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Maritime Law: FMC Proposes New Rules for OTIs--Have You Made Your Views Known?

On May 31, 2013, the United States Federal Maritime Commission ("FMC") issued proposed rulemaking, significantly affecting the licensing, financial responsibility and duties of Ocean Transportation Intermediaries ("OTI"). The rulemaking started a 60-day notice and comment period, ending July 31, 2013, during which affected or interested parties can provide feedback, objections and other comments to the proposed rule. The proposed new rules impose significant new conditions and alter the regulatory environment and risks for OTIs.
Under current regulations, an OTI license is for an unlimited term. Under the proposed rules, OTI licenses would have to be renewed every two years. Renewal applications would have to be submitted at least 60 days prior to the expiration date, and would include Qualifying Individual (QI) identification and contact information along with changes to the OTI's business or organization, trade names, tariff publication, physical address and electronic contact data.
Experience requirements for QIs are expanded and are stated in more detail than before. Under current regulations, an OTI's license may be revoked for failing to respond to a lawful order, making false or misleading statements or failing to have a current tariff or bond. The proposed new rules add that an OTI's license may be revoked for processing, booking, accepting or transporting cargo for the account of an NVOCC with knowledge that said NVOCC is not licensed or registered.
The Commission also proposes to streamline the appeals process for any license revocation by eliminating an OTI’s right for a full evidentiary hearing. Instead, the FMC proposes to establish a procedure by which appeals could be handled by a hearing officer on a written record without any apparent right of discovery concerning matters that may be in the FMC’s files.
Financial Responsibility
Financial responsibility levels also increase with the new rules:
  • Ocean Freight Forwarders: from $50,000 to $75,000
  • NVOCCs: from $75,000 to $100,000
  • Registered (foreign) NVOCCs: from $150,000 to $200,000
However, the FMC would eliminate the $10,000 additional bonding required for each unincorporated branch office. The proposed new rules also establish three payment priority tiers for claims against an OTI bond, with shipper and consignee claims given priority over common carriers, ports, terminals and other third-party creditors.
Foreign NVOCCs
Under current regulations, foreign NVOCCs without a physical presence in the United States may operate in U.S. trades without a license if they: (1) file a Form FMC-1; (2) establish a bond of $150,000; and (3) publish an ocean tariff. Under the proposed new rules, a licensed foreign-based NVOCC must establish a U.S. office qualified to do business in the state and operated by a bona fide employee. The registered NVOCC must use a licensed OTI as its agent and registrations must be renewed every two years.
Comments Currently Requested
Given the effects of the new rules, industry participants are strongly encouraged to provide comments. Non-confidential comments must be submitted to the FMC no later than July 31, 2013. Such comments may be submitted confidentially if they are clearly marked as such on each page. After reviewing the comments submitted, the FMC will issue a revised final rule, as well as an effective date for all changes and new requirements.
The proposed rule can be viewed here => OTI Proposed Rulemaking. If you are unable to access the link, if your business is impacted by these new proposed regulations, if you are interested in submitting comments or understanding how these new proposed regulations will affect your operations, please feel free to contact me at


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