effective May 1, 1999

New FMC tariff publication regulations issued in Docket No. 98-29 became final on March 1, 1999. These new regulations implement the Ocean Shipping Reform Act of 1998 (OSRA), and take effect on May 1, 1999, at which time they will become part of CFR-46 Part 520. These new regulations form the basis for FMC’s new tariff publication requirements for conferences, rate agreements, independent vessel operating common carriers, and NVOCCs. Here is a summary of these new regulations:

ATFI Standards Retained: the new regulations bring forward many of the standards of the FMC’s “ATFI” tariff database system. Spellings used in tariffs for ports and cities must agree with those used in ATFI. Much of the standardized tariff terminology used by the ATFI system is required or recommended. The only significant change is the elimination of the mandatory requirement for assessorials to support rate calculation by the FMC-ATFI system. Assessorials will be strictly optional, but DPI will continue to provide these for customers who need them for use in their internal systems.

ATFI Will be Replaced by Private Systems Monitored by FMC: effective 01May1999 tariffs will no longer be electronically transmitted to the ATFI computer system operated by the FMC. Instead, each carrier, or an FMC certified tariff publisher acting its behalf, must provide the FMC with free access to its computerized tariff database system. The FMC will monitor tariffs published on certified databases, and notify carriers when it finds items that are not acceptable. Carriers will be required to provide FMC with a written certification that the information in their tariffs is true and accurate. Carriers who fail to comply with FMC instructions risk substantial penalties. DPI will distribute the new tariff certification forms and assist with filing during April 1999.

The FMC will maintain a master listing of certified tariff database systems: access to each database system must also be provided to the shipping public, at reasonable charge, via the Internet or via telephone dial-in services. Tariff database systems must provide retrieval abilities similar to those currently provided by ATFI, and must maintain data on-line for a period of 5 years. In response to comments, the proposed requirement for bottom-line rate calculation was removed by FMC.

Tariffs published by Distribution-Publications, Inc. (DPI) will meet FMC’s new requirements: Here at DPI, we expect to gain FMC certification for our tariff database systems, and for each of the tariffs published on behalf of our customers in good standing. DPI will also continue to print page based paper tariffs for our customers, and provide tariffs on CD-ROM disks and via the Internet. Current procedures for tariff updating by DPI will be maintained without change. Except for essential term tariffs, only minor amendments will be needed to ensure tariffs currently published by DPI meet the new regulations. DPI will ensure a smooth transition to the new tariff regulations for all its customers.

filing with FMC is simplified, but still required

In response to industry comments, the FMC has made significant changes to Docket Nos. 98-26 and 98-30, which implement service contract requirements authorized by the Ocean Shipping Reform Act of 1998 (OSRA). FMC filing of service contracts will continue to be required under the new regulations, but the filing requirement has been simplified, and proposed reporting requirements have been eliminated.

Proposed New S/C Reporting Requirements Eliminated: at a meeting of Commissioners on February 18 it was decided to remove the proposed new service contract (s/c) reporting requirements contained in Docket 98-26. The Commissioners also eliminated the portion of the rule that purported to implement provisions of OSRA dealing with “voluntary guidelines” for service contracting by conference members. These proposed requirements would have increased FMC oversight in this area, and given the FMC additional information on service contract negotiations and proposals.

FMC Filing of Service Contracts is Still Required: the Commissioners decided to significantly reduce the restrictive filing requirements proposed in Docket 98-30. At a meeting on February 25 the Commissioners determined that carriers will continue to be required to file the full details of each service contract with the FMC, but will not be required to transmit these filings to the FMC’s “ATFI” system, as proposed in Docket 98-30. Instead, the FMC will allow the filing of service contracts via Internet e-mail messages, with attached files in text, word processing or spreadsheet formats. The ATFI based system will remain as an option for a transition period in 1999. This has been adopted as an interim rule.

Essential Terms Tariffs are Still Required: in addition to the filing requirement, carriers will be required to publish and maintain tariffs containing five (5) essential terms of each service contract, viz: origins, destinations, commodities, volumes, and contract duration. These tariffs must meet FMC tariff publication requirements defined in Docket 98-29. These carrier tariffs will not include details of rates, surcharges or shipper/consignee names. The “me-too” provision of the current service contract regulations will be eliminated on May 1, 1999.

possible violations of the Shipping Act

After extensive investigation by the Bureau of Enforcement, the FMC issued Docket 99-01 on January 18 to order a formal investigation and hearing into possible violations of sections 10(a)(1) and 10(b)(1) of the Shipping Act of 1984 by Direct Container Line Inc., (DCL) a Carson, CA based NVOCC.

In Docket 99-01 FMC alleges DCL misdeclared the cargo measurements and cargo weights its master bills of lading submitting to underlying ocean carriers so as reduce its shipping costs. DCL’s charges to its own NVOCC customers, meanwhile, were calculated on the basis of the higher measurements and weights shown only on DCL internal manifests. The house bills of lading issued by DCL to its shippers likewise reflect its reliance upon the higher measurements and weights. In its investigation, FMC also examined DCL’s rating of cargoes under the provisions of its NVOCC tariff. In examining copies of rated house bills of lading for these same shipments, it appears that DCL has in many instances applied LCL rates which are higher than those on file in its FMC tariff.

Section 10(a)(1) of the Shipping Act of 1984, prohibits any person by means of false billings, false classification, false weighing, false report of weight, false measurement, or by any other unjust or unfair device or means, to obtain or attempt to obtain ocean transportation at less than applicable tariffs. Section 10 (b)(1) of the 1984 Act, prohibits a common carrier from charging, collecting or receiving greater, less or different compensation for the transportation than the rates and charges set forth in its tariff. FMC ordered an investigation and hearing in this matter. In the event violations of the Shipping Act are found, civil penalties could be assessed, and the tariff of Direct Container Line could be suspended.

effective May 1, 1999

New FMC requirements will require every US based Non-Vessel Operating Common Carrier (NVOCC) to obtain a license to operate as an Ocean Transportation Intermediary (OTI). This new regulation was proposed in FMC Docket No. 98-28. It was finalized, with several amendments, on March 1, 1999 and becomes part of CFR-46 Part 515 effective May 1, 1999. This new regulation significantly increases the FMC’s regulation over NVOCCs in the USA. It also gives NVOCCs based outside the USA the option to obtain the OTI license, and thereby reduce bonding requirements, and act as their own US agents.

FMC Licensed Ocean Freight Forwarders Are Not Required to Apply for the OTI License: in order to implement this new requirement, the FMC amended the licensing application procedures it has long used for ocean freight forwarders, and made most of these apply for NVOCCs in the USA as well. Currently licensed ocean freight forwarders will not be required to apply for the new OTI License. The Commission will issue new licenses to all currently licensed freight forwarders, using the same license numbers, provided that they increase their bonds as required by the new regulations.

OTI License Requirements for NVOCCs: to obtain the OTI license, each NVOCC currently operating in the USA, except those licensed as ocean freight forwarders, must complete License Form FMC-18 Rev. by May 1, 1999, submit it to the FMC with a license fee of USD 778, and meet the necessary qualifications. Each applicant must provide proof it meets the basic qualifications, viz:

“(1) It possesses the necessary experience, that is, its qualifying individual has a minimum of three years experience in ocean transportation intermediary activities in the United States, and the necessary character to render ocean transportation intermediary services. A foreign NVOCC seeking to be licensed under this part must demonstrate that its qualifying individual has a minimum 3 years’ experience in ocean transportation intermediary activities; and the necessary character to render ocean transportation intermediary services.

(2) It has obtained and filed with the Commission a valid bond, proof of insurance, or other surety in conformance with CFR-46 Part 515.21.

(3) An NVOCC with a tariff and proof of financial responsibility in effect as of April 30, 1999 may continue to operate as an NVOCC without the requisite three years experience; and will be provisionally licensed while the Commission reviews their application. Such person designated as the qualifying individual for a provisionally licensed NVOCC may not act as a qualifying individual for another ocean transportation intermediary until it has obtained the necessary three years experience in ocean transportation intermediary services in the United States.”

More information on OTI licensing requirements is available from DPI, and from the FMC Bureau of Tariffs, Certification and Licensing, in Washington, DC, tel: 202-523-5796, fax: 202-523-5830.

resident in, or incorporated in the USA

A simple definition makes a big difference in bonding and licensing requirements under the new regulations of Docket 98-28. Effective May 1, 1999 FMC will require Non-Vessel Operating Common Carriers (NVOCC) in the USA to increase their bonds to USD 75,000 and obtain licenses as Ocean Transportation Intermediaries (OTI). NVOCCs outside the USA are not required to obtain the OTI license, but must increase their bonds to USD 150,000, and must use agents in the USA that are licensed as OTIs. The definition of “in the USA” follows:

“…a person is considered to be ‘in the United States’ if such person is resident in, or incorporated or established under, the laws of the United States. Only persons licensed under this part may furnish or contract to furnish ocean transportation intermediary services in the United States on behalf of an unlicensed ocean transportation intermediary.”

New rules issued under FMC Docket No. 98-28 substantially increase financial responsibility (bonding) requirements for Ocean Transportation Intermediaries (OTI), Ocean Freight Forwarders, and Non-Vessel Operating Common Carriers (NVOCC). Effective May 1, 1999 new FMC bonding requirements under CFR-46 Part 515 are as follows:

OTI-Ocean Freight Forwarders in the USA: USD 50,000 plus USD 10,000 per branch office;

OTI-NVOCCs in the USA: USD 75,000 plus USD 10,000 per branch office;

NVOCCs outside the USA: USD 150,000 (no branch office bonding requirement).

In addition to the increased dollar value of the bond, the language of the bond document has been changed significantly. To help implement new rule quickly the FMC amended this it to allow currently bonded ocean freight forwarders and NVOCCs to increase the dollar amount of their bonds by filing a simple “rider” by May 1st. The new language requirements can be met within one year, at the time when the OTI or unlicensed NVOCC would ordinarily renew its bond. Freight Forwarders and NVOCCs that do not comply with the new requirements and continue to operate in the foreign commerce of the USA risk cancellation of their licenses and/or tariffs, and substantial FMC penalties.

presents budget for FY2000

On February 11, 1999 Chairman Hal Creel appeared before the Committee On Transportation And Infrastructure of United States House Of Representatives to present President Clinton’s fiscal year 2000 budget for the Federal Maritime Commission. The budget proposal calls for an increase of USD1.15 million over fiscal year 1999 to USD 15.3 million. Nearly two-thirds of the increase funds salary and benefit increases for the Commission’s staff of 138 employees. The remainder is for rent increases and to support computer modernization efforts. Chairman Creel noted the “ATFI” system is not a part of the FY 2000 budget request, but the FMC has included funding to maintain historical tariff records electronically.

On February 10, 1999 President Clinton’s press secretary announced Joseph E. Brennan, former Governor of Maine will be nominated to fill the fifth seat on the Federal Maritime Commission. Brennan was governor of Maine from 1979 to 1987, and later spent four years in Congress, where he was a member of the House Merchant Marine & Fisheries Committee, which had oversight responsibility for the FMC at that time. The appointment of Gov. Brennan will bring the FMC up to full strength for the first time in three years, at least temporarily. Commissioner Ming Hsu plans to retire when her term expires later this year. The FY 2000 budget presented by Chairman Creel includes funding for only four Commissioners.

Index of all SIGNALS™ Issues

SIGNALS™ is provided as a service to its customers by Distribution-Publications, Inc. © 1999. All rights reserved.

“Navigating the Regulatory Seas” is a service mark of Distribution-Publications, Inc.

The information contained herein is obtained from reliable sources. It is subject to change at any time, however, depending on changes in laws and regulations. While we continually attempt to monitor this information, we do not guarantee its accuracy and are not responsible for any damages suffered by any party in reliance on it.

Distribution-Publications, Inc. A General Steamship Company

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SIGNALS™ the newsletter of Distribution-Publications, Inc. Vol. 3, No. 3, March 1, 1999