[Federal Register Volume 69, Number 66 (Tuesday, April 6, 2004)]
[Rules and Regulations]
[Pages 17941-17946]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-7782]


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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: Final rule.

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

EFFECTIVE DATE: April 6, 2004.

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:

I. Background

    This rulemaking proceeding was initiated on January 23, 2004, with 
the issuance by the Federal Maritime Commission (``FMC'' or 
``Commission'') of a Notice of Proposed Rulemaking (``NPR''). 69 FR 
4271 (January 29, 2004). Comments on the NPR were to be due on February 
20, 2004, but requests for

[[Page 17942]]

extension from the American Surety Association (``ASA'') and the Surety 
Association of America (``SAA'') were granted on February 19, 2004, and 
the comment period was extended until February 27, 2004. The Commission 
also invited interested persons to make oral presentations in addition 
to filing written comments; however, no such presentations or meetings 
were made. The Commission received comments in response to the NPR from 
the National Customs Brokers and Forwarders Association of America, 
Inc. (``NCBFAA''), ASA and SAA.
    The NPR arose from a Commission order issued January 22, 2004 
granting in part and denying in part a petition for rulemaking from 
NCBFAA. Petition No. P10-03, Petition of the National Customs Brokers 
and Forwarders Association of America, Inc. for Rulemaking. NCBFAA, the 
primary trade association representing licensed ocean transportation 
intermediaries (``OTIs'') in the U.S., who states that its members 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 
bilateral Maritime Agreement between the United States and China 
(``Agreement''). The Agreement's associated Memorandum of Consultations 
provides that the Chinese government will not require U.S. non-vessel-
operating common carriers (``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.\1\ Therefore, it appears that an FMC-
licensed U.S. 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 other Chinese agencies) for violations of the Regulations 
of the People's Republic of China on International Maritime 
Transportation (``RIMT''),\2\ 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 proposed 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 
(hereinafter ``optional bond riders'').
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    \1\ The Agreement and Memorandum of Consultations can be found 
on the Maritime Administration's Web site at http://www.marad.dot.gov/Headlines/announcements/China/China.htm.
    \2\ Promulgated by Decree No. 335 of the State Council of the 
People's Republic of China, on December 11, 2001, and effective as 
of January 1, 2002. An English translation is available at: http://english.mofcom.gov.cn/article/200211/20021100050858_1.xml. MOC has 
issued Implementing Rules of the Regulations of the People's 
Republic of China on International Maritime Transportation, 
promulgated by Decree No. 1 of the MOC on January 20, 2003, and 
effective as of March 1, 2003. An English translation of these 
Implementing Rules is available at: http://www.moc.gov.cn/zhinengbm/sys/1026.htm.
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    The proposed rule granted NCBFAA's petition in most substantive 
respects. As requested by NCBFAA, the Commission proposed to amend its 
rules to add a new subsection to provide for the optional rider at 
Sec.  515.25. 69 FR at 4272-73. As suggested by NCBFAA, the Commission 
proposed to provide for group surety bonds by the addition of Sec.  
515.25(c), changes to Sec.  515.21(b), and the addition of Appendix F. 
Id. Finally, the Commission declined to propose changes requested by 
NCBFAA that would have the effect of creating a procedure by which the 
Commission would administer the payment of claims against these 
optional riders. Id. at 4772. The Commission found that it would be 
inappropriate for it to be involved in the collection of claims arising 
from decisions of the MOC, whether involving reparations, fines or 
penalties. Id. The Commission noted that the issuers of such bonds 
might 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 invited comments on that issue particularly. Id.

II. Summary of the Comments

    The Commission received three comments, from NCBFAA, ASA and SAA, 
generally in support of the proposed rule. All of the commenters 
propose that the Commission include further language in the rule that 
would limit the scope and application of the optional bond rider.
    NCBFAA supports the NPR and urges the Commission to adopt the 
proposed rule in its entirety. NCBFAA at 2. The proposed rule, NCBFAA 
believes, is essential to reduce regulatory burdens on small and 
medium-sized NVOCCs that would otherwise result from the Chinese 
regulations. Id. Furthermore, NCBFAA points out, because the new rule 
is optional, it will not impose any burden on NVOCCs that either do not 
engage in the U.S./China trade or prefer to meet their obligations 
under Chinese law in a different manner. Id.
    The commenters urge the Commission to narrow the scope and coverage 
of the optional bond rider. SAA and ASA request that the Commission 
include further specific requirements for the optional bond rider, as 
their members must consider the risks and uncertainty of the 
underwriting of such an instrument and NCBFAA appears to agree with 
this assertion. SAA at 1; ASA at 12; NCBFAA at 3. ASA and NCBFAA agree 
that the optional bond rider should only be limited to ``fines and 
penalties'' imposed by MOC for violations of the RIMT. ASA at 5; NCBFAA 
at 3.
    ASA argues that the optional bond rider should only be available in 
the U.S. bilateral trades between the U.S. and the PRC. ASA at 5. This 
is consistent, ASA asserts, with limitations in the ``base'' bond \3\ 
which cover only ``shipments between the U.S. and a foreign port'' but 
not for shipments or activities occurring between foreign to foreign 
points. Id. To support this assertion, ASA relies on the Memorandum of 
Consultations referenced in the NPR which states, ``[t]he bond required 
by the FMC covers liabilities for transportation-related activities in 
the U.S./China trade (as well as other U.S./foreign trades).'' ASA at 6 
(quoting Memorandum of Consultations at 2). Further, ASA contends the 
rider should only be available to pay ``fines and penalties'' assessed 
against a U.S. NVOCC operating in the U.S.-China trades, and to allow 
otherwise would be inconsistent with the FMC-filed main bond. ASA at 6.
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    \3\ Bonds obtained to satisfy the requirements of section 19 of 
the Shipping Act of 1984, 46 U.S.C. app. 1718, are hereinafter 
referred to as ``main bonds.''
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    The commenters also request that the Commission include in the rule 
further guidance regarding the procedure for claims against the 
optional rider. SAA at 1-2; ASA at 7; NCBFAA at 3-4. SAA believes that 
if the Commission does not include such guidance, then the general risk 
will be increased and such riders may be less available. SAA further 
asserts that, as an obligee on the main bond, the Commission has an 
interest in ensuring the claims process is fair and

[[Page 17943]]

definite. SAA at 1-2. SAA proposes that the Commission set forth, 
either in the regulation or in the rider, requirements that all claims 
against the optional rider be submitted by the MOC (as opposed to any 
other Chinese government agency) with documentation substantiating the 
claim in English, and that any litigation regarding the claim be heard 
by a U.S. Federal Court. Id. SAA also notes the rule as proposed does 
not contain any indication whether the claim may be paid in U.S. 
dollars. Id. at 1.
    ASA and NCBFAA suggest that the optional bond rider should 
incorporate the claims procedures in 46 CFR 515.23, which provides a 
time line for review and payment of claims, notice requirements, etc. 
ASA at 7; NCBFAA at 3-4. ASA asserts that the Commission's rules should 
state that claims against the optional bond rider must: sufficiently 
identify the NVOCC (name and bond number); state the amount sought, how 
calculated, date of violation, and specific law, rule or regulation 
violated; include a sufficient, detailed summary of the proceedings 
before the Chinese regulatory authority; be in English, with which 
NCBFAA agrees (NCBFAA at 3); and be presented to the surety at its 
address listed on the rider. ASA at 7-8.
    ASA is confused by the proposed rule's language regarding the 
Commission's intentions not to be a depository or distributor as to the 
optional rider document itself. Id. at 8. ASA objects to the proposed 
requirements for written notice of termination in Subpart C regarding 
notice of termination. Id. Further, ASA asserts that the declaration 
that the Commission will not ``serve as a depository or distributor to 
third parties of optional bond rider'' is inconsistent with the 
Commission's ``mandate that proof of financial responsibility be filed 
with the Commission.'' Id. (citing 46 U.S.C. app. 1718). The proposed 
language, ASA argues, will prejudice sureties because it is 
inconsistent with the date of termination of the main bond. Id. at 8-9. 
As an alternative, ASA proposes that the Commission maintain a copy of 
the notice of termination and that such notice be included as part of 
the main bond file so that the Commission has a complete record of the 
dates upon which the optional bond rider became effective and was 
terminated. Id. at 9. In addition, ASA objects to the language in the 
proposed rule that makes the termination date of the optional rider 
effective 30 days after either receipt by the Commission of a notice, 
or transmission of the notice to the MOC, whichever occurs later. Using 
the ``whichever occurs later'' standard, ASA argues, is prejudicial, 
arbitrary and unfair to the surety who is required to provide notice to 
the Commission but termination is effective only after MOC receives it. 
Id. ASA conjectures that notices of termination will follow a surety's 
decision to cancel the optional bond rider bond for underwriting 
reasons, the failure of the bond principal to respond to a claim, or an 
MOC fine or penalty. The surety may wish to terminate both the main 
bond and the optional bond rider at the same time, thus, ASA concludes, 
receipt of the notice to the Commission should trigger termination, and 
subsequent notice to MOC should not preempt the effectiveness of the 
notice to the Commission. Id. at 9-10. Termination of the optional bond 
rider, ASA asserts, should become effective 30 days after receipt of 
notice by the Commission or transmission of the notice to MOC, 
whichever occurs earlier. Id. at 10.
    Furthermore, ASA believes that it would be more prudent to require 
whichever party (principal or surety) provides notice of termination to 
the Commission also to provide such notice to MOC. Id. at 11. 
Otherwise, ASA worries, the Commission would be obligating the surety 
to notify MOC when the surety itself may not be aware of the 
termination filed with the Commission by the principal. Id.
    ASA proposes that the optional bond rider include a sum certain, 
namely, $21,000.00. Id. at 10. This change, ASA recommends, would 
accord with the supplementary information of the NPR and be consistent 
with NCBFAA's petition. Id. at 10-11. ASA suggests that the Commission 
revise proposed Sec.  515.25(c) to indicate that when an optional bond 
rider is used that it must be filed with the Commission. Id. at 1. 
Finally, ASA is confused by reference in the proposed Appendix F (group 
bond optional rider) which refers to an ``Appendix A.'' ASA recommends 
the Commission's rule ensure that references to any Appendix in either 
form FMC-69 or FMC-69A be clear as to which entities will be covered. 
Id. at 12.

III. Discussion

    We believe that several of the questions raised by the comments may 
be resolved through close examination of the language of the Memorandum 
of Consultations \4\ associated with the Agreement. Specifically, the 
Chinese Government has stated that it will not ``require [a] U.S. 
NVOCC[] to make a cash deposit in a Chinese bank, as a prerequisite to 
apply to the Chinese Ministry of Communications (MOC) to engage in non-
vessel operating service between U.S. and Chinese ports'' if such 
applicants provide authentic and valid documentation that they: (1) Are 
``legal person[s] registered by U.S. authorities;'' (2) have 
``obtain[ed] an FMC license evidencing NVOCC eligibility;'' and (3) 
``provide[] evidence of financial responsibility in the total amount of 
800,000RMB or $96,000.''
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    \4\ The Memorandum of Consultations is available at the Web site 
of the Maritime Administration: http://www.marad.dot.gov/Headlines/announcements/China/China.htm.
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    All of these requirements stem from Chinese law and regulation; no 
part of these requirements arise from the Shipping Act or the 
Commission's regulations. Rather, the Commission is providing this 
opportunity for eligible NVOCCs to add such optional bond riders to 
their currently filed FMC bonds to enable them to benefit from the 
commitments made in connection with the Agreement. We are hopeful that 
this will prove to be a temporary measure until other, less burdensome 
forms of financial responsibility to the cash deposit become available 
in China and the Chinese law and regulations are amended to reflect 
that availability.
    We agree with the commenters' suggestion that the scope and 
coverage of the optional bond rider form can be clarified and narrowed. 
With respect to the concerns about the geographic scope of the optional 
bond rider, we agree that the optional bond rider is subject to the 
limitations of the main bond, whose coverage includes only the U.S.-
foreign trades. We agree, therefore, that the coverage of the optional 
bond rider should be limited to the U.S.-China trade. This limitation 
is reflected in Appendices E and F to the Final Rule.
    The Memorandum of Consultations' use of the term ``total amount,'' 
and its recognition that Chinese shippers are able to assert claims for 
non-performance against the main bond, may indicate that the Chinese 
negotiators anticipated that additional coverage would be necessary to 
cover only fines and penalties assessed under the RIMT to which the 
main bond is not subject. As all FMC-licensed NVOCCs are currently 
required to carry a minimum of $75,000.00 of financial responsibility, 
the difference to reach the total required by MOC ($96,000) is 
$21,000.00. The Final Rule adopts the commenters' proposal that the 
optional bond rider forms include the sum of $21,000.00. This appears 
consistent with the text of the Memorandum of Consultations that 
``financial responsibility in the total amount of

[[Page 17944]]

800,000RMB or $96,000'' must be provided.
    The language of the Memorandum of Consultations also suggests that 
the Chinese would not require any particular currency, but would accept 
payment in either U.S. Dollars or Renminbi Yuan (``RMB''). Therefore, 
the optional bond rider forms in Appendices E and F to the Final Rule 
include a provision stating that either currency may be used, at the 
option of the surety.
    The NPR stated that the Commission found it inappropriate to be 
involved in the collection of claims arising under foreign law. 69 FR 
4272. The Commission requested comments with respect to adding such 
procedures to the language of the optional bond rider forms. The 
commenters suggest that the Commission should require claims against 
the optional bond rider to be subject to the provisions of 46 CFR 
515.23(b) and 545.3.\5\ Section 19(b)(3) of the Shipping Act directs 
the Commission to protect the interests of claimants, principals and 
sureties ``with respect to the process of pursuing claims against [OTI] 
bonds * * * through court judgments.'' 46 U.S.C. app. 1718(b)(3). That 
section is designed to ensure that the bond coverage is used for 
damages arising out of an NVOCC's transportation-related activities. In 
contrast, the optional bond rider here is not so limited, but rather, 
is to cover fines and penalties imposed by MOC. Therefore, the 
Commission declines to make the claim procedures at 46 CFR 515.23(b) 
applicable to the coverage provided by the optional bond rider.
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    \5\ 46 CFR 545.3, an interpretive rule referring to Sec.  
515.23(b), provides:
    A claimant seeking to settle a claim in accordance with Sec.  
515.23(b)(1) of this chapter should promptly provide to the 
financial responsibility provider all documents and information 
relating to and supporting its claim for the purpose of evaluating 
the validity and subject matter of the claim.
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    We understand that the uncertainties of the risks involved may 
increase the cost of the security. However, the assessment of the risks 
associated with issuing these instruments will have to be determined by 
the surety who issues them. While the Commission is optimistic that the 
marketplace will make such instruments available to the NVOCCs who seek 
them, it cannot require sureties to provide them or dictate at what 
cost they will be provided. We conclude that it would be inappropriate 
for the Commission to prescribe by rule any claims procedures for 
another government seeking to enforce its laws and regulations.
    In response to ASA's comments, the Commission, in order to give 
effect to the provisions of the Agreement, agrees to act as a 
repository of the document indicating proof of filing of an optional 
bond rider. However, as it does with regard to the main bond under 
Sec.  515.23(c), the Final Rule indicates that, for the optional bond 
rider, the Commission ``shall not serve as depository or distributor to 
third parties of bond, guaranty, or insurance funds in the event of any 
claim, judgment, or order for reparation.'' Thus, the bonds are filed 
with the Commission, but the Commission is not responsible for 
disbursing funds in the event of a claim. The change in Sec.  515.23(d) 
in the Final Rule clarifies this.
    The Commission also finds that certain aspects of the commenters' 
recommendations regarding notice and date of termination of the 
optional bond rider valid. As discussed above, if the main bond is 
terminated, which may be done by either the principal or surety, it 
follows that the optional bond rider would also be terminated. The 
Commission's rules regarding termination of the main bond are found at 
46 CFR 515.26. The present practice of the Commission's staff is to 
notify principals, sureties and tariff publishers when it receives 
termination notices for main bonds. This notice includes the date upon 
which termination of the main bond becomes effective. In a case in 
which a main bond also has an optional bond rider as described in this 
Final Rule, the Commission will add MOC as a recipient of such 
termination notices.
    ASA and SAA express concern that if the principal informs the 
Commission, but does not inform the MOC of the termination of an 
optional bond rider, the termination of the optional bond rider might 
not take effect until 30 days after the surety itself learns of the 
principal's notice of termination to the Commission. As the Commission 
will serve as the principal point of contact for the effectiveness of 
the optional bond rider, and will indicate on its Web site the 
existence of optional bond riders, it must have information regarding 
termination. However, as the Chinese Government is the likely claimant 
against and beneficiary of the optional bond rider, we also find it 
reasonable to require that the party terminating the optional bond 
rider notify MOC of that termination as well.
    To that end, the procedure for termination shall be notification to 
the Commission accompanied by proof of transmission to MOC.\6\ 
Notification will not be deemed complete unless accompanied by proof of 
transmission of notice of termination to MOC. The 30-day period will 
not begin until the Commission receives both notification and proof of 
transmission to MOC. We believe that the language in Appendices E and F 
in the Final Rule, requiring whichever party terminates the optional 
bond rider to provide proof that it has sent such notification also to 
MOC, sufficiently addresses the concern expressed by ASA and SAA.
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    \6\ Acceptable proof of transmission will include copies (may be 
electronic) of signed, dated return postal receipts, copies of 
successful fascimile transmissions or electronic mail receipts.
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    ASA questions the possible effect of exhaustion of the optional 
bond rider on the main bond. The optional bond rider supplements the 
main bond. Therefore, the fact that the amount available to MOC under 
the optional bond rider may be exhausted will have no effect on the 
availability of coverage of the main bond. Unlike the optional bond 
rider, the main bond is not available to pay claims based solely upon 
Chinese law.
    The Commission will indicate the filing of optional bond riders on 
its OTI list, located at http://www.fmc.gov/oti/oti_index2.htm, which 
includes all OTIs licensed by the Commission.\7\ The optional bond 
rider forms will also be available at the Commission's Web site at 
http://www.fmc.gov/Forms.htm#FF.
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    \7\ This list also includes foreign unlicenced NVOCCs, which are 
required to maintain financial responsibility and a tariff. NVOCCs 
are required by Commission regulation 46 CFR 520.11(a) to include 
information in its publicly-available tariff regarding financial 
responsibility, including the type of bond, the name and address of 
the surety, the bond number, and (where applicable) the name and 
address of the group or association providing coverage. The location 
of an NVOCC's tariff publication can be found at the Commission's 
Web site, Form FMC-1. http://www.fmc.gov/fmcfrml/scripts/ExtReports.asp?tariffClass=oti.
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    The Administrative Procedure Act (``APA'') provides that ``the 
required publication of a substantive rule shall not be made less than 
30 days before its effective date.'' 5 U.S.C. 553. However, the APA 
further provides an exception for rulemakings ``as otherwise provided 
by the agency for good cause found and published with the rule.'' 5 
U.S.C. 553(d). Accordingly, the Commission finds that good cause exists 
for waiving the customary delay of 30 days after the publication of a 
final rule before it becomes effective.
    This Final Rule is provided at the request of the entities 
regulated in the hopes that it will provide an alternative to the 
requirements of the laws and regulations of the Government of China 
pursuant to the recent bilateral Maritime Agreement. This Final Rule 
provides an avenue for licensed NVOCCs to file with the Commission 
proof of additional

[[Page 17945]]

financial responsibility in the form of the optional bond rider. We are 
optimistic that, over time, alternative forms of financial 
responsibility will become available in China, rendering this optional 
bond rider unnecessary. For the present, however, we find that there 
exists adequate public interest in allowing these instruments to be 
filed with the Commission as soon as possible and that there exists 
good cause to make this rule effective upon publication. This Final 
Rule will become effective upon publication in the Federal Register.
    In accordance with the Regulatory Flexibility Act, 5 U.S.C. 601 et 
seq., the Chairman of the Federal Maritime Commission has certified to 
the Chief Counsel for Advocacy, Small Business Administration, that the 
rule will not have a significant impact on a substantial number of 
small entities. In its NPR, the Commission stated its intention to 
certify this rulemaking because the proposed changes establish an 
optional provision for U.S. licensed NVOCCs, which may be used at their 
discretion. While these businesses qualify as small entities under the 
guidelines of the Small Business Administration, the rule poses no 
economic detriment, but rather provides a more cost-effective 
alternative than would otherwise be available to assist U.S. licensed 
NVOCCs with their business endeavors in the PRC. As such, the rule 
helps to promote U.S. business interests in the PRC and facilitate U.S. 
foreign commerce. No comments were filed to dispute this certification. 
Therefore, the certification remains valid.
    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 in 46 CFR Part 515

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

0
Accordingly, the Federal Maritime Commission amends 46 CFR part 515 
subpart C as follows:

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

0
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.

0
2. Amend Sec. 515.21(b) by adding 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 bond rider as provided for by 
Sec.  515.25 (c).
* * * * *

0
3. Amend Sec. 515.23 by adding paragraph (d) to read as follows:


Sec.  515.23  Claims against an ocean transportation intermediary.

* * * * *
    (d) Optional bond riders. The Federal Maritime Commission shall not 
serve as a depository or distributor to third parties of funds payable 
pursuant to optional bond riders described in Sec.  515.25(c).

0
4. Amend Sec. 515.25 by adding paragraph (c) to read as follows:


Sec.  515.25  Filing of proof of financial responsibility.

* * * * *
    (c) Optional bond rider. Any NVOCC as defined by Sec.  515.2(o)(2), 
in addition to a bond meeting the requirements of Sec.  515.21(a)(2), 
may obtain and file with the Commission proof of an optional bond 
rider, as provided for in appendix E or appendix F of this part.

0
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]

FMC-48A, OMB No. 3072-0018, (04/06/04)

Optional Rider for Additional NVOCC Financial Responsibility [Optional 
Rider to Form FMC-48]

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:
    a. An additional condition of this Bond is that $21,000 (payable 
in U.S. Dollars or Renminbi Yuan at the option of the Surety) shall 
be available to pay any fines and penalties for activities in the 
U.S.-China trades imposed by the Ministry of Communications of the 
People's Republic of China (``MOC'') 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 or 
affect its availability.
    b. 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 1a of this Rider. In no event shall the 
Surety's obligation under this Rider exceed the amount set forth in 
section 1a regardless of the number of claims.
    c. 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 offices in 
Washington, D.C., accompanied by proof of transmission of notice to 
MOC. Such termination shall become effective thirty (30) days after 
receipt of said notice and proof of transmission by the Federal 
Maritime Commission. 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.
    2. This Bond 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:

[[Page 17946]]

[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. 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].

0
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]

FMC-69A, OMB No. 3072-0018 (04/06/04)

Optional Rider for Additional NVOCC Financial Responsibility for Group 
Bonds [Optional Rider to Form FMC-69]

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:
    a. An additional condition of this Bond is that $ [------------
](payable in U.S. Dollars or Renminbi Yuan at the option of the 
Surety) shall be available to any NVOCC enumerated in an Appendix to 
this Rider to pay any fines and penalties for activities in the 
U.S.-China trades imposed by the Ministry of Communications of the 
People's Republic of China (``MOC'') 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 or 
affect its availability. The Surety shall indicate that $21,000 is 
available to pay such fines and penalties for each NVOCC listed on 
appendix A to this Rider wishing to exercise this option.
    b. 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 1a of this Rider. In no event shall the 
Surety's obligation under this Rider exceed the amount set forth in 
section 1a regardless of the number of claims.
    c. 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 offices in 
Washington, DC., accompanied by proof of transmission of notice to 
MOC. Such termination shall become effective thirty (30) days after 
receipt of said notice and proof of transmission by the Federal 
Maritime Commission. 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.
    2. This Bond 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. 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].

By the Commission.
Bryant L. VanBrakle,
Secretary.
[FR Doc. 04-7782 Filed 4-5-04; 8:45 am]
BILLING CODE 6730-01-P