NCBFAA Voices OTI Rule Concerns as FMC's Cordero Defends the Proposal at Congressional Hearing

A Federal Maritime Commission (FMC) proposed rulemaking will inhibit job creation, national economic growth and increase regulations, National Customs Brokers and Forwarders Association of America (NCBFAA) Vice President Geoffrey Powell said in testimony on Sept. 10 (here). The testimony was delivered to the Committee on Transportation and Infrastructure Subcommittee on Coast Guard and Maritime Transportation during a hearing on maritime transportation regulations. Powell said the rulemaking, on regulations for Ocean Transport Intermediary (OTI) licensing and financial responsibility requirements would increase regulatory costs on the segment of the maritime industry referred to as ocean transportation intermediaries.

“None of the proposed new requirements are based upon changes in industry conditions; they will complicate rather than streamline the agency’s internal processes,” said Powell, referring to the FMC. “They will not increase transparency in any meaningful way and, they will clearly impose rather than reduce unwarranted regulatory barriers and costs.” Powell also said the agency is unnecessarily hiking ocean forwarder and NVOCC bonds by 50 percent and 33.33 percent, moves that will increase bond premiums for several thousands of OTI licensees. The NCBFAA voiced some similar concerns in comments it submitted to the agency (see 13082122

The proposed policy of converting all OTI licenses to two-year terms requiring biennial renewals will be burdensome and expensive, Powell said. Instead of a license renewal process, the agency could have mandated that licensees file a list of current officers, directors, among other information, Powell said. The agency failure to meet with industry to solicit suggestions on how to alleviate problems is the root of the poor rulemaking, the NCBFAA official said. Powell also criticized the proposal to put all OTI licensees at risk of suspension or revocation of their licenses for 1) doing business in any manner with a company that is not licensed, bonded or tariffed, 2) if the Commission somehow deems the licensee “not qualified” to provide service, 3) for “any act, omission or matter that would provide the basis for denial of a license to a new applicant.” That proposal is irrational and vague, he said.

FMC Chairman Mario Cordero disagreed with several of Powell’s arguments, saying the agency did meet with industry over recent years, including the NCBFAA, the Pacific Coast Council of Customs Brokers and Freight Forwarders Association’s Wesccon Conference, the Transportation Intermediaries Association and the International Federation of Freight Forwarders Associations, in written testimony for the same hearing (here) . Cordero said the OTI renewal policy introduced in the proposal was needed, because there's currently no requirement for OTIs to renew licenses. Outdated information has prevented the agency’s attempts to locate licensees in investigations, enforcement actions and private complaints, he said.

The FMC has found "that too many OTIs cannot be found at the address of record, operate without a current Qualifying Individual, with new or different branch offices, new or different officers, or with previously unknown or unregistered trade names,” said Cordero. In defense of the ocean forwarder and NVOCC bond hikes, Cordero said the bond levels have remained unchanged since 1999. Over the past three years alone, there have been nearly 20 federal lawsuit cases against OTIs where the bond amount “did not approximate the claims that would have been covered by the bond.” Moreover, the proposed rulemaking will reduce regulatory burdens on OTI licensees by eliminating the additional $10,000 bond amount mandatory for each OTI branch office and by further enabling the use of agents, in accordance with developments in the law, Cordero said. The chairman also said the agency will take comments into account when making adjustments. The comment period ended Aug. 30. -- Brian Dabbs