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Rule

In the Matter of a Single Individual Contemporaneously Acting as the Qualifying Individual for Both an Ocean Freight Forwarder and a Non-Vessel-Operating Common Carrier

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Information about this document as published in the Federal Register.

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AGENCY:

Federal Maritime Commission.

ACTION:

Final rule.

SUMMARY:

The Federal Maritime Commission amends its regulations pertaining to the licensing requirements of ocean transportation intermediaries in accordance with the Shipping Act of 1984, as amended by The Ocean Shipping Reform Act of 1998. We are also republishing a certification process pertaining to drug convictions that was previously omitted.

DATES:

This rule becomes effective March 22, 2000.

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FOR FURTHER INFORMATION CONTACT:

Sandra L. Kusumoto, Director, Bureau of Consumer Complaints and Licensing, Federal Maritime Commission, 800 North Capitol Street, NW, Washington, DC 20573-0001; (202) 523-5788

Thomas Panebianco, General Counsel, Federal Maritime Commission, 800 North Capitol St., NW, Washington, DC 20573-0001; (202) 523-5740

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SUPPLEMENTARY INFORMATION:

On February 14, 2000, the Federal Maritime Commission (“FMC” or “Commission”) published a proposed rule to amend 46 CFR 515.11(c) to allow affiliated companies to have the same qualifying individual to obtain a license under this part. 65 FR 7335. The proceeding was initiated in response to a petition filed with the Commission by the National Customs Brokers & Forwarders Association of America (“NCBFAA”) which sought the issuance of a declaratory order confirming, pursuant to 46 CFR 515.11(c) (1999), that a single individual can act contemporaneously as the qualifying individual for both an ocean freight forwarder and a non-vessel-operating common carrier (“NVOCC”), as long as they are affiliated entities. In the alternative, NCBFAA sought a rulemaking to amend § 515.11(c) to achieve the same result. As discussed in the notice of proposed rulemaking, the Commission denied NCBFAA's petition for a declaratory order, and opted to address its concerns through a rulemaking.

Although not addressed in NCBFAA's petition, the Commission also proposed to amend the definition of “branch office” at 46 CFR 515.2(c), by removing the last sentence of the definition, which states that the term does not include a separately incorporated branch office. We explained that the Commission has recognized separately incorporated branch offices elsewhere in part 515, particularly with respect to the licensing and financial responsibility requirements, and that the proposed modification should remove any potential confusion.

Finally, we noted that in promulgating the rules to implement the Ocean Shipping Reform Act of 1998, Pub. L. 105-258, 112 Stat. 1902, in Docket No. 98-28, Licensing, Financial Responsibility Requirements and General Duties for Ocean Start Printed Page 15253Transportation Intermediaries, we inadvertently failed to carry over § 510.12(a)(2) into part 515. That section was a certification process to effect the requirements of 21 U.S.C. 862, which provides that Federal benefits shall be withheld in certain circumstances from individuals who have been convicted of drug distribution or possession in Federal or state courts.

For the reasons set forth below, the Commission adopts the rules as proposed.

First, the Commission received one comment in response to the notice of proposed rulemaking from NCBFAA, who finds the Commission's proposal to amend § 515.11(c) sufficiently broad to remedy and eliminate the problems identified by NCBFAA in its petition. In addition, NCBFAA notes that it agrees with the Commission that the proposal will reduce unnecessary regulatory burdens and provide savings to those companies that would have been otherwise forced to modify their business structures. NCBFAA asserts that the proposal will not serve to diminish the professionalism and responsibility of ocean transportation intermediaries (“OTIs”), because the entities will be supervised by a person possessing the requisite expertise in accordance with the Commission's licensing requirements. Finally, NCBFAA declares that it fully supports the proposal, believing it to be in the public interest, and requests that the Commission issue a final rule in the proposed form at the earliest date.

We appreciate NCBFAA's comments and accordingly adopt as final the amendment to § 515.11(c).

In addition, no comments were submitted with respect to either the proposed modification to the definition of branch office or the republication of the certification required by 21 U.S.C. 862. Therefore, the proposed modifications are carried forward in the final rule.

Final Regulatory Flexibility Analysis

Need for and Objective of the Rule

In response to a petition filed by the NCBFAA, the FMC is amending 46 CFR 515.11(c) to allow affiliated ocean freight forwarder and NVOCC entities to have the same qualifying individual in order to obtain a license under this part.

Summary of the Significant Issues Raised by Public Comments in Response to the Initial Regulatory Flexibility Analysis

No public comments were received in response to the initial regulatory flexibility analysis.

Description and an Estimate of the Number of Small Businesses to Which the Rule Will Apply

The Commission believes that the final rule will benefit OTIs by allowing affiliated ocean freight forwarders and NVOCCs to have the same qualifying individual in order to obtain a license under this part. At present, there are approximately 600 OTIs with affiliated ocean freight forwarder and NVOCC operations affected by the proposed rulemaking, including approximately 20 sole proprietorships.

Entities affected by the current rule, particularly sole proprietorships, could have been required to modify their existing business structures, either by: (1) Merging their affiliated ocean freight forwarder and NVOCC operations; (2) creating a branch office; or (3) hiring another qualifying individual to oversee their operations. However, the Commission's Bureau of Consumer Complaints and Licensing (formerly the Bureau of Tariffs, Certification and Licensing) has refrained from denying licenses on this basis pending the conclusion of this proceeding.

Description of the Projected Reporting, Recordkeeping and Other Compliance Requirements of the Rule, Including an Estimate of the Classes of Small Entities That Will Be Subject to the Requirement and the Types of Professional Skills Necessary for the Preparation of the Report or Record

The Commission is not aware of any additional reporting, recordkeeping or other compliance requirements as a result of the proposed rulemaking. Rather, the Commission believes that the impact of the new rule will be primarily to benefit sole proprietorship OTIs by permitting affiliated entities to have the same qualifying individual to satisfy the licensing requirements of this part.

The benefit of the final rulemaking can be measured primarily as the savings to sole proprietorships of not having to modify their business structures as described above. Moreover, it will benefit corporations and partnerships with affiliated freight forwarder and NVOCC operations by giving them greater flexibility in selecting a single qualifying individual for both organizations. However, it is not feasible to specifically quantify these benefits because individual OTI operations vary dramatically in scope and overhead.

The Chairman cannot certify that the final rulemaking will not have a significant economic impact on a substantial number of small entities. However, the Commission believes that the new rule will have no adverse impact on small entities, and further, that the impact will be to benefit OTIs by allowing affiliated entities to have the same qualifying individual to obtain an OTI license.

Steps the FMC Has Taken To Minimize the Significant Economic Impact on Small Entities Consistent With the Stated Objectives of Applicable Statutes, Including a Statement of the Factual, Policy and Legal Reasons for Selecting the Alternative in the Final Rule, and the Reasons for Rejecting Each of the Other Significant Alternatives

The Commission invited comments to the initial regulatory flexibility analysis from all interested parties. However, as stated above, no public comments were received in response to the initial regulatory flexibility analysis. The Commission believes that the only significant impact of the rulemaking will be to benefit OTIs by allowing affiliated ocean freight forwarders and NVOCCs to have the same qualifying individual.

The modifications to the proposed rule, the reasons for selecting alternative approaches, and the reasons for rejecting initial proposals, if any, are each thoroughly described in the Supplementary Information to the final rule.

Relevant Federal Rules That May Duplicate, Overlap, or Conflict With the New Rule

The Commission is not aware of any other federal rules that duplicate, overlap, or conflict with the final rulemaking.

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List of Subjects in 46 CFR Part 515

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For the reasons stated in the preamble, the Federal Maritime Commission amends 46 CFR chapter IV, subchapter B, as set forth below:

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PART 515—LICENSING, FINANCIAL RESPONSIBILITY REQUIREMENTS, AND GENERAL DUTIES OF OCEAN TRANSPORTATION INTERMEDIARIES

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1. The authority citation is amended to read as follows:

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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.

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2. In § 515.2, revise paragraph (c) to read as follows:

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Definitions.
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(c) Branch office means any office in the United States established by or maintained by or under the control of a licensee for the purpose of rendering intermediary services, which office is located at an address different from that of the licensee's designated home office.

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3. In § 515.11, revise paragraph (c) to read as follows:

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Basic requirements for licensing; eligibility.
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(c) Affiliates of intermediaries. An independently qualified applicant may be granted a separate license to carry on the business of providing ocean transportation intermediary services even though it is associated with, under common control with, or otherwise related to another ocean transportation intermediary through stock ownership or common directors or officers, if such applicant submits: a separate application and fee, and a valid instrument of financial responsibility in the form and amount prescribed under § 515.21. The qualifying individual of one active licensee shall not also be designated as the qualifying individual of an applicant for another ocean transportation intermediary license, unless both entities are commonly owned or where one directly controls the other.

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4. In § 515.12, revise paragraph (a) to read as follows:

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Application for license.

(a) Application and forms.

(1) Any person who wishes to obtain a license to operate as an ocean transportation intermediary shall submit, in duplicate, to the Director of the Commission's Bureau of Tariffs, Certification and Licensing, a completed application Form FMC-18 Rev. (“Application for a License as an Ocean Transportation Intermediary”) accompanied by the fee required under § 515.5(b). All applicants will be assigned an application number, and each applicant will be notified of the number assigned to its application. Notice of filing of such application shall be published in the Federal Register and shall state the name and address of the applicant and the name and address of the qualifying individual. If the applicant is a corporation or partnership, the names of the officers or partners thereof shall be published.

(2) An individual who is applying for a license in his or her own name must complete the following certification:

I, ___ (Name), ___, certify under penalty of perjury under the laws of the United States, that I have not been convicted, after September 1, 1989, of any Federal or state offense involving the distribution or possession of a controlled substance, or that if I have been so convicted, I am not ineligible to receive Federal benefits, either by court order or operation of law, pursuant to 21 U.S.C. 862.

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Start Signature

By the Commission.

Bryant L. VanBrakle,

Secretary.

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[FR Doc. 00-7097 Filed 3-21-00; 8:45 am]

BILLING CODE 6730-01-P