commission 
concurs that the proviso is unnecessary and will delete it from Forms 
FMC-48, FMC-67 and FMC-68.
    Roanoke also proposes that the Commission provide guidance as to 
the schedule for incorporating the claim reporting changes to the 
financial responsibility forms and how to quickly make the rule 
effective in current financial responsibility contracts. Roanoke 
suggests that the changes be permitted, in the short term, by riders to 
current bonds. Roanoke also suggests the Commission give OTIs and 
financial responsibility providers twelve months after the proposed 
rule becomes effective for new bonds to be fully updated and executed.
    Under OSRA, the Commission authorized use of riders so that OTIs 
and financial responsibility providers could more easily meet the new 
statutory requirements. This process worked well under OSRA and the 
Commission agrees that the use of riders here is also appropriate. The 
Commission also concurs that 12 months would be a reasonable period 
over which current financial responsibility contracts can be reworked 
and replaced using the new forms. The Commission will closely monitor 
this process and work with financial responsibility providers and OTIs 
following effectiveness of the proposed rule.

Section 515.27--Proof of Compliance--NVOCC.

    Section 515.27(a) makes it clear that no common carrier shall 
``knowingly and willfully'' transport cargo for an NVOCC unless the 
common carrier has determined that the NVOCC has: A license or 
registration; published a tariff; and provided proof of financial 
responsibility. Section 515.27(b)(2) sets forth the Commission's web 
address as the single-source location that common carriers can consult 
to verify an NVOCC's status. The Commission is working to ensure that 
common carriers can readily make the required verifications at a 
single, convenient location on the Commission's Web site.
    The World Shipping Council suggests that the Commission also make a 
change to Sec.  515.27(d) that would harmonize it with paragraph (b)(1) 
by using the same reference to ``applicable licensing, registration, 
tariff and financial responsibility requirements'' throughout this 
section. The Commission agrees that these conforming changes improve 
the section and revises Sec.  515.27(d) to read as follows:


[[Page 68729]]


(d) The Commission will publish at its Web site, www.fmc.gov, a list 
of the locations of all carrier and conference tariffs, and a list 
of ocean transportation intermediaries who have met their applicable 
licensing, registration, tariff and financial responsibility 
requirements, current as of the last date on which the list is 
updated. The Commission will update this list on a periodic basis.

Subpart D--Duties and Responsibilities of Ocean Transportation 
Intermediaries; Reports to Commission

Section 515.31--General Duties

    Section 515.31(g) places an obligation on all OTIs to promptly 
respond to requests for all records and books of accounts made by 
authorized Commission representatives. In addition, Sec.  515.31(g) now 
clarifies that OTI principals are responsible for requiring that their 
agents promptly respond to requests directed to such OTI's agents.
    NYNJFFF&BA comments that OTIs are not in a position to ensure that 
their agents make their corporate records available as those records 
are not legally the OTI's. The association also indicates that, if the 
agents resist requests by the OTI, the OTI should not experience the 
regulatory consequences.
    Section 515.31(g) makes OTIs responsible to make available all 
records relating to ocean transportation intermediary service provided 
by or for the OTI. The Commission agrees with NYNJFFF&BA that the law 
of agency and contract govern the OTI's relationship with its agents. 
Accordingly, the regulation requires OTIs to obligate its agents to 
provide all records relating to its OTI principal's activities. The 
Commission's rule anticipates OTIs will be readily able to include 
provisions in their agency agreements so as to ensure compliance by 
their agents.
    Section 515.31(j) embodies the Commission's decision in Docket No. 
06-01, Worldwide Relocations, Inc., et. al--Possible Violations, 32 SRR 
495, 503 (FMC 2012), in which the Commission found that persons or 
entities may hold themselves out to act as an NVOCC ``by the 
establishment and maintenance of tariffs, by advertisement and 
solicitation, and otherwise.'' Section 515.31(j) applies to OFFs, as 
well as NVOCCs, insofar as they hold out to perform ocean freight 
forwarding services via advertising and solicitation.
    TIA, NCBFAA, NYNJFFF&BA, North American, J.W. Allen, Customs 
Clearance, K&N, John S. Connor, New Direx, W.R. Zanes, Pride, John S. 
James, C J International, Cargo-Link, Mohawk, Vanguard, Thunderbolt 
express their concern that Sec.  515.31(j) can be read to apply to 
agents that might advertise to perform an OTI service, as agent, for an 
OTI. TIA indicates that the use of ``OTI services'' in the rule is 
confusing because such services are not defined in the proposed rule. 
As a consequence, these commenters view Sec.  515.31(j) as problematic. 
The Commission agrees that the section as proposed is imprecise and is 
revised as follows:

No person may advertise or hold out to act as an OTI unless that 
person holds a valid OTI license or is registered under this part.

The reference to ``OTI services'' is deleted and the words ``to act as 
an OTI'' are inserted to make it clear that only those advertising or 
holding out to act as an OTI are subject to the rule.

Subpart E--Freight Forwarding Fees and Compensation

Section 515.41--Forwarder and Principal; Fees

    The current content of Sec.  515.41(c) with respect to special 
contracts of ocean freight forwarders is deleted. The Commission has 
determined it is no longer needed. NCBFAA supports the elimination of 
the current content of Sec.  515.41(c) as not relevant in light of the 
enactment of OSRA and the importance of individually negotiated rates.

Section 515.42--Forwarder and Carrier; Compensation

    Section 515.42(c) is revised to specifically authorize electronic 
certifications by forwarders to carriers that forwarding services have 
been provided. Such electronic certifications (e.g., an automated 
forwarder database) must identify the shipments for which compensation 
is made and provide for the forwarder's confirmation that the services 
for which forwarder compensation is to be paid have been provided. This 
provision will ensure, for example, that the forwarder will confirm 
that the carrier's list of shipments is correct, and, if not, the 
forwarder will advise the carrier of shipments that should be added or 
deleted. Certifications must be retained for a period of 5 years by the 
common carrier.
    NCBFAA supports the authorization in section 515.42(c) of 
electronic certifications that forwarder services have been provided. 
However, it proposes that there is no need for any certification 
because vessel operating common carriers have largely eliminated 
forwarder compensation, in that compensation is only paid where 
forwarders bring substantial cargo to the carrier and provide 
significant services. J.W. Allen and W.R. Zanes support elimination of 
certifications.
    NYNJFFF&BA also urges that certifications by forwarders and by 
vessel operators be dropped based on the paucity of compensation being 
paid by vessel operators. The association also expresses a concern that 
carriers may create their own systems requiring OFFs to provide 
verification of carrier lists. No comments were received from vessel 
operators or their associations on the change to Sec.  515.42(c).
    Vanguard suggests the Commission should allow for a one-time 
blanket certification by the OFF that services have been rendered on 
all future shipments, or eliminate certifications entirely. Vanguard 
questions why a vessel operator certification is necessary.
    The Commission appreciates that the number of shipments on which 
forwarder compensation is paid have greatly diminished. However, the 
reasons for certification remain--to ensure that forwarder compensation 
is only paid and received for services actually rendered in accordance 
with vessel operators' service contracts and tariffs. It would appear 
that the provision of electronic certification exchanges, verified 
periodically by the forwarder and the vessel operator, together with 
the greatly reduced volume of compensation paid will reduce 
correspondingly the number of certifications required.

Regulatory Flexibility Act--Threshold Analysis and Chairman's 
Certification of No Significant Economic Impact

    When an agency issues a rulemaking proposal, the Regulatory 
Flexibility Act (RFA) requires the agency to ``prepare and make 
available for public comment an initial regulatory flexibility 
analysis'' which will describe the impact of the proposed rule on small 
entities. (5 U.S.C. 603(a)). Section 605 of the RFA allows an agency to 
certify a rule, in lieu of preparing an analysis, if the proposed 
rulemaking is not expected to have a significant economic impact on a 
substantial number of small entities.
    In the NPRM, the Commission advised the public that the proposed 
rule directly affects all U.S. licensed OTIs, of which there were 
4,648. The FMC estimated that approximately 97 percent of these OTIs 
are small entities. Therefore, the Commission determined that this 
proposed rule will affect a substantial number of small entities.
    At that time, the Commission determined that the economic impact on 
entities affected by the proposed rule would not be significant. Most 
of the proposed changes were found to have either no economic impact or 
beneficial economic impacts. Concerning the one

[[Page 68730]]

change with the potential to generate economic disbenefit, i.e., the 
license renewal requirement, the dollar magnitude of the economic 
impact was estimated to be less than one-tenth of one percent of 
average annual revenue for even the smallest of small entities. The 
Commission invited comment from members of the public who believe the 
rule will have a significant economic impact on the U.S.-based OTIs.
    The NCBFAA comments asserted that the license renewal requirement 
would have a significant economic impact on a substantial number of 
small entities. Inasmuch as NCBFAA provided no data regarding the 
potential economic burden associated with this requirement, their 
assertion remains unsubstantiated. On the other hand, with respect to 
the rule's elimination of the $10,000 bonding requirement for each 
unincorporated branch office, a number of OTIs and associations stated 
that the elimination of that requirement would ease their regulatory 
burden, reduce their cost of operations and make their companies more 
competitive in the market for OTI services. These commenters offered no 
data to quantify their assertions.
    NCBFAA asserts that the Commission likewise ignores the cost 
implications of small entities having to respond to follow-up requests 
or the need for such entities to defend against any action that might 
challenge the renewal of a license. As outlined, the on-line renewal 
process will be free, user-friendly and focused upon verifying factual 
issues material to the licensee's current status. Only information that 
is no longer accurate need be updated.
    The Commission may revoke a license where an OTI no longer has the 
experience or character to act as an OTI. OTIs are in control of 
whether they meet those standards and, correspondingly, in control of 
whether they have engaged in activities that might lead to a revocation 
proceeding. The occurrence of such litigation is highly speculative and 
ultimately in the hands of the OTI. Similarly, the incidence of OTIs 
needing to respond to follow-up requests by the Commission staff is 
also speculative as the OTI is expected to provide accurate information 
in the first instance.
    Accordingly, the Chairman of the FMC hereby certifies that this 
rule will not have a significant economic impact on a substantial 
number of small entities. The FMC's certification and supporting 
statement of factual basis will be provided to the Chief Counsel for 
Advocacy of the Small Business Administration (SBA) for review under 5 
U.S.C. 605(b).
    This rule is not a ``major rule'' under 5 U.S.C. 804(2).

List of Subjects in 46 CFR Part 515

    Freight, Freight forwarders, Maritime carriers, Reporting and 
recordkeeping requirements.

    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.

Subpart A--General

0
2. In Sec.  515.1, revise paragraph (b) to read as follows:


Sec.  515.1  Scope.

* * * * *
    (b) Information obtained under this part is used to determine the 
qualifications of ocean transportation intermediaries and their 
compliance with shipping statutes and regulations. Failure to follow 
the provisions of this part may result in denial, revocation or 
suspension of an ocean transportation intermediary license or 
registration. Persons operating without the proper license or 
registration may be subject to civil penalties not to exceed $9,000 for 
each such violation, unless the violation is willfully and knowingly 
committed, in which case the amount of the civil penalty may not exceed 
$45,000 for each violation; for other violations of the provisions of 
this part, the civil penalties range from $9,000 to $45,000 for each 
violation (46 U.S.C. 41107-41109). Each day of a continuing violation 
shall constitute a separate violation.

0
3. Revise Sec.  515.2 to read as follows:


Sec.  515.2  Definitions.

    The terms used in this part are defined as follows:
    (a) Act or Shipping Act means the Shipping Act of 1984, as amended. 
46 U.S.C. 40101-41309.
    (b) Beneficial interest includes a lien or interest in or right to 
use, enjoy, profit, benefit, or receive any advantage, either 
proprietary or financial, from the whole or any part of a shipment of 
cargo where such interest arises from the financing of the shipment or 
by operation of law, or by agreement, express or implied. The term 
``beneficial interest'' shall not include any obligation in favor of an 
ocean transportation intermediary arising solely by reason of the 
advance of out-of-pocket expenses incurred in dispatching a shipment.
    (c) Branch office means any office in the United States established 
by or maintained by or under the control of a licensee for the purpose 
of rendering intermediary services, which office is located at an 
address different from that of the licensee's designated home office.
    (d) Commission means the Federal Maritime Commission.
    (e) Common carrier means any person holding itself out to the 
general public to provide transportation by water of passengers or 
cargo between the United States and a foreign country for compensation 
that:
    (1) Assumes responsibility for the transportation from the port or 
point of receipt to the port or point of destination, and
    (2) Utilizes, for all or part of that transportation, a vessel 
operating on the high seas or the Great Lakes between a port in the 
United States and a port in a foreign country, except that the term 
does not include a common carrier engaged in ocean transportation by 
ferry boat, ocean tramp, chemical parcel tanker, or by a vessel when 
primarily engaged in the carriage of perishable agricultural 
commodities:
    (i) If the common carrier and the owner of those commodities are 
wholly-owned, directly or indirectly, by a person primarily engaged in 
the marketing and distribution of those commodities, and
    (ii) Only with respect to those commodities.
    (f) Compensation means payment by a common carrier to a freight 
forwarder for the performance of services as specified in Sec.  
515.2(h).
    (g) Freight forwarding fee means charges billed by an ocean freight 
forwarder to a shipper, consignee, seller, purchaser, or any agent 
thereof, for the performance of freight forwarding services.
    (h) Freight forwarding services refers to the dispatching of 
shipments on behalf of others, in order to facilitate shipment by a 
common carrier, which may include, but are not limited to, the 
following:
    (1) Ordering cargo to port;
    (2) Preparing and/or processing export documents, including the 
required `electronic export information';
    (3) Booking, arranging for or confirming cargo space;

[[Page 68731]]

    (4) Preparing or processing delivery orders or dock receipts;
    (5) Preparing and/or processing common carrier bills of lading or 
other shipping documents;
    (6) Preparing or processing consular documents or arranging for 
their certification;
    (7) Arranging for warehouse storage;
    (8) Arranging for cargo insurance;
    (9) Assisting with clearing shipments in accordance with United 
States Government export regulations;
    (10) Preparing and/or sending advance notifications of shipments or 
other documents to banks, shippers, or consignees, as required;
    (11) Handling freight or other monies advanced by shippers, or 
remitting or advancing freight or other monies or credit in connection 
with the dispatching of shipments;
    (12) Coordinating the movement of shipments from origin to vessel; 
and
    (13) Giving expert advice to exporters concerning letters of 
credit, other documents, licenses or inspections, or on problems 
germane to the cargoes' dispatch.
    (i) From the United States means oceanborne export commerce from 
the United States, its territories, or possessions, to foreign 
countries.
    (j) Licensee is any person licensed by the Federal Maritime 
Commission as an ocean transportation intermediary.
    (k) Non-vessel-operating common carrier services refers to the 
provision of transportation by water of cargo between the United States 
and a foreign country for compensation without operating the vessels by 
which the transportation is provided, and may include, but are not 
limited to, the following:
    (1) Purchasing transportation services from a common carrier and 
offering such services for resale to other persons;
    (2) Payment of port-to-port or multimodal transportation charges;
    (3) Entering into affreightment agreements with underlying 
shippers;
    (4) Issuing bills of lading or other shipping documents;
    (5) Assisting with clearing shipments in accordance with U.S. 
government regulations;
    (6) Arranging for inland transportation and paying for inland 
freight charges on through transportation movements;
    (7) Paying lawful compensation to ocean freight forwarders;
    (8) Coordinating the movement of shipments between origin or 
destination and vessel;
    (9) Leasing containers;
    (10) Entering into arrangements with origin or destination agents;
    (11) Collecting freight monies from shippers and paying common 
carriers as a shipper on NVOCC's own behalf.
    (l) Ocean common carrier means a common carrier that operates, for 
all or part of its common carrier service, a vessel on the high seas or 
the Great Lakes between a port in the United States and a port in a 
foreign country, except that the term does not include a common carrier 
engaged in ocean transportation by ferry boat, ocean tramp, or chemical 
parcel-tanker.
    (m) Ocean transportation intermediary (OTI) means an ocean freight 
forwarder or a non-vessel-operating common carrier. For the purposes of 
this part, the term:
    (1) Ocean freight forwarder (OFF) means a person that--
    (i) In the United States, dispatches shipments from the United 
States via a common carrier and books or otherwise arranges space for 
those shipments on behalf of shippers; and
    (ii) Processes the documentation or performs related activities 
incident to those shipments; and
    (2) Non-vessel-operating common carrier (NVOCC) means a common 
carrier that does not operate the vessels by which the ocean 
transportation is provided, and is a shipper in its relationship with 
an ocean common carrier.
    (n) Person means individuals, corporations, companies, including 
limited liability companies, associations, firms, partnerships, 
societies and joint stock companies existing under or authorized by the 
laws of the United States or of a foreign country.
    (o) 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.
    (p) Qualifying individual (QI) means an individual who meets the 
experience and character requirements of section 19 of the Shipping Act 
(46 U.S.C. 40901-40904) and this part.
    (q) Reduced forwarding fees means charges to a principal for 
forwarding services that are below the licensed ocean freight 
forwarder's usual charges for such services.
    (r) Registered non-vessel-operating common carrier (registered 
NVOCC) means an NVOCC whose primary place of business is located 
outside the United States and who elects not to become licensed as an 
NVOCC, but to register with the Commission as provided in Sec.  515.19, 
post a bond or other surety in the required amount, and publish a 
tariff as required by 46 CFR part 520.
    (s) Shipment means all of the cargo carried under the terms of a 
single bill of lading.
    (t) Shipper means:
    (1) A cargo owner;
    (2) The person for whose account the ocean transportation is 
provided;
    (3) The person to whom delivery is to be made;
    (4) A shippers' association; or
    (5) A non-vessel-operating common carrier that accepts 
responsibility for payment of all charges applicable under the tariff 
or service contract.
    (u) Special contract is a contract for ocean freight forwarding 
services which provides for a periodic lump sum fee.
    (v) Transportation-related activities which are covered by the 
financial responsibility obtained pursuant to this part include, to the 
extent involved in the foreign commerce of the United States, any 
activity performed by an ocean transportation intermediary that is 
necessary or customary in the provision of transportation services to a 
customer, but are not limited to the following:
    (1) For an ocean transportation intermediary operating as an ocean 
freight forwarder, the freight forwarding services enumerated in 
paragraph (h) of this section, and
    (2) For an ocean transportation intermediary operating as a non-
vessel-operating common carrier, the non-vessel-operating common 
carrier services enumerated in Sec.  515.2(k).
    (w) United States includes the several States, the District of 
Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the 
Northern Marianas, and all other United States territories and 
possessions.

0
4. Revise Sec.  515.3 to read as follows:


Sec.  515.3  License; when required.

    Except as otherwise provided in this part, no person in the United 
States may act as an ocean transportation intermediary unless that 
person holds a valid license issued by the Commission. For purposes of 
this part, a person is considered to be ``in the United States'' if 
such person is resident in, or incorporated or established under, the 
laws of the United States. Registered NVOCCs must utilize only licensed 
ocean transportation intermediaries to provide NVOCC services in the 
United States. In the United States, only licensed OTIs may act as 
agents to provide OTI services for registered NVOCCs.

0
5. Revise Sec.  515.4 to read as follows:

[[Page 68732]]

Sec.  515.4  License; when not required.

    A license is not required in the following circumstances:
    (a) Shippers. Any person whose primary business is the sale of 
merchandise may, without a license, dispatch and perform freight 
forwarding services on behalf of its own shipments, or on behalf of 
shipments or consolidated shipments of a parent, subsidiary, affiliate, 
or associated company. Such person shall not receive compensation from 
the common carrier for any services rendered in connection with such 
shipments.
    (b) Agents, employees, or branch offices of a licensed ocean 
transportation intermediary. An agent, individual employee, or branch 
office of a licensed ocean transportation intermediary is not required 
to be licensed in order to act on behalf of and in the name of such 
licensee; however, branch offices must be reported to the Commission in 
Form FMC-18 or pursuant to Sec.  515.20(e). A licensed ocean 
transportation intermediary shall be fully responsible for the acts and 
omissions of any of its employees and agents that are performed in 
connection with the conduct of such licensee's business.
    (c) Common carriers. A common carrier, or agent thereof, may 
perform ocean freight forwarding services without a license only with 
respect to cargo carried under such carrier's own bill of lading. 
Charges for such forwarding services shall be assessed in conformance 
with the carrier's published tariffs.
    (d) Federal military and civilian household goods. Any person which 
exclusively transports used household goods and personal effects for 
the account of the Department of Defense, or for the account of the 
federal civilian executive agencies shipping under the International 
Household Goods Program administered by the General Services 
Administration, or both, is not subject to the requirements of subpart 
B of this part, but may be subject to other requirements, such as 
alternative surety bonding, imposed by the Department of Defense, or 
the General Services Administration.

0
6. Revise Sec.  515.5 to read as follows:


Sec.  515.5  Forms and fees.

    (a) Forms. License Application Form FMC-18 Rev., Application for 
Renewal of Ocean Transportation Intermediary License Form-__, and 
Foreign-based Unlicensed NVOCC Registration/Renewal Form FMC-65, are 
found at the Commission's Web site www.fmc.gov for completion on-line 
by applicants, licensees, and registrants. Financial responsibility 
Forms FMC-48, FMC-67, FMC-68, FMC-69 may be obtained from the 
Commission's Web site at www.fmc.gov, from the Director, Bureau of 
Certification and Licensing, Federal Maritime Commission, Washington, 
DC 20573, or from any of the Commission's Area Representatives.
    (b) Filing of license applications and registration forms. All 
applications and forms are to be filed electronically unless a waiver 
is granted to file in paper form. A waiver request must be submitted in 
writing to the Director, Bureau of Certification and Licensing, 800 
North Capitol Street NW., Washington, DC 20573, and must demonstrate 
that electronic filing imposes an undue burden on the applicant or 
registrant. The director, or a designee, will render a decision on the 
request and notify the requestor within two (2) business days of 
receiving the request. If a waiver request is granted, the approval 
will provide instructions for submitting a paper application or 
registration. If the waiver request is denied, a statement of reasons 
for the denial will be provided.
    (c) Fees. (1)(i) All fees shall be paid by:
    (A) Money order, certified, cashier's, or personal check payable to 
the order of the ``Federal Maritime Commission;''
    (B) Pay.gov;
    (C) The Automated Clearing House system; or
    (D) By other means authorized by the Director of the Commission's 
Office of Budget and Finance.
    (ii) Applications or registrations shall be rejected unless the 
applicable fee and any bank charges assessed against the Commission are 
received by the Commission within ten (10) business days after 
submission of the application or registration. In any instance where an 
application has been processed in whole or in part, the fee will not be 
refunded.
    (2) Fees under this part 515 shall be as follows:
    (i) Application for new OTI license as required by Sec.  515.12(a): 
Automated filing $250; paper filing pursuant to waiver $825.
    (ii) Application for change to OTI license or license transfer as 
required by Sec.  515.20(a) and (b): Automated filing $125; paper 
filing pursuant to waiver $525.

Subpart B--Eligibility and Procedure for Licensing and Registration

0
7. Revise the heading for subpart B to read as set forth above.

0
8. Revise Sec.  515.11 to read as follows:


Sec.  515.11  Basic requirements for licensing; eligibility.

    (a) Necessary qualifications. To be eligible for an ocean 
transportation intermediary license, the applicant must demonstrate to 
the Commission that:
    (1) It possesses the necessary experience, that is, its qualifying 
individual has a minimum of three (3) years' experience in ocean 
transportation intermediary activities in the United States, and the 
necessary character to render ocean transportation intermediary 
services. A foreign NVOCC seeking to be licensed under this part must 
demonstrate that its qualifying individual has a minimum 3 years' 
experience in ocean transportation intermediary activities, and the 
necessary character to render ocean transportation intermediary 
services. The required OTI experience of the QI of a foreign-based 
NVOCC seeking to become licensed under this part (foreign-based 
licensed NVOCC) may be experience acquired in the U.S. or a foreign 
country with respect to shipments in the United States oceanborne 
foreign commerce.
    (2) In addition to information provided by the applicant and its 
references, the Commission may consider all information relevant to 
determining whether an applicant has the necessary character to render 
ocean transportation intermediary services, including but not limited 
to, information regarding: Violations of any shipping laws, or statutes 
relating to the import, export, or transport of merchandise in 
international trade; operating as an OTI without a license or 
registration; state and federal felonies and misdemeanors; voluntary 
and non-voluntary bankruptcies not discharged; outstanding tax liens 
and other court and administrative judgments and proceedings; 
compliance with immigration status requirements described in 49 CFR 
1572.105; denial, revocation, or suspension of a Transportation Worker 
Identification Credential under 49 CFR 1572; and the denial, 
revocation, or suspension of a customs broker's license under 19 CFR 
subpart B, section 111. The required OTI experience of the QI of a 
foreign-based NVOCC seeking to become licensed under this part 
(foreign-based licensed NVOCC) may be acquired in the U.S. or a foreign 
country with respect to shipments in the United States oceanborne 
foreign commerce.
    (b) Qualifying individual. The following individuals must qualify 
the applicant for a license:
    (1) Sole proprietorship. The applicant sole proprietor.

[[Page 68733]]

    (2) Partnership. At least one of the active managing partners.
    (3) Corporation. At least one of the active corporate officers.
    (4) Limited liability company. One of the members or managers, or 
an individual in an equivalent position in the LLC as expressly set 
forth in the LLC operating agreement.
    (c) Affiliates of intermediaries. An independently qualified 
applicant may be granted a separate license to carry on the business of 
providing ocean transportation intermediary services even though it is 
associated with, under common control with, or otherwise related to 
another ocean transportation intermediary through stock ownership or 
common directors or officers, if such applicant submits: A separate 
application and fee, and a valid instrument of financial responsibility 
in the form and amount prescribed under Sec.  515.21. The qualifying 
individual of one active licensee shall not also be designated as the 
qualifying individual of an applicant for another ocean transportation 
intermediary license, unless both entities are commonly owned or where 
one directly controls the other.
    (d) Common carrier. A common carrier or agent thereof which meets 
the requirements of this part may be licensed as an ocean freight 
forwarder to dispatch shipments moving on other than such carrier's own 
bills of lading subject to the provisions of Sec.  515.42(g).
    (e) Foreign-based licensed NVOCC. A foreign-based NVOCC that elects 
to obtain a license must establish a presence in the United States by 
opening an unincorporated office that is resident in the United States 
and is qualified to do business where it is located.

0
9. Revise Sec.  515.12 to read as follows:


Sec.  515.12  Application for license.

    (a) Application and forms. (1) Any person who wishes to obtain a 
license to operate as an ocean transportation intermediary shall submit 
electronically (absent a waiver pursuant to Sec.  515.5(b)) a completed 
application Form FMC-18 Rev. (Application for a License as an Ocean 
Transportation Intermediary) in accordance with the automated FMC-18 
filing system and corresponding instructions. A filing fee shall be 
paid, as required under Sec.  515.5(c). Notice of filing of each 
application shall be published on the Commission's Web site www.fmc.gov 
and shall state the name and address of the applicant and the name of 
the QI. If the applicant is a corporation or partnership, the names of 
the officers or partners thereof may be published. For an LLC, the 
names of the managers, members or officers, as applicable, may be 
published.
    (2) An individual who is applying for a license as a sole 
proprietor must complete the following certification:


I, __ (Name)__, certify under penalty of perjury under the laws of the 
United States, that I have not been convicted, after September 1, 1989, 
of any Federal or state offense involving the distribution or 
possession of a controlled substance, or that if I have been so 
convicted, I am not ineligible to receive Federal benefits, either by 
court order or operation of law, pursuant to 21 U.S.C. 862.

    (b) Rejection. Any application which appears upon its face to be 
incomplete or to indicate that the applicant fails to meet the 
licensing requirements of the Act, or the Commission's regulations, may 
be rejected and a notice shall be sent to the applicant, together with 
an explanation of the reasons for rejection, and the filing fee shall 
be refunded in full. Persons who have had their applications rejected 
may submit a new Form FMC-18 at any time, together with the required 
filing fee.
    (c) Failure to provide necessary information and documents. In the 
event an applicant fails to provide documents or information necessary 
to complete processing of its application, notice will be sent to the 
applicant identifying the necessary information and documents and 
establishing a date for submission by the applicant. Failure of the 
applicant to submit the identified materials by the established date 
will result in the closing of its application without further 
processing. In the event an application is closed as a result of the 
applicant's failure to provide information or documents necessary to 
complete processing, the filing fee will not be returned. Persons who 
have had their applications closed under this section may reapply at 
any time by submitting a new application with the required filing fee.
    (d) Investigation. Each applicant shall be investigated in 
accordance with Sec.  515.13.
    (e) Changes in fact. Each applicant shall promptly advise the 
Commission of any material changes in the facts submitted in the 
application. Any unreported change may delay the processing and 
investigation of the application and result in rejection, closing, or 
denial of the application.

0
10. In Sec.  515.14, revise the section heading and paragraph (b) and 
add paragraphs (c) and (d) to read as follows:


Sec.  515.14  Issuance, renewal, and use of license.

* * * * *
    (b) To whom issued. The Commission will issue a license only in the 
name of the applicant, whether the applicant is a sole proprietorship, 
a partnership, a corporation, or limited liability company. A license 
issued to a sole proprietor doing business under a trade name shall be 
in the name of the sole proprietor, indicating the trade name under 
which the licensee will be conducting business. Only one license shall 
be issued to any applicant regardless of the number of names under 
which such applicant may be doing business, and except as otherwise 
provided in this part, such license is limited exclusively to use by 
the named licensee and shall not be transferred without prior 
Commission approval to another person.
    (c) Duration of license. Licenses shall be issued for an initial 
period of three (3) years. Thereafter, licenses will be renewed for 
sequential three year periods upon successful completion of the renewal 
process in paragraph (d) of this section.
    (d) License renewal process. (1) The licensee shall submit 
electronically to the Director of the Bureau of Certification and 
Licensing (BCL) a completed Form FMC-__ (Application for Renewal of 
Ocean Transportation Intermediary License) no later than sixty (60) 
days prior to the renewal date set forth on its license. Upon 
successful completion of the renewal process, the Commission shall 
issue a new license bearing a renewal date three (3) years later on the 
same day and month on which the license was originally issued. The 
renewal date will remain the same for subsequent renewals irrespective 
of the date on which the license renewal is submitted or when the 
renewed license is issued by the Commission, unless another renewal 
date is assigned by the Commission.
    (2) Where information provided in an OTI's renewal form, Form FMC-
__, is changed from that set out in its current Form FMC-18 and 
requires Commission approval pursuant to Sec.  515.20, the licensee 
must promptly submit a request for such approval on Form FMC-18 
together with the required filing fee. The licensee may continue to 
operate as an ocean transportation intermediary during the pendency of 
the Commission's approval process.
    (3) Though the foregoing license renewal process is not intended to 
result in a re-evaluation of a licensee's character, the Commission may 
review a licensee's character at any time, including at the time of 
renewal, based

[[Page 68734]]

upon information received from the licensee or other sources.

0
11. In Sec.  515.15, revise paragraph (c) to read as follows:


Sec.  515.15  Denial of license.

* * * * *
    (c) Has made any materially false or misleading statement to the 
Commission in connection with its application; then, a notice of intent 
to deny the application shall be sent to the applicant stating the 
reason(s) why the Commission intends to deny the application. The 
notice of intent to deny the application will provide, in detail, a 
statement of the facts supporting denial. An applicant may request a 
hearing on the proposed denial by submitting to the Secretary, Federal 
Maritime Commission, Washington, DC 20573, within twenty (20) days of 
the date of the notice, a statement of reasons why the application 
should not be denied. Such hearing shall be provided pursuant to the 
procedures contained in Sec.  515.17. Otherwise, the denial of the 
application will become effective and the applicant shall be so 
notified.

0
12. Revise Sec.  515.16 to read as follows:


Sec.  515.16  Revocation or suspension of license.

    (a) Grounds. Except for the automatic revocation for termination of 
proof of financial responsibility under Sec.  515.26, a license may be 
revoked or suspended after notice and an opportunity for a hearing 
under the procedures of Sec.  515.17. The notice of revocation or 
suspension will provide, in detail, a statement of the facts supporting 
the action. The licensee may request a hearing on the proposed 
revocation or suspension by submitting to the Commission's Secretary, 
within twenty (20) days of the date of the notice, a statement of 
reasons why the license should not be revoked or suspended. Such 
hearing shall be provided pursuant to the procedures contained in Sec.  
515.17. Otherwise, the action regarding the license will become 
effective. A license may be revoked or suspended for any of the 
following reasons:
    (1) Violation of any provision of the Act, or any other statute or 
Commission order or regulation related to carrying on the business of 
an ocean transportation intermediary;
    (2) Failure to respond to any lawful order or inquiry by the 
Commission;
    (3) Making a materially false or misleading statement to the 
Commission in connection with an application for a license or an 
amendment to an existing license;
    (4) A Commission determination that the licensee is not qualified 
to render intermediary services; or
    (5) Failure to honor the licensee's financial obligations to the 
Commission.
    (b) Notice. The Commission shall publish on the Commission's Web 
site www.fmc.gov notice of each revocation and suspension.

0
13. Revise Sec.  515.17 to read as follows:


Sec.  515.17  Hearing procedures governing denial, revocation, or 
suspension of OTI license.

    (a) Hearing requests. All hearing requests under Sec. Sec.  515.15 
and 515.16 shall be submitted to the Commission's Secretary. The 
Secretary will designate a hearing officer for review and decision 
under the procedures established in this section. Upon receipt of a 
request for hearing, the hearing officer shall notify BCL, and BCL will 
provide to the hearing officer and applicant or licensee a copy of the 
notice given to the applicant or licensee and a copy of BCL materials 
supporting the notice. The hearing officer will then issue a notice 
advising the applicant or, in the case of a revocation or suspension of 
the license, the licensee of the right to submit information and 
documents, including affidavits of fact and written argument, in 
support of an OTI application or continuation of a current OTI license.
    (b) Notice. The notice shall establish a date no later than thirty 
(30) days from the date of the notice for submission of all supporting 
materials by the applicant or licensee. The notice shall also provide 
that BCL may submit responsive materials no later than twenty (20) days 
from the date the applicant or licensee submitted its materials. BCL's 
notice and materials supporting its notice, the submission of the 
applicant or licensee, and the responsive submission of BCL shall 
constitute the entire record upon which the hearing officer's decision 
will be based. The hearing officer's decision must be issued within 
forty (40) days after the closing of the record.
    (c) Review by Commission. An applicant or licensee may seek review 
of the hearing officer's decision by filing exceptions pursuant to 46 
CFR 502.227, and within the time provided by 46 CFR 502.227(a)(1). Upon 
receipt of the exceptions, the Commission may conduct a hearing under 
Part 502.
    (d) Commission-initiated enforcement proceedings. In proceedings 
for assessment of civil penalties for violations of the Shipping Act or 
Commission regulations, a license may be revoked or suspended after 
notice and an opportunity for hearing under Part 502 (Rules of Practice 
and Procedure).


Sec.  515.18  [Redesignated as Sec.  515.20]

0
14. Redesignate Sec.  515.18 as Sec.  515.20.


Sec.  515.17  [Redesignated as Sec.  515.18]

0
15. Redesignate Sec.  515.17 as Sec.  515.18.

0
16. In Sec.  515.19 add paragraph (g)(2) to read as follows:


Sec.  515.19  Registration of foreign-based non-vessel-operating common 
carriers.

* * * * *
    (g) * * *
    (2) Hearing procedure. Registrants may request a hearing for 
terminations or suspensions of the effectiveness of their registrations 
following the same procedures set forth in Sec.  515.17 (governing 
hearing requests for denials, revocations and suspensions of licenses).
* * * * *

0
17. Revise newly redesignated Sec.  515.20 to read as follows:


Sec.  515.20  Changes in organization.

    (a) Licenses. The following changes in an existing licensee's 
organization require prior approval of the Commission, and application 
for such status change or license transfer shall be made on Form FMC-
18, filed with the Commission's Bureau of Certification and Licensing, 
and accompanied by the fee required under Sec.  515.5(c):
    (1) Transfer of a corporate license to another person;
    (2) Change in ownership of a sole proprietorship;
    (3) Any change in the business structure of a licensee from or to a 
sole proprietorship, partnership, limited liability company, or 
corporation, whether or not such change involves a change in ownership;
    (4) Any change in a licensee's name; or
    (5) Change in the identity or status of the designated QI, except 
as described in paragraphs (b) and (c) of this section.
    (b) Operation after death of sole proprietor. In the event that the 
owner of a licensed sole proprietorship dies, the licensee's executor, 
administrator, heir(s), or assign(s) may continue operation of such 
proprietorship solely with respect to shipments for which the deceased 
sole proprietor had undertaken to act as an ocean transportation 
intermediary pursuant to the existing license, if the death is reported 
within 30 days to the Commission and to all principals and shippers for 
whom services on such shipments are to be rendered. The acceptance or 
solicitation of any other shipments is expressly prohibited until

[[Page 68735]]

a new license has been issued. Applications for a new license by the 
executor, administrator, heir(s), or assign(s) shall be made on Form 
FMC-18, and shall be accompanied by the fee required under Sec.  
515.5(c).
    (c) Operation after retirement, resignation, or death of QI. When a 
partnership, LLC, or corporation has been licensed on the basis of the 
qualifications of one or more of the partners, members, managers or 
officers thereof, and the QI no longer serves as a full-time employee 
with the OTI or is no longer responsible for the licensee's OTI 
activities, the licensee shall report such change to the Commission 
within thirty (30) days. Within the same 30-day period, the licensee 
shall furnish to the Commission the name(s) and detailed intermediary 
experience of any other active partner(s), member(s), manager(s) or 
officer(s) who may qualify the licensee. Such QI(s) must meet the 
applicable requirements set forth in Sec.  515.11(a) through (c). The 
licensee may continue to operate as an ocean transportation 
intermediary while the Commission investigates the qualifications of 
the newly designated partner, member, manager, or officer.
    (d) Acquisition of one or more additional licensees. In the event a 
licensee acquires one or more additional licensees, for the purpose of 
merger, consolidation, or control, the acquiring licensee shall advise 
the Commission of such acquisition, including any change in ownership, 
within 30 days after such change occurs by submitting an amended Form 
FMC-18. No application fee is required when reporting this change.
    (e) Other changes. Other changes in material fact of a licensee 
shall be reported within thirty (30) days of such changes, in writing 
by mail or email (bcl@fmc.gov) to the Director, Bureau of Certification 
and Licensing, Federal Maritime Commission, Washington, DC 20573. 
Material changes include, but are not limited to: Changes in business 
address; any criminal indictment or conviction of a licensee, QI, or 
officer; any voluntary or involuntary bankruptcy filed by or naming a 
licensee, QI, or officer; changes of five (5) percent or more of the 
common equity ownership or voting securities of the OTI; or, the 
addition or reduction of one or more partners of a licensed 
partnership, one or more members or managers of a Limited Liability 
Company, or one or more branch offices. No fee shall be charged for 
reporting such changes.

Subpart C--Financial Responsibility Requirements; Claims Against 
Ocean Transportation Intermediaries

0
18. In Sec.  515.21, revise paragraphs (a)(1) through (3), remove 
paragraph (a)(4), and revise paragraph (b).
    The revisions read as follows:


Sec.  515.21  Financial responsibility requirements.

    (a) * * *
    (1) Any person operating in the United States as an ocean freight 
forwarder as defined in Sec.  515.2(m)(1) shall furnish evidence of 
financial responsibility in the amount of $50,000.
    (2) Any person operating in the United States as an NVOCC as 
defined in Sec.  515.2(m)(2) shall furnish evidence of financial 
responsibility in the amount of $75,000.
    (3) Any registered NVOCC, as defined in Sec.  515.2(r), shall 
furnish evidence of financial responsibility in the amount of $150,000. 
Such registered NVOCC shall be strictly responsible for the acts and 
omissions of its employees and agents, wherever they are located.
    (b) Group financial responsibility. When a group or association of 
ocean transportation intermediaries accepts liability for an ocean 
transportation intermediary's financial responsibility for such ocean 
transportation intermediary's transportation-related activities under 
the Act, the group or association of ocean transportation 
intermediaries shall file a group bond form, insurance form or guaranty 
form, clearly identifying each ocean transportation intermediary 
covered, before a covered ocean transportation intermediary may provide 
ocean transportation intermediary services. In such cases, a group or 
association must establish financial responsibility in an amount equal 
to the lesser of the amount required by paragraph (a) of this section 
for each member, or $3,000,000 in aggregate. A group or association of 
ocean transportation intermediaries may also file an optional bond 
rider as provided in Sec.  515.25(b).
* * * * *

0
19. Revise Sec.  515.23 to read as follows:


Sec.  515.23  Claims against an ocean transportation intermediary.

    (a) Who may seek payment. Shippers, common carriers, and other 
affected persons may seek payment from the bond, insurance, or other 
surety maintained by an ocean transportation intermediary for damages 
arising out of its ocean transportation-related activities. The 
Commission may also seek payment of civil penalties assessed under 
section 13 of the Shipping Act (46 U.S.C. 41107-41109).
    (b) Payment pursuant to a claim. (1) If a person does not file a 
complaint with the Commission pursuant to section 11 of the Shipping 
Act (46 U.S.C. 41301-41302, 41305-41307(a)), but otherwise seeks to 
pursue a claim against an ocean transportation intermediary bond, 
insurance, or other surety for damages arising from its transportation-
related activities, it shall attempt to resolve its claim with the 
financial responsibility provider prior to seeking payment on any 
judgment for damages obtained. When a claimant seeks payment under this 
section, it simultaneously shall notify both the financial 
responsibility provider and the ocean transportation intermediary of 
the claim by mail or courier service. The bond, insurance, or other 
surety may be available to pay such claim if:
    (i) The ocean transportation intermediary consents to payment, 
subject to review by the financial responsibility provider; or
    (ii) The ocean transportation intermediary fails to respond within 
forty-five (45) days from the date of the notice of the claim to 
address the validity of the claim, and the financial responsibility 
provider deems the claim valid.
    (2) If the parties fail to reach an agreement in accordance with 
paragraph (b)(1) of this section within ninety (90) days of the date of 
the initial notification of the claim, the bond, insurance, or other 
surety shall be available to pay any final judgment for reparations 
ordered by the Commission or damages obtained from an appropriate 
court. The financial responsibility provider shall pay such judgment 
for damages only to the extent they arise from the transportation-
related activities of the ocean transportation intermediary, ordinarily 
within thirty (30) days, without requiring further evidence related to 
the validity of the claim; it may, however, inquire into the extent to 
which the judgment for damages arises from the ocean transportation 
intermediary's transportation-related activities.
    (c) Notices of court and other claims against OTIs by financial 
responsibility providers. (1) As provided in each financial 
responsibility instrument between an OTI and its financial 
responsibility provider(s), the issuing financial responsibility 
provider shall submit a notice to the Commission of each claim, court 
action, or court judgment against the financial responsibility and each 
claim paid (including the amount) by the provider.

[[Page 68736]]

    (2) Notices described in paragraph (c)(1) of this section shall be 
promptly submitted in writing by mail or email (bcl@fmc.gov) to the 
Director, Bureau of Certification and Licensing, Federal Maritime 
Commission, Washington, DC 20573.
    (3) Notices required by this section shall include the name of the 
claimant, name of the court and case number assigned, and the name and 
license number of the OTI involved. Such notices may include or attach 
other information relevant to the claim.
    (d) The Federal Maritime Commission shall not serve as depository 
or distributor to third parties of bond, guaranty, or insurance funds 
in the event of any claim, judgment, or order for reparation.
    (e) Optional bond riders. The Federal Maritime Commission shall not 
serve as a depository or distributor to third parties of funds payable 
pursuant to optional bond riders described in Sec.  515.25(b).

0
20. Revise Sec.  515.25 to read as follows:


Sec.  515.25  Filing of proof of financial responsibility.

    (a) Filing of proof of financial responsibility--(1) Licenses. Upon 
notification by the Commission that an applicant has been approved for 
licensing, the applicant shall file with the Director of the 
Commission's Bureau of Certification and Licensing, proof of financial 
responsibility in the form and amount prescribed in Sec.  515.21. No 
license will be issued until the Commission is in receipt of valid 
proof of financial responsibility from the applicant. If, within 120 
days of notification of approval for licensing by the Commission, the 
applicant does not file proof that its financial responsibility is in 
effect, the application will be invalid. Applicants whose applications 
have become invalid may submit a new Form FMC-18, together with the 
required filing fee, at any time.
    (2) Registrations. A registration shall not become effective until 
the applicant has furnished proof of financial responsibility pursuant 
to Sec.  515.21, has submitted a Form FMC-1, and its published tariff 
becomes effective pursuant to 46 CFR part 520.
    (b) Optional bond rider. Any NVOCC as defined in Sec.  515.2(m)(2), 
in addition to a bond meeting the requirements of Sec.  515.21(a)(2) or 
(3), may obtain and file with the Commission proof of an optional bond 
rider, as provided in Appendix E or Appendix F of this part.

0
21. Revise Sec.  515.26 to read as follows:


Sec.  515.26  Termination of financial responsibility.

    No license or registration shall remain in effect unless valid 
proof of a financial responsibility instrument is maintained on file 
with the Commission. Upon receipt of notice of termination of such 
financial responsibility, the Commission shall notify the concerned 
licensee, registrant, or registrant's legal agent in the United States, 
by mail, courier, or other method reasonably calculated to provide 
actual notice, at its last known address, that the Commission shall, 
without hearing or other proceeding, revoke the license or terminate 
the registration as of the termination date of the financial 
responsibility instrument, unless the licensee or registrant shall have 
submitted valid replacement proof of financial responsibility before 
such termination date. Replacement financial responsibility must bear 
an effective date no later than the termination date of the expiring 
financial responsibility instrument.

0
22. Revise Sec.  515.27 to read as follows:


Sec.  515.27  Proof of compliance--NVOCC.

    (a) No common carrier shall knowingly and willfully transport cargo 
for the account of an NVOCC unless the carrier has determined that the 
NVOCC has a license or registration, a tariff, and financial 
responsibility as required by sections 8 (46 U.S.C. 40501-40503) and 19 
(46 U.S.C. 40901-40904) of the Shipping Act and this part.
    (b) A common carrier can obtain proof of an NVOCC's compliance with 
the OTI licensing, registration, tariff and financial responsibility 
requirements by:
    (1) Consulting the Commission's Web site www.fmc.gov as provided in 
paragraph (d) below, to verify that the NVOCC has complied with the 
applicable licensing, registration, tariff, and financial 
responsibility requirements; or
    (2) Any other appropriate procedure, provided that such procedure 
is set forth in the carrier's tariff.
    (c) A common carrier that has employed the procedure prescribed in 
paragraph (b)(1) of this section shall be deemed to have met its 
obligations under section 10(b)(11) of the Act (46 U.S.C. 41104(11)), 
unless the common carrier knew that such NVOCC was not in compliance 
with the applicable licensing, registration, tariff, and financial 
responsibility requirements.
    (d) The Commission will publish at its Web site, www.fmc.gov, a 
list of the locations of all carrier and conference tariffs, and a list 
of ocean transportation intermediaries (including a separate list for 
NVOCCs) who have met all of their applicable licensing, registration, 
tariff and financial responsibility requirements, current as of the 
last date on which the list is updated. The Commission will update this 
list on a periodic basis.

Appendices A-F [Removed]

0
23. Remove appendices A through F to subpart C.

Subpart D--Duties and Responsibilities of Ocean Transportation 
Intermediaries; Reports to Commission

0
24. Revise Sec.  515.31 to read as follows:


Sec.  515.31  General duties.

    (a) Licensees and registrants; names and numbers. Each licensee and 
registrant shall carry on its business only under the name in which it 
was licensed or registered and only under its license or registration 
number as assigned by the Commission. When the licensee's or 
registrant's name appears on shipping documents, its Commission license 
or registration number shall also be included.
    (b) Stationery and billing forms. The name and license or 
registration number of each OTI shall be permanently imprinted on the 
licensee's or registrant's office stationery and billing forms.
    (c) Use of license or registration by others; prohibition. No OTI 
shall permit its name, license, license number, registration, or 
registration number to be used by any person who is not an employee or 
an agent of the OTI. An entity that also provides OTI services in its 
own name and not on behalf of a licensed or registered OTI must be 
separately licensed under this part and must provide proof of its own 
financial responsibility and publish a tariff, if applicable. A branch 
office of an OTI may use the license of the OTI, provided that the 
address of the branch office has been reported to the Commission in 
Form FMC-18 or pursuant to Sec.  515.20(e).
    (d) Arrangements with ocean transportation intermediaries whose 
licenses have been revoked. Unless prior written approval from the 
Commission has been obtained, no OTI shall, directly or indirectly:
    (1) Agree to perform ocean transportation intermediary services on 
shipments as an associate, correspondent, officer, employee, agent, or 
sub-agent of any person whose license has been revoked or suspended 
pursuant to Sec.  515.16, or registration terminated or suspended 
pursuant to Sec.  515.19(g);
    (2) Assist in the furtherance of any ocean transportation 
intermediary

[[Page 68737]]

business of an OTI whose license has been revoked;
    (3) Share forwarding fees or freight compensation with any such 
person; or
    (4) Permit any such person, directly or indirectly, to participate, 
through ownership or otherwise, in the control or direction of the 
ocean transportation intermediary business of the licensee or 
registrant.
    (e) False or fraudulent claims, false information. No OTI shall 
prepare or file or assist in the preparation or filing of any claim, 
affidavit, letter of indemnity, or other paper or document concerning 
an ocean transportation intermediary transaction which it has reason to 
believe is false or fraudulent, nor shall any such OTI knowingly impart 
to a principal, shipper, common carrier or other person, false 
information relative to any ocean transportation intermediary 
transaction.
    (f) Errors and omissions of the principal or shipper. An OTI who 
has reason to believe that its principal or shipper has not, with 
respect to a shipment to be handled by such OTI, complied with the laws 
of the United States, or has made any error or misrepresentation in, or 
omission from, any export declaration, bill of lading, affidavit, or 
other document which the principal or shipper executes in connection 
with such shipment, shall advise its principal or shipper promptly of 
the suspected noncompliance, error, misrepresentation or omission, and 
shall decline to participate in any transaction involving such document 
until the matter is properly and lawfully resolved.
    (g) Response to requests of Commission. Upon the request of any 
authorized representative of the Commission, an OTI shall make 
available promptly for inspection or reproduction all records and books 
of account in connection with its ocean transportation intermediary 
business, and shall respond promptly to any lawful inquiries by such 
representative. All OTIs are responsible for requiring that, upon the 
request of any authorized Commission representative, their agents make 
available all records and books of account relating to ocean 
transportation intermediary service provided by or for their 
principals, and respond promptly to any lawful inquiries by such 
representative.
    (h) Express written authority. No OTI shall endorse or negotiate 
any draft, check, or warrant drawn to the order of its OTI principal or 
shipper without the express written authority of such OTI principal or 
shipper.
    (i) Accounting to principal or shipper. An OTI shall account to its 
principal(s) or shipper(s) for overpayments, adjustments of charges, 
reductions in rates, insurance refunds, insurance monies received for 
claims, proceeds of C.O.D. shipments, drafts, letters of credit, and 
any other sums due such principal(s) or shipper(s).
    (j) Prohibition. No person may advertise or hold out to act as an 
OTI unless that person holds a valid OTI license or is registered under 
this part.


Sec.  515.32  [Amended]

0
25. In Sec.  515.32, in paragraph (b), in the first sentence, remove 
the word ``sales''.

0
26. In Sec.  515.33, revise the introductory text and paragraph (d) to 
read as follows:


Sec.  515.33  Records required to be kept.

    Each licensed or registered NVOCC and each licensed ocean freight 
forwarder shall maintain in an orderly and systematic manner, and keep 
current and correct, all records and books of account in connection 
with its OTI business. The licensed or registered NVOCC and each 
licensed freight forwarder may maintain these records in either paper 
or electronic form, which shall be readily available in usable form to 
the Commission; the electronically maintained records shall be no less 
accessible than if they were maintained in paper form. These 
recordkeeping requirements are independent of the retention 
requirements of other federal agencies. In addition, each licensed 
freight forwarder must maintain the following records for a period of 
five years:
* * * * *
    (d) Special contracts. A true copy, or if oral, a true and complete 
memorandum, of every special arrangement or contract between a licensed 
freight forwarder and a principal, or modification or cancellation 
thereof.


Sec.  515.32  [Amended]

0
27. Amend Sec.  515.34 by removing the reference ``$108'' and adding 
the reference ``the fee set forth in Sec.  515.5(c)'' in its place.

Subpart E--Freight Forwarding Fees and Compensation

0
28. Amend Sec.  515.41 as follows:
0
a. Remove paragraph (c);
0
b. Redesignate paragraphs (d) and (e) as paragraphs (c) and (d); and
0
c. Revise newly redesignated paragraph (d).
    The revision reads as follows:


Sec.  515.41  Forwarder and principal; fees.

* * * * *
    (d) In-plant arrangements. A licensed freight forwarder may place 
an employee or employees on the premises of its principal as part of 
the services rendered to such principal, provided:
    (1) The in-plant forwarder arrangement is reduced to writing and 
identifies all services provided by either party (whether or not 
constituting a freight forwarding service); states the amount of 
compensation to be received by either party for such services; sets 
forth all details concerning the procurement, maintenance or sharing of 
office facilities, personnel, furnishings, equipment and supplies; 
describes all powers of supervision or oversight of the licensee's 
employee(s) to be exercised by the principal; and details all 
procedures for the administration or management of in-plant 
arrangements between the parties; and
    (2) The arrangement is not an artifice for a payment or other 
unlawful benefit to the principal.

0
29. In Sec.  515.42, revise paragraphs (a), (b), (c), and (f) to read 
as follows:


Sec.  515.42  Forwarder and carrier compensation; fees.

    (a) Disclosure of principal. The identity of the shipper must 
always be disclosed in the shipper identification box on the bill of 
lading. The licensed freight forwarder's name may appear with the name 
of the shipper, but the forwarder must be identified as the shipper's 
agent.
    (b) Certification required for compensation. A common carrier may 
pay compensation to a licensed freight forwarder only pursuant to such 
common carrier's tariff provisions. When a common carrier's tariff 
provides for the payment of compensation, such compensation shall be 
paid on any shipment forwarded on behalf of others where the forwarder 
has provided a certification as prescribed in paragraph (c) of this 
section and the shipper has been disclosed on the bill of lading as 
provided for in paragraph (a) of this section. The common carrier shall 
be entitled to rely on such certification unless it knows that the 
certification is incorrect. The common carrier shall retain such 
certifications for a period of five (5) years.
    (c) Form of certification. When a licensed freight forwarder is 
entitled to compensation, the forwarder shall provide the common 
carrier with a certification which indicates that the forwarder has 
performed the required services that entitle it to compensation. The 
required certification may be provided electronically by the forwarder 
or may be placed on one copy of the relevant bill of lading, a summary

[[Page 68738]]

statement from the forwarder, the forwarder's compensation invoice, or 
as an endorsement on the carrier's compensation check. Electronic 
certification must contain confirmations by the forwarder and the 
carrier identifying the shipments upon which forwarding compensation 
may be paid. Each forwarder shall retain evidence in its shipment files 
that the forwarder, in fact, has performed the required services 
enumerated on the certification. The certification shall read as 
follows:

    The undersigned hereby certifies that neither it nor any holding 
company, subsidiary, affiliate, officer, director, agent or executive 
of the undersigned has a beneficial interest in this shipment; that it 
is the holder of valid FMC License No. 2, issued by the Federal 
Maritime Commission and has performed the following services:
    (1) Engaged, booked, secured, reserved, or contracted directly with 
the carrier or its agent for space aboard a vessel or confirmed the 
availability of that space; and
    (2) Prepared and processed the ocean bill of lading, dock receipt, 
or other similar document with respect to the shipment.
* * * * *
    (f) Compensation; services performed by underlying carrier; 
exemptions. No licensed freight forwarder shall charge or collect 
compensation in the event the underlying common carrier, or its agent, 
has, at the request of such forwarder, performed any of the forwarding 
services set forth in Sec.  515.2(h), unless such carrier or agent is 
also a licensed freight forwarder, or unless no other licensed freight 
forwarder is willing and able to perform such services.
* * * * *

0
30. Add appendices A, B, C, D, E, and F to part 515 to read as follows:

Appendix A to Part 515--Ocean Transportation Intermediary (OTI) Bond 
Form [Form 48]

Form FMC-48
Federal Maritime Commission

    Ocean Transportation Intermediary (OTI) Bond (Section 19, 
Shipping Act of 1984 (46 U.S.C. 40901-40904)) __ [indicate whether 
NVOCC or Freight Forwarder], as Principal (hereinafter 
``Principal''), and __, as Surety (hereinafter ``Surety'') are held 
and firmly bound unto the United States of America in the sum of $__ 
for the payment of which sum we bind ourselves, our heirs, 
executors, administrators, successors and assigns, jointly and 
severally.
    Whereas, Principal operates as an OTI in the waterborne foreign 
commerce of the United States in accordance with the Shipping Act of 
1984, 46 U.S.C. 40101-41309, and, if necessary, has a valid tariff 
published pursuant to 46 CFR part 515 and 520, and pursuant to 
section 19 of the Shipping Act (46 U.S.C. 40901-40904), files this 
bond with the Commission;
    Whereas, this bond is written to ensure compliance by the 
Principal with section 19 of the Shipping Act (46 U.S.C. 40901-
40904), and the rules and regulations of the Federal Maritime 
Commission relating to evidence of financial responsibility for OTIs 
(46 CFR part 515), this bond shall be available to pay any judgment 
obtained or any settlement made pursuant to a claim under 46 CFR 
515.23 for damages against the Principal arising from the 
Principal's transportation-related activities under the Shipping 
Act, or order for reparations issued pursuant to section 11 of the 
Shipping Act (46 U.S.C. 41301-41302, 41305-41307(a)), or any penalty 
assessed against the Principal pursuant to section 13 of the 
Shipping Act (46 U.S.C. 41107-41109).
    Now, Therefore, The condition of this obligation is that the 
penalty amount of this bond shall be available to pay any judgment 
or any settlement made pursuant to a claim under 46 CFR 515.23 for 
damages against the Principal arising from the Principal's 
transportation-related activities or order for reparations issued 
pursuant to section 11 of the Shipping Act (46 U.S.C. 41301-41302, 
41305-41307(a)), or any penalty assessed against the Principal 
pursuant to section 13 of the Shipping Act (46 U.S.C. 41107-41109).
    This bond shall inure to the benefit of any and all persons who 
have obtained a judgment or a settlement made pursuant to a claim 
under 46 CFR Sec.  515.23 for damages against the Principal arising 
from its transportation-related activities or order of reparation 
issued pursuant to section 11 of the Shipping Act (46 U.S.C. 41301-
41302, 41305-41307(a)), and to the benefit of the Federal Maritime 
Commission for any penalty assessed against the Principal pursuant 
to section 13 of the Shipping Act (46 U.S.C. 41107-41109). However, 
the bond shall not apply to shipments of used household goods and 
personal effects for the account of the Department of Defense or the 
account of federal civilian executive agencies shipping under the 
International Household Goods Program administered by the General 
Services Administration.
    The liability of the Surety shall not be discharged by any 
payment or succession of payments hereunder, unless and until such 
payment or payments shall aggregate the penalty amount of this bond, 
and in no event shall the Surety's total obligation hereunder exceed 
said penalty amount, regardless of the number of claims or 
claimants.
    This bond is effective the __ day of __, __ and shall continue 
in effect until discharged or terminated as herein provided. The 
Principal or the Surety may at any time terminate this bond by mail 
or email (bcl@fmc.gov) written notice to the Director, Bureau of 
Certification and Licensing, Federal Maritime Commission, 
Washington, DC 20573. Such termination shall become effective thirty 
(30) days after receipt of said notice by the Commission. The Surety 
shall not be liable for any transportation-related activities of 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 event occurring prior to the date when said 
termination becomes effective.
    The Surety consents to be sued directly in respect of any bona 
fide claim owed by Principal for damages, reparations or penalties 
arising from the transportation-related activities under the 
Shipping Act of Principal in the event that such legal liability has 
not been discharged by the Principal or Surety after a claimant has 
obtained a final judgment (after appeal, if any) against the 
Principal from a United States Federal or State Court of competent 
jurisdiction and has complied with the procedures for collecting on 
such a judgment pursuant to 46 CFR 515.23, the Federal Maritime 
Commission, or where all parties and claimants otherwise mutually 
consent, from a foreign court, or where such claimant has become 
entitled to payment of a specified sum by virtue of a compromise 
settlement agreement made with the Principal and/or Surety pursuant 
to 46 CFR 515.23, whereby, upon payment of the agreed sum, the 
Surety is to be fully, irrevocably and unconditionally discharged 
from all further liability to such claimant; provided, however, that 
Surety's total obligation hereunder shall not exceed the amount set 
forth in 46 CFR 515.21, as applicable.
    The underwriting Surety will promptly notify the Director, 
Bureau of Certification and Licensing, Federal Maritime Commission, 
Washington, DC 20573, in writing by mail or email (bcl@fmc.gov), of 
all claims made, lawsuits filed, judgments rendered, and payments 
made against this bond.

Signed and sealed this __ day of __, __.
(Please type name of signer under each signature.)

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Individual Principal or Partner

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Business Address

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Individual Principal or Partner

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Business Address

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Individual Principal or Partner

-----------------------------------------------------------------------
Business Address

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Trade Name, If Any

-----------------------------------------------------------------------
Corporate Principal

-----------------------------------------------------------------------
State of Incorporation

-----------------------------------------------------------------------
Trade Name, If Any

-----------------------------------------------------------------------
Business Address

-----------------------------------------------------------------------
By

-----------------------------------------------------------------------
Title

-----------------------------------------------------------------------
(Affix Corporate Seal)

-----------------------------------------------------------------------
Corporate Surety

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

[[Page 68739]]

Business Address

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By

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Title
(Affix Corporate Seal)

Appendix B to Part 515--Ocean Transportation Intermediary (OTI) 
Insurance Form [Form 67]

Form FMC-67
Federal Maritime Commission
Ocean Transportation Intermediary (OTI) Insurance
Form Furnished as Evidence of Financial Responsibility
Under 46 U.S.C. 40901-40904

    This is to certify, that the (Name of Insurance Company), 
(hereinafter ``Insurer'') of (Home Office Address of Company) has 
issued to (OTI or Group or Association of OTIs [indicate whether 
NVOCC(s) or Freight Forwarder(s)]) (hereinafter ``Insured'') of 
(Address of OTI or Group or Association of OTIs) a policy or 
policies of insurance for purposes of complying with the provisions 
of Section 19 of the Shipping Act of 1984 (46 U.S.C. 40901-40904) 
and the rules and regulations, as amended, of the Federal Maritime 
Commission, which provide compensation for damages, reparations or 
penalties arising from the transportation-related activities of 
Insured, and made pursuant to the Shipping Act of 1984 (46 U.S.C. 
40101-41309) (Shipping Act).
    Whereas, the Insured is or may become an OTI subject to the 
Shipping Act and the rules and regulations of the Federal Maritime 
Commission, or is or may become a group or association of OTIs, and 
desires to establish financial responsibility in accordance with 
section 19 of the Shipping Act (46 U.S.C. 40901-40904), files with 
the Commission this Insurance Form as evidence of its financial 
responsibility and evidence of a financial rating for the Insurer of 
Class V or higher under the Financial Size Categories of A.M. Best & 
Company or equivalent from an acceptable international rating 
organization on such organization's letterhead or designated form, 
or, in the case of insurance provided by Underwriters at Lloyd's, 
documentation verifying membership in Lloyd's, or, in the case of 
surplus lines insurers, documentation verifying inclusion on a 
current ``white list'' issued by the Non-Admitted Insurers' 
Information Office of the National Association of Insurance 
Commissioners.
    Whereas, the Insurance is written to assure compliance by the 
Insured with section 19 of the Shipping Act (46 U.S.C. 40901-40904), 
and the rules and regulations of the Federal Maritime Commission 
relating to evidence of financial responsibility for OTIs, this 
Insurance shall be available to pay any judgment obtained or any 
settlement made pursuant to a claim under 46 CFR 515.23 for damages 
against the Insured arising from the Insured's transportation-
related activities under the Shipping Act, or order for reparations 
issued pursuant to section 11 of the Shipping Act (46 U.S.C. 41301-
41302, 41305-41307(a)), or any penalty assessed against the Insured 
pursuant to section 13 of the Shipping Act (46 U.S.C. 41107-41109).
    Whereas, the Insurer certifies that it has sufficient and 
acceptable assets located in the United States to cover all 
liabilities of Insured herein described, this Insurance shall inure 
to the benefit of any and all persons who have a bona fide claim 
against the Insured pursuant to 46 CFR 515.23 arising from its 
transportation-related activities under the Shipping Act, or order 
of reparation issued pursuant to section 11 of the Shipping Act (46 
U.S.C. 41301-41302, 41305-41307(a)), and to the benefit of the 
Federal Maritime Commission for any penalty assessed against the 
Insured pursuant to section 13 of the Shipping Act (46 U.S.C. 41107-
41109).
    The Insurer consents to be sued directly in respect of any bona 
fide claim owed by Insured for damages, reparations or penalties 
arising from the transportation-related activities under the 
Shipping Act, of Insured in the event that such legal liability has 
not been discharged by the Insured or Insurer after a claimant has 
obtained a final judgment (after appeal, if any) against the Insured 
from a United States Federal or State Court of competent 
jurisdiction and has complied with the procedures for collecting on 
such a judgment pursuant to 46 CFR 515.23, the Federal Maritime 
Commission, or where all parties and claimants otherwise mutually 
consent, from a foreign court, or where such claimant has become 
entitled to payment of a specified sum by virtue of a compromise 
settlement agreement made with the Insured and/or Insurer pursuant 
to 46 CFR 515.23, whereby, upon payment of the agreed sum, the 
Insurer is to be fully, irrevocably and unconditionally discharged 
from all further liability to such claimant; provided, however, that 
Insurer's total obligation hereunder shall not exceed the amount per 
OTI set forth in 46 CFR 515.21 or the amount per group or 
association of OTIs set forth in 46 CFR 515.21.
    The liability of the Insurer shall not be discharged by any 
payment or succession of payments hereunder, unless and until such 
payment or payments shall aggregate the penalty of the Insurance in 
the amount per member OTI set forth in 46 CFR 515.21, or the amount 
per group or association of OTIs set forth in 46 CFR 515.21, 
regardless of the financial responsibility or lack thereof, or the 
solvency or bankruptcy, of Insured. The insurance evidenced by this 
undertaking shall be applicable only in relation to incidents 
occurring on or after the effective date and before the date 
termination of this undertaking becomes effective. The effective 
date of this undertaking shall be __ day of __, __, and shall 
continue in effect until discharged or terminated as herein 
provided. The Insured or the Insurer may at any time terminate the 
Insurance by mail or email (bcl@fmc.gov) written notice to the 
Director, Bureau of Certification and Licensing, Federal Maritime 
Commission, Washington, DC 20573. Such termination shall become 
effective thirty (30) days after receipt of said notice by the 
Commission. The Insurer shall not be liable for any transportation-
related activities under the Shipping Act of the Insured after the 
expiration of the 30-day period but such termination shall not 
affect the liability of the Insured and Insurer for such activities 
occurring prior to the date when said termination becomes effective.
    (Name of Agent) __ domiciled in the United States, with offices 
located in the United States, at __ is hereby designated as the 
Insurer's agent for service of process for the purposes of enforcing 
the Insurance certified to herein.
    If more than one insurer joins in executing this document, that 
action constitutes joint and several liability on the part of the 
insurers.
    The Insurer will promptly notify the Director, Bureau of 
Certification and Licensing, Federal Maritime Commission, 
Washington, DC 20573, in writing by mail or email (bcl@fmc.gov), of 
all claims made, lawsuits filed, judgments rendered, and payments 
made against the Insurance.
    Signed and sealed this __ day of __, __.

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Signature of Official signing on behalf of Insurer
-----------------------------------------------------------------------
Type Name and Title of signer

    This Insurance Form has been filed with the Federal Maritime 
Commission.

Appendix C to Part 515--Ocean Transportation Intermediary (OTI) 
Guaranty Form [Form 68]

Form FMC-68
Federal Maritime Commission

    Guaranty in Respect of Ocean Transportation Intermediary (OTI) 
Liability for Damages, Reparations or Penalties Arising from 
Transportation-Related Activities Under the Shipping Act of 1984 (46 
U.S.C. 40101-41309) (Shipping Act).
    1. Whereas __ (Name of Applicant [indicate whether NVOCC or 
Freight Forwarder]) (hereinafter ``Applicant'') is or may become an 
Ocean Transportation Intermediary (``OTI'') subject to the Shipping 
Act of 1984 (46 U.S.C. 40101-41309) and the rules and regulations of 
the Federal Maritime Commission (FMC), or is or may become a group 
or association of OTIs, and desires to establish its financial 
responsibility in accordance with section 19 of the Shipping Act (46 
U.S.C. 41107-41109), then, provided that the FMC shall have 
accepted, as sufficient for that purpose, the Applicant's 
application, supported by evidence of a financial rating for the 
Guarantor of Class V or higher under the Financial Size Categories 
of A.M. Best & Company or equivalent from an acceptable 
international rating organization on such rating organization's 
letterhead or designated form, or, in the case of Guaranty provided 
by Underwriters at Lloyd's, documentation verifying membership in 
Lloyd's, or, in the case of surplus lines insurers, documentation 
verifying inclusion on a current ``white list'' issued by the Non-
Admitted Insurers' Information Office of the National Association of 
Insurance Commissioners, the undersigned Guarantor certifies that it 
has sufficient and acceptable assets located in the United States to 
cover all damages arising from the transportation-related activities 
of the covered OTI as specified under the Shipping Act.

[[Page 68740]]

    2. Whereas, this Guaranty is written to ensure compliance by the 
Applicant with section 19 of the Shipping Act (46 U.S.C. 40901-
40904), and the rules and regulations of the Federal Maritime 
Commission relating to evidence of financial responsibility for OTIs 
(46 CFR part 515), this guaranty shall be available to pay any 
judgment obtained or any settlement made pursuant to a claim under 
46 CFR 515.23 for damages against the Applicant arising from the 
Applicant's transportation-related activities under the Shipping 
Act, or order for reparations issued pursuant to section 11 of the 
Shipping Act (46 U.S.C. 41301-41302, 41305-41307(a)), or any penalty 
assessed against the Applicant pursuant to section 13 of the 
Shipping Act (46 U.S.C. 41107-41109).
    3. Now, Therefore, The condition of this obligation is that the 
penalty amount of this Guaranty shall be available to pay any 
judgment obtained or any settlement made pursuant to a claim under 
46 CFR 515.23 for damages against the Applicant arising from the 
Applicant's transportation-related activities or order for 
reparations issued pursuant to section 11 of the Shipping Act (46 
U.S.C. 41301-41302, 41305-41307(a)), or any penalty assessed against 
the Principal pursuant to section 13 of the Shipping Act (46 U.S.C. 
41107-41109).
    4. The undersigned Guarantor hereby consents to be sued directly 
in respect of any bona fide claim owed by Applicant for damages, 
reparations or penalties arising from Applicant's transportation-
related activities under the Shipping Act, in the event that such 
legal liability has not been discharged by the Applicant after any 
such claimant has obtained a final judgment (after appeal, if any) 
against the Applicant from a United States Federal or State Court of 
competent jurisdiction and has complied with the procedures for 
collecting on such a judgment pursuant to 46 CFR 515.23, the FMC, or 
where all parties and claimants otherwise mutually consent, from a 
foreign court, or where such claimant has become entitled to payment 
of a specified sum by virtue of a compromise settlement agreement 
made with the Applicant and/or Guarantor pursuant to 46 CFR 515.23, 
whereby, upon payment of the agreed sum, the Guarantor is to be 
fully, irrevocably and unconditionally discharged from all further 
liability to such claimant. In the case of a guaranty covering the 
liability of a group or association of OTIs, Guarantor's obligation 
extends only to such damages, reparations or penalties described 
herein as are not covered by another insurance policy, guaranty or 
surety bond held by the OTI(s) against which a claim or final 
judgment has been brought.
    5. The Guarantor's liability under this Guaranty in respect to 
any claimant shall not exceed the amount of the guaranty; and the 
aggregate amount of the Guarantor's liability under this Guaranty 
shall not exceed the amount per OTI set forth in 46 CFR 515.21, or 
the amount per group or association of OTIs set forth in 46 CFR 
515.21 in aggregate.
    6. The Guarantor's liability under this Guaranty shall attach 
only in respect of such activities giving rise to a cause of action 
against the Applicant, in respect of any of its transportation-
related activities under the Shipping Act, occurring after the 
Guaranty has become effective, and before the expiration date of 
this Guaranty, which shall be the date thirty (30) days after the 
date of receipt of mail or email (bcl@fmc.gov) written notice to the 
Director, Bureau of Certification and Licensing, Federal Maritime 
Commission, Washington, DC 20573, that either Applicant or the 
Guarantor has elected to terminate this Guaranty. The Guarantor and/
or Applicant specifically agree to file such written notice of 
cancellation.
    7. Guarantor shall not be liable for payments of any of the 
damages, reparations or penalties hereinbefore described which arise 
as the result of any transportation-related activities of Applicant 
after the cancellation of the Guaranty, as herein provided, but such 
cancellation shall not affect the liability of the Guarantor for the 
payment of any such damages, reparations or penalties prior to the 
date such cancellation becomes effective.
    8. Guarantor shall pay, subject to the limit of the amount per 
OTI set forth in 46 CFR 515.21, directly to a claimant any sum or 
sums which Guarantor, in good faith, determines that the Applicant 
has failed to pay and would be held legally liable by reason of 
Applicant's transportation-related activities, or its legal 
responsibilities under the Shipping Act and the rules and 
regulations of the FMC, made by Applicant while this agreement is in 
effect, regardless of the financial responsibility or lack thereof, 
or the solvency or bankruptcy, of Applicant.
    9. The Applicant or Guarantor will promptly notify the Director, 
Bureau of Certification and Licensing, Federal Maritime Commission, 
Washington, DC 20573, in writing by mail or email (bcl@fmc.gov), of 
all claims made, lawsuits filed, judgments rendered, and payments 
made under the Guaranty.
    10. Applicant and Guarantor agree to handle the processing and 
adjudication of claims by claimants under the Guaranty established 
herein in the United States, unless by mutual consent of all parties 
and claimants another country is agreed upon. Guarantor agrees to 
appoint an agent for service of process in the United States.
    11. This Guaranty shall be governed by the laws in the State of 
__ to the extent not inconsistent with the rules and regulations of 
the FMC.
    12. This Guaranty is effective the day of __, __, __ 12:01 a.m., 
standard time at the address of the Guarantor as stated herein and 
shall continue in force until terminated as herein provided.
    13. The Guarantor hereby designates as the Guarantor's legal 
agent for service of process domiciled in the United States __, with 
offices located in the United States at __, for the purposes of 
enforcing the Guaranty described herein.

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(Place and Date of Execution)

-----------------------------------------------------------------------
(Type Name of Guarantor)

-----------------------------------------------------------------------
(Type Address of Guarantor)

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By

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(Signature and Title)

Appendix D to Part 515--Ocean Transportation Intermediary (OTI) Group 
Bond Form [FMC-69]

Form FMC-69
Federal Maritime Commission

    Ocean Transportation Intermediary (OTI) Group Supplemental 
Coverage Bond Form (Shipping Act of 1984 (46 U.S.C. 40101-41309)) 
(Shipping Act).
    __ [indicate whether NVOCC or Freight Forwarder], as Principal 
(hereinafter ``Principal''), and __ as Surety (hereinafter 
``Surety'') are held and firmly bound unto the United States of 
America in the sum of $__ for the payment of which sum we bind 
ourselves, our heirs, executors, administrators, successors and 
assigns, jointly and severally.
    Whereas, (Principal) __ operates as a group or association of 
OTIs in the waterborne foreign commerce of the United States and 
pursuant to section 19 of the Shipping Act of 1984 (46 U.S.C. 40901-
40904), files this bond with the Federal Maritime Commission;
    Whereas, this group bond is written to ensure compliance by the 
OTIs, enumerated in Appendix A of this bond, with section 19 of the 
Shipping Act (46 U.S.C. 40901-40904), and the rules and regulations 
of the Federal Maritime Commission relating to evidence of financial 
responsibility for OTIs (46 CFR part 515), this group bond shall be 
available to pay any judgment obtained or any settlement made 
pursuant to a claim under 46 CFR 515.23 for damages against such 
OTIs arising from OTI transportation-related activities under the 
Shipping Act, or order for reparations issued pursuant to section 11 
of the Shipping Act (46 U.S.C. 41301-41302, 41305-41307(a)), or any 
penalty assessed against one or more OTI members pursuant to section 
13 of the Shipping Act (46 U.S.C. 41107-41109); provided, however, 
that the Surety's obligation for a group or association of OTIs 
shall extend only to such damages, reparations or penalties 
described herein as are not covered by another surety bond, 
insurance policy or guaranty held by the OTI(s) against which a 
claim or final judgment has been brought and that Surety's total 
obligation hereunder shall not exceed the amount per OTI provided 
for in 46 CFR 515.21 or the amount per group or association of OTIs 
provided for in 46 CFR 515.21 in aggregate.
    Now, therefore, the conditions of this obligation are that the 
penalty amount of this bond shall be available to pay any judgment 
obtained or any settlement made pursuant to a claim under 46 CFR 
515.23 against the OTIs enumerated in Appendix A of this bond for 
damages arising from any or all of the identified OTIs' 
transportation-related activities under the Shipping Act (46 U.S.C. 
40101-41309), or order for reparations issued pursuant to section 11 
of the Shipping Act (46 U.S.C. 41301-41302, 41305-41307(a)), or any 
penalty assessed pursuant to section 13 of the Shipping Act (46 
U.S.C. 41107-41109), that are not covered by the identified OTIs' 
individual insurance policy(ies), guaranty(ies) or surety bond(s).

[[Page 68741]]

    This group bond shall inure to the benefit of any and all 
persons who have obtained a judgment or made a settlement pursuant 
to a claim under 46 CFR 515.23 for damages against any or all of the 
OTIs identified in Appendix A not covered by said OTIs' insurance 
policy(ies), guaranty(ies) or surety bond(s) arising from said OTIs' 
transportation-related activities under the Shipping Act, or order 
for reparation issued pursuant to section 11 of the Shipping Act, 
and to the benefit of the Federal Maritime Commission for any 
penalty assessed against said OTIs pursuant to section 13 of the 
Shipping Act (46 U.S.C. 41107-41109). However, the bond shall not 
apply to shipments of used household goods and personal effects for 
the account of the Department of Defense or the account of federal 
civilian executive agencies shipping under the International 
Household Goods Program administered by the General Services 
Administration.
    The Surety consents to be sued directly in respect of any bona 
fide claim owed by any or all of the OTIs identified in Appendix A 
for damages, reparations or penalties arising from the 
transportation-related activities under the Shipping Act of the OTIs 
in the event that such legal liability has not been discharged by 
the OTIs or Surety after a claimant has obtained a final judgment 
(after appeal, if any) against the OTIs from a United States Federal 
or State Court of competent jurisdiction and has complied with the 
procedures for collecting on such a judgment pursuant to 46 CFR 
515.23, the Federal Maritime Commission, or where all parties and 
claimants otherwise mutually consent, from a foreign court, or where 
such claimant has become entitled to payment of a specified sum by 
virtue of a compromise settlement agreement made with the OTI(s) 
and/or Surety pursuant to 46 CFR 515.23, whereby, upon payment of 
the agreed sum, the Surety is to be fully, irrevocably and 
unconditionally discharged from all further liability to such 
claimant(s).
    The liability of the Surety shall not be discharged by any 
payment or succession of payments hereunder, unless and until such 
payment or payments shall aggregate the penalty of this bond, and in 
no event shall the Surety's total obligation hereunder exceed the 
amount per member OTI set forth in 46 CFR 515.21, identified in 
Appendix A, or the amount per group or association of OTIs set forth 
in 46 CFR 515.21, regardless of the number of OTIs, claims or 
claimants.
    This bond is effective the __, day of __, and shall continue in 
effect until discharged or terminated as herein provided. The 
Principal or the Surety may at any time terminate this bond by mail 
or email (bcl@.fmc.gov) written notice to the Director, Bureau of 
Certification and Licensing, Federal Maritime Commission, 
Washington, DC 20573. Such termination shall become effective thirty 
(30) days after receipt of said notice by the Commission. The Surety 
shall not be liable for any transportation-related activities of the 
OTIs identified in Appendix A as covered by 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 
transportation-related activities occurring prior to the date when 
said termination becomes effective.
    The Principal or financial responsibility provider will promptly 
notify the underwriting Surety in writing and the Director, Bureau 
of Certification and Licensing, Federal Maritime Commission, 
Washington, DC 20573, by mail or email (bcl@fmc.gov), of any 
additions, deletions or changes to the OTIs enumerated in Appendix 
A. In the event of additions to Appendix A, coverage will be 
effective upon receipt of such notice, in writing, by the Commission 
at its office in Washington, DC. In the event of deletions to 
Appendix A, termination of coverage for such OTI(s) shall become 
effective 30 days after receipt of written notice by the Commission. 
Neither the Principal nor the Surety shall be liable for any 
transportation-related activities of the OTI(s) deleted from 
Appendix A that occur after the expiration of the 30-day period, but 
such termination shall not affect the liability of the Principal and 
Surety for any transportation-related activities of said OTI(s) 
occurring prior to the date when said termination becomes effective.
    The underwriting Surety will promptly notify the Director, 
Bureau of Certification and Licensing, Federal Maritime Commission, 
Washington, DC 20573, in writing by mail or email (bcl@fmc.gov), of 
all claims made, lawsuits filed, judgments rendered, and payments 
made against this group bond.
    Signed and sealed this __ day of __,
(Please type name of signer under each signature).

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Individual Principal or Partner

-----------------------------------------------------------------------
Business Address

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Individual Principal or Partner

-----------------------------------------------------------------------
Business Address

-----------------------------------------------------------------------
Individual Principal or Partner

-----------------------------------------------------------------------
Business Address

-----------------------------------------------------------------------
Trade Name, if Any

-----------------------------------------------------------------------
Corporate Principal

-----------------------------------------------------------------------
Place of Incorporation

-----------------------------------------------------------------------
Trade Name, if Any

-----------------------------------------------------------------------
Business Address (Affix Corporate Seal)

-----------------------------------------------------------------------
By
-----------------------------------------------------------------------
Title
-----------------------------------------------------------------------
Principal's Agent for Service of Process (Required if Principal is 
not a U.S. Corporation)

-----------------------------------------------------------------------
Agent's Address
-----------------------------------------------------------------------
Corporate Surety

-----------------------------------------------------------------------
Business Address (Affix Corporate Seal)

-----------------------------------------------------------------------
By

-----------------------------------------------------------------------
Title

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Appendix E to 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

[[Page 68742]]

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 mail or email (bcl@fmc.gov) written notice to 
the Director, Bureau of Certification and Licensing, Federal Maritime 
Commission, Washington, DC 20573, 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.
    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: _____________________________

Appendix F to Part 515--Optional Rider for Additional NVOCC Financial 
Responsibility for Group Bonds [Optional Rider to Form FMC-69]

FMC-69A, OMB No. 3072-0018 (04/06/04)

Optional Rider for Additional NVOCC Financial Responsibility for Group 
Bonds [Optional Rider to Form FMC-69]

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 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.
    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. 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 mail or email (bcl@fmc.gov) written notice 
to the Director, Bureau of Certification and Licensing, Federal 
Maritime Commission, Washington, DC 20573, 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.
    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: ________________________________

Privacy Act and Paperwork Reduction Act Notice

    The collection of this information is authorized generally by 
Section 19 of the Shipping Act of 1984 (46 U.S.C. 40901-40904). This 
is an optional form. Submission is completely voluntary. Failure to 
submit this form will in no way impact the Federal Maritime 
Commission's assessment of your firm's financial responsibility.
    You are not required to provide the information requested on a 
form that is subject to the Paperwork Reduction Act unless the form 
displays a valid OMB control number. Copies of this form will be 
maintained until the corresponding license has been revoked.
    The time needed to complete and file this form will vary 
depending on individual circumstances. The estimated average time 
is: Recordkeeping, 20 minutes; Learning about the form, 20 minutes; 
Preparing and sending the form to the FMC, 20 minutes.
    If you have comments concerning the accuracy of these time 
estimates or suggestions for making this form simpler, we would be 
happy to hear from you. You can write to the Secretary, Federal 
Maritime Commission, 800 North Capitol Street NW., Washington, DC 
20573-0001 or email: secretary@fmc.gov.

    By the Commission.
Karen V. Gregory,
Secretary.
[FR Doc. 2015-27914 Filed 11-4-15; 8:45 am]
 BILLING CODE 6731-AA-P

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