[Federal Register Volume 71, Number 51 (Thursday, March 16, 2006)]
[Notices]
[Pages 13596-13597]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-3789]


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FEDERAL MARITIME COMMISSION

[Docket No. 06-04]


Revocation of Licenses for Failure To Comply With the Financial 
Responsibility Requirements of the Shipping Act of 1984; Order To Show 
Cause

    Since enactment of the Shipping Act of 1984 (``1984 Act''), 46 
U.S.C. app. Sec. Sec.  1701-1721, section 19 \1\ of the statute set 
forth the licensing and bonding requirements applicable to ocean 
freight forwarders, while section 23 of the 1984 Act established 
separate bonding requirements for non-vessel-operating common carriers 
(``NVOCCs''). Effective May 1, 1999, the 1984 Act was modified and 
updated by the passage of the Ocean Shipping Reform Act of 1998 
(``OSRA''), Public Law 105-258, 112 Stat. 1902. OSRA delineated a new 
category of regulated the entities called an ocean transportation 
intermediary (``OTI''), defined to include both freight forwarders and 
NVOCCs. While continuing the statutory requirements of the 1984 Act 
that all OTIs submit a surety bond as proof of financial 
responsibility, a revised section 19 for the first time required that 
NVOCCs operating in the United States be licensed by the Federal 
Maritime Commission (``Commission'').
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    \1\ 46 U.S.C. app. 1718 (1984).
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    Concurrent with the effective date of OSRA, the Commission 
prescribed new regulations at 46 CFR Part 515 (Licensing, Financial 
Responsibility Requirements, and General Duties for Ocean 
Transportation Intermediaries), implementing those revisions to the 
1984 Act with respect to OTI licensing and financial responsibility (64 
FR 11156, March 8, 1999). The Commission's OTI regulations specify that 
each OTI must establish its financial responsibility by furnishing the 
Commission a surety bond, evidence of insurance or evidence of guaranty 
to provide coverage for damages, reparations or penalties arising from 
the OTI's transportation-related activities. See 46 CFR 515.22. In the 
case of surety bonds, the regulations specify that such bonds must be 
issued by a surety company found acceptable by the Secretary of the 
Treasury. 46 CFR 515.22(a).\2\
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    \2\ The Department of Treasury maintains an extensive list of 
approved surety bonding companies, known as Circular 570. Circular 
570 is published on Treasury's Web site at:http://www.fms.treas.gov/c570/index.html.
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    By notice issued June 23, 2003, the Department of Treasury 
terminated the Certificate of Authority issued to American Motorists 
Insurance Company, which had qualified that company as an acceptable 
surety on Federal bonds. Under the Treasury program, bonds that are 
continuous in nature remain valid and effective for the purposes 
issued, but may no longer be renewed. Commencing with the anniversary 
date of such termination, OTIs holding surety bonds issued by American 
Motorists Insurance Company were obligated to replace their OTI bond 
with a valid bond issued by a surety company currently certified by 
Treasury.
    Contacts by Commission staff over an extended period have resulted 
in licensees voluntarily furnishing replacement evidence of financial 
responsibility with respect to all but 21 of the licensees previously 
covered by American Motorists Insurance Company bonds. In October and 
November 2005, the Commission contacted the licensees by phone and by 
formal letter, notifying each remaining licensee that continued failure 
to comply with bonding requirements placed them at risk of license 
revocation or other action to suspend such OTI's right to continue 
operations in the U.S. trades. Following direct notice to the affected 
parties and an extended period to bring themselves into compliance, it 
appears that the 8 OTIs listed in the attached Schedule A no longer 
meet the requirements for demonstrating financial responsibility 
imposed by section 19 of the 1984 Act.
    Now therefore, it is ordered that pursuant to section 11 of the 
Shipping Act of 1984, 46 U.S.C. app. 1710, the entities listed in 
Schedule A to this Order are directed to show cause why the Commission 
should not revoke their licenses for failure to comply with section 19 
of the Shipping Act of 1984, 46 U.S.C. app. 1718, as amended, and 46 
CFR 515.22(a).
    It is further ordered that pursuant to section 11 of the Shipping 
Act of 1984, the entities listed in Schedule A to this Order are 
directed to show cause why the Commission should not order each of them 
to cease and desist from operating as an ocean transportation 
intermediary in the foreign trade of the United States, for failure to 
comply with section 19 of the Shipping Act of 1984, as amended, and 46 
CFR Part 515;
    It is further ordered that this proceeding is limited to the 
submission of affidavits of facts and memoranda of law;
    It is further ordered that any person having an interest and 
desiring to intervene in this proceeding shall file a petition for 
leave to intervene in accordance with Rule 72 of the Commission's Rules 
of Practice and Procedure, 46 CFR 502.72. Such petition shall be 
accompanied by the petitioner's memorandum of law and affidavits of 
fact, if any, and shall be filed no later than the day fixed below;
    It is further ordered that the entities listed in Schedule A to 
this Order are named as Respondents in this proceeding. Affidavits of 
fact and memoranda of law shall be filed by Respondents and any 
intervenors in support of Respondents no later than April 17, 2006;
    It is further ordered that the Commission's Bureau of Enforcement 
be made a party to this proceeding;
    It is further ordered that reply affidavits and memoranda of law 
shall be filed by the Bureau of Enforcement and any intervenors in 
opposition to Respondents no later than May 17, 2006;
    It is further ordered that rebuttal affidavits and memoranda of law 
shall be filed by Respondents and intervenors in support no later than 
June 1, 2006;
    It is further ordered that:
    (a) Should any party believe that an evidentiary hearing is 
required, that party must submit a request for such

[[Page 13597]]

hearing together with a statement setting forth in detail the facts to 
be proved, the relevance of those facts to the issues in this 
proceeding, a description of the evidence which would be adduced, and 
why such evidence cannot be submitted by affidavit;
    (b) Should any party believe that an oral argument is required, 
that party must submit a request specifying the reasons therefore and 
why argument by memorandum is inadequate to present the party's case; 
and
    (c) Any request for evidentiary hearing or oral argument shall be 
filed no later than May 17, 2006;
    It is further ordered that notice of this Order to Show Cause be 
published in the Federal Register, and that a copy thereof be served 
upon each respondent at its last known address;
    It is further ordered that all documents submitted by any party of 
record in this proceeding shall be filed in accordance with Rule 118 of 
the Commission's Rules of Practice and Procedure, 46 CFR 502.118, and 
be mailed directly to all parties of record;
    Finally, it is ordered that pursuant to the terms of Rule 61 of the 
Commission's Rules of Practice and Procedure, 46 CFR 502.61, the final 
decision of the Commission in this proceeding shall be issued by 
October 31, 2006.

    By the Commission.
Bryant L. VanBrakle,
Secretary.

               Schedule A.--Licensees in the United States
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             Organization No.                           Name
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004278....................................  Cambell & Gardiner, Inc.
008727....................................  Ken Lehat & Associates, Inc.
015494....................................  Ocean Transportation
                                             Services, LLC.
011405....................................  Interfreight, Inc.
016391....................................  Caribbean American Shipping
                                             Corp.
008751....................................  Ford International
                                             Forwarding, Inc.
016817....................................  Independence Shipping Lines,
                                             Ltd.
017387....................................  S & B International Freight
                                             Forwarders, Inc.
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 [FR Doc. E6-3789 Filed 3-15-06; 8:45 am]
BILLING CODE 6730-01-P