FMC Commissioner Discusses NRA Exemption for NVOs, Revising OTI Rules, Etc.
On September 15, 2011, Federal Maritime Commissioner Michael Khouri spoke at the Annual Meeting of the International Association of Movers on expanding the NRA exemption to foreign NVOCCs and on how recommendations for Fact Finding No. 27 on the international shipment of household goods and personal property can be used to revise regulations on ocean transportation intermediaries (OTIs).
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Highlights of his written comments include the following:
Hopes FMC Will Consider Modifications to Expand NRA Exemption by Feb 2012
The FMC has a new Negotiated Rate Arrangements (NRA) exemption for licensed Non-Vessel Operators (NVOs) from the Shipping Act requirement to publish and adhere to rate tariffs, which took effect in April 2011. The FMC staff had expressed concerns that immediate extension of the exemption to FMC bonded and registered foreign based NVOs could harm the agency’s mission. Therefore, the exemption currently only applies to "licensed" NVOs.
However, the FMC will commence proceedings to potentially modify the NRA final rule, including the possible extension of the exemption to these foreign NVOCCs. Khouri states that he and FMC Chairman Lidinsky hope these modifications can be reviewed and considered by the FMC by February 2012.
(NRAs are written and binding arrangements between a shipper and a licensed NVOCC to provide specific transportation service for a stated cargo quantity, from origin to destination, on and after a stated date or within a defined time frame. If an NVOCC uses NRAs and meets the conditions below, it does not have to publish its rate in the tariff it makes available to the public.)
Only About 100 NVOs Indicated Intent to Operate NRA
While the licensed NVO exemption is still relatively new and NVOs are adjusting their business practices, to date, only about 100 licensed NVOs (of a total pool of 3300) have indicated their intention to operate in the new system - with NRAs and without rate tariffs. Khouri requested feedback as to what the FMC could do to increase participation.
(See ITT’s Online Archives or 02/17/11 news, 11021712, for BP summary of FMC’s vote. See ITT’s Online Archives or 04/20/11 news, 11042023, for BP summary of NCBFAA’s letter urging the FMC to reopen the NRA final rule on the issues of foreign NVOs, general rate increases, credit, and other issues.)
Proposals on Household Goods to be Given to FMC by Sept 30
In April 2011, the team for Fact Finding No. 27 produced a final report, which the FMC considered and unanimously approved, on a series of specific recommendations to address the scope of unlawful, unfair or deceptive ocean transportation practices by household goods movers. The FMC staff is developing proposals for implementation of these recommendations and will report to the FMC by September 30, 2011.
(See ITT's Online Archives or 05/13/11 news, 11051327, for BP summary of the fact finding team's recommendations.)
Staff Draft Proposed Rule on OTI License Renewal System Expected this Fall
Building on the work of Fact Finding No. 27, the FMC is in the process of reviewing Part 515 of its regulations on OTI rules and identifying potential improvements to protect the shipping public and maintain the integrity of the FMC's licensing requirements. The staff is expected to submit a proposed rule for the FMC's consideration this fall.
In addition to cleaning up and clarifying the current rules, Khouri stated that he would like to see these revisions include a badly needed licensing renewal system for OTIs and a streamlined procedure for appeal of any denial of OTI license applications and revocation or suspension of existing OTI licenses. He stated the FMC also need a more efficient way to terminate the application process where the applicant fails to submit information and documents necessary to process its application by an established deadline.
Khouri Hopes OTI Revisions Will Clarify FMC Authority over Advertising, Etc.
Khouri hopes that revisions to the OTI rules will incorporate several of the recommendations of Fact Finding No. 27, including clarifying the FMC's authority over advertising by OTIs and their agents. He also stated that the FMC should consider whether to require OTIs to ensure that their bona fide agents disclose information about the principal in the agents’ advertising and on shipping documents prepared or issued by the agents. The FMC should also consider whether the failure of the agent to do so should give rise to a rebuttable presumption that the so called “agent” is actually operating as an OTI in its own name and not as an agent on behalf of a licensed OTI.
Also Wants to Address Carrier Acceptance of Cargo from Non-Licensed NVOs, FFs
Lastly, Khouri stated that the FMC should consider ways to address the issue of common carriers working with and accepting cargo from NVOCCs who do not have an FMC license, tariff, and proper evidence of financial responsibility or from a freight forwarder that is operating without a license or financial responsibility.