FMC Opens OTI Rulemaking Proposal to Add Licensing Requirements, New Bonding Levels

The Federal Maritime Commission (FMC) is considering numerous changes to its current Ocean Transport Intermediary (OTI) regulations, it said in a proposed rule. The agency said it is seeking the new rules to streamline internal processes, improve transparency and remove unwarranted regulatory burdens. The FMC voted to begin the rulemaking earlier this month (see 13052014). Comments are due July 31.

The proposed rules create several new definitions within the regulations. For instance, the proposal seeks to define "advertisement" to "a rebuttable presumption that an entity that advertises OTI services has performed those services" and that all ads from OTIs and their agents must include the OTI name and license number. The rule would also define a "registered non-vessel-operating common carrier" to identify foreign NVOCCs that chose to register rather than get a license, the notice said. The National Customs Brokers and Forwarders Association of America previously voiced some concerns with several of the planned changes (see 13041004).

The new rules would also create some additional licensing requirements for OTIs, somewhat similar to what is required of customs brokers. Licenses for OTIs would be issued for an initial two year period and renewed every two years, the notice said. "The license renewal requirement is intended to ensure that information essential to the Commission’s oversight of OTIs is verified periodically," said the FMC. Renewal will require licensed OTIs to update their [Qualifying Individuals’] identification and contact information, changes in business or organization, trade names, tariff publication information, physical address, and electronic contact data."

The FMC said it's aware that it could face processing delays if the currently licensed OTIs -- about 4,500 -- all seek to renew their licenses at the same time. The agency is seeking public input on how to handle this issue. The FMC also plans to do away with Federal Register publication of license applications.

There's concern regarding the adequacy of bonds that would be used to compensate claims made against OTIs, said the FMC. Accordingly, to improve protection to claimants, the Commission proposes to increase the ocean freight forwarder financial responsibility amount from $50,000 to $75,000; the NVOCC amount from $75,000 to $100,000; and $200,000 for registered NVOCCs (an increase from $150,000, which is currently applicable pursuant to section 515.21(a)(3) to “unlicensed foreign-based entities” providing NVOCC services)," it said.

The agency also seeks to create three tiers of payment priorities for claims against OTIs. The payments priorities would be for shipper and consignee claims first, then claims by common carriers, ports, terminals and other third party creditors and finally the FMC.

(Federal Register 5/31/13)