Forward, Summer 2016 Issue

airforwarders.org

Summer 2016

Forward Magazine

entire record that the hearing officer will

consider, and upon closing of the record,

the hearing officer must issue a decision

within forty days.

The OTI may seek review of a hearing

officer’s decision by filing exceptions, and

the FMC may subsequently conduct a

hearing. Proceedings for assessments of

civil penalties for violations of the Ship-

ping Act or FMC regulations will still be

governed by the FMC’s current Rules of

Practice and Procedure.

Branch offices of a licensed OTI are no

longer required to be covered by increased

financial responsibility. The branch offices

must just be reported to the FMC on form

FMC-18. The Final Rule provides that a

licensed OTI is “fully” responsible for the

acts and omissions of its employees and

agents performed in connection with the

conduct of the OTI’s business, which is a

change from the previous regulations using

the language “strictly” responsible. In the

supplemental information section of the

Final Rule, the FMC notes that this was

to avoid any inference of a statutory strict

liability scheme, and simply to clarify that

full responsibility is on the OTIs for the acts

and omissions of their employees and agents.

Certain changes in organization will now

require prior approval from the FMC,

including transfer of a corporate license,

change in ownership of a sole proprietor-

ship, change in business structure, change

in a licensee’s name, or change in the iden-

tity or status of a QI. It should be noted

that in terms of a change in the QI, the

regulations provide that the OTI may con-

tinue to operate while a proposed replace-

ment QI is investigated. Other changes,

such as the acquisition of other licensees,

changes in address, changes in five percent

or more of common equity ownership,

must be reported to the FMC within thirty

(30) days of the applicable change.

Financial responsibility providers

are now

obligated to submit notice to the FMC of

every claim, court action, or court judg-

ment against the financial responsibility

and each claim paid (with the amount) by

the provider. The notices will include the

name of the claimant, name of the court

and case number assigned, and the name

and license number of the OTI involved.

The Final Rule makes it clear that a

common carrier may not knowingly and

willfully transport cargo for an NVOCC

unless the carrier has determined that the

NVOCC has a license or registration, a

published tariff, and proof of financial

responsibility. Verification of these require-

ments will now be done at the FMC

website, which will publish a list of OTI’s

(including a separate list for NVOCCs)

which have met all of the applicable

licensing, registration, tariff and financial

responsibility requirements. The list will be

updated periodically.

The Final Rule affects the portion of the

FMC’s regulations dealing with OTI

duties. A prohibition clause was inserted

in this section, which makes it clear that

no person may advertise or hold out to

act as an OTI unless that person holds a

valid OTI license or is registered. Another

obligation added into the regulation is

that OTIs are now not only responsible

for responding to the FMC’s requests for

inspection or reproduction of all records

and books in connection with its business;

OTIs must now make sure that their agents

make available all records and books of

account relating to OTI service provided

by or for their principals. The FMC notes

in the Supplemental Information portion

of the Final Rule that OTIs should include

provisions in their agency agreements so as

to ensure agent compliance.

When a licensed freight forwarder is

entitled to compensation, it must provide

the common carrier with a certification

which indicates that the forwarder has

performed the required services entitling

it to compensation. The Final Rule pro-

vides that this certification may now be

provided electronically.

because the FMC demanded proof of satisfaction of two small claims cases, each amounting to less than $2,000.00, in two states, one ten and

the other twelve years old. One is compelled to question the relevance of such minor and ancient matters to the character and fitness of an existing

licensee that had held its license for decades and had an otherwise unblemished record. Given other experiences to date, it is not unrealistic to

anticipate similar nit picking on the part of the FMC.

The regulations note that the QI of an LLC may be “[o]ne of the members or managers, or an individual in an equivalent position in the LLC as

expressly set forth in the LLC operating agreement.”

Surety companies that issue OTI bonds.

Consequently, any company engaging in providing

OTI services, or that works with OTIs, is well advised to

become familiar with the revisions to the regulations.