The United States Federal Maritime Commission (FMC) issued its Final Rule on November 3, 2015, regarding the financial and other requirements of freight forwarders and non-vessel operating common carriers (NVOCC). Located in 46 CFR Part 515, the new rules are meant to adapt to a changing industry by improving regulatory effectiveness and transparency and streamlining processes while reducing regulatory burdens. An article discussing the potential changes regarding the licensing of Ocean Transportation Intermediaries (OTIs) was published in the February issue of Benesch Currents. It is vital for NVOCCs and ocean freight forwarders (OFFs) to review these changes in order to implement them into their business practices, including contracts and policies.
The main changes can be broken down into seven categories, which include: redefined terms; changes to current OTI license requirements; reporting requirements; financial requirements; registration and renewal; business records; and appeals process clarification.
Definitions. “Freight forwarding services” are now defined in broader terms, to include the preparation of “export documents, including the required ‘electronic export information’” and “[p]reparing and/or processing common carrier bills of lading or other shipping documents.” Moreover, “[r]egistered non-vessel-operating common carrier” is defined as a “NVOCC whose primary place of business is located outside the United States and who elects not to become licensed as a NVOCC.” Foreign-based NVOCCs will have to register with the Commission, post bond or surety and publish a tariff. § 515.2(h), § 515.2(r).
OTI license requirements. Moving forward, when considering an OTI for licensure, the Commission may consider: violations of any shipping or international trade laws; operating as an OTI without a license or registration; state and federal felonies and misdemeanors; bankruptcies; tax liens; judgments and proceedings; compliance with immigration status requirements; negative history associated with a Transportation Worker Identification Credential (TWIC); and negative customs broker’s license history. §515.11(a)(2).
NVOCC licensing and registration. Common carriers may not knowingly or willfully transport cargo for an NVOCC unless the carrier has confirmed that the NVOCC is licensed or registered and compliant with tariff and bond requirements. Common carriers may review the list of licensed and registered NVOCCs, along with their tariff and financial responsibility compliance, on the FMC’s website. § 515.27(a), § 515.27(b).
Reporting requirements. OTIs are now required to report to the FMC the following changes: a change in business address; a conviction or indictment of the licensee (or other key individuals); a bankruptcy filed by or naming a licensee (or other key individuals); or a change of partners, members, managers or ownership of five percent (5%) or more; and the addition or reduction of one or more branch offices. § 515.20(e).