Recently, the U.S. Federal Maritime Commission (FMC) voted 3-2 to move forward on a proposed rewrite of OTI (Ocean Transportation Intermediary) regulations. The new regulations would require:

1. OTI’s to renew their licenses every two years;

2. foreign-based non-vessel ocean common carriers (NVOCC) to keep a full-time staffed U.S. presence;

3. more stringent qualification requirements for new OTI entrants, regarding age, experience, and character; and

4. increase in OTI bonding levels

To some, this decision suggests a general assumption among advocates that costs will only rise marginally and that regulatory burdens will see a minor and harmless increase. However, FMC Commissioner Rebecca Dye disagrees and issued a dissenting statement.

Commissioner Dye’s statement hinges on the belief that any regulatory changes should work to limit government compliance costs, increase the efficiency of the supply chain, and “allow American businesses to be more competitive in the global marketplace.” The proposed regulation changes, as Dye describes, negate more appropriate advances.

Firstly, Dye asserts that the new proposal does not address the potential harm of the change in regulations. Such changes should come with a clear analysis of harm with the weigh-in of all stakeholders, including the shipping public. Dye cites Executive Order 13563’s call for a Retrospective Review of Existing Rules as grounds for a thorough harm analysis.

Next, Dye points out worrisome blanks where the user costs should be. Dye suggests advocates for changes have not adequately forecasted what the costs of such changes will be. Without detailed forecasting, the shipping public cannot respond knowledgeably.

Thirdly, Dye does not believe the harm to the public of raising OTI bonding has been quantified. Specifically, Dye points to the possibility of deterring new OTI entrants with raised bonds, thereby diminishing the U.S. capacity to be competitive in the global marketplace.

Finally, in her dissenting statement, Dye asserts that the proposed changes initiate a higher bonding level with a shorter renewal time period than those “recently enacted by Congress in MAP-21, Public Law 112-141.” This creates a disharmony between MAP-21 and proposed OTI regulations. Dye believes OTI regulations should be made synchronous to MAP-21.

The advanced notice of the FMC’s proposal will be published in the Federal Register. Upon publication, a 60-day notice and comment period will precede the final rule publication.

To learn more about how this and other legislation effects your cargo and logistics, simply contact GSIS today!