Transportation Update: Regulatory Developments

Date: November 11, 2015

STB Moves Toward Relaxing Ex Parte Communication Ban

On November 9, 2015 the Surface Transportation Board (STB) issued a decision in Ex Parte No. 724 (Sub No. 4), United States Rail Service Issues – Performance Data Reporting (EP724), waiving its general prohibition on ex parte communications to allow its staff to conduct meetings with interested parties in this rulemaking proceeding to develop railroad performance data reporting rules.

While recognizing its regulations and practice generally prohibit ex parte communications during any proceeding, the STB deemed it appropriate to waive that restriction in EP724. The STB reasoned that having an informal dialogue through meetings, rather than relying on written records alone, will help the agency better understand issues, including technical questions regarding the data, and ultimately develop better final rules than would be possible without these meetings. The STB also found the waiver appropriate because EP724 is a “quasi-legislative” proceeding, as opposed to an adjudicatory matter.

Of particular note, Commissioners Ann Begeman and Deb Miller wrote separate concurrences to express their hope that the STB will issue similar waivers in future proceedings that would extend to board members themselves, as opposed to just STB staff. Vice Chairman Begeman expressed her preference that the current waiver apply more broadly to STB members in EP724 itself to allow them to “hear directly from affected stakeholders” subject to certain protocols to comply with the Sunshine Act. Commissioner Miller supported future board member participation but voiced practical concerns over the potential time delay it could have on EP724 because of the protocols that would have to be created for board member participation due to the current statutory prohibition on ex parte discussions. Congress is considering legislation that would alleviate some of the existing ex parte restrictions in the Surface Transportation Board Reauthorization Act of 2015.

The STB staff will conduct the EP724 ex parte meetings in person or by telephone between November 16 and December 7, 2015. Interested parties can contact the STB’s Office of Public Assistance, Governmental Affairs, and Compliance at 202.245.0238 for scheduling. Our lawyers are available to provide guidance on preparing for the meeting.

FMC Final Rule Modifies Ocean Transportation Intermediary Regulations

On November 3, 2015 the Federal Maritime Commission (FMC) issued a final rule modifying its licensing and financial responsibility requirements for ocean transportation intermediaries (OTIs), including ocean freight forwarders (OFFs) and non-vessel-operating common carriers (NVOCCs), found in 46 CFR Part 515. The modifications reflect changes in industry conditions and the FMC’s attempt to streamline internal processes, improve transparency and remove unwarranted regulatory burdens.

The FMC has modified or eliminated definitions of key terms, such as:

  • OFF & NVOCC services expanded. “Freight forwarding services” is redefined to include preparing paper or electronic versions of export documents. In addition, “freight forwarding services” and “non-vessel-operating common carrier services” are updated to include preparing ocean common carrier and NVOCC bills of lading, or other shipping documents related to transporting cargo regardless of whether they constitute an ocean bill of lading.
  • *Registered NVOCC. The FMC defines the new term “registered non-vessel-operating common carrier” as an NVOCC with its principal place of business outside the United States that registers with the FMC under section 515.19, posts a bond or other surety and publishes a tariff pursuant to Part 520, as opposed to becoming a licensed NVOCC. Registered NVOCCs must use licensed OTIs as their agents in the United States with respect to OTI services performed here, effectively providing that only licensed OTIs may provide OTI services in the United States.
  • *Qualifying individual (QI). “Qualifying individual” is an added term defined as an individual who meets the Shipping Act’s experience and character requirements. A QI must maintain these standards from the time an OTI license is issued. Where a QI ceases to act as the QI, its OTI must find a timely replacement.
  • The FMC eliminated a number of definitions that are not relevant to its regulatory functions, including “ocean freight broker,” “brokerage” and “small shipment.”

Noteworthy modifications changing OTI licensing requirements and other general duties include:

  • Electronically filed license application required. All OTI license applications and registration forms must be filed electronically with the FMC unless a waiver to file on paper is granted.
  • Types of OTI information considered for character determination. The agency clarified that it may consider all relevant information to determine whether an OTI applicant has the necessary character to render OTI services. The revised regulation sets forth a nonexclusive list of the types of information that may be considered, which are intended to reflect existing reviews performed by the FMC.
  • *Duration and renewal of licenses. A new regulation provides an issued OTI license will be valid for three years and must be renewed thereafter by successful completion of the renewal process. This process requires the OTI to initiate the renewal 60 days prior to the license expiration date.
  • Appeals procedure streamlined. The FMC eliminated the right to a full evidentiary hearing under its Rules of Practice and Procedures and instead provides a streamlined procedure for appealing a denial of an OTI license application or a revocation or suspension of previously issued license.
  • NVOCC proof of compliance. The FMC clarified that a common carrier shall not knowingly and willfully transport cargo for an NVOCC without determining that the NVOCC has obtained a license or registration, published a tariff and provided proof of financial responsibility. Common carriers can now verify an NVOCC’s compliance on the FMC’s website.
  • Reporting and records requirements. Other revisions require an OTI to report certain changes (for example, change of address or ownership) and specified events (for example, filing for bankruptcy or a criminal conviction) to the FMC. A new recordkeeping requirement dictates that while an OTI’s business records may be maintained in either paper or electronic form, they must be kept current and readily available to and usable by the FMC. Also, in addition to being required to respond to FMC requests for inspection or reproduction of its own records, an OTI will be responsible for requiring its agents to make such records available upon request by the FMC.

The revised regulations become effective December 9, 2015, except for the new licensing renewal requirements, which take effect one year later on December 9, 2016. The FMC’s final rule is published in the Federal Register.

*New provisions added to 49 CFR Part 515.


For more information, please contact:

Karyn A. Booth

Sandra L. Brown

Jeff Moreno

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