00-13088. Interpretations and Statements of Policy Regarding Ocean Transportation Intermediaries

AGENCY:

Federal Maritime Commission.

ACTION:

Interpretive rule.

SUMMARY:

The Federal Maritime Commission amends its regulations for interpretive statements of policy to interpret a section of its regulations regarding ocean transportation intermediaries to clarify the claim settlement procedures.

DATES:

This rule is effective June 23, 2000.

FOR FURTHER INFORMATION CONTACT:

Thomas Panebianco, General Counsel, Federal Maritime Commission, 800 North Capitol St. NW, Room 1018, Washington, DC 20573-0001; [phone].

SUPPLEMENTARY INFORMATION:

On March 8, 1999, the Federal Maritime Commission published a final rule and interim final rule to add new regulations at 46 CFR part 515 to implement changes made by the Ocean Shipping Reform Act of 1998 (“OSRA”), Public Law 105-258, 112 Stat. 1902, to the Shipping Act of 1984 (“Shipping Act”), 46 U.S.C. app. 1701 et seq., relating to ocean transportation intermediaries (“OTIs”). 64 FR 11156-11183. Section 515.23(b) sets forth the claim settlement procedure for claimants seeking to pursue a claim against an OTI. The Interpretive Rule seeks to clarify the Commission's intention with respect to this procedure, as there have been reported misunderstandings in the industry as to the responsibilities inherent in this requirement.

Section 515.23(b)(1) sets forth the claim settlement procedures and provides, in part, that:

If a party does not file a complaint with the Commission pursuant to section 11 of the Act, but otherwise seeks to pursue a claim against an ocean transportation intermediary bond, insurance or other surety for damages arising from its transportation-related activities, it shall attempt to resolve its claim with the financial responsibility provider prior to seeking payment on any judgment for damages obtained.

It is the Commission's intention that a claimant seeking to settle a claim in accordance with this section should promptly provide to the financial responsibility provider all documents and information relating to and supporting its claim for the purpose of evaluating the validity and subject matter of the claim. The information relevant to the claim settlement procedure includes documents such as bills of lading, as well as the existence of pending court claims or judgments obtained.

In addition, the financial responsibility provider is allowed to evaluate the validity of the claim during the settlement process in § 515.23(b)(1). However, if the parties do not reach a settlement of the claim, the financial responsibility provider, in accordance with section 19 of the Shipping Act, 46 U.S.C. app. 1718 (1999), and 46 CFR 515.23(b)(2), must pay on a final judgment and may only inquire into the extent that the damages claimed arise from the transportation-related activities of the OTI, under section 3(17) of the Shipping Act, 46 U.S.C. app. 1702(17).

Furthermore, if settlement of the claim is not reached, the financial responsibility provider may not unilaterally reduce the amount awarded in a final court judgment; Congress has determined that, at that point, a financial responsibility provider must pay on a final judgment for damages arising from the transportation-related activities of the OTI, and the Commission cannot nullify that statutory requirement. However, the financial responsibility provider and the claimant are not precluded from mutually agreeing to compromise the amount awarded in a final judgment. In the event that the financial responsibility provider believes that a judgment against its OTI bond principal was obtained fraudulently, or that the claim underlying the judgment is itself fraudulent, the financial responsibility provider is not precluded from challenging a judgment if permitted in the jurisdiction where it was obtained.

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.

List of Subjects

46 CFR Part 515

• Exports
• Freight
• Freight forwarders
• Maritime carriers
• Non-vessel-operating common carriers
• Ocean transportation intermediaries
• Licensing requirements
• Financial responsibility requirements
• Reporting and recordkeeping requirements

46 CFR Part 545

• Antitrust
• Exports
• Freight forwarders
• Maritime carriers
• Non-vessel-operating common carriers
• Ocean transportation intermediaries
• Licensing requirements
• Financial responsibility requirements
• Reporting and recordkeeping requirements

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

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

1. The authority citation for part 515 continues to read as follows:

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.

2. In § 515.23, revise the introductory text to read as follows:

§ 515.23

Claims against an ocean transportation intermediary.

The Commission or another party may seek payment from the bond, insurance, or other surety that is obtained by an ocean transportation intermediary pursuant to this section. (See also § 545.3 of this chapter.)

* * * * *

PART 545—INTERPRETATIONS AND STATEMENTS OF POLICY

1. The authority citation for part 545 is revised to read as follows:

Authority: 5 U.S.C. 553; 46 U.S.C. app. 1706, 1707, 1709, 1716, and 1718; Pub. L. 105-383, 112 Stat. 3411; 46 CFR 515.23.

2. Add § 545.3 to read as follows:

§ 545.3

Interpretation of § 515.23(b) of this chapter—Payment pursuant to a claim against an ocean transportation intermediary.

A claimant seeking to settle a claim in accordance with § 515.23(b)(1) of this chapter should promptly provide to the financial responsibility provider all documents and information relating to and supporting its claim for the purpose of evaluating the validity and subject matter of the claim.

By the Commission.

Bryant L. VanBrakle,

Secretary.