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Commissioner Rebecca Dye’s Comments Delivered at the NCBFAA Government Affairs Conference

September 24, 2013

Comments of Federal Maritime Commissioner Rebecca Dye at the NCBFAA Government Affairs Conference, September 23, 2013

Thank you for inviting me here today. I have enjoyed speaking to you a number of times in the past, and was very pleased when Ed invited me to be part of your Government Affairs Conference. My remarks today reflect my individual views and are not offered as the official position of the Federal Maritime Commission.
 

Cut Compliance Costs to Improve American Competitiveness 

Ocean transportation intermediaries handle at least 40 percent of all international ocean shipments annually and are critical to American success in international trade.
 
Your companies are working with U.S. importers and exporters to develop logistics operations which allow American companies to thrive in the fiercely competitive world market.
 
For these reasons, increased regulation of your industry has a major effect on the effectiveness of the American supply chain. 
 
My position is that we should cut government compliance costs across the board to make our supply chain more effective and improve American competitiveness.
 

Opposition to New FMC Regulations of OTIs

As many of you know, I am strongly opposed to the Commission’s recent Advanced Notice of Proposed Rulemaking concerning Ocean Transportation Intermediaries.
 
I urged the Commission to change course last December and reassess the need for additional OTI regulations.
 
Adding new layers of regulatory requirements and costs to American businesses is going in the wrong direction.
 
Unfortunately, the Commission approved the Advance Notice on May 15th. I voted against the Rulemaking for many of the same reasons you oppose it.
 
Clearly Define Harm, In Cooperation With Industry
 
At the Commission’s December, 2012, meeting, I outlined four general objections to the regulatory approach proposed in the Advance Notice considered by the Commission.
 
First, I stated that any new regulatory proposal must clearly define the harm the regulatory change would address, in light of the standards and priorities of the President’s Executive Order 13563.
 
I also stated that the analysis of harm should be developed in cooperation with the OTI industry, to determine whether or not our proposals make our program more efficient and less burdensome for the shipping public.
 
Executive Order 13563 calls for Federal agencies to perform a Retrospective Review of Existing Rules.
 
The purpose of the review is to determine whether agency rules should be modified to make a regulatory program more effective and less burdensome in achieving regulatory objectives.
 
The Executive Order also requires agencies to give high priority to reforms that will promote economic growth.
 
In your public comments on our Regulatory Review, you discussed several areas of demonstrable harm, especially regarding the inflexibility of Commission Negotiated Service Arrangement (NSA) filing requirements and the need to eliminate tariff publication and enforcement requirements.
 
Not one of the Regulatory Review comments we received mentioned the need to add additional requirements to our OTI regulations.
 
I do not believe that the Advance Notice adequately justifies the need for the regulatory changes included in this package.
 
The Rulemaking will simply make it more difficult and expensive for individuals and small businesses to become licensed and bonded.
 
The Commission should work with you, not against you, to develop realistic solutions to the clearly defined problems you have identified to the Commission: tariff publication and enforcement and NSA filing requirements.
 
Regulatory Costs Not Defined
 
My second major objection to the Advance Notice is that it does not contain the new user fees for new or existing regulatory requirements.
 
Also, since the OTI industry is made up of thousands of small businesses, I look forward to the Regulatory Flexibility Act Analysis for this proposal, which will evaluate the effect of the Rulemaking on small businesses. 
 
I oppose new and increased user fees, which will simply increase government compliance costs for ocean transportation intermediaries.
 
Quantify Harm Justifying Increased Bonding Levels
 
My third objection to the proposal is that it does not quantify the harm to the public that would justify raising the OTI bonding levels.
 
The proposal should also address whether raising the bond would deter new entrants from entering the OTI industry and adversely affect competition in the marketplace.
 
As I stated, there are millions of ocean shipments handled by American OTIs annually; at least forty percent of all ocean shipments to and from the U.S. are handled by OTIs.
 
The few cases cited in the Advance Notice in which an OTI bond was insufficient does not justify raising the bonding level.
 
Harmonize with Other Transportation Regimes
 
Changes to our OTI regulatory system related to the timing of renewals and bonding levels should be harmonized with those recently enacted by Congress in MAP-21, Moving Ahead for Progress in the 21st Century, Public Law 112-141.
 
This legislation establishes a five year renewal period and a $75,000 bonding level for brokers and freight forwarders under the Department of Transportation’s jurisdiction for domestic motor carrier freight movements.
 
I do not believe we should create a higher bonding level and a shorter renewal time period than the recently enacted Department of Transportation levels.
 
This assumes that the Commission has the statutory authority to require renewals, which is questionable.
 
Industry United in Opposition
 
I have reviewed the over 80 public comments to the Advanced Notice.
 
I appreciate the comments from NCBFAA members clearly explaining the many problems with this Rulemaking.
 
The public comments on this Rulemaking are overwhelmingly negative.
 
Many of the comments make the Commission appear out of touch with the commercial realities of the industry.
 
I agree with many who commented that the Commission should involve the maritime industry, including intermediaries, vessel operators, and cargo owners, when developing new policy proposals.
 
In fact, I believe the Commission should take your advice and establish an industry Advisory Committee for Ocean Transportation Intermediaries.  
 
Periodic industry advice on current commercial practices and concrete problems faced by your industry would be extremely helpful to the Commission.
 
Strategic Approach To Regulation
 
I believe the Commission’s regulatory strategy should be to limit government compliance costs, encourage greater supply chain efficiency, and allow American businesses to be more competitive in the global marketplace.
 
My approach to regulatory policy is to focus attention on the most pressing problems to the shipping public and constantly reevaluate the results of and the need for a particular regulation. 
 
In order to measure the effectiveness of a regulation, the harm or the problem to be addressed must be clearly defined by significant evidence supporting regulatory action.
 
I believe that the Commission should exercise restraint when imposing new regulatory requirements, because companies cannot afford the crushing burden that results when the government is cavalier about the effects of regulatory requirements.
 
Eliminate Tariff Publication and NSA Filing
 
I support a complete reexamination of the Commission’s OTI program, to determine which existing requirements can be streamlined or eliminated to promote economic growth in your industry and the American economy. 
 
The best way for the Commission to help your industry would be to exempt NVOCCs from the requirement to publish and adhere to rate tariffs.
 
The NVOCC Negotiated Rate Agreement (NRA) substitute, while useful for some OTIs, is not adequate regulatory relief for your industry.
 
I also strongly support your comments requesting that the Commission grant relief from our current NVOCC Service Agreement (NSA) filing regulations.
 
Earlier this year, the Commission agreed to my motion to review service contract and NSA filing rules this year instead of in 2015.
 
Making our NSA filing requirements less time consuming and costly would give shippers and NVO’s the contractual flexibility they need to meet their business goals.
 
Thank you again.  I look forward to working with you to make the market-based reforms that will increase the resiliency and reliability of the United States international ocean transportation system.