DPI Memo - FMC-65 Certification - Distribution-Publications, Inc.

By signing form FMC-65 for your company you certify that you have read the U.S. Federal Maritime Commission (FMC) licensing regulations and pertinent sections of the U.S. Shipping Act. This memo provides links to these regulations and guidance on their key points.

1. NVOCCs Outside the USA

Many of the FMC licensing regulations (46 CFR Part 515) apply to ocean freight forwarders, NVOCCs, and freight handling agents who have offices and employees in the USA. These companies are required to obtain a license issued by the FMC before they begin advertising or operating any services for ocean shipping. This is the Ocean Transportation Intermediary or “OTI” license.

Ocean freight forwarders and NVOCCs who operate outside the USA are not required to be licensed by the FMC. However, when an NVOCC outside the USA handles shipments to or from the USA it is required to:

1) register with FMC and keep its registration updated by advising FMC promptly whenever registration details change;
2) submit the surety bond of USD 150,000 and maintain it continuously;
3) publish a tariff that satisfies FMC’s requirements and update as needed to reflect freight rates and additional charges collected from your customers, as well as rules, practices, and BL terms; and
4) comply with the pertinent sections of the U.S. Shipping Act.

2. FMC-65 Certification

By signing the FMC-65 you are certifying that your company will comply with the above requirements. Operating as an NVOCC without a valid FMC registration is a violation of the Shipping Act.

By signing the FMC-65 you are also certifying that you have read the pertinent sections of U.S. Shipping Act. This is the U.S. law that gives the FMC its authority. For NVOCCs outside the USA, the pertinent sections (sec.) of the Shipping Act are:

Sec. 40102 Definitions;
Sec. 40501 Tariffs;
Sec. 40901-04 Ocean Transportation Intermediaries (OTIs), which includes ocean forwarders, NVOCCs and their agents; and
Sec. 41101-09, Prohibitions & Penalties, which includes provisions that apply to both vessel operators and NVOCCs. The penalty amounts in sec. 41107 are annually increased due to “inflation adjustment” and the current penalty amount for most violations is now USD $13,132 per BL or per day.

Several sections of the Shipping Act apply only to vessel operating carriers, and are not pertinent to NVOCCs. These are: Sec. 40301-07 Agreements, Sec. 40701-06 Controlled Carriers, and Sec. 41105 Concerted Action. So there is no need to review these sections.

Sections 41301-09 of the Shipping Act covers enforcement procedures, and allows anyone to lodge a complaint with the FMC. This provides the opportunity for shippers, forwarders, carriers and marine terminal operators to formally ask the FMC to investigate any conduct that may be in violation of the Shipping Act and take appropriate action. FMC also provides the option to submit informal complaints and it offers alternative dispute resolution services.

3. Grounds for Registration Termination

One useful approach to understanding the FMC-65 registration requirements is to carefully review the listing of reasons why FMC will terminate or suspend a registration. These are found in sec. 515.19(g) of the FMC licensing regulations, and provide as follows:

(g) Termination or suspension of registration

(1) Grounds. A registration shall become automatically ineffective for a failure of a registered NVOCC to maintain proof of financial responsibility on file with the Commission. The effectiveness of such a registration may otherwise be terminated or suspended, after notice and the opportunity for a hearing, for any of the following reasons:

(i) Violation of any provision of the Act, or any other statute or Commission order or regulation related to carrying on the business of an ocean transportation intermediary;
(ii) Failure to respond to any lawful order or inquiry by the Commission or an authorized Commission representative;
(iii) Making a materially false or misleading statement to the Commission in connection with a registration or renewal thereof;
(iv) Failure to honor financial obligations to the Commission;
(v) Failure to timely renew a registration;
(vi) Failure to maintain a Form FMC-1 or a tariff in compliance with 46 CFR part 520;
(vii) Knowingly and willfully accepting cargo from or transporting cargo for the account of: (A) an NVOCC that does not have a published tariff as required by 46 U.S.C. 40501 and part 520 of this chapter, and a bond, insurance, or other surety as required by 46 U.S.C. 40902 and this part; or (B) an OFF that does not have a bond, insurance, or other surety as required by 46 U.S.C. 40902 and this part; and
(viii) Failure to designate and maintain a person in the United Stated as legal agent for the receipt of judicial and administrative process, including subpoenas, as required by § 515.24.

Please be mindful of item (vii) – this means you must not handle shipments for forwarders that sell ocean transportation and rates to cargo owners in the same manner as an FMC registered NVOCC does. This is strictly prohibited by FMC.

More Information

Links to the complete FMC regulations are found here.

If you have questions about any aspect of the Shipping Act or the FMC regulations please not hesitate to contact us here at DPI.

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