FMC Enforces Licensing Regulations for Ocean Transportation Intermediaries

The Federal Maritime Commission (FMC) is actively enforcing licensing regulations for Ocean Transportation Intermediaries (OTIs) under the Shipping Act of 1984. Recent investigations have taken place in major locations such as Houston, Seattle, South Florida, and New York, highlighting the importance of compliance with the established guidelines for OTIs.

Regulatory Framework and Requirements for OTIs

The regulatory framework governing OTIs is outlined in the Shipping Act of 1984, with specific rules that OTIs must adhere to in order to maintain their licenses. A key requirement is the renewal of licenses every three years, ensuring that only qualified and compliant entities operate in the industry. The final rules for OTIs were approved on October 25, 2015, and emphasize the necessity for OTIs to use only licensed and bonded agents in their operations.

Additionally, OTIs must maintain an active Qualifying Individual (QI) to ensure ongoing compliance. Licensees are obligated to notify the FMC of any significant changes, such as changes in officers, within a 30-day period. Failure to maintain an active QI or to notify the Commission of changes can lead to serious consequences, including the suspension or revocation of the OTI license.

Cargologic USA LLC Under Scrutiny

Cargologic USA LLC, a company established in July 2005 and licensed since September 2011 under license No. 022025, is currently under scrutiny for potential violations of the FMC's regulations. The company's principal office is located in Springfield Gardens, NY, with Alex Epshteyn serving as President and Secretary. Matvey Gurfinkel was the designated Qualifying Individual until his departure in March 2013, leaving the company without an active QI since that time.

The FMC has issued an order for Cargologic USA LLC to demonstrate compliance with the OTI regulations, directing the company to show cause by March 21, 2014. The Commission's investigation revealed that Cargologic violated multiple sections of the Code of Federal Regulations, including 46 CFR SEC 515.11(b), 515.12(d), 515.18(c), and 515.31(g), which pertain to the proper maintenance of an active QI and the timely notification of officer changes.

Potential Consequences and Legal Proceedings

The FMC has outlined the potential consequences for Cargologic's non-compliance, which may include the revocation of its OTI license. The company is required to submit affidavits and memoranda of law to address the violations, with a deadline set for March 21, 2014. The Bureau of Enforcement (BOE) is set to be made a party in the proceedings, further emphasizing the seriousness of the allegations.

Intervenors wishing to participate in the proceedings must file a petition by the same deadline, March 21, 2014. Reply affidavits are due by April 7, 2014, along with any requests for an evidentiary hearing. The outcome of these proceedings will be closely monitored by the FMC and published in the Federal Register.

Implications for the OTI Community

The ongoing enforcement actions and legal proceedings serve as a critical reminder for the OTI community to adhere strictly to the regulations set forth by the FMC. A panel discussion held on September 21 highlighted the challenges and responsibilities that OTIs face in maintaining compliance. The FMC's ability to investigate and address violations of the Shipping Act underscores the importance of maintaining transparency and integrity in the shipping industry.

Licensees must remain vigilant in fulfilling their regulatory obligations to avoid the severe repercussions associated with non-compliance. The case of Cargologic USA LLC exemplifies the potential risks and consequences that can arise when regulatory requirements are not met, stressing the need for OTIs to ensure they are fully informed and compliant with all relevant regulations.