FMC ISSUES FINAL RULE ON OTIs

FMC issues final rule on regulation of OTIs

The Federal Maritime Commission will also seek comment on revising service contract regulations.

By Chris Dupin |Thursday, October 22, 2015

   The Federal Maritime Commission voted 4-1 Wednesday to issue a final rule on requirements for ocean transportation intermediary (OTI) licensing and financial responsibility. The agency also directed its staff to prepare an advanced notice of proposed rulemaking on service contracts and NVOCC service arrangements.
   Under the new rules, OTIs will be required to renew licenses every three years.
   The FMC said this can be accomplished using a convenient on-line portal beginning in late 2016, and it also said “an expedited hearing process will be provided for license denials, revocations, or suspensions.”
   Revision to the OTI rules was first proposed in May of 2013 in an advance notice of proposed rulemaking, and then in October 2014 a proposed rule was issued by the commission. The FMC said it received extensive comment from the industry throughout the process.
   Last year, the Transportation Intermediaries Association praised the FMC for its “decision not to proceed with the most problematic proposals” in an earlier draft of the rules, but said they “could be improved by removing or amending several proposals which increase the regulatory burden on the private sector for minimal public benefit.”
   Rebecca Dye, the commissioner who voted against the rule adopted yesterday, said revisions that had been made were good, but that “from the beginning of this rulemaking, I have emphasized my position that we should focus on the critical problems in the supply chain rather than focusing on our own internal regulatory challenges. And I was concerned this rule does not do that, but yet imposes new regulatory requirements on the entire OTI industry with what I thought not an adequate justification.
   “I want to see an actual quantification of the problem and I just did not believe that what we were presented was an adequate justification for the requirement,” said Dye.
   The revisions were made as part of the FMC’s retrospective review of regulations that President Obama ordered all agencies to undertake in 2011.
   That order gave “excellent guidance on how to make and focus regulatory programs to make them less burdensome and more effective," according to Dye. "From the beginning I did not see how this fit in to being less burdensome. I’m interested in taking government compliance costs out of the supply chain, to make the supply chain more effective and responsive.
   “When the industry commented on our retrospective review, their comments didn’t mention the need for any additional OTI requirements. We did have comments that supported eliminating certain regulatory burdens such as tariff publication and service contract filing, so I was not convinced that this rule dealt with actual harm in the supply chain.”
   She noted there have been problems with household goods movers, and commended a fact finding study undertaken by her fellow commissioner Michael Khouri, but that the rules issued yesterday “did not address that.”
   Separately, in its closed session, the FMC said it "determined to seek comment on revising its service contract rules to clarify, update, encourage leveraging technology, and provide regulatory relief where possible. The commission will publish the proposal and request public comment later in the year." It said this review was also initiated in response to comments it received from the industry about its retrospective review of existing regulations.