The U.S. Federal Maritime Commission (FMC) voted unanimously Wednesday to issue a final rule implementing new agency authority under the 2018 Frank LoBiondo Coast Guard Authorization Act.
The legislation gave the FMC increased authority over those licensed ocean transportation intermediaries (OTIs) with the agency, including ocean freight forwarders and non-vessel-operating common carriers (NVOs).
The final rule, which all five commissioners approved, clarifies that persons who advertise or hold themselves as OTIs must be licensed with the agency and meet certain financial responsibility requirements.
The final rule also makes clear that OTI licensing and financial responsibility requirements do not apply to a person performing OTI services on behalf of an OTI for which it is a disclosed agent.
The Frank LoBiondo Coast Guard Authorization Act authorized the FMC to expand the prohibition on common carriers knowingly and willfully accepting or transporting cargo for OTIs that do not have a tariff or do not meet financial responsibility requirements.
The final rule also allows comments submitted to the FMC regarding filed ocean common carrier and marine terminal operator agreements to be confidential.
In addition, it includes the Frank LoBiondo Coast Guard Authorization Act’s authority for a provision on “nonpublic collaborative discussions” between FMC commissioners.
The FMC said the final rule “permits the commission to consider policy issues more efficiently, more effectively address deceptive business practices of unlicensed OTIs and creates an atmosphere that encourages even more candid comments from the public in response to filed confidential agreements.”
FMC Commissioner Daniel Maffei called the Frank LoBiondo Coast Guard Authorization Act the “first legislation that has a major change on what we do since the late last century,” adding that “this is real progress.”
The final rule implementing provisions of the Frank LoBiondo Coast Guard Authorization Act must still be reviewed by the Office of Information and Regulatory Affairs before it can be published in the Federal Register.
During the meeting, the commission also voted to issue a final rule that modifies hearing procedures governing the denial, revocation or suspension of an OTI license.
The rule designates that the commission’s administrative law judge preside over these hearings and provides clear procedures and timelines for managing the process.
FMC Chairman Michael Khouri said, “There are occasions where we have NVOs who when they come to our attention that they are harming the public by their bad behavior … there needs to be a rapid process through which we can also protect the public from bad actors.
“Overall, the rule has good balance,” he said.
The final rule is expected to be published in the Federal Register next week and will become effective in 30 days following publication, the agency said.
On Dec. 16, another new final rule took effect requiring that before the FMC will issue an NVO license, the NVO must have on file with the agency the required bond, insurance or other form of surety, as well as the Form FMC-1 (published tariff location).
Other key changes in the Licensing, Registration, Financial Responsibility Requirements and General Duties for Ocean Transportation Intermediaries final rule include:
- Applicants employing officers, managers or members from an OTI with a license that was revoked or denied within the previous three years are subject to direct commission review.
- Applicants previously determined to be unqualified to provide OTI services are subject to direct commission review.
- Clarification on eligibility to be a qualified individual when partnerships are involved.
- The initial renewal of an OTI license can take place no sooner than one year and no later than four years from issuance. All subsequent renewals will take place on regular three-year intervals.
- All application forms (FMC-18) are now filed electronically.
