Subchapter B—Regulations Affecting Ocean Shipping in Foreign Commerce

SUBCHAPTER B—REGULATIONS AFFECTING OCEAN SHIPPING IN FOREIGN COMMERCE

PART 515—LICENSING, FINANCIAL APPENDIX F TO SUBPART C OF PART 515—OP- TIONAL RIDER FOR ADDITIONAL NVOCC FI- RESPONSIBILITY REQUIREMENTS, NANCIAL RESPONSIBILITY FOR GROUP AND GENERAL DUTIES FOR BONDS(OPTIONAL RIDER TO FORM FMC–69] OCEAN TRANSPORTATION INTER- MEDIARIES Subpart D—Duties and Responsibilities of Ocean Transportation Intermediaries; Subpart A—General Reports to Commission Sec. 515.31 General duties. 515.1 Scope. 515.32 Freight forwarder duties. 515.2 Definitions. 515.33 Records required to be kept. 515.3 License; when required. 515.34 Regulated Persons Index. 515.4 License; when not required. 515.5 Forms and fees. Subpart E—Freight Forwarding Fees and Compensation Subpart B—Eligibility and Procedure for Licensing 515.41 Forwarder and principal; fees. 515.42 Forwarder and carrier; compensation. 515.11 Basic requirements for licensing; eli- 515.91 OMB control number assigned pursu- gibility. ant to the Paperwork Reduction Act. 515.12 Application for license. AUTHORITY: 5 U.S.C. 553; 31 U.S.C. 9701; 46 515.13 Investigation of applicants. U.S.C. 305, 40102, 40104, 40501–40503, 40901– 515.14 Issuance and use of license. 40904, 41101–41109, 41301–41302, 41305–41307; 515.15 Denial of license. Pub. L. 105–383, 112 Stat. 3411; 21 U.S.C. 862. 515.16 Revocation or suspension of license. 515.17 Application after revocation or de- SOURCE: 64 FR 11171, Mar. 8, 1999, unless nial. otherwise noted. 515.18 Changes in organization. EDITORIAL NOTE: Nomenclature changes to part 515 appear at 67 FR 39860, June 11, 2002, Subpart C—Financial Responsibility Re- and 70 FR 7669, Feb. 15, 2005. quirements; Claims Against Ocean Transportation Intermediaries Subpart A—General 515.21 Financial responsibility requirements. § 515.1 Scope. 515.22 Proof of financial responsibility. (a) This part sets forth regulations 515.23 Claims against an ocean transportation intermediary. providing for the licensing as ocean 515.24 Agent for service of process. transportation intermediaries of per- 515.25 Filing of proof of financial responsi- sons who wish to carry on the business bility. of providing intermediary services, in- 515.26 Termination of financial responsi- cluding the grounds and procedures for bility. revocation and suspension of licenses. 515.27 Proof of compliance. This part also prescribes the financial APPENDIX A TO SUBPART C—OCEAN TRANS- responsibility requirements and the du- PORTATION INTERMEDIARY (OTI) BOND ties and responsibilities of ocean trans- FORM [FORM-48] portation intermediaries, and regula- APPENDIX B TO SUBPART C—OCEAN TRANS- PORTATION INTERMEDIARY (OTI) INSUR- tions concerning practices of ocean ANCE FORM [FORM-67] transportation intermediaries with re- APPENDIX C TO SUBPART C—OCEAN TRANS- spect to common carriers. PORTATION INTERMEDIARY (OTI) GUAR- (b) Information obtained under this ANTY FORM [FORM-68] part is used to determine the qualifica- APPENDIX D TO SUBPART C—OCEAN TRANS- tions of ocean transportation inter- PORTATION INTERMEDIARY (OTI) GROUP mediaries and their compliance with BOND FORM [FMC–69] APPENDIX E TO SUBPART C OF PART 515—OP- shipping statutes and regulations. Fail- TIONAL RIDER FOR ADDITIONAL NVOCC FI- ure to follow the provisions of this part NANCIAL RESPONSIBILITY (OPTIONAL RIDER may result in denial, revocation or sus- TO FORM FMC–48] [FORM 48A] pension of an ocean transportation

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intermediary license. Persons oper- States and a foreign country for com- ating without the proper license may pensation that: be subject to civil penalties not to ex- (1) Assumes responsibility for the ceed $5,500 for each such violation un- transportation from the port or point less the violation is willfully and of receipt to the port or point of des- knowingly committed, in which case tination, and the amount of the civil penalty may (2) Utilizes, for all or part of that not exceed $27,500 for each violation; transportation, a vessel operating on for other violations of the provisions of the high seas or the Great Lakes be- this part, the civil penalties range from tween a port in the United States and $5,500 to $27,500 for each violation (46 a port in a foreign country, except that U.S.C. 41107–41109). Each day of a con- the term does not include a common tinuing violation shall constitute a carrier engaged in ocean transpor- separate violation. tation by ferry boat, ocean tramp, chemical parcel tanker, or by a vessel [64 FR 11171, Mar. 8, 1999, as amended at 74 FR 50719, Oct. 1, 2009] when primarily engaged in the carriage of perishable agricultural commodities. § 515.2 Definitions. (i) if the common carrier and the owner of those commodities are whol- The terms used in this part are de- ly-owned, directly or indirectly, by a fined as follows: person primarily engaged in the mar- (a) Act means the Shipping Act of keting and distribution of those com- 1984, as amended by the Ocean Shipping modities, and Reform Act of 1998 and the Coast Guard (ii) only with respect to those com- Authorization Act of 1998. modities. (b) Beneficial interest includes a lien (g) Compensation means payment by a or interest in or right to use, enjoy, common carrier to a freight forwarder profit, benefit, or receive any advan- for the performance of services as spec- tage, either proprietary or financial, ified in § 515.42(c). from the whole or any part of a ship- (h) Freight forwarding fee means ment of cargo where such interest charges billed by a freight forwarder to arises from the financing of the ship- a shipper, consignee, seller, purchaser, ment or by operation of law, or by or any agent thereof, for the perform- agreement, express or implied. The ance of freight forwarding services. term ‘‘beneficial interest’’ shall not in- (i) Freight forwarding services refers to clude any obligation in favor of an the dispatching of shipments on behalf ocean transportation intermediary of others, in order to facilitate ship- arising solely by reason of the advance ment by a common carrier, which may of out-of-pocket expenses incurred in include, but are not limited to, the fol- dispatching a shipment. lowing: (c) Branch office means any office in (1) Ordering cargo to port; the United States established by or (2) Preparing and/or processing ex- maintained by or under the control of port declarations; a licensee for the purpose of rendering (3) Booking, arranging for or con- intermediary services, which office is firming cargo space; located at an address different from (4) Preparing or processing delivery that of the licensee’s designated home orders or dock receipts; office. (5) Preparing and/or processing ocean (d) Brokerage refers to payment by a bills of lading; common carrier to an ocean freight (6) Preparing or processing consular broker for the performance of services documents or arranging for their cer- as specified in paragraph (n) of this sec- tification; tion. (7) Arranging for warehouse storage; (e) Commission means the Federal (8) Arranging for cargo insurance; Maritime Commission. (9) Clearing shipments in accordance (f) Common carrier means any person with United States Government export holding itself out to the general public regulations; to provide transportation by water of (10) Preparing and/or sending advance passengers or cargo between the United notifications of shipments or other

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documents to banks, shippers, or con- cargo for such carrier and/or to sell or signees, as required; offer for sale ocean transportation (11) Handling freight or other monies services and which holds itself out to advanced by shippers, or remitting or the public as one who negotiates be- advancing freight or other monies or tween shipper or consignee and carrier credit in connection with the dis- for the purchase, sale, conditions and patching of shipments; terms of transportation. (12) Coordinating the movement of (o) Ocean transportation intermediary shipments from origin to vessel; and means an ocean freight forwarder or a (13) Giving expert advice to exporters non-vessel-operating common carrier. concerning letters of credit, other doc- For the purposes of this part, the term uments, licenses or inspections, or on (1) Ocean freight forwarder means a problems germane to the cargoes’ dis- person that— patch. (i) in the United States, dispatches (j) From the United States means shipments from the United States via a oceanborne export commerce from the common carrier and books or otherwise United States, its territories, or pos- arranges space for those shipments on sessions, to foreign countries. behalf of shippers; and (k) Licensee is any person licensed by (ii) processes the documentation or the Federal Maritime Commission as performs related activities incident to an ocean transportation intermediary. those shipments; and (l) Non-vessel-operating common carrier (2) Non-vessel-operating common carrier services refers to the provision of trans- (‘‘NVOCC’’) means a common carrier portation by water of cargo between that does not operate the vessels by the United States and a foreign coun- which the ocean transportation is pro- try for compensation without oper- vided, and is a shipper in its relation- ating the vessels by which the trans- ship with an ocean common carrier. portation is provided, and may include, (p) Person includes individuals, cor- but are not limited to, the following: porations, partnerships and associa- (1) Purchasing transportation serv- tions existing under or authorized by ices from a VOCC and offering such the laws of the United States or of a services for resale to other persons; foreign country. (2) Payment of port-to-port or (q) Principal, except as used in Surety multimodal transportation charges; Bond Form FMC–48, and Group Bond (3) Entering into affreightment Form FMC–69, refers to the shipper, agreements with underlying shippers; consignee, seller, or purchaser of prop- (4) Issuing bills of lading or equiva- erty, and to anyone acting on behalf of lent documents; such shipper, consignee, seller, or pur- (5) Arranging for inland transpor- chaser of property, who employs the tation and paying for inland freight services of a licensed freight forwarder charges on through transportation to facilitate the ocean transportation movements; of such property. (6) Paying lawful compensation to (r) Reduced forwarding fees means ocean freight forwarders; charges to a principal for forwarding (7) Leasing containers; or services that are below the licensed (8) Entering into arrangements with freight forwarder’s usual charges for origin or destination agents. such services. (m) Ocean common carrier means a (s) Shipment means all of the cargo common carrier that operates, for all carried under the terms of a single bill or part of its common carrier service, a of lading. vessel on the high seas or the Great (t) Shipper means: Lakes between a port in the United (1) A cargo owner; States and a port in a foreign country, (2) The person for whose account the except that the term does not include a ocean transportation is provided; common carrier engaged in ocean (3) The person to whom delivery is to transportation by ferry boat, ocean be made; tramp, or chemical parcel-tanker. (4) A shippers’ association; or (n) Ocean freight broker is an entity (5) a non-vessel-operating common which is engaged by a carrier to secure carrier that accepts responsibility for

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payment of all charges applicable § 515.4 License; when not required. under the tariff or service contract. A license is not required in the fol- (u) Small shipment refers to a single shipment sent by one consignor to one lowing circumstances: consignee on one bill of lading which (a) Shipper. Any person whose pri- does not exceed the underlying com- mary business is the sale of merchan- mon carrier’s minimum charge rule. dise may, without a license, dispatch (v) Special contract is a contract for and perform freight forwarding services freight forwarding services which pro- on behalf of its own shipments, or on vides for a periodic lump sum fee. behalf of shipments or consolidated (w) Transportation-related activities shipments of a parent, subsidiary, affil- which are covered by the financial re- iate, or associated company. Such per- sponsibility obtained pursuant to this son shall not receive compensation part include, to the extent involved in from the common carrier for any serv- the foreign commerce of the United ices rendered in connection with such States, any activity performed by an shipments. ocean transportation intermediary (b) Employee or branch office of li- that is necessary or customary in the censed ocean transportation intermediary. provision of transportation services to (1) An individual employee or unincor- a customer, but are not limited to the porated branch office of a licensed following: ocean transportation intermediary is (1) For an ocean transportation inter- not required to be licensed in order to mediary operating as a Freight for- act solely for such licensee, provided warder, the freight forwarding services that such branch offices: enumerated in § 515.2(i), and (i) Have been reported to the Com- (2) For an ocean transportation inter- mission in writing; and mediary operating as a non-vessel-op- (ii) Are covered by increased finan- erating common carrier, the non-ves- cial responsibility in accordance with sel-operating common carriers services § 515.21(a)(4). enumerated in § 515.2(l). (2) Each licensed ocean transpor- (x) United States includes the several tation intermediary will be held strict- States, the District of Columbia, the ly responsible for the acts or omissions Commonwealth of Puerto Rico, the of any of its employees or agents ren- Commonwealth of the Northern Mari- dered in connection with the conduct anas, and all other United States terri- of its business. tories and possessions. (c) Common carrier. A common car- [64 FR 11171, Mar. 8, 1999, as amended at 65 rier, or agent thereof, may perform FR 15254, Mar. 22, 2000; 65 FR 26512, May 8, ocean freight forwarding services with- 2000] out a license only with respect to cargo carried under such carrier’s own bill of § 515.3 License; when required. lading. Charges for such forwarding Except as otherwise provided in this services shall be assessed in conform- part, no person in the United States ance with the carrier’s published tar- may act as an ocean transportation iffs. intermediary unless that person holds (d) Ocean freight brokers. An ocean a valid license issued by the Commis- freight broker is not required to be li- sion. A separate license is required for censed to perform those services speci- each branch office that is separately fied in § 515.2(n). incorporated. For purposes of this part, (e) Federal military and civilian house- a person is considered to be ‘‘in the hold goods. Any person which exclu- United States’’ if such person is resi- sively transports used household goods dent in, or incorporated or established and personal effects for the account of under, the laws of the United States. the Department of Defense, or for the Only persons licensed under this part account of the federal civilian execu- may furnish or contract to furnish tive agencies shipping under the Inter- ocean transportation intermediary national Household Goods Program ad- services in the United States on behalf ministered by the General Services Ad- of an unlicensed ocean transportation ministration, or both, is not subject to intermediary. the requirements of subpart B of this

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part, but may be subject to other re- mediary activities, and the necessary quirements, such as alternative surety character to render ocean transpor- bonding, imposed by the Department of tation intermediary services; and Defense, or the General Services Ad- (2) It has obtained and filed with the ministration. Commission a valid bond, proof of insurance, or other surety in conform- § 515.5 Forms and Fees. ance with § 515.21. (a) Forms. License form FMC–18 Rev., (3) An NVOCC with a tariff and proof and financial responsibility forms of financial responsibility in effect as FMC–48, FMC–67, FMC–68, FMC–69 may of April 30, 1999, may continue to oper- be obtained from the Commission’s ate as an NVOCC without the requisite Web site at http://www.fmc.gov, the Di- three years’ experience and necessary rector, Bureau of Certification and Li- character to render ocean transpor- censing, Federal Maritime Commis- tation intermediary services and will sion, Washington, DC 20573, or from be provisionally licensed while the any of the Commission’s area rep- Commission reviews its application. resentatives. Such person designated as the quali- (b) Fees. All fees shall be payable by fying individual for a provisionally li- money order, certified check, cashier’s censed NVOCC may not act as a quali- check, or personal check to the ‘‘Fed- fying individual for another ocean eral Maritime Commission.’’ Should a transportation intermediary until it personal check not be honored when has obtained the necessary three years’ presented for payment, the processing experience in ocean transportation of an application under this section intermediary services. shall be suspended until the processing (b) Qualifying individual. The fol- fee is paid. In any instance where an lowing individuals must qualify the ap- application has been processed in whole plicant for a license: or in part, the fee will not be refunded. (1) Sole proprietorship. The applicant Such fees are: sole proprietor. (1) Application for license as required (2) Partnership. At least one of the ac- by § 515.12(a): $825; tive managing partners, but all part- (2) Application for status change or ners must execute the application. license transfer as required by (3) Corporation. At least one of the ac- §§ 515.18(a) and 515.18(b): $525; and tive corporate officers. [64 FR 11171, Mar. 8, 1999, as amended at 67 (c) Affiliates of intermediaries. An inde- FR 39860, June 11, 2002; 70 FR 10330, Mar. 3, pendently qualified applicant may be 2005; 72 FR 56273, Oct. 3, 2007] granted a separate license to carry on the business of providing ocean trans- Subpart B—Eligibility and portation intermediary services even Procedure for Licensing though it is associated with, under common control with, or otherwise re- § 515.11 Basic requirements for licens- lated to another ocean transportation ing; eligibility. intermediary through stock ownership (a) Necessary qualifications. To be eli- or common directors or officers, if such gible for an ocean transportation inter- applicant submits: a separate applica- mediary license, the applicant must tion and fee, and a valid instrument of demonstrate to the Commission that: financial responsibility in the form and (1) It possesses the necessary experi- amount prescribed under § 515.21. The ence, that is, its qualifying individual qualifying individual of one active li- has a minimum of three (3) years expe- censee shall not also be designated as rience in ocean transportation inter- the qualifying individual of an appli- mediary activities in the United cant for another ocean transportation States, and the necessary character to intermediary license, unless both enti- render ocean transportation inter- ties are commonly owned or where one mediary services. A foreign NVOCC directly controls the other. seeking to be licensed under this part (d) Common carrier. A common carrier must demonstrate that its qualifying or agent thereof which meets the re- individual has a minimum 3 years’ ex- quirements of this part may be licensed perience in ocean transportation inter- to dispatch shipments moving on other

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