[Federal Register Volume 65, Number 56 (Wednesday, March 22, 2000)]
[Rules and Regulations]
[Pages 15252-15254]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-7097]


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FEDERAL MARITIME COMMISSION

46 CFR Part 515

[Docket No. 99-23]


In the Matter of a Single Individual Contemporaneously Acting as 
the Qualifying Individual for Both an Ocean Freight Forwarder and a 
Non-Vessel-Operating Common Carrier

AGENCY: Federal Maritime Commission.

ACTION: Final rule.

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SUMMARY: The Federal Maritime Commission amends its regulations 
pertaining to the licensing requirements of ocean transportation 
intermediaries in accordance with the Shipping Act of 1984, as amended 
by The Ocean Shipping Reform Act of 1998. We are also republishing a 
certification process pertaining to drug convictions that was 
previously omitted.

DATES: This rule becomes effective March 22, 2000.

FOR FURTHER INFORMATION CONTACT:

Sandra L. Kusumoto, Director, Bureau of Consumer Complaints and 
Licensing, Federal Maritime Commission, 800 North Capitol Street, NW, 
Washington, DC 20573-0001; (202) 523-5788
Thomas Panebianco, General Counsel, Federal Maritime Commission, 800 
North Capitol St., NW, Washington, DC 20573-0001; (202) 523-5740


SUPPLEMENTARY INFORMATION: On February 14, 2000, the Federal Maritime 
Commission (``FMC'' or ``Commission'') published a proposed rule to 
amend 46 CFR 515.11(c) to allow affiliated companies to have the same 
qualifying individual to obtain a license under this part. 65 FR 7335. 
The proceeding was initiated in response to a petition filed with the 
Commission by the National Customs Brokers & Forwarders Association of 
America (``NCBFAA'') which sought the issuance of a declaratory order 
confirming, pursuant to 46 CFR 515.11(c) (1999), that a single 
individual can act contemporaneously as the qualifying individual for 
both an ocean freight forwarder and a non-vessel-operating common 
carrier (``NVOCC''), as long as they are affiliated entities. In the 
alternative, NCBFAA sought a rulemaking to amend Sec. 515.11(c) to 
achieve the same result. As discussed in the notice of proposed 
rulemaking, the Commission denied NCBFAA's petition for a declaratory 
order, and opted to address its concerns through a rulemaking.
    Although not addressed in NCBFAA's petition, the Commission also 
proposed to amend the definition of ``branch office'' at 46 CFR 
515.2(c), by removing the last sentence of the definition, which states 
that the term does not include a separately incorporated branch office. 
We explained that the Commission has recognized separately incorporated 
branch offices elsewhere in part 515, particularly with respect to the 
licensing and financial responsibility requirements, and that the 
proposed modification should remove any potential confusion.
    Finally, we noted that in promulgating the rules to implement the 
Ocean Shipping Reform Act of 1998, Pub. L. 105-258, 112 Stat. 1902, in 
Docket No. 98-28, Licensing, Financial Responsibility Requirements and 
General Duties for Ocean

[[Page 15253]]

Transportation Intermediaries, we inadvertently failed to carry over 
Sec. 510.12(a)(2) into part 515. That section was a certification 
process to effect the requirements of 21 U.S.C. 862, which provides 
that Federal benefits shall be withheld in certain circumstances from 
individuals who have been convicted of drug distribution or possession 
in Federal or state courts.
    For the reasons set forth below, the Commission adopts the rules as 
proposed.
    First, the Commission received one comment in response to the 
notice of proposed rulemaking from NCBFAA, who finds the Commission's 
proposal to amend Sec. 515.11(c) sufficiently broad to remedy and 
eliminate the problems identified by NCBFAA in its petition. In 
addition, NCBFAA notes that it agrees with the Commission that the 
proposal will reduce unnecessary regulatory burdens and provide savings 
to those companies that would have been otherwise forced to modify 
their business structures. NCBFAA asserts that the proposal will not 
serve to diminish the professionalism and responsibility of ocean 
transportation intermediaries (``OTIs''), because the entities will be 
supervised by a person possessing the requisite expertise in accordance 
with the Commission's licensing requirements. Finally, NCBFAA declares 
that it fully supports the proposal, believing it to be in the public 
interest, and requests that the Commission issue a final rule in the 
proposed form at the earliest date.
    We appreciate NCBFAA's comments and accordingly adopt as final the 
amendment to Sec. 515.11(c).
    In addition, no comments were submitted with respect to either the 
proposed modification to the definition of branch office or the 
republication of the certification required by 21 U.S.C. 862. 
Therefore, the proposed modifications are carried forward in the final 
rule.

Final Regulatory Flexibility Analysis

Need for and Objective of the Rule

    In response to a petition filed by the NCBFAA, the FMC is amending 
46 CFR 515.11(c) to allow affiliated ocean freight forwarder and NVOCC 
entities to have the same qualifying individual in order to obtain a 
license under this part.

Summary of the Significant Issues Raised by Public Comments in Response 
to the Initial Regulatory Flexibility Analysis

    No public comments were received in response to the initial 
regulatory flexibility analysis.

Description and an Estimate of the Number of Small Businesses to Which 
the Rule Will Apply

    The Commission believes that the final rule will benefit OTIs by 
allowing affiliated ocean freight forwarders and NVOCCs to have the 
same qualifying individual in order to obtain a license under this 
part. At present, there are approximately 600 OTIs with affiliated 
ocean freight forwarder and NVOCC operations affected by the proposed 
rulemaking, including approximately 20 sole proprietorships.
    Entities affected by the current rule, particularly sole 
proprietorships, could have been required to modify their existing 
business structures, either by: (1) Merging their affiliated ocean 
freight forwarder and NVOCC operations; (2) creating a branch office; 
or (3) hiring another qualifying individual to oversee their 
operations. However, the Commission's Bureau of Consumer Complaints and 
Licensing (formerly the Bureau of Tariffs, Certification and Licensing) 
has refrained from denying licenses on this basis pending the 
conclusion of this proceeding.

Description of the Projected Reporting, Recordkeeping and Other 
Compliance Requirements of the Rule, Including an Estimate of the 
Classes of Small Entities That Will Be Subject to the Requirement and 
the Types of Professional Skills Necessary for the Preparation of the 
Report or Record

    The Commission is not aware of any additional reporting, 
recordkeeping or other compliance requirements as a result of the 
proposed rulemaking. Rather, the Commission believes that the impact of 
the new rule will be primarily to benefit sole proprietorship OTIs by 
permitting affiliated entities to have the same qualifying individual 
to satisfy the licensing requirements of this part.
    The benefit of the final rulemaking can be measured primarily as 
the savings to sole proprietorships of not having to modify their 
business structures as described above. Moreover, it will benefit 
corporations and partnerships with affiliated freight forwarder and 
NVOCC operations by giving them greater flexibility in selecting a 
single qualifying individual for both organizations. However, it is not 
feasible to specifically quantify these benefits because individual OTI 
operations vary dramatically in scope and overhead.
    The Chairman cannot certify that the final rulemaking will not have 
a significant economic impact on a substantial number of small 
entities. However, the Commission believes that the new rule will have 
no adverse impact on small entities, and further, that the impact will 
be to benefit OTIs by allowing affiliated entities to have the same 
qualifying individual to obtain an OTI license.

Steps the FMC Has Taken To Minimize the Significant Economic Impact on 
Small Entities Consistent With the Stated Objectives of Applicable 
Statutes, Including a Statement of the Factual, Policy and Legal 
Reasons for Selecting the Alternative in the Final Rule, and the 
Reasons for Rejecting Each of the Other Significant Alternatives

    The Commission invited comments to the initial regulatory 
flexibility analysis from all interested parties. However, as stated 
above, no public comments were received in response to the initial 
regulatory flexibility analysis. The Commission believes that the only 
significant impact of the rulemaking will be to benefit OTIs by 
allowing affiliated ocean freight forwarders and NVOCCs to have the 
same qualifying individual.
    The modifications to the proposed rule, the reasons for selecting 
alternative approaches, and the reasons for rejecting initial 
proposals, if any, are each thoroughly described in the Supplementary 
Information to the final rule.

Relevant Federal Rules That May Duplicate, Overlap, or Conflict With 
the New Rule

    The Commission is not aware of any other federal rules that 
duplicate, overlap, or conflict with the final rulemaking.

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.

    For the reasons stated in the preamble, the Federal Maritime 
Commission amends 46 CFR chapter IV, subchapter B, as set forth below:

PART 515--LICENSING, FINANCIAL RESPONSIBILITY REQUIREMENTS, AND 
GENERAL DUTIES OF OCEAN TRANSPORTATION INTERMEDIARIES

    1. The authority citation is amended to read as follows:


    Authority: 5 U.S.C. 553; 31 U.S.C. 9701; 46 U.S.C. app. 1702, 
1707, 1709, 1710, 1712, 1714, 1716, and 1718; Pub. L. 105-383, 112 
Stat. 3411; 21 U.S.C. 862.


[[Page 15254]]



    2. In Sec. 515.2, revise paragraph (c) to read as follows:


Sec. 515.2  Definitions.

* * * * *
    (c) Branch office means 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 office is located at an 
address different from that of the licensee's designated home office.
* * * * *

    3. In Sec. 515.11, revise paragraph (c) to read as follows:


Sec. 515.11  Basic requirements for licensing; eligibility.

* * * * *
    (c) Affiliates of intermediaries. An independently qualified 
applicant may be granted a separate license to carry on the business of 
providing ocean transportation intermediary services even though it is 
associated with, under common control with, or otherwise related to 
another ocean transportation intermediary through stock ownership or 
common directors or officers, if such applicant submits: a separate 
application and fee, and a valid instrument of financial responsibility 
in the form and amount prescribed under Sec. 515.21. The qualifying 
individual of one active licensee shall not also be designated as the 
qualifying individual of an applicant for another ocean transportation 
intermediary license, unless both entities are commonly owned or where 
one directly controls the other.
* * * * *

    4. In Sec. 515.12, revise paragraph (a) to read as follows:


Sec. 515.12  Application for license.

    (a) Application and forms.
    (1) Any person who wishes to obtain a license to operate as an 
ocean transportation intermediary shall submit, in duplicate, to the 
Director of the Commission's Bureau of Tariffs, Certification and 
Licensing, a completed application Form FMC-18 Rev. (``Application for 
a License as an Ocean Transportation Intermediary'') accompanied by the 
fee required under Sec. 515.5(b). All applicants will be assigned an 
application number, and each applicant will be notified of the number 
assigned to its application. Notice of filing of such application shall 
be published in the Federal Register and shall state the name and 
address of the applicant and the name and address of the qualifying 
individual. If the applicant is a corporation or partnership, the names 
of the officers or partners thereof shall be published.
    (2) An individual who is applying for a license in his or her own 
name must complete the following certification:

    I, ______ (Name), ______, certify under penalty of perjury under 
the laws of the United States, that I have not been convicted, after 
September 1, 1989, of any Federal or state offense involving the 
distribution or possession of a controlled substance, or that if I 
have been so convicted, I am not ineligible to receive Federal 
benefits, either by court order or operation of law, pursuant to 21 
U.S.C. 862.
* * * * *

By the Commission.
Bryant L. VanBrakle,
Secretary.
[FR Doc. 00-7097 Filed 3-21-00; 8:45 am]
BILLING CODE 6730-01-P