[Federal Register Volume 64, Number 82 (Thursday, April 29, 1999)]
[Rules and Regulations]
[Pages 23019-23020]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-10755]
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FEDERAL MARITIME COMMISSION
46 CFR Parts 510, 515 and 583
[Docket No. 98-28]
Licensing, Financial Responsibility Requirements, and General
Duties for Ocean Transportation Intermediaries
AGENCY: Federal Maritime Commission.
ACTION: Confirmation of interim final rule and correction.
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SUMMARY: This rule confirms as final the interim rule published on
March 8, 1999, which added a provision to the Federal Maritime
Commission's licensing requirements to allow foreign non-vessel-
operating common carriers the opportunity to seek to obtain a license.
In addition, this document contains a correction to the final
regulations which were published in the same document on March 8, 1999.
DATES: Effective May 1, 1999.
FOR FURTHER INFORMATION CONTACT:
Austin L. Schmitt, Director, Bureau of Tariffs, Certification and
Licensing, Federal Maritime Commission, 800 North Capitol Street, NW,
Washington, DC 20573-0001, (202) 523-5796
Thomas Panebianco, General Counsel, Federal Maritime Commission, 800
North Capitol Street, NW, Washington, DC 20573-0001, (202) 523-5740
SUPPLEMENTARY INFORMATION:
On February 26, 1999, the Federal Maritime Commission (``FMC'' or
``Commission'') adopted new regulations at 46 CFR part 515 to implement
changes made by the Ocean Shipping Reform Act of 1998 (``OSRA''), Pub.
L. 105-258, 112 Stat. 1902, to the Shipping Act of 1984 (``1984 Act''),
46 U.S.C. app. section 1701 et seq., relating to ocean freight
forwarders and non-vessel-operating common carriers (``NVOCCs''), 64 FR
11155-11183, March 8, 1999.
As part of the final rule, the Commission published as an interim
final rule a provision to allow foreign NVOCCs the opportunity to seek
to obtain a license under the provisions of 46 CFR part 515. We
explained that pursuant to the definition of ``in the United States''
in 46 CFR 515.3 adopted by the Commission, a foreign NVOCC could choose
to establish a presence in the United States for licensing purposes in
accordance with 515.3 and secure financial responsibility applicable to
NVOCCs in the United States. To establish a presence in the United
States necessary to obtain a license under this part, a foreign NVOCC
must set up an unincorporated office that is resident in the United
States. We would not consider the foreign NVOCC's primary location in
the United States to be a separate branch office subject to additional
licensing and financial responsibility requirements of this part.
However, in the event that the licensee seeks to establish other branch
offices in addition to its primary United States office, those other
offices would be subject to the licensing and financial responsibility
requirements applicable to separately incorporated and unincorporated
branch offices.
We further limited the option of a foreign entity becoming licensed
under this part to NVOCCs, and not freight forwarders, because an
``ocean freight forwarder'' is defined in Sec. 515.2(o)(1) as a person
who dispatches shipments ``from the United States.'' Moreover, a
freight forwarder has a fiduciary relationship with its customer, and a
foreign freight forwarder, by its very nature, would be performing
services for its customers in a foreign country beyond the reach of the
Commission. Finally, in order to better assist foreign NVOCCs who seek
to become licensed under this part, we amended Sec. 515.11(a)(1) to
provide that a foreign NVOCC's experience in ocean transportation
intermediary (``OTI'') services need not be in the United States.
We sought comments on those aspects of the rule that were
implemented as an interim final rule. We received comments from North
American Van Lines, Inc., t/a North American International, who
supports the Commission's proposal to permit foreign NVOCCs to obtain a
license, believing it will result in enhanced compliance with the 1984
Act. No other comments were received, and, therefore, we implement as
final those provisions which allow foreign NVOCCs to seek to obtain a
license under 46 CFR part 515.
As the Commission is preparing to implement the licensing and
financial responsibility requirements of this part, several issues have
been raised which we will now address.
With respect to the licensing requirements of Sec. 515.11, in the
supplementary information to the final rule, we stated that an NVOCC
with a tariff and financial responsibility in effect as of April 30,
1999, would be permitted to continue operating without the requisite
three years' experience and character requirement. 64 FR 11158-59.
However, in Sec. 515.11(a)(3), the reference to the character
requirement was inadvertently omitted. Therefore, Sec. 515.11(a)(3) is
corrected to reflect that an NVOCC with a tariff and financial
[[Page 23020]]
responsibility in effect as of April 30, 1999 will be permitted to
continue operating without satisfying the requisite qualifications of
three years' experience and necessary character to render OTI services.
In addition, we stated that an applicant will be provisionally
licensed while the Commission reviews its application. Concerns have
been raised as to what the Commission intends by the term
``provisionally.'' The Commission will issue licenses to those NVOCCs
who have tariffs and financial responsibility in effect on April 30,
1999 and who file license applications and increase their financial
responsibility by May 1, 1999. These entities are permitted to continue
operating while the Commission processes their applications. Should the
review and investigation of applications reveal that an applicant is
otherwise unqualified or unsuitable to retain a license, the regular
procedures set forth at Sec. 515.16 for revocation or suspension of a
license would apply.
OSRA and 46 CFR part 515 require, for the first time, that NVOCCs
obtain a license. Consistent with the licensing provisions applicable
to freight forwarders under current regulations at 46 CFR part 510, and
applicable to all licensed OTIs effective May 1, 1999 under 46 CFR part
515, separately incorporated branch offices are treated as separate
entities. Section 515.3 requires a separate license for separately
incorporated branch offices. Branch office is defined at Sec. 515.2(c)
as ``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 is located at an address different from
that of the licensee's designated home office. This term does not
include a separately incorporated entity.'' Similarly, subpart C of 46
CFR part 515 requires that separately incorporated branch offices
obtain their own financial responsibility. Unincorporated branch
offices are not required to obtain their own licenses, but the licensee
is required to increase its financial responsibility by $10,000 for
each unincorporated branch office.
Section 515.25(a), in conjunction with the licensing requirements
of this part, could be read to require that a separately incorporated
branch office of an NVOCC publish its own tariff, because an applicant
who seeks to obtain a license to operate as an NVOCC must establish its
financial responsibility and publish a tariff. We wish to clarify that
a separately incorporated branch office of an NVOCC is not required to
publish its own tariff. An NVOCC branch office which provides
intermediary services is required to satisfy the licensing and
financial responsibility requirements applicable to unincorporated and
separately incorporated branch offices, as freight forwarders
previously have been, and continue to be, so required. To the extent
that a separately incorporated branch office of an NVOCC is issuing,
processing, or otherwise handling, the designated home office's bills
of lading, based on the rates published in the designated home office's
tariff, it is not required to publish its own tariff.
An office under the corporate umbrella that does not provide
intermediary services under this part, but for example provides air
freight forwarding, does not fall under the branch office requirements
of this part, as it is not established or maintained by or under the
control of the licensee for the purpose of rendering intermediary
services within the meaning of the 1984 Act or this part. Similarly, a
licensed OTI is allowed to use an agent, say for sales work on behalf
of the licensed principal, and the agent is not required to obtain its
own license and financial responsibility, so long as the agent is not,
in actuality, operating as a branch office of the licensee, whether
unincorporated or separately incorporated.
The Commission has received OMB approval for this collection of
information pursuant to the Paperwork Reduction Act of 1995, as
amended. In accordance with that Act, agencies are required to display
a currently valid control number. The valid control number for this
collection of information is 3072-0012.
The Commission is not aware of any other federal rules that
duplicate, overlap, or conflict with the new rule.
List of Subjects in 46 CFR Part 515
Exports, Freight forwarders, Non-vessel-operating common carriers,
Ocean transportation intermediaries, Licensing requirements, Financial
responsibility requirements, Reports and recordkeeping requirements.
Accordingly, the second sentence of Sec. 515.11(a)(1), which was
published as an interim final rule within the final rule adding part
515 at 64 FR 11173 on March 8, 1999, is adopted as a final rule without
change.
In addition, the following corrections are made:
1. At the end of the preamble on page 11171 in the first column, in
the fourth line above the heading for part 510, the words ``proposes to
remove'' are corrected to read ``removes'', and in the following line,
the word ``add'' is corrected to read ``adds'.
2. In Sec. 515.11(a)(3), which was published at 64 FR 11173 in the
third column on March 8, 1999, make the following correction: in the
first sentence after the word ``experience'' and before the word
``and'' add the phrase ``and necessary character to render ocean
transportation intermediary services'.
Bryant L. VanBrakle,
Secretary.
[FR Doc. 99-10755 Filed 4-28-99; 8:45 am]
BILLING CODE 6730-01-P