[Federal Register Volume 69, Number 19 (Thursday, January 29, 2004)]
[Proposed Rules]
[Pages 4271-4274]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-1808]


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FEDERAL MARITIME COMMISSION

46 CFR Part 515

[Docket No. 04-02]


Optional Rider for Proof of Additional NVOCC Financial 
Responsibility

AGENCY: Federal Maritime Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Federal Maritime Commission proposes to amend its 
regulations governing proof of financial responsibility for ocean 
transportation intermediaries. The Commission proposes to allow an 
optional rider for additional coverage to be filed with a licensed non-
vessel-operating common carrier's proof of financial responsibility for 
such carriers serving the U.S. oceanborne trade with the People's 
Republic of China.

DATES: Comments must be received no later than February 20, 2004. 
Requests for meetings to make oral presentations to individual 
Commissioners must be received, and the meetings completed, by this 
date as well. Submit an original and 15 copies of comments (paper), or 
e-mail comments as an attachment in WordPerfect 8, Microsoft Word 2000, 
or earlier versions of these applications.

ADDRESSES: Address all comments concerning this proposed rule to: 
Bryant L. VanBrakle, Secretary, Federal Maritime Commission, 800 North 
Capitol Street, NW., Room 1046, Washington, DC 20573-0001, (202) 523-
5725, E-mail: [email protected].

FOR FURTHER INFORMATION CONTACT: Amy W. Larson, General Counsel, 
Federal Maritime Commission, 800 North Capitol Street, NW., Room 1018, 
Washington, DC 20573-0001, (202) 523-5740, E-mail: 
[email protected].
    Sandra A. Kusumoto, Director, Bureau of Consumer Complaints and 
Licensing, Federal Maritime Commission, 800 North Capitol Street, NW., 
Room 970, Washington, DC 20573-0001, (202) 523-5787, E-mail: 
[email protected].

SUPPLEMENTARY INFORMATION: On January 22, 2004, the Federal Maritime 
Commission (``FMC'' or ``Commission'') granted in part and denied in 
part a petition for rulemaking (``Petition'') from the National Customs 
Brokers and Forwarders Association of America, Inc. (``NCBFAA''). 
Petition No. P10-03, Petition of the National Customs Brokers and 
Forwarders Association of America, Inc. for Rulemaking. NCBFAA, a trade 
association representing licensed ocean transportation intermediaries 
(``OTIs'') in the U.S., whose members it claims are linked to 90% of 
the U.S. oceanborne cargo, petitioned the Commission to change its 
rules to effectuate concessions made by the People's Republic of China 
(``PRC'' or ``China'') in a recently concluded U.S.-China Agreement on 
Maritime Transport (``Agreement''). The Agreement's associated 
Memorandum of Consultations provides that the Chinese government will 
not require U.S. NVOCCs to make a cash deposit in a Chinese bank, as 
long as the NVOCC: (1) Is a legal person registered by U.S. 
authorities; (2) obtains an FMC license as an NVOCC; and (3) provides 
evidence of financial responsibility in the total amount of RMB 800,000 
or U.S. $96,000. Therefore, it appears that an FMC-licensed NVOCC that 
voluntarily provides an additional surety bond in the amount of 
$21,000, which by its conditions is responsive to potential claims of 
the Chinese Ministry of Communications (``MOC'') (as well as

[[Page 4272]]

other Chinese agencies) for violations of the RIMT, would be able to 
register in the PRC without paying the cash deposit otherwise required 
by Chinese law and regulation. However, because current FMC regulations 
do not provide any mechanism for NVOCCs to file proof of such 
additional financial responsibility with the FMC, the Commission 
proposes to amend its regulations in order to permit licensed NVOCCs to 
file such additional proof in the form of optional riders to the 
required NVOCC bond.
    The rule the Commission proposes differs from that requested by 
NCBFAA in its Petition as described in the Commission's order granting 
the Petition in part and denying it in part. The rule changes proposed 
herein reflect the grant of that Petition in most substantive respects. 
However, while NCBFAA's Petition requests a rule that would ``provide 
that the bond would * * * be available for the payment of fines or 
reparation awards,'' the language proposed by NCBFAA does not include 
``reparation awards'' imposed by the Chinese Ministry of Communications 
(``MOC''). NCBFAA Petition at 2. Thus, NCBFAA's request is internally 
inconsistent. Therefore we are proposing a rule which would relate only 
to ``fines and penalties'' imposed by MOC, as provided in NCBFAA's 
proposed language for the optional rider form. Comments on the proposed 
coverage of the optional rider are invited.
    As requested by NCBFAA, the Commission proposes to amend its rules 
to add a new subsection to provide for the optional rider at Sec. 
515.25. As suggested by NCBFAA, the Commission proposes to provide for 
group security bonds by the addition of Sec. 515.25(c), changes to Sec. 
515.21(b), and the addition of Appendix F. Finally, the Commission 
declines to propose changes requested by NCBFAA which would have the 
effect of creating a procedure by which the Commission would administer 
the payment of claims against these optional riders. NCBFAA Petition at 
5. The Commission declines to propose such changes because it would be 
inappropriate for the Commission to be involved in the collection of 
claims arising from decisions of the MOC, whether involving 
reparations, fines or penalties. The issuers of such bonds may wish to 
propose language to be included in the optional rider itself that would 
relate to procedures by which claims may be exercised against the 
optional rider, such as whether the English language must be used for 
all claims, whether the surety will not pay any claim earlier than 30 
days after it has been notified of the claim, or what documentation the 
surety will require before paying a claim. The Commission invites 
comments on this issue.
    Pursuant to Rule 53(a) of the Commission's Rules of Practice and 
Procedure, 46 CFR 502.53(a), in notice-and-comment rulemakings the 
Commission may permit interested persons to make oral presentations in 
addition to filing written comments. The Commission has determined to 
permit interested persons to make such presentations to individual 
Commissioners in this proceeding, at the discretion of each 
Commissioner.
    Interested persons may request one-on-one meetings at which they 
may make presentations describing their views on the proposed rule. Any 
meeting or meetings shall be completed before the close of the comment 
period. The summary or transcript of oral presentations will be 
included in the record and must be submitted to the Secretary of the 
Commission within 5 days of the meeting. Interested persons wishing to 
make an oral presentation should contact the Office of the Secretary to 
secure contact names and numbers for individual Commissioners.
    In accordance with the Regulatory Flexibility Act, 5 U.S.C. 601 et 
seq., the Chairman of the Federal Maritime Commission certifies that 
this rule, if promulgated, will not have a significant economic impact 
on a substantial number of small entities. The Commission recognizes 
that the majority of businesses that would be affected by this rule 
qualify as small entities under the guidelines of the Small Business 
Administration. The rule, however, would establish an optional 
provision for U.S. licensed NVOCCs, which may be used at their 
discretion. The rule would pose no economic detriment to small business 
entities. Rather, it would provide a cost effective alternative, than 
would otherwise be available, to assist licensed NVOCCs with their 
business endeavors in the PRC. As such, the rule would help to promote 
U.S. business interests in the PRC and facilitate U.S. foreign 
commerce.
    This regulatory action is not a ``major rule'' under 5 U.S.C. 
804(2).
    The collection of information requirements contained in this rule 
have been submitted to the Office of Management and Budget for review 
under section 3504(h) of the Paperwork Reduction Act of 1980, as 
amended. Public reporting burden for this collection of information is 
estimated to be 1 hour per response, including time for reviewing 
instructions, searching existing data sources, gathering and 
maintaining the data needed, and completing and reviewing the 
collection of information. Send comments regarding the burden estimate 
or any other aspect of this collection of information, including 
suggestions for reducing this burden, to Austin L. Schmitt, Deputy 
Executive Director, Federal Maritime Commission, 800 North Capitol 
Street, NW., Washington, DC 20573; and to the Office of Information and 
Regulatory Affairs, Office of Management and Budget, Attention: Desk 
Officer for the Federal Maritime Commission, Washington, DC 20503.

List of Subjects for 46 CFR Part 515

    Common carriers, Exports, Non-vessel-operating common carriers, 
Ocean transportation intermediaries, Financial responsibility 
requirements, Reports and recordkeeping requirements, Surety bonds.

    Accordingly, the Federal Maritime Commission proposes to amend 46 
CFR part 515 subpart C as follows:

Subpart C--Financial Responsibility Requirements; Claims Against 
Ocean Transportation Intermediaries

    1. The authority citation for part 515 continues 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.

    2. Revise 46 CFR 515.21(b) to add a new sentence at the end as 
follows:


Sec. 515.21  Financial responsibility requirements.

* * * * *
    (b) * * * A group or association of ocean transportation 
intermediaries may also file an optional additional bond as provided 
for by Sec. 515.25(c).
* * * * *
    3. Amend 46 CFR 515.23 to add paragraph (d) to read as follows:


Sec. 515.23  Claims against an ocean transportation intermediary.

* * * * *
    (d) The Federal Maritime Commission shall not serve as depository 
or distributor to third parties of optional bond riders as described in 
Sec. 515.25(c), Appendix E to Subpart C of this Part [Optional Rider to 
Form FMC-48] or Appendix F to Subpart C of this Part [Optional Rider to 
Form FMC-69]. Administration of claims against such optional bond 
riders will be pursuant to the terms of the optional bond rider itself.
    4. Revise 46 CFR 515.25 to add paragraph (c) to read as follows:

[[Page 4273]]

Sec. 515.25  Filing of proof of financial responsibility.

* * * * *
    (c) Optional bond rider. Any person operating as an NVOCC in the 
United States as defined by Sec. 515.2(o)(2), in addition to the bond 
required by Sec. 515.21(a)(2), may file with the Commission proof of 
additional financial responsibility in the form of a rider as provided 
for in Appendix E or Appendix F of this Part.
    5. Add Appendix E to read as follows:

Appendix E to Subpart C of Part 515--Optional Rider for Additional 
NVOCC Financial Responsibility (Optional Rider to Form FMC-48) [Form 
48A]

Form FMC-48A

RIDER

    The undersigned [--------------], as Principal and [----------], 
as Surety do hereby agree that the existing Bond No. [------] to the 
United States of America and filed with the Federal Maritime 
Commission pursuant to Section 19 of the Shipping Act of 1984 is 
modified as follows:
    1. The following condition is added to this Bond:
    An additional condition of this Bond is that $[--------] shall 
be available to pay any fines and penalties imposed by the Ministry 
of Communications of the People's Republic of China or its 
authorized competent communications department of the people's 
government of the province, autonomous region or municipality 
directly under the Central Government or the State Administration of 
Industry and Commerce pursuant to the Regulations of the People's 
Republic of China on International Maritime Transportation and the 
Implementing Rules of the Regulations of the PRC on International 
Maritime Transportation promulgated by MOC Decree No. 1, January 20, 
2003. Such amount is separate and distinct from the bond amount set 
forth in the first paragraph of this Bond. Payment under this Rider 
shall not reduce the bond amount in the first paragraph of this 
Bond.
    2. The liability of the Surety shall not be discharged by any 
payment or succession of payments pursuant to section 1 of this 
Rider, unless and until the payment or payments shall aggregate the 
amount set forth in section 1 of this Rider. In no event shall the 
Surety's obligation under this Rider exceed the amount set forth in 
section 1 regardless of the number of claims.
    3. This Rider is effective the [------] day of [----------], 
200[--], and shall continue in effect until discharged, terminated 
as herein provided, or upon termination of the Bond in accordance 
with the sixth paragraph of the Bond. The Principal or the Surety 
may at any time terminate this Rider by written notice to the 
Federal Maritime Commission at its office in Washington, DC. The 
Surety also shall send notice to the Ministry of Communications of 
the People's Republic of China via telecopier or e-mail. Evidence of 
transmission of the notice to the Ministry of Communications shall 
constitute proof of notice. Such termination shall become effective 
thirty (30) days after receipt of said notice by the Commission, or 
transmission of the notice to the Ministry of Communications, 
whichever occurs later. The Surety shall not be liable for fines or 
penalties imposed on the Principal after the expiration of the 30-
day period but such termination shall not affect the liability of 
the Principal and Surety for any fine or penalty imposed prior to 
the date when said termination becomes effective.
    4. Bond No. [--------] remains in full force and effect 
according to its terms except as modified above.
    In witness whereof we have hereunto set our hands and seals on 
this [----] day of [--------], 200[--],

[Principal]
By:

[Surety]
By:

Privacy Act and Paperwork Reduction Act Notice.

    The collection of this information is authorized generally by 
Section 19 of the Shipping Act of 1984, 46 U.S.C. app. Sec. 1718.
    This is an optional form. Submission is completely voluntary. 
Failure to submit this form will in no way impact the Federal 
Maritime Commission's assessment of your firm's financial 
responsibility.
    You are not required to provide the information requested on a 
form that is subject to the Paperwork Reduction Act unless the form 
displays a valid OMB control number. Copies of this form will be 
maintained until the corresponding license has been revoked.
    The time needed to complete and file this form will vary 
depending on individual circumstances. The estimated average time 
is: Recordkeeping, 20 minutes; Learning about the form, 20 minutes; 
Preparing and sending the form to the FMC, 20 minutes.
    If you have comments concerning the accuracy of these time 
estimates or suggestions for making this form simpler, we would be 
happy to hear from you. You can write to the Secretary, Federal 
Maritime Commission, 800 North Capitol Street, NW, Washington, DC 
20573-0001 or e-mail: [email protected].

    6. Add Appendix F to read as follows:

Appendix F to Subpart C of Part 515--Optional Rider for Additional 
NVOCC Financial Responsibility for Group Bonds [Optional Rider to Form 
FMC-69] [Form 69A]

Form FMC-69A

RIDER

    The undersigned [--------------], as Principal and [----------], 
as Surety do hereby agree that the existing Bond No. [------] to the 
United States of America and filed with the Federal Maritime 
Commission pursuant to Section 19 of the Shipping Act of 1984 is 
modified as follows:
    1. The following condition is added to this Bond:
    An additional condition of this Bond is that $[--------] shall 
be available to any NVOCC enumerated in Appendix A to pay any fines 
and penalties imposed by the Ministry of Communications of the 
People's Republic of China or its authorized competent 
communications department of the people's government of the 
province, autonomous region or municipality directly under the 
Central Government or the State Administration of Industry and 
Commerce pursuant to the Regulations of the People's Republic of 
China on International Maritime Transportation and the Implementing 
Rules of the Regulations of the PRC on International Maritime 
Transportation promulgated by MOC Decree No. 1, January 20, 2003. 
Such amount is separate and distinct from the bond amount set forth 
in the first paragraph of this Bond. Payment under this Rider shall 
not reduce the bond amount in the first paragraph of this Bond. The 
Surety shall indicate the amount available to pay such fines and 
penalties on the Appendix A listing for each NVOCC wishing to 
exercise this option.
    2. The liability of the Surety shall not be discharged by any 
payment or succession of payments pursuant to section 1 of this 
Rider, unless and until the payment or payments shall aggregate the 
amount set forth in section 1 of this Rider. In no event shall the 
Surety's obligation under this Rider exceed the amount set forth in 
section 1 regardless of the number of claims.
    3. This Rider is effective the [------] day of [----------], 
200[--], and shall continue in effect until discharged, terminated 
as herein provided, or upon termination of the Bond in accordance 
with the sixth paragraph of the Bond. The Principal or the Surety 
may at any time terminate this Rider by written notice to the 
Federal Maritime Commission at its office in Washington, DC. The 
Surety also shall send notice to the Ministry of Communications of 
the People's Republic of China via telecopier or email. Evidence of 
transmission of the notice to the Ministry of Communications shall 
constitute proof of notice. Such termination shall become effective 
thirty (30) days after receipt of said notice by the Commission, or 
transmission of the notice to the Ministry of Communications, 
whichever occurs later. The Surety shall not be liable for fines or 
penalties imposed on the Principal after the expiration of the 30-
day period but such termination shall not affect the liability of 
the Principal and Surety for any fine or penalty imposed prior to 
the date when said termination becomes effective.
    4. Bond No. [--------] remains in full force and effect 
according to its terms except as modified above.
    In witness whereof we have hereunto set our hands and seals on 
this [----] day of [--------], 200[--],

[Principal]
By:

[Surety]
By:

Privacy Act and Paperwork Reduction Act Notice.

    The collection of this information is authorized generally by 
Section 19 of the Shipping Act of 1984, 46 U.S.C. app. Sec. 1718.
    This is an optional form. Submission is completely voluntary. 
Failure to submit this

[[Page 4274]]

form will in no way impact the Federal Maritime Commission's 
assessment of your firm's financial responsibility.
    You are not required to provide the information requested on a 
form that is subject to the Paperwork Reduction Act unless the form 
displays a valid OMB control number. Copies of this form will be 
maintained until the corresponding license has been revoked.
    The time needed to complete and file this form will vary 
depending on individual circumstances. The estimated average time 
is: Recordkeeping, 20 minutes; Learning about the form, 20 minutes; 
Preparing and sending the form to the FMC, 20 minutes.
    If you have comments concerning the accuracy of these time 
estimates or suggestions for making this form simpler, we would be 
happy to hear from you. You can write to the Secretary, Federal 
Maritime Commission, 800 North Capitol Street, NW., Washington, DC 
20573-0001 or e-mail: [email protected].

    By the Commission.
Bryant L. VanBrakle,
Secretary.
[FR Doc. 04-1808 Filed 1-28-04; 8:45 am]
BILLING CODE 6730-01-P