November 12, 2015 | Industry Insights
FMC Final Rule Affecting FMC Bonds
On November 5, 2015, the Federal Maritime Commission published its Final Rule amending certain regulations concerning the licensing, financial responsibility requirements, and general duties of Ocean Transportation Intermediaries. The Final Rule discusses the changes to be made to 46 CFR Part 515 and the public comments submitted during the rulemaking process. Roanoke encourages each licensed OTI to review this document to become familiar with the changes it makes.
The most significant change impacts the licensure of OTIs: The FMC is establishing an expiration date on the OTI license and requiring online renewal every three years. This change starts December 9, 2016, and for existing licenses will be phased in over 3 years. Additionally, certain definitions of terms have been updated to reflect modern practices, including removing some terms as obsolete.
Another change impacts OTIs with multiple US branch offices. The FMC no longer requires the OTI bond to be increased by $10,000 for each US branch. Starting December 9, 2015, all bonds for licensed OTIs are $50,000 (Freight Forwarder) and $75,000 (NVOCC). Registered foreign NVOCC bonds continue to be $150,000. Also, the FMC revised the text of the bond. All OTI bonds for all regulated OTIs will need to be updated to reflect the new language. The FMC allows the filing of a rider to make this change. To facilitate smooth and timely processing, riders will be accepted over a 12 month period.
For our licensed OTI clients with bonds covering US branch offices, Roanoke will process bond riders that will amend the bond amount and will amend the language. These will be done effective December 9, 2015. Additionally, these multi-office OTIs that also make use of the China bond rider may need that rider amended so that the combined coverage of the bond and China rider is $125,000. Where it occurs, unearned premium will be returned to the OTI. Shortly after December 9, Roanoke will begin processing riders to amend the language for all remaining OTI bonds so that this work is concluded in advance of the FMC’s deadline.
Insurance, surety and risk management solutions for supply chain and transportation intermediaries are Roanoke focus. Contact your Roanoke service representative or call us at 1-800-ROANOKE (800-762-6653) for more information.