§ 510.6 Publication of applications.

After application has been filed, the Commission shall cause to be published in the FEDERAL REGISTER a notice of the filing of each application, stating the name and address of the applicant and if the applicant is a corporation, association, or partnership, the names of the officers or members thereof. Parts 1 and 2 of the application shall be public information and available for inspection at the office of the Commission in Washington, D.C. § 510.7

Investigation of applicants.

All applicants shall be investigated and such investigation shall seek information relevant to the applicant's qualifications for a license, including (a) the correctness of the statements made in the application, (b) the business integrity and financial responsibility of the applicant, (c) the character and experience of the applicant, officers or members of the corporation or partnership as the case may be, and (d) such further evidence of the fitness, willingness, and ability of the applicant properly to carry on the business of forwarding as the Commission may require.

§ 510.8 Issuance or denial of licenses.

(a) After evaluation of the results of the investigation, the Commission will issue a license to an applicant found to be qualified within the provisions of applicable statutes and the requirements, rules, and regulations of the Commission thereunder, otherwise such application shall be denied. Prior to the denial of a license the Commission shall advise the applicant of its intention to do so and state the reasons therefor. If the applicant within 20 days after the receipt of such advice requests a hearing on his application, such hearing shall be granted by the Commission pursuant to its rules of practice and procedure.

(b) The Commission will issue licenses only in the name of the person applying therefor. Where such person is a partnership, association, corporation or similar legal entity, the license will be issued in the legal name thereof. Licenses will not be issued to partnerships unless all partners execute the application.

(c) Except as provided in subparagraph (1) of this paragraph, only one license shall be issued to any person regardless of the number of names under which such person may be doing business.

(1) Each separately incorporated qualified applicant for an independent freight forwarder license may be granted a separate license even though under common control with other independent ocean freight forwarding corporations, if such applicant submits a separate (i) application form FMC-18, (ii) $100.00 application fee as required by § 510.5(b), and (iii) surety bond in the form and amount hereafter to be prescribed.

(2) Each independent ocean freight forwarder authorized to carry on the business of forwarding under the Shipping Act, 1916, shall indicate on its letterhead stationery and on billing invoices the name or names of all such related freight forwarders on or before 180 days after publication of this rule in the FEDERAL REGISTER.

(d) Licenses shall not be transferrable without the prior approval of the Commission.

[G.O. 4, 26 F.R. 12252, Dec. 22, 1961, as amended by Amdt. 3, 27 F.R. 10122, Oct. 16, 1962]

A license may be revoked, suspended, or modified after notice and hearing for any of the following reasons:

(a) Violation of any provision of the Shipping Act, 1916, as amended, or of any other statute related to carrying on the business of forwarding.

(b) Failure to respond to any lawful inquiries, or to comply with any lawful rules, regulations, or orders of the Commission.

(c) Making any wilfully false statement to the Commission in connection with an application for a license or its continuance in effect.

(d) Change of circumstances whereby the licensee no longer qualifies as an independent ocean freight forwarder.

(e) Such conduct as the Commission shall find renders the licensee unfit or unable to carry on the business of forwarding.

Provided, however, That no license shall remain in force unless a valid surety bond is maintained on file with the Commission. A license will be automatically suspended or revoked, without hearing or other proceeding, for failure of a licensee to maintain a valid surety bond on file. The Commission, upon receipt of notice of cancellation of any bond, will notify the licensee in writing that his license will automatically be suspended or re

voked, effective on the bond cancellation date, unless a new or reinstated bond is submitted to and approved by the Commission prior to such date:

Provided further, That notice of each suspension or revocation effected pursuant to this section shall be published in the FEDERAL REGISTER.

[G.O. 4, 26 F.R. 12252, Dec. 22, 1961, as amended by G.O. 4, Amdt. 12, 32 F.R. 8524, June 14, 1967]

Subpart B-Duties and Obligations

AUTHORITY: The provisions of this Subpart B issued under secs. 43, 44, Shipping Act, 1916 (75 Stat. 522, 523, 766); sec. 204, Merchant Marine Act, 1936 (49 Stat. 1987, as amended; 46 U.S.C. 1114).

SOURCE: The provisions of this Subpart B contained in General Order 4, Amdt. 1, 28 F.R. 4300, May 1, 1963, unless otherwise noted.

(a) The term "licensee" means any person licensed by the Commission as an independent ocean freight forwarder, or any independent ocean freight forwarder who, on September 19, 1961, was carrying on the business of freight forwarding under a valid registration number issued by the Commission, or its predecessors, who filed an application for such a license (Form FMC-18) on or before January 17, 1962, and whose application has not been denied.

(b) The term "in commerce from the United States" means export commerce from the United States, its Territories, or possessions to foreign countries, or between the United States and its Territories or possessions or between such Territories and possessions.

(c) The term "oceangoing common carrier" as used in the rules in this subpart means a common carrier engaged in transportation by water of property in commerce from the United States, as defined in paragraph (b) of this section.

(d) The term "non-vessel operating common carrier by water" means a person who holds himself out by the establishment and maintenance of tariffs, by advertisement, solicitation, or otherwise, to provide transportation for hire by water in interstate commerce as defined

in the Act, and in commerce from the United States as defined in paragraph (b) of this section; assumes responsibility or has liability imposed by law for safe transportation of shipments; and arranges in his own name with underlying water carriers for the performance of such transportation whether or not owning or controlling the means by which such transportation is effected.

(e) The term "principal" means the shipper, consignee, seller, purchaser who employs the services of a licensee.

(f) The term "ocean freight broker" means any person who is engaged by a carrier to sell or offer for sale transportation, and who holds himself out by solicitation or advertisement as one who negotiates between shipper and carrier for the purchase, sale, conditions and terms of transportation.

(g) The term "freight forwarding fee" means payment by a shipper, consignee, seller, purchaser, or any agent thereof, to a licensee for the performance of a freight forwarding service as defined in § 510.2(c).

(h) The term "compensation" means payment by an oceangoing common carrier for the performance of services as specified in § 510.24(e).

(i) The term "brokerage" means payment by a common carrier by water to an ocean freight broker for the performance of functions specified in paragraph (f) of this section.

(j) The term "special contract" means lump sum forwarding charges, monthly retainer fees, or similar financial arrangements that may exist between a principal and a licensee.

(k) The term "Act" means the Shipping Act, 1916 (46 U.S.C. 801 et seq.). (1) The term "Beneficial interest" for the purpose of these rules includes, but is not limited to, any lien interest in; right to use, enjoy, profit, benefit, or receive any advantage, either proprietary or financial, from; the whole or any part of a shipment or cargo, arising by financing of the shipment or by operation of law or by agreement, express or implied, provided, however, that any obligation arising in favor of a licensee by reason of advances of out-of-pocket expenses incurred in dispatching of shipments shall not be deemed a beneficial interest.

(m) The term "reduced forwarding fees" as used herein means charges to a principal for forwarding services that are below the licensee's usual charges.

(a) An oceangoing common carrier, or agent thereof, meeting the requirements of section 44 and these rules, may be licensed. An oceangoing common carrier may perform freight forwarding services without a license only with respect to cargo carried under its own bill of lading, in which case charges for such forwarding services shall be assessed in accordance with published tariffs on file with the Commission. No licensee can charge or collect compensation in the event that he requests the carrier or its agent to perform any of the forwarding services set forth in § 510.2 (c) unless no other licensee is willing and able to perform such services; or unless the Commission has granted a portwide exemption from this rule to licensee/agents in the port of loading. Such exemptions may be granted by the Commission upon (1) application of any licensed forwarder/agent serving the port of loading, (2) publication in the FEDERAL REGISTER of notice of application and an opportunity for interested parties to comment and request a hearing, and (3) a finding by the Commission that an adequate supply of forwarding services is not being held out by nonagent licensees domiciled at the port of loading. Exemptions shall remain in effect until otherwise ordered by the Commission.

(b) Nothing in the rules in this subpart shall be interpreted to prohibit a person whose primary business is the sale of merchandise from performing freight forwarding services on his own shipments or the shipments of a parent, subsidiary, affiliated, or associated company or on consolidated shipments to the same consignee of merchandise sold to such consignee by a parent, subsidiary, affiliated or associated company of such person: Provided, however, That such person may not be paid by the carrier for any service which he performs in connection with any such shipment.

(c) A nonvessel operating common carrier by water or person related thereto, otherwise qualified, may be licensed as an independent ocean freight forwarder to dispatch export shipments moving on other than its through export bill of lading. Such carrier or person related thereto may collect compensation under section 44(e) when, and only when, the following certification is made on the "line copy" of the ocean

carrier's bill of lading, in addition to all other certifications required by section 44 of the Shipping Act, 1916, and this part: "The undersigned certifies that neither it, nor any related person, has issued a bill of lading covering ocean transportation or otherwise undertaken common carrier responsibility for the ocean transportation of the shipment covered by this bill of lading." Whenever a person acts in the capacity of a nonvessel operating common carrier by water as to any shipment he shall not be entitled to collect compensation under section 44 (e) nor shall a common carrier by water pay such compensation to a nonvessel operating common carrier for such shipment.

[G.O. 4, Amdt. 1, 28 F.R. 4300, May 1, 1963, as amended by Amdt. 8, 30 F.R. 1849, Feb. 10, 1965; Amdt. 9, 31 F.R. 11652, Sept. 8, 1966]

(a) No licensee shall permit his 11cense or name to be used by any person not employed by him for the performance of any freight forwarding service. No licensee may provide freight forwarding services through an unlicensed branch office or other separate establishment without written approval of the Federal Maritime Commission. Such approval may be granted only when it is found that qualified personnel competent to perform complete ocean freight forwarding services are employed in the branch office or other separate establishment. Applications for approval of branch offices or other separate establishment in existence on the date of adoption of this rule must be submitted within 3 months of such date.

(b) No licensee shall, directly or indirectly, (1) accept employment to perform forwarding services on export shipments as an associate, correspondent, officer, employee, agent or subagent from any person whose license as an independent ocean freight forwarder shall have been revoked, or whose license is under suspension; (2) assist the furtherance of any forwarding business of such person; (3) share forwarding fees or freight compensation with any such person; or (4) permit any such person directly or indirectly to participate, whether through ownership or otherwise, in the control or direction of the freight forwarding business of the licensee.

(c) A licensee who has reason to believe that a principal has not, with respect to a shipment to be handled by such licensee, complied with the law of the United States or any state, commonwealth or territory thereof, or has made any error or misrepresentation in, or omission from, any export declaration, bill of lading, affidavit, or other paper which the principal executes in connection with such shipment, shall advise his principal promptly of the suspected non-compliance, error, misrepresentation or omission, and shall decline to participate in such transaction involving such document until the matter is clarified.

(d) Every licensee shall exercise due diligence to ascertain the correctness of any information which he imparts to a principal with reference to any forwarding transaction; and no licensee shall knowingly impart to a principal or oceangoing common carrier false information relative to any such transaction.

(e) No licensee shall withhold information relative to a forwarding transaction from his principal.

(f) Each licensee shall promptly pay over to the oceangoing common carrier or its agent within seven (7) days after the receipt thereof, excluding Saturdays, Sundays, and legal holidays, or within five (5) days after departure of the vessel from each port of loading, excluding Saturdays, Sundays, and legal holidays, whichever is later, all sums advanced the licensee by its principal for freight and transportation charges, and shall disburse to other person(s) when due all sums advanced by its principal for the payment of any charges, debts, or obligations in connection with the forwarding transaction, and shall promptly account to its principal for overpayments, adjustments of charges, reductions in rates, insurance refunds, insurance money paid to the forwarder as the result of claims, proceeds of c.o.d. shipments, drafts, letters of credit, and any other sums due such principal.

licensee, which he has reason to believe is false or fraudulent.

(i) Any receipt issued for cargo by a licensee shall be clearly identified as a "Receipt for Cargo", and shall be in a form readily distinguishable from a bill of lading.

(j) Every licensee shall use invoices or other forms of billing which state separately as to each shipment: (1) The actual amount of ocean freight assessed by the oceangoing common carrier; (2) the actual amount of consular fees paid; (3) the insured value, insurance rate, and premium cost of insurance arranged; (4) the charge for each accessorial service performed in connection with the shipment. All other charges or fees assessed by the licensee for arranging the services enumerated in subparagraphs (1), (2), (3), and (4) of this paragraph shall be itemized. Licensees shall not be required to itemize the components of charges with respect to transactions made pursuant to § 510.25: Provided, however, That licensees who offer to the public at large to forward small shipments for uniform charges available to all and duly filed with the Federal Maritime Commission, shall not be required to itemize the components of such uniform charges on shipments as to which the charges shall have been stated to the shipper at time of shipment, and accepted by the shipper by payment; but if such licensees procure Marine Insurance to cover such shipments, they must state their total charge for such insurance, inclusive of premiums and placing fees, separately from the aforementioned uniform charge. Provided further, That a licensee who maintains and adheres to a uniform schedule of fees to be charged for arranging insurance and for performing other accessorial services (stated by dollar amount and/or percentage of mark-up) need not state separately the components of the charges for such insurance and for such other accessorial services. A licensee who elects to maintain such schedules must make the current schedule and every superseded schedule available upon request. A licensee shall not assess different fees than those specified in the effective schedules. Such schedules shall be filed with the Federal Maritime Commission and posted in a conspicuous place in the forwarder's office, and shall be mailed upon request.

(k) Each licensee shall maintain in an orderly, systematic, and convenient

manner, and keep current and correct, all records and books of account in connection with carrying on the business of forwarding. These records must be kept in such a manner as to permit authorized Commission personnel to determine readily the licensee's cash position, accounts receivable, and accounts payable. As a minimum requirement, the licensee must maintain the following records:

(1) A current running account of overall cash receipts, disbursements, and daily balance. This account may be maintained on check book stubs. The account must be supported by bank deposit slips, paid checks, and a monthly reconciliation of the bank statement.

(2) A separate file for each shipment, to include a copy or notation of each document prepared, processed, or obtained by the licensee with respect to each individual shipment or files which will make readily available such copies or notations with respect to each individual shipment. Records must be maintained which show the date and amount for payments received and disbursed by the licensee for the performance of services rendered or reimbursement for advance of out-of-pocket expenses. Such records shall be retained for a period of five years.

(1) Each licensee shall make available promptly all records and books of account in connection with carrying on the business of forwarding, for inspection or reproducing or other official use upon the request of any authorized representative of the Commission.

[G.O. 4, Amdt. 1, 28 F.R. 4300, May 1, 1963, as amended by Amdt. 7, 29 F.R. 13972, Oct. 9, 1964; 29 F.R. 14486, Oct. 22, 1964; Amdt. 10, 31 F.R. 13652, Oct. 22, 1966; 32 F.R. 5457, Apr. 1, 1967]

§ 510.24 Compensation and freight forwarder certifications.

(a) No oceangoing common carrier shall pay to a licensee, and no licensee shall charge or receive from any such carrier, either directly or indirectly, any compensation or payment of any kind whatsoever, whether called "brokerage," "commission," "fee," or by any other name, in connection with any cargo or shipment wherein the licensee's name appears on the ocean bill of lading as shipper or as agent for an undisclosed principal.

(b) No licensee shall render, or offer to render, any forwarding service free of charge or at a reduced freight forwarding fee in consideration of the li

censee receiving compensation from oceangoing common carriers on the shipment: Provided, however, That a licensee may perform freight forwarding services for recognized relief agencies or charitable organizations, designated as such in the tariff of the oceangoing common carrier, free of charge, or at reduced fees.

(c) No licensee shall share, directly or indirectly, any compensation or freight forwarding fee with a shipper, consignee, seller, purchaser, or their agents, affiliates or employees; nor with any person or persons advancing the purchase price of the merchandise or guaranteeing payment therefor; nor with any person or persons having a beneficial interest in the shipment.

(d) No oceangoing common carrier shall compensate a licensee when such carrier has reason to believe that receipt of such compensation by the licensee is prohibited by these rules, or by the Act.

(e) Before any compensation is paid by an oceangoing common carrier to a licensee, or before a licensee may accept any such compensation, the licensee shall incorporate the certification set forth below on one copy of the ocean bill of lading, parcel receipt, or forwarder's invoice covering such shipment and endorse the certification. Where certification is made on a copy of a bill of lading such copy shall be referred to as the "Line Copy" and shall be retained in the possession of the carrier. The oceangoing carrier shall be entitled to rely on such certification unless it knows that the certification is incorrect. The form of certification follows:

-----

The undersigned hereby certifies that it is operating under license No. (or application No. and registration No. ---, issued by the Federal Maritime Commission, or its predecessors) and has performed in addition to the solicitation and securing of the cargo for the ship or the booking of, or otherwise arranging for space for, such cargo, two or more of the following services: (Check services performed.)

(1) The coordination of the movement of the cargo to shipside;

(2) The preparation and processing of the ocean bill of lading;

(3) The preparation and processing of dock receipts or delivery orders;

(4) The preparation and processing of consular documents or export declarations; (5) The payment of the ocean freight charges on the cargo.

(f) An oceangoing common carrier may compensate a licensee to the extent of the value rendered such carrier