[House Hearing, 119 Congress]
[From the U.S. Government Publishing Office]
FUTURE OF UNITED STATES MARITIME,
PART 1: REVIEW OF FISCAL YEAR 2026
FEDERAL MARITIME COMMISSION
BUDGET REQUEST
=======================================================================
(119-27)
HEARING
BEFORE THE
SUBCOMMITTEE ON
COAST GUARD AND MARITIME TRANSPORTATION
OF THE
COMMITTEE ON
TRANSPORTATION AND INFRASTRUCTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINETEENTH CONGRESS
FIRST SESSION
__________
JULY 22, 2025
__________
Printed for the use of the
Committee on Transportation and Infrastructure
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available online at: https://www.govinfo.gov/committee/house-
transportation?path=/browsecommittee/chamber/house/committee/
transportation
__________
U.S. GOVERNMENT PUBLISHING OFFICE
61-683 PDF WASHINGTON : 2025
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COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
Sam Graves, Missouri, Chairman
Rick Larsen, Washington, Ranking
Member
Eleanor Holmes Norton, Eric A. ``Rick'' Crawford,
District of Columbia Arkansas,
Jerrold Nadler, New York Vice Chairman
John Garamendi, California Daniel Webster, Florida
Henry C. ``Hank'' Johnson, Jr., Georgiaomas Massie, Kentucky
Andre Carson, Indiana Scott Perry, Pennsylvania
Dina Titus, Nevada Brian Babin, Texas
Jared Huffman, California David Rouzer, North Carolina
Julia Brownley, California Mike Bost, Illinois
Frederica S. Wilson, Florida Doug LaMalfa, California
Mark DeSaulnier, California Bruce Westerman, Arkansas
Salud O. Carbajal, California Brian J. Mast, Florida
Greg Stanton, Arizona Pete Stauber, Minnesota
Sharice Davids, Kansas Tim Burchett, Tennessee
Jesus G. ``Chuy'' Garcia, Illinois Dusty Johnson, South Dakota
Chris Pappas, New Hampshire Jefferson Van Drew, New Jersey
Seth Moulton, Massachusetts Troy E. Nehls, Texas
Marilyn Strickland, Washington Tracey Mann, Kansas
Patrick Ryan, New York Burgess Owens, Utah
Val T. Hoyle, Oregon Eric Burlison, Missouri
Emilia Strong Sykes, Ohio, Mike Collins, Georgia
Vice Ranking Member Mike Ezell, Mississippi
Hillary J. Scholten, Michigan Kevin Kiley, California
Valerie P. Foushee, North Carolina Vince Fong, California
Christopher R. Deluzio, Pennsylvania Tony Wied, Wisconsin
Robert Garcia, California Tom Barrett, Michigan
Nellie Pou, New Jersey Nicholas J. Begich III, Alaska
Kristen McDonald Rivet, Michigan Robert P. Bresnahan, Jr.,
Laura Friedman, California Pennsylvania
Laura Gillen, New York Jeff Hurd, Colorado
Shomari Figures, Alabama Jefferson Shreve, Indiana
Vacancy Addison P. McDowell, North
Carolina
David J. Taylor, Ohio
Brad Knott, North Carolina
Kimberlyn King-Hinds,
Northern Mariana Islands
Mike Kennedy, Utah
Robert F. Onder, Jr., Missouri
Jimmy Patronis, Florida
------ 7
Subcommittee on Coast Guard and Maritime Transportation
Mike Ezell, Mississippi, Chairman
Salud O. Carbajal, California, Ranking Member
Daniel Webster, Florida Chris Pappas, New Hampshire
Brian J. Mast, Florida Marilyn Strickland, Washington
Jefferson Van Drew, New Jersey Hillary J. Scholten, Michigan
Nicholas J. Begich III, Alaska Robert Garcia, California,
Addison P. McDowell, North Vice Ranking Member
Carolina, John Garamendi, California
Vice Chairman Rick Larsen, Washington (Ex
Jimmy Patronis, Florida Officio)
Sam Graves, Missouri (Ex Officio)
CONTENTS
Page
Summary of Subject Matter........................................ v
STATEMENTS OF MEMBERS OF THE COMMITTEE
Hon. Mike Ezell, a Representative in Congress from the State of
Mississippi, and Chairman, Subcommittee on Coast Guard and
Maritime Transportation, opening statement..................... 1
Prepared statement........................................... 2
Hon. Rick Larsen, a Representative in Congress from the State of
Washington, and Ranking Member, Committee on Transportation and
Infrastructure, opening statement.............................. 3
Prepared statement........................................... 4
Hon. Salud O. Carbajal, a Representative in Congress from the
State of California, and Ranking Member, Subcommittee on Coast
Guard and Maritime Transportation, opening statement........... 4
Prepared statement........................................... 6
WITNESS
Hon. Rebecca F. Dye, Commissioner, Federal Maritime Commission,
oral statement................................................. 7
Prepared statement........................................... 8
APPENDIX
Questions to Hon. Rebecca F. Dye, Commissioner, Federal Maritime
Commission, from Hon. John Garamendi........................... 29
July 18, 2025
SUMMARY OF SUBJECT MATTER
TO: LMembers, Subcommittee on Coast Guard and Maritime
Transportation
FROM: LStaff, Subcommittee on Coast Guard and Maritime
Transportation
RE: LSubcommittee Hearing on ``Future of United States
Maritime Part 1: Review of Fiscal Year 2026 Federal Maritime
Commission Budget Request''
_______________________________________________________________________
I. PURPOSE
The Subcommittee on Coast Guard and Maritime Transportation
of the Committee on Transportation and Infrastructure will meet
on Tuesday, July 22, 2025, at 2:00 p.m. ET in 2167 Rayburn
House Office Building to receive testimony on the President's
Fiscal Year (FY) 2026 Budget Request for the Federal Maritime
Commission (FMC) and FMC reauthorization issues. The
Subcommittee will hear testimony from the FMC.
II. BACKGROUND
FEDERAL MARITIME COMMISSION
The FMC was established in 1961 as an independent agency
that regulates ocean-borne transportation in the foreign
commerce of the United States.\1\ The FMC protects shippers and
carriers from restrictive or unfair practices of ocean
carriers, including foreign-flagged carrier alliances. The FMC
also enforces laws related to cruise vessel financial
responsibility to ensure cruise vessel operators have
sufficient resources to pay judgments to passengers for
personal injury or death or for nonperformance of a voyage.\2\
---------------------------------------------------------------------------
\1\ 46 U.S.C. Sec. 46101.
\2\ FMC. Federal Maritime Commission FY 2026 Budget Justification,
(May 2025), available at https://www.fmc.gov/wp-content/uploads/2025/
05/FY2026CongressionalBudgetJustification
2025.pdf.
---------------------------------------------------------------------------
The FMC is composed of five commissioners appointed for
five-year terms by the President with the advice and consent of
the Senate. The Commission currently has two vacancies. The
Honorable Rebecca Dye serves as a Commissioner.\3\
---------------------------------------------------------------------------
\3\ FMC. Rebecca Dye, available at https://www.fmc.gov/about/
commissioner-archive/rebecca-f-dye/.
---------------------------------------------------------------------------
IMPLEMENTATION OF THE OCEAN SHIPPING REFORM ACT OF 2022
The Ocean Shipping Reform Act of 2022 (P.L. 117-146) was
signed into law on June 16, 2022, and strengthened FMC
authorities to promote the growth and development of United
States exports through an ocean transportation system that is
competitive, efficient, and economical. The law authorizes
appropriations for the FMC through FY 2025; sets standards that
detention and demurrage charges must comply with and penalties
for charges deemed inaccurate; allows the FMC to set minimum
contract standards for ocean shipping service contracts to
protect United States shippers from actions that leave export
cargoes stranded at United States ports; and increases
protections for United States shippers from retaliation by
foreign ocean carriers. The Commission has been working to
implement the legislation since its passage more than two years
ago and has signaled that the majority of all statutorily
mandated requirements will be implemented by the end of FY
2025.\4\
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\4\ The Ocean Shipping Reform Act of 2022, Pub. L. No. 117-146, 136
Stat. 1272.
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FMC INVESTIGATION ON FLAGGING PRACTICES
On May 21, 2025, the FMC announced a ``nonadjudicatory
investigation into whether the vessel flagging laws,
regulations, or practices of foreign countries, including so-
called flags of convenience, or competitive methods employed by
the owners, operators, agents, or masters of foreign-flagged
vessels, are creating unfavorable shipping conditions in the
foreign trade of the United States.'' \5\ Many vessels in the
international trade fly flags that differ from the nation where
the ownership is based. The FMC is concerned that certain flag
states may have standards that provide vessels with lower costs
and oversight at the expense of reliability and safety.\6\ The
FMC has a public comment period open through August 20, 2025.
---------------------------------------------------------------------------
\5\ Investigation Into Flags of Convenience and Unfavorable
Conditions Created by Certain Flagging Practices, 90 Fed. Reg. 21926
(May 22, 2025).
\6\ Id.
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III. BUDGET FOR FMC
The President's FY 2025 budget request for the FMC \7\
compares to the FY 2024 enacted funding level \8\ as shown
here:
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\7\ Supra, note 2.
\8\ Consolidated Appropriations Act, 2024, Pub. L. No. 118-42, 138
Stat. 25.
FMC FY 2025 Enacted to FY 2026 President's Budget Request Comparison
(Dollars in Thousands)
----------------------------------------------------------------------------------------------------------------
President's FY FY 2025 to FY FY 2025 to FY
Account FY 2025 2026 Budget 2026 Change 2026 Change
Enacted Request ($) (%)
----------------------------------------------------------------------------------------------------------------
Operations and Administrative Program............ $ 40,000 $ 40,000 $ 0 0%
----------------------------------------------------------------------------------------------------------------
The President requests $40 million in FY 2026 for the
activities of the FMC, an amount equal to the FY 2025 enacted
level.\9\ The request includes $25,869,320 for salaries and
expenses to support 120 full-time equivalent positions, which
represents a $2 million decrease from current levels. The
remainder of the funding request includes operational expenses,
including rent and technology upgrades. The funding would allow
the Commission to continue its efforts to enforce antitrust
exceptions for ocean carriers and ensure a competitive ocean
transportation system.\10\
---------------------------------------------------------------------------
\9\ Id.
\10\ Id.
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IV. WITNESS
The Honorable Rebecca Dye, Commissioner, Federal
Maritime Commission
FUTURE OF UNITED STATES MARITIME, PART 1: REVIEW OF FISCAL YEAR 2026
FEDERAL MARITIME COMMISSION BUDGET REQUEST
----------
TUESDAY, JULY 22, 2025
House of Representatives,
Subcommittee on Coast Guard and
Maritime Transportation,
Committee on Transportation and Infrastructure,
Washington, DC.
The committee met, pursuant to call, at 2 p.m., in Room
2167, Rayburn House Office Building, Hon. Mike Ezell (Chairman
of the subcommittee) presiding.
Mr. Ezell. The Subcommittee on Coast Guard and Maritime
Transportation will come to order.
I ask unanimous consent that the chair may be authorized to
declare a recess at any time during today's hearing.
Without objection, so ordered.
I also ask unanimous consent that Members not on the
subcommittee be permitted to sit with the subcommittee at
today's hearing and ask questions.
Without objection, so ordered.
As a reminder, if Members wish to insert a document into
the record, please also email it to [email protected].
I now recognize myself for the purpose of an opening
statement for 5 minutes.
OPENING STATEMENT OF HON. MIKE EZELL OF MISSISSIPPI, CHAIRMAN,
SUBCOMMITTEE ON COAST GUARD AND MARITIME TRANSPORTATION
Mr. Ezell. We meet today to review the President's fiscal
year 2026 budget request for the Federal Maritime Commission,
or FMC. The FMC is an independent agency responsible for the
regulation of oceanborne transportation in the foreign commerce
of the United States. They also protect shippers and carriers
from unfair practices of foreign-flagged carrier alliances.
The President's fiscal year 2026 budget request includes
$40 million to fund the salaries, operations, and capital needs
of the FMC.
Today, we welcome our witness, Commissioner Rebecca Dye--
welcome, Commissioner--of the Federal Maritime Commission, to
discuss the President's fiscal year 2026 budget request, as
well as the state of the ocean shipping industry and their
ongoing work implementing the Ocean Shipping Reform Act of
2022, also known as OSRA, O-S-R-A.
The FMC has worked diligently since the enactment of OSRA
to implement its enhanced authorities, and I look forward to
hearing from Commissioner Dye today on the status of FMC's
efforts.
Earlier this year, the FMC announced an investigation into
vessel flagging laws, regulations, and practices of foreign
countries. I fear these so-called flags of convenience create
unfavorable shipping conditions in the foreign trade of the
United States.
Many vessels conducting international trade fly a flag that
differs from the nation where the ownership is based. The FMC
is examining whether certain flag states may have standards
that provide vessels with lower cost and oversight at the
expense of reliability and safety. I look forward to hearing
from Commissioner Dye on the progress of the investigation.
In line with President Trump's Executive order to restore
American maritime dominance, we are working to bolster our
domestic maritime capabilities, which are paramount to both the
security and economic growth of our Nation. I look forward to
hearing from our witness on how the FMC plans to make United
States maritime great again.
Commissioner Dye, thank you for being here today.
[Mr. Ezell's prepared statement follows:]
Prepared Statement of Hon. Mike Ezell of Mississippi, Chairman,
Subcommittee on Coast Guard and Maritime Transportation
We meet today to review the President's fiscal year 2026 budget
request for the Federal Maritime Commission (FMC).
The FMC is an independent agency responsible for the regulation of
ocean-borne transportation in the foreign commerce of the United
States. They also protect shippers and carriers from unfair practices
of foreign-flagged carrier alliances. The President's fiscal year 2026
budget request includes $40 million to fund the salaries, operations,
and capital needs of the FMC.
Today, we welcome our witness, Commissioner Rebecca Dye of the
Federal Maritime Commission, to discuss the budget request, as well as
the state of the ocean shipping industry and their ongoing work
implementing the Ocean Shipping Reform Act of 2022 (OSRA).
The FMC has worked diligently since the enactment of OSRA to
implement its enhanced authorities, and I look forward to hearing from
Commissioner Dye today on the status of FMC's efforts.
Earlier this year, the FMC announced an investigation into vessel
flagging laws, regulations, and practices of foreign countries. I fear
these so called ``flags of convenience'' create unfavorable shipping
conditions in the foreign trade of the United States.
Many vessels conducting international trade fly flags that differ
from the nation where the ownership is based. The FMC is examining
whether certain flag states may have standards that provide vessels
with lower costs and oversight at the expense of reliability and
safety. I look forward to hearing from Commissioner Dye on the progress
of the investigation.
In line with President Trump's executive order to restore American
maritime dominance, we are working to bolster our domestic maritime
capabilities, which are paramount to both the security and economic
growth of our nation. I look forward to hearing from our witness on how
the FMC plans to make United States maritime great again.
Mr. Ezell. I now recognize Ranking Member Carbajal for 5
minutes for an opening statement.
Mr. Carbajal. Thank you, Mr. Chairman. As usual, I will
defer my time to Ranking Member Larsen.
OPENING STATEMENT OF HON. RICK LARSEN OF WASHINGTON, RANKING
MEMBER, COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
Mr. Larsen of Washington. Thank you, Mr. Chairman, thank
you, Ranking Member, for scheduling this hearing on the fiscal
year budget for the Federal Maritime Commission.
While a small agency, the FMC has a big role. They protect
shippers and consumers by monitoring and taking action against
unfair and uncompetitive foreign shipping practices.
Ocean shipping is dominated by foreign shipping companies,
with U.S.-flagged operations comprising less than 2 percent of
imports and exports. The supply chain crisis associated with
the pandemic and ongoing international conflicts demonstrate
the need for robust oversight to ensure there is a fair playing
field. Fluctuations in service and pricing are normal, but it
is the role of the FMC to ensure these fluctuations are
justified in a competitive market.
The President's fiscal year 2026 budget request for the FMC
is flat. And I look forward to hearing from our witness how the
agency can ensure fair shipping with flat funding.
The FMC has begun to use its new investigative and
prosecutorial authorities provided under OSRA of 2022. I look
forward to hearing an update on the implementation of these new
authorities.
And since the passage of the reform act, container prices
have fallen and queues at ports have evaporated.
The FMC has also improved its reporting process, leading to
an increase in charge complaints from American businesses, one
of which resulted in a $2 million settlement over findings that
the shipping company knowingly and willfully violated the
shipping act.
This means lower costs for consumers, thanks to the quick
action and passage of this bill by Congress and signature by
President Biden.
These are positive trends, but I am concerned this will be
short-lived if the administration neglects the FMC. The FMC has
lost nearly 20 percent of its workforce due to the deferred
resignation program and the ongoing hiring freeze. This means
fewer investigators finding unfair shipping practices and fewer
attorneys prosecuting cases.
The FMC is also operating without two Commissioners, and
currently there is no Chair. As a bipartisan, independent
agency, the FMC's critical functions cannot be understated.
I look forward to hearing from Commissioner Dye about ways
to ensure a fair and competitive maritime supply chain and to
build upon the successes we have seen so far.
With that, I yield back.
[Mr. Larsen of Washington's prepared statement follows:]
Prepared Statement of Hon. Rick Larsen of Washington, Ranking Member,
Committee on Transportation and Infrastructure
Mr. Chairman, thank you for scheduling this afternoon's hearing to
review the Fiscal Year 2026 budget request for the Federal Maritime
Commission.
While a small agency, the Federal Maritime Commission has an
important role. It protects shippers and consumers by monitoring and
taking action against unfair and uncompetitive foreign shipping
practices.
Ocean shipping is dominated by foreign shipping companies with
U.S.-flagged operations comprising less than 2 percent of imports and
exports. The supply chain crisis associated with the pandemic and
ongoing international conflicts demonstrate the need for robust
oversight to ensure a fair playing field.
Fluctuations in service and pricing are normal, but it is the role
of the FMC to ensure that those fluctuations are justified in a
competitive market.
The President's fiscal year 2026 budget request for the Federal
Maritime Commission--is flat. I look forward to hearing from our
witness how the agency can ensure fair shipping with flat funding.
The FMC has begun to use its new investigative and prosecutorial
authorities provided under the Ocean Shipping Reform Act of 2022. I
look forward to hearing an update on the implementation of these new
authorities.
Since passage of the Ocean Shipping Reform Act of 2022, container
prices have fallen and queues at ports have evaporated.
The FMC has also improved its reporting process leading to an
increase in charge complaints from American businesses. One of which
resulted in a $2 million settlement over findings that the shipping
company knowingly and willfully violated the Shipping Act.
This means lower costs for consumers thanks to quick action by
Congress and President Biden.
These are positive trends. But, I am concerned this will be short
lived if the Administration neglects the FMC. The FMC has lost nearly
20 percent of its workforce due to the Deferred Resignation Program and
the ongoing hiring freeze. This means fewer investigators finding
unfair shipping practices and fewer attorneys prosecuting cases.
The FMC is also operating without two Commissioners and there's
currently no chair. As a bipartisan, independent agency, the FMC's
critical functions cannot be overstated.
I look forward to hearing from Commissioner Dye about ways to
ensure a fair and competitive maritime supply chain and to build upon
the success we have seen so far.
I yield back.
Mr. Ezell. The gentleman yields back.
I would once again like to welcome our witness and thank
her for being here today.
Briefly, I would like to take a moment to explain our
lighting system to our witness. There are three lights in front
of you. Green means go, yellow means you are running out of
time, red means put on brakes.
I ask unanimous consent that the witness' full statement
be--Mr. Carbajal, did you want to?
Mr. Carbajal. Sure.
Mr. Ezell. The Chair now recognizes Mr. Carbajal.
OPENING STATEMENT OF HON. SALUD O. CARBAJAL OF CALIFORNIA,
RANKING MEMBER, SUBCOMMITTEE ON COAST GUARD AND MARITIME
TRANSPORTATION
Mr. Carbajal. Thank you, Chair Ezell, for scheduling
today's hearing on the ``Future of United States Maritime, Part
1: Review of Fiscal Year 2026 Federal Maritime Commission
Budget Request.''
I look forward to hearing from Commissioner Dye of the
Federal Maritime Commission, or FMC as we know it, on the
President's budget request and their agency's priorities for
the upcoming year.
In 2022, we worked hard to pass the Ocean Shipping Reform
Act out of this subcommittee, which subsequently became law. I
am particularly eager to hear about its implementation and how
its new authorities have helped maintain a resilient and
efficient supply chain.
As a federal agency tasked with ensuring fairness for
American shippers, carriers, and consumers, the FMC plays a
crucial role in safeguarding transparency and enforcing
equitable maritime commerce. According to the U.N., over 80
percent of the world trade volume is carried over the ocean. In
2024, over 11 percent of the total U.S. GDP came from ocean
shipping, which translates into over $4 trillion.
In a global economy, the FMC is often our only referee for
a fair shipping market.
We know from recent history that weaknesses in our supply
chain were exposed as landside port congestion and unfair
shipping practices by foreign ocean carriers led to backlogs
and price increases. This contributed to higher prices for
Americans on almost everything they buy.
The reforms in our bill strengthen the FMC's authority to
investigate unfair fees and help facilitate the efficient
movement of cargo through U.S. ports. I am proud to say that
since the passage of the OSRA, vessel congestion at ports has
decreased. And in the 3 years since the enactment in 2022, more
than $5.8 million in fees have been waived or refunded in undue
charges by carriers.
In May of this year, the FMC launched an investigation into
flagging practices of foreign governments, otherwise known as
flags of convenience. These practices severely undermine flag
states that employ rigorous standards, ensure fair pay, and
provide basic human rights. I hope that the FMC will leverage
every authority they have to address this systemic global
problem.
Further, the FMC is currently undertaking a rulemaking
aimed at ensuring that exporters are given fair access to cargo
space. It is important that the FMC is sufficiently funded so
that it can properly carry out these reforms, which will
greatly benefit American businesses and the American consumer.
While I am pleased to hear about all the success that FMC
has been having, I would be remiss if I did not mention my
growing concern with the shortage of Commissioners, the loss of
employees through the deferred resignation program, and the
lack of a Chair for the agency. The absence of leadership
threatens the positive momentum they have had so far.
I look forward to a robust discussion about the FMC's
ongoing actions and how they will ensure a strong maritime
industry.
Mr. Chairman, I yield back.
[Mr. Carbajal's prepared statement follows:]
Prepared Statement of Hon. Salud O. Carbajal of California, Ranking
Member, Subcommittee on Coast Guard and Maritime Transportation
Thank you, Chair Ezell, for scheduling today's hearing on the
``Future of United States Maritime, Part 1: Review of Fiscal Year 2026
Federal Maritime Commission Budget Request.''
I look forward to hearing from Commissioner Dye of the Federal
Maritime Commission, or FMC, on the President's budget request and
their agency priorities for the upcoming year.
In 2022, we worked hard to pass the Ocean Shipping Reform Act out
of this subcommittee which subsequently became law. I am particularly
eager to hear about its implementation, and how its new authorities
have helped maintain a resilient and efficient supply chain.
As the federal agency tasked with ensuring fairness for American
shippers, carriers, and consumers, the FMC plays a crucial role in
safeguarding transparency and enforcing equitable maritime commerce.
According to the U.N., over 80 percent of world trade volume is carried
over the ocean. In 2024, over 11 percent of the total U.S. GDP came
from ocean shipping--which translates into over $4 trillion dollars.
In a global economy, the FMC is often our only referee for a fair
shipping market.
We know from recent history that weaknesses in our supply chain
were exposed as landside port congestion and unfair shipping practices
by foreign ocean carriers led to backlogs and price increases. This
contributed to higher prices for Americans on almost everything they
buy.
The reforms in our bill strengthened the FMC's authority to
investigate unfair fees and help facilitate the efficient movement of
cargo through U.S. ports. I am proud to say that since the passage of
the OSRA, vessel congestion at ports has decreased and in the three
years since the enactment in 2022, more than $5.8 million in fees have
been waived or refunded in undue charges by carriers.
In May of this year, the FMC launched an investigation into
flagging practices of foreign governments, otherwise known as ``Flags
of Convenience.'' These practices severely undermine flag states that
employ rigorous standards, ensure fair pay, and provide basic human
rights. I hope that the FMC will leverage every authority they have to
address this systemic global problem.
Further, the FMC is currently undertaking a rulemaking aimed at
ensuring that exporters are given fair access to cargo space. It is
important that the FMC is sufficiently funded so that it can properly
carry out these reforms, which will greatly benefit American businesses
and the American consumer.
While I am pleased to hear about all the success that FMC has been
having, I would be remiss if I did not mention my growing concern with
the shortage of commissioners, the loss of employees to the deferred
resignation program, and the lack of a Chair of the agency. The absence
of leadership threatens the positive momentum they have had so far.
I look forward to a robust discussion about how the FMC's ongoing
actions will ensure stronger maritime industry.
I yield back.
Mr. Ezell. The gentleman yields.
I ask unanimous consent that the witness' full statement be
included in the record.
Without objection, so ordered.
I ask unanimous consent that the record of today's hearing
remain open until such time as our witness has provided answers
to any questions that may be submitted to her in writing.
Without objection, so ordered.
I also ask unanimous consent that the record remain open
for 15 days for any additional comments and information
submitted by Members or witnesses to be included in the record
of today's hearing.
Without objection, so ordered.
As your written testimony has been made part of the record,
the subcommittee asks that you limit your oral remarks to 5
minutes.
With that, Commissioner Dye, you are recognized for 5
minutes for your testimony.
TESTIMONY OF HON. REBECCA F. DYE, COMMISSIONER, FEDERAL
MARITIME COMMISSION
Ms. Dye. Thank you very much. Mr. Chairman, Ranking Member
Carbajal, members of the subcommittee, it is like coming home
for me. And I very much appreciate your holding this hearing.
And thank you so much for your interest in the responsibilities
of the Federal Maritime Commission.
As you are aware, my friend and colleague Lou Sola departed
on June 30, and we look forward to news of his future
endeavors.
There has been a smooth transition at the Federal Maritime
Commission, and there will be consistency in dealing with
shipping issues of importance to you and your constituents.
I fully support the President's FY 2026 budget of $40
million for the Federal Maritime Commission. This will fund
FMC's mission and statutorily driven activity, as well as
important technology investments. This level of funding
reflects no change from the 2025 enacted budget.
As in past years, our budget is straightforward, with the
majority of funding going to personnel, office space, and
important information technology. We have budgeted $25.8
million for employee salaries and benefits, a reduction from FY
2025 of $2 million.
The Commission had 13 employees depart under the deferred
resignation program, the voluntary retirement program. They
will be paid from the FMC budget until the end of 2025.
We are working with OPM for six exemptions to hire critical
attorneys and economists in our flag ship competition and
enforcement programs in line with the administration's 4-to-1
hiring ratio.
Finally, that leaves rent and security services of $4.2
million, a slight increase of $150,000 from FY 2025.
Also, $6 million has been budgeted for badly needed core IT
operations and modernization. The remainder consists of all
other budget requirements to support essential operational
needs.
This $40 million allows us to effectively carry out our
mission, identifying and assertively investigating conduct that
unlawfully disadvantages U.S. interests essential to protect
marketplace integrity.
OSRA 22 has better prepared the FMC to meet the demands for
its services and to respond to developments in the marketplace.
The Commission issued two OSRA 22 mandated final rules in 2024:
detention and demurrage billing practices; and unreasonable
refusal to deal with respect to vessel space.
Two rulemakings remain to be completed: our Shipping
Exchange Registry; and certain outstanding elements of unfair
or unjustly discriminatory methods.
Although the two final rules are operational today, we are
still involved in litigation over the final outcome.
Section 10 of the Ocean Shipping Reform Act of 2022
established a new way for shippers to submit complaints to the
Commission. These are regarding charges assessed by common
carriers, and to receive a refund or waiver for noncompliant
charges. Those charge complaints were voluntarily resolved
during the investigations phase, we are pleased to say.
Next year, the FMC will propose a rulemaking for fast
resolution of disputed charges in which the ocean carrier is
ordered to demonstrate the lawfulness of a charge.
The Commission is guided by the purposes of one of the
sections of the shipping act, including ``encourage an
economically sound and efficient liner fleet of vessels of the
United States capable of meeting national security needs.'' I
applaud President Trump for emphasizing the importance of both
the U.S. military, U.S. Coast Guard, and commercial maritime
sectors.
We appreciate the Congress and the Commission's support and
the Congress' support to fund the FMC at $40 million for FY
2026.
Thank you. I will be glad to answer your questions.
[Ms. Dye's prepared statement follows:]
Prepared Statement of Hon. Rebecca F. Dye, Commissioner, Federal
Maritime Commission
Chairman Ezell, Ranking Member Carbajal, Members of the
Subcommittee, thank you for holding this hearing and for your interest
in the responsibilities of the Federal Maritime Commission (FMC or
Commission).
As you are aware, my friend and colleague, Louis E. Sola, departed
on June 30, 2025, and we look forward to news of his future endeavors.
There is a smooth transition and there will be consistency in dealing
with the international ocean supply chain and shipping issues of most
importance to each of you and your constituents.
The Commission will continue to emphasize strong enforcement and
compliance, protecting exporters and importers from potential
anticompetitive behavior, supporting port and marine terminal process
improvements to strengthen our international ocean freight delivery
system, and revitalizing the American merchant marine industry.
I applaud President Trump for emphasizing the criticality of both
the U.S. military and commercial maritime sectors and prioritizing the
growth of the maritime industry. The President is taking the actions
necessary to develop a vibrant maritime industry that creates economic
security for many and national security benefits for us all.
I support the President's FY 2026 budget of $40 million for the
Federal Maritime Commission, which will fully fund the FMC's mission
and statutory-driven activity, as well as important technology
investments. This level of funding reflects no change from the FY 2025
enacted budget.
As in past years, our budget is straightforward, with the majority
of funding going to personnel, office space, and important information
technology (IT). We have budgeted $25.8 million for employee salary and
benefits, a reduction from FY 2025 of $2 million. That leaves rent and
security services at $4.2 million, a slight increase of $150,000 from
FY 2025. Finally, $6 million has been budgeted for core IT operations
and modernization. The remainder consists of all other budget
requirements to support essential operational needs.
The $40 million budget allows us to effectively carry out our
mission: identifying and assertively investigating conduct that
unlawfully disadvantages U.S. interests is essential to protect
marketplace integrity.
I. Statutory Authorities
OSRA 2022
The most recent update to the Commission's statutory authorities
took place when the Ocean Shipping Reform Act (OSRA 2022) was enacted,
positioning the Commission to be even better prepared to meet the
demand for its services and to respond to developments in the
marketplace. The Commission issued two OSRA 2022 mandated final rules
in 2024:
Detention and Demurrage Billing Practices; and
Unreasonable Refusal to Deal With Respect to Vessel Space
Accommodations.
With both of these rules now in force, only two rulemakings remain
to be completed: the Shipping Exchange Registry and completing any
elements of Unfair or Unjustly Discriminatory Methods that were not
included as part of the Final Rule on Unreasonable Refusal to Deal.
Elements of both the Final Rule on Detention and Billing
Practices and the Final Rule on Unreasonable Refusal to Deal With
Respect to Vessel Space Accommodations are being legally challenged by
the World Shipping Council.
Oral arguments in the Detention and Demurrage case has
been heard before the U.S. Court of Appeals for the D.C. Circuit and we
are awaiting the court's ruling. Oral arguments in the Refusal to Deal
case is scheduled for September 9, 2025.
The Commission is guided by the purposes section of the Shipping
Act: to ``encourage an economically sound and efficient liner fleet of
vessels of the United States capable of meeting national security needs
and supporting commerce [,]'' 46 United States Code (U.S.C.) Sec.
40101(3). The Commission is using all its authorities to meet this
goal.
Here are other statutory authorities of the Federal Maritime
Commission that support commerce:
Unfavorable Conditions in Foreign Trade, Section 19 Authority
(Chapter 421 of Title 46, United States Code) (46 U.S.C. Sec. Sec.
42106, 42107)
The Commission may investigate and address general or special
conditions unfavorable to shipping in the foreign trade when the
conditions are attributable to laws or regulations of a foreign
country, or competitive methods, pricing practices, or other practices
of foreign vessel operating common carriers, including container
vessels. The Commission has very broad authority under this provision,
including over entities it does not typically regulate under the
Shipping Act, such as vessel owners, and over a wider scope of
activities, including other services and activities integral to
transportation systems. The Commission may initiate an investigation on
its own, or in response to a petition.
Foreign Shipping Practices Act
(Chapter 423 of Title 46, United States Code) (46 U.S.C. Sec. Sec.
42304, 42305)
This authority is narrower than the Commission's Section 19
authority. It is tailored to address laws, regulations, or practices of
a foreign government, or practices of a foreign carrier, that adversely
affect U.S.-flag common carriers and that do not exist for foreign-flag
carriers. The Commission has extensive authority to address these
conditions by imposing restrictions or fines on foreign-flag vessel-
operating common carriers.
Foreign-to-Foreign Jurisdiction
(Chapter 411 of Title 46, United States Code) (46 U.S.C. Sec.
41108(d))
The FMC has jurisdiction over actions by foreign governments or
foreign carriers that impair access of U.S.-flag vessels to ocean trade
between foreign ports. The FMC's authority to respond to these
conditions is extensive, mirroring that under the Foreign Shipping
Practices Act. This statutory provision refers to U.S.-flag vessels and
is broader than the statute's definition of a common carrier. It
empowers the Commission to address access restrictions imposed on bulk,
tramp, tanker, or other kinds of vessels so long as they are U.S.-
flagged. This results in the scope of the Commission's foreign-to-
foreign jurisdiction being broader than its jurisdiction under the
Foreign Shipping Practices Act.
Controlled Carrier Act
(Chapter 407 of Title 46, United States Code) (46 U.S.C. Sec. 40701)
Ocean carriers may benefit from different forms of direct and
indirect governmental support. In instances where that subsidization
goes from support to control, the Commission designates the shipping
company as a Controlled Carrier. A Controlled Carrier is an ocean
common carrier operating in the U.S.-foreign trades that is, or whose
operating assets are, directly or indirectly owned or controlled by a
foreign government. Controlled carriers are subject to enhanced
regulatory oversight by the Commission.
By statute, the Commission monitors government-controlled carriers,
whose marketplace decision-making can be influenced by foreign
governmental priorities or by their access to non-market sources of
capital, to ensure that they do not engage in unreasonable below-cost
pricing, which would disrupt trade or harm privately owned shipping
companies.
Since 2024, the Commission has added four companies to the
Controlled Carrier list. Today, six are from the People's Republic of
China (COSCO, OOCL, OOCL Europe, HEDE, ANJI, and Chipolbrok) and one is
from the Republic of Korea (HMM).
Additionally, pursuant to section 14 of OSRA 2022 (section 46106(b)
of Title 46, United States Code), the Commission is required to
identify otherwise concerning practices by ocean carriers, particularly
controlled carriers, that are:
(A) State-owned or State-controlled enterprises; or
(B) Owned or controlled by a subsidiary of, or related legally or
financially to a corporation in a nonmarket economy country, identified
by the U.S. Trade Representative as a priority foreign country or
subject to monitoring by the U.S. Trade Representative.
The Commission is currently developing a methodology to identify
otherwise concerning practices by ocean carriers in the above-mentioned
countries.
II. Supporting U.S. Commerce
Using the above referenced statutory authorities, the Federal
Maritime Commission carries out enforcement matters and investigations.
Below are some of the Commission's ongoing investigations.
Lake Carriers Investigation (Investigation Into Conditions
Affecting United States Carriers in Connection With Canadian Ballast
Water Regulation in the United States/Canada Great Lakes Trade, 89 FR
44979 (May 22, 2024))
The Commission is statutorily authorized to investigate
and take remedial measures to address laws or policies of foreign
governments that discriminate against U.S.-flag vessels.
The Commission has been investigating and monitoring the
impacts of Canadian ballast water regulations on U.S.-flag vessels
since 2020. The core issue is whether Canadian regulations would
require U.S.-flag vessels to install new, expensive, and unnecessary
ballast water management systems.
The Commission initiated a targeted Chapter 423
investigation in May 2024 of the impact of the Canadian regulations on
specific U.S.-flag vessels built after a certain date. In response,
Canada developed a process for U.S.-flag vessels to request exemptions
from the regulations, and all covered vessels were exempted. Due to
this successful outcome, the Commission closed its Chapter 423
investigation in December 2024.
The Chapter 421 Investigation remains open. FMC continues
to investigate and monitor the impact of Canada's ballast water
regulations on all U.S.-flag vessels, regardless of build date, in
anticipation of Canada's planned 2030 full implementation of its
ballast water rules.
Spain Investigation (Investigation Into Conditions Affecting
Shipping in the Foreign Trade and Denial of Entry of Vessels Into
Spanish Ports, 89 FR 96973 (Dec. 6, 2024))
FMC is authorized by statute to investigate and take
remedial measures to address laws or policies of foreign governments
that discriminate against U.S.-flag vessels.
FMC initiated an investigation in December 2024 because
reports that the Government of Spain had denied port entry to U.S.-flag
vessels participating in the U.S. Department of Transportation's
Maritime Administration's (MARAD) Maritime Security Program.
Comment period closed on December 26, 2024. The FMC
received 8,323 comments. The Government of Spain filed a comment that
focused on their sovereignty rather than on their reasons for refusing
port access.
The Commission continues to investigate and will make
public findings this year.
Chokepoints Investigation (Order of Investigation Into Transit
Constraints at International Maritime Chokepoints, 90 FR 12158 (March
14, 2025))
The Commission is authorized by statute to investigate
unfavorable shipping conditions caused by the laws, regulations, or
practices of foreign governments or the practices of foreign-flag
vessel owners or operators.
FMC initiated an investigation of conditions at seven key
global chokepoints--the English Channel, the Malacca Strait, the
Northern Sea Passage, the Singapore Strait, the Panama Canal, the
Strait of Gibraltar, and the Suez Canal.
The comment period closed on May 13, 2025. Thirteen
comments were filed, including from the Panama Canal Authority and the
Government of Singapore.
The Commission continues this investigation and may reach
out to specific governments or commercial entities for additional
information.
Flags of Convenience Investigation (Investigation Into Flags of
Convenience and Unfavorable Conditions Created by Certain Flagging
Practices, 90 FR 21926 (May 22, 2025))
The Commission is statutorily authorized to investigate
unfavorable shipping conditions caused by the laws, regulations or
practices of foreign governments or the practices of foreign-flag
vessel owners or operators.
The Commission initiated an investigation of the flagging
rules and practices of foreign governments in May 2025. The 90-day
public comment period will close on August 20, 2025.
Initial indications are that vessel registration
practices of certain foreign countries, so-called flags of convenience,
are creating unfavorable shipping conditions in the foreign trade of
the United States. These flags enable unsafe vessels to operate, and
further enable shadow fleet activity and the evasion of sanctions.
There has been a race to the bottom--a situation where
flag states compete by lowering standards and easing compliance
requirements, lowering the cost of flagging vessels beyond a point
where the efficiency, reliability, and safety of the vessels used in
the ocean shipping supply chain can be assured. The use of these flags
of convenience endangers the U.S. ocean shipping supply chain.
The Commission will review all filed comments and
determine next steps later this year.
Unfortunately, not all foreign ship registries share a commitment
with the United States to ocean shipping integrity and accountability.
This lack of ship registry accountability not only disadvantages U.S.-
flag shipping, but also presents a problem in addressing smuggling
operations, sanctions evasion, disguised ownership, and other
irregularities.
Aggressively investigating and enforcing the law against foreign
conduct that disadvantages U.S.-flag interests is an incentive to
registering ships under the United States flag, as the United States is
prepared to intervene legally on behalf of U.S.-flag vessels.
Shipowners have a multitude of options to register their vessels,
and the ability of the Federal Maritime Commission to take direct
action to enforce the law against discriminatory behavior of other
foreign governments or foreign-flag carriers, with the involvement of
the President, Federal agencies, and Federal courts, is a unique
benefit to U.S.-flagged vessels.
III. Competition Enforcement
The FMC's Competition Enforcement Program monitors filed agreements
to ensure that collaboration between vessel-operating common carriers
(VOCCs) and/or marine terminal operators, which compete against each
other in the market, do not result in a reduction in competition that
produces unreasonable increases in transportation costs or unreasonable
decreases in transportation services. (46 U.S.C. Sec. 41307 (b)(1)).
The number of major carriers in the U.S. transpacific and
transatlantic trades has decreased from 20 in 2015 to 11 by 2022, due
to ocean carrier mergers and the bankruptcy of one major carrier.
The Federal Maritime Commission and the U.S. Department of Justice
(DOJ) have a statutory division of competition authority over
international liner shipping in the U.S. trades. The DOJ reviews and
approves mergers of ocean carriers. The FMC analyzes the competitive
market effects of collaborative agreements among competitors, such as
vessel sharing agreements (alliances are vessel sharing agreements that
operate globally) or joint ventures. It is noted that market
concentration results from mergers, not from the market effects of
collaborative agreements among competitors.
While it may be characterized as an exemption, the Shipping Act of
1984 is not an exemption from the antitrust laws, but an alternative
competition regime put in place by Congress in recognition of the
multinational nature of international ocean shipping and importance of
working with our international trading partners in this arena.
The FMC, with its specialized knowledge and expertise, is the
agency responsible for administering this alternative competition law.
The basic framework for initial analysis aligns with established
guidelines used for evaluating collaboration among competitors and is
performed by attorneys, economists, and industry analysts who are
experts in the ocean transportation system.
Agreements that may pose competitive concerns are subject to
continuous monitoring by Commission staff. The Commission validates the
data and information collected through our monitoring with external
sources of information on ship schedules, capacity, and measures of
cargo moved. The FMC also regularly reviews and revises monitoring data
to ensure that the data collected aligns with the realities of the
industry.
During the pandemic, blank sailings were a particular concern
because of their potential to be used for anti-competitive purposes.
Our monitoring, however, indicated that this reduced service by ocean
carriers was driven by port congestion rather than a desire to reduce
capacity, and delays and skipped ports have been a frequent occurrence.
The Commission staff have reviewed the data collected on blank sailings
to assess the factors driving schedule delays and blanked sailings.
Protecting the integrity of the marketplace is one of the key
missions of the FMC and the linchpin of these efforts is our
competition program. Accurate, insightful, in-depth analysis is
essential to monitoring the behavior of carrier agreements, especially
shipping alliances. The Commission took two important actions in 2024
to bolster its abilities to review newly filed agreements and monitor
filed agreements for anticompetitive effects.
First, the Commission issued a policy statement in July
2024 announcing that it may use its investigatory authorities,
including fact finding investigations, when reviewing the competitive
effects of some cooperative agreements among ocean carriers or marine
terminal operators.
Separately, in December 2024 the Commission moved primary
responsibility for its monitoring program from the Bureau of Trade
Analysis economists to the Office of the General Counsel attorneys, a
realignment I strongly supported. The consolidation fosters greater
efficiency and integration in the legal and economic review of
competition analysis. As a result, the Commission will be able to
conduct more extensive reviews of filed agreements and ensure that
there are no current anticompetitive effects regarding agreements that
are in effect.
IV. Alliance Structure
Most large VOCCs participate in alliances, which are agreements
between competitors to rationalize vessel utilization and trade lanes.
Alliance members are expressly prohibited from agreeing on pricing and
agreeing on prices within an alliance carries severe criminal
consequences. In 2025, the world's largest VOCC, Swiss-based
Mediterranean Shipping Company (MSC), determined to operate independent
of its previous alliance, although it currently cooperates with the
Premier Alliance.
As it currently stands, there are three alliances:
1) Gemini (Hapag-Lloyd and Maersk);
2) Ocean (COSCO, OOCL, CMA, and Evergreen); and
3) Premier (HMM, ONE, and Yang Ming)).
The three alliances comprise 70% of U.S. trade, and MSC, which on
its own covers 15% of U.S. trade. The remaining 15% of U.S. trade is
served by smaller carriers.
The alliance system benefits U.S. trade by helping maintain a
larger number of VOCCs in U.S. trades and disincentivizing further
mergers and consolidation. VOCCs can join together to create
efficiencies and economies of scale without the permanence of a merger.
The system also promotes a steady level of service and shipping options
in the U.S.
The withdrawal of MSC from the now dissolved 2M Alliance (Maersk
and MSC) resulted in the filing of two new alliance agreements: the
Gemini Cooperation Agreement and the Premier Alliance Agreement. In
both alliances, the Commission issued a Request for Additional
Information (RFAI) to obtain documents and verifiable information
necessary to achieve clarity on matters that were not addressed by
filing parties or where insufficient information was provided in the
originally filed agreements. The Gemini and Premier agreements are now
fully in effect.
V. Commission Matters
In addition to all the previously described enforcement activities
and responsibilities of the FMC above, the Commission's jurisdiction
covers many areas across the supply chain. For example, one notable
investigation was in regard to OCEMA Box Rules. In a complaint case
filed by an association of truckers, the Commission found that in four
national transportation markets, ocean common carriers' restrictions
limiting truckers and shippers to the carriers' designated chassis
provider violate the Shipping Act, and ordered those practices to
immediately cease so truckers and shippers can negotiate and deal with
chassis providers they choose. Ocean carriers had benefited financially
from the restrictions they imposed on truckers and shippers.
Reports that ocean carriers continued to enforce their
unlawful restrictions in violation of the cease and desist order led
the Commission to launch an investigation, subpoena documents and
testimony from the carriers and other transportation providers and
conduct in-person site visits at facilities servicing the Memphis
region to document actual practices and barriers to truckers and
shippers using chassis providers they choose.
The Commission's Bureau of Enforcement, Investigations,
and Compliance (BEIC) concluded its investigation and reported its
findings earlier this year. BEIC concluded that carriers have changed
their practices, as ordered by the Commission, so that truckers and
shippers in the markets covered by the order are no longer restricted
to carriers' designated chassis providers and can choose other options.
After the Commission ordered certain restrictive
practices to cease, the parties continued to litigate other claims
raised by the truckers' association, and the Commission's Chief
Administrative Law Judge dismissed as moot those remaining claims
because intervening changes in the chassis market, including increased
reliance on trucker-owned chassis, alleviated conditions the truckers
sued to remedy. A motion by the ocean common carriers asking the
Commission to reconsider and vacate the cease and desist order is
pending before the Commission.
Additionally, the Commission reviewed a proposed amendment to the
New York Shipping Exchange (NYSHEX) Agreement, which initially became
effective on December 2, 2017. The Agreement intended to offer an
American-based shipping index. Upon review of the proposed amendment
that was filed in January 2025, the Commission issued an RFAI. The
amendment to the NYSHEX agreement is now in effect.
VI. Significant Litigation
In addition to ongoing investigations, the Commission has cases
pending in the U.S. Court of Appeals for the District of Columbia
Circuit:
World Shipping Council v. FMC (D.C. Cir. No. 24-1088)--
World Shipping Council, a trade association for ocean carriers,
challenged the Commission's OSRA 2022-based demurrage and detention
billing rule as it applies to the billing of truckers. The case was
argued on March 13, 2025, and is pending a decision.
World Shipping Council v. FMC (D.C. Cir. No. 24-1298)--
World Shipping Council challenged FMC's OSRA 2022-based rulemaking on
unreasonable refusal to deal. The case has been briefed and is awaiting
oral argument.
Evergreen Shipping Agency (America) Corp. v. FMC (D.C.
Cir. No. 25-1104)--Evergreen, a Taiwan-based VOCC, challenged the FMC's
decision that it could not bill demurrage to a motor carrier on certain
days when a port was closed and equipment could not be returned, and
the equipment was not available for pickup until the port's closure.
The case is currently in briefing.
Recently, on June 24 2025, the U.S. Court of Appeals for the
District of Columbia Circuit issued its decision in Mediterranean
Shipping Co. v. FMC (D.C. Cir. No. 24-1262). MSC, a Swiss-headquartered
VOCC, had challenged FMC's decision in a private complaint case, in
which the FMC ruled against the company because it refused to
participate in discovery. The D.C. Cir. Court denied MSC's petition and
determined that it was reasonable for the Commission to find that MSC's
actions undermined the agency's authority.
VII. Informal Dispute Resolution
The Commission is a venue for resolving disputes related to ocean
shipping. This can be done informally and cooperatively though the
Office of Consumer Affairs and Dispute Resolution Services (CADRS) or
adjudicated through more structured, formal, and traditional litigation
options. Across the board, the demand for Commission services remains
strong.
In FY 2025 to date, CADRS has received more than 1,000 requests for
assistance, resulting in more than 300 cases being opened.
Section 10 of the Ocean Shipping Reform Act 2022 established a new
way for shippers to submit complaints to the Commission regarding
charges assessed by common carriers and to receive a refund or waiver
for non-compliant charges, 46 U.S.C. Sec. 41310. From the start of FY
2025 to date, the FMC received 209 charge complaints. Of those, 118
were appropriate for the charge complaint process and assigned for
investigation. Since OSRA 2022, the total amount of charge complaints
refunded or waived during this period has been over $5 million.
While most charge complaints were voluntarily resolved during the
investigation phase, the FMC's process also provides for fast
resolution of non-compliant charges disputed by the parties through a
proceeding before the Commission where the carrier is ordered to
demonstrate the lawfulness of a charge. This temporary process has
provided practical experience the Commission will include in a
rulemaking that it will initiate to establish a permanent procedure for
administering Charge Complaints. A rulemaking regarding the Charge
Complaint process will begin in FY 2026.
VIII. Adjudicatory Proceedings
Adjudicatory proceedings at the FMC have increased dramatically in
recent years, and this increased pace is expected to continue in
upcoming years. FY 2024 was the Office of the Administrative Law
Judge's (OALJ) busiest year on record with the highest caseload in
decades. In FY 2024, the OALJ both received and resolved more cases
than in prior years. We anticipate finishing FY 2025 with a significant
number of new cases.
To address this additional demand, the Commission now has five
Administrative Law Judges (three permanent, two detailed from the U.S.
Department of Health and Human Services (HHS)) presiding over cases
involving multiple parties in which potential damages can run into the
millions of dollars. The Commission has seen a sharp increase in the
motions practice before its ALJs.
The Commission's Small Claims Officer, located within the OALJ, has
the highest number of pending cases ever recorded, and is on a pace to
double.
Formal complaints, small claims, and CADRS activity demonstrate
that the Commission is serving the U.S. shipper community.
The Commission continues to carry out its mission critical
statutory responsibilities, making it a vital agency serving the
American public. From helping small shippers informally resolve
shipping disputes to adjudicating cases that establish precedent to
resolve shipping disputes in the future, the FMC provides a wide range
of services and resources to all parties involved in international
ocean freight delivery. The FMC continued its critical mission to
ensure coemption and integrity for America's oceanic supply chain. We
have appreciated the President and Congress' support to fund the FMC at
$40 million for FY 2026.
Mr. Ezell. Thank you for your testimony. We will now turn
to questions from the panel.
I will recognize myself for 5 minutes for questions.
The global ocean shipping market is increasingly dominated
by foreign state bad actors, bad carriers, particularly from
China, which raises concerns about unfair competition and
potential harm to U.S. mariners, shippers, and long-term supply
chain operations.
Does the Commission have enough resources to protect U.S.
mariners and shippers from unfair practices by foreign state-
sponsored carriers like those backed by the Chinese Government?
Ms. Dye. Thank you, Mr. Chairman. We do. One of the
advantages of a small agency, I have found, is that we are able
to pivot much more quickly than giant organizations. And we
have reorganized our competition office to combine our
economists with our attorneys working on competition.
And I have long supported this approach. And it will make
us much more effective. And we have also refocused our
enforcement regime to make sure that we are using those
resources effectively.
So, thank you very much. I am confident that we will be
effective.
Mr. Ezell. Very good.
The Ocean Shipping Reform Act of 2022, OSRA, expanded the
FMC's authority to regulate detention and demurrage practices,
investigate discriminatory behavior by carriers, and enhance
protections for shippers.
Where is the FMC on OSRA implementation? When do you expect
full implementation of OSRA? How have shippers benefited since
OSRA's passage?
Ms. Dye. As I reported, we have completed two of the most
important regulations. And we are waiting to see the final
court action on those. But today, ocean carriers are complying
with those regulations.
Mr. Ezell. Very good.
Ms. Dye. We get good reports about the operation of those.
We still are working on the Exchange Registry and a small
remainder of the discriminatory regulation that we will
complete.
We are also going to complete the new charge complaint
regulation to make sure the public understands the approach.
And we are in good shape in compliance with all the reports in
OSRA as well.
Mr. Ezell. Very good. The FMC recently launched an
investigation into whether foreign vessel flagging laws,
regulations, and practices create unfavorable conditions for
U.S. trade. What prompted this investigation?
What practices are you concerned about that could undermine
fair maritime trade?
Ms. Dye. Thank you. These authorities that I outlined in my
statement for the record are advantageous to U.S.-flag ships.
And we believe that it could provide a good grounding for a
U.S. vessel registry to know that if there are problems, the
United States will go to bat for you. And this is one of them.
Flags of convenience are really open registries. Panama,
Marshall Islands, and Liberia accept registrations from owners
of vessels who are outside their residence. The United States
has a closed registry. And many other major ones are closed
registries.
There has been a concern that the open registries, flags of
convenience, are not as effective in enforcing regulations. And
then, in some ways, their enforcement has been pushed off onto
core states like the United States.
These fact findings, these investigations are very
flexible, they can be stood up quickly. They do not have, on
their own, authority to require violations or anything like
that.
But we will get to the bottom of this. And then, of course,
we will inform the Coast Guard.
Mr. Ezell. Thank you very much.
I yield back.
Ms. Dye. Thank you.
Mr. Ezell. I now recognize Mr. Larsen.
Mr. Larsen of Washington. Thank you, Mr. Chair.
Commissioner Dye, according to the budget request, most of
the rulemakings have been completed as part of the OSRA. Can
you report on the progress of the remaining rulemakings?
Ms. Dye. On the remaining rulemakings?
Mr. Larsen of Washington. The remaining rulemakings.
Ms. Dye. We have made good progress on exchanges. We have a
couple things to check out before we can complete this
registration process. And the remaining discrimination parts
that were not addressed in the refusal to deal rule have--we
have begun those as well.
Mr. Larsen of Washington. And do you have a timeline,
prospective timeline, a hopeful timeline?
Ms. Dye. I would say as soon as we can turn our attention
to it.
Mr. Larsen of Washington. Yes. Related to that, we know the
FMC has lost employees. And by our count, it's about 20
percent. And whether it's 20 percent, or 19 percent, or 21
percent, it's a lot; it doesn't make much difference.
Could you outline the impacts of the loss of those folks
and then not replacing folks has had on the work of the FMC?
Ms. Dye. Well, as I reported, we are working with OPM on an
exception for six employees, not new hires, but to replace
people who have left.
Mr. Larsen of Washington. Mm-hmm.
Ms. Dye. We believe that with those that we will be in good
shape.
Mr. Larsen of Washington. Yes. And do you sense there's
progress in getting them hired?
Ms. Dye. That we want authority to hire those six.
Mr. Larsen of Washington. Okay.
Ms. Dye. To replace. I say--so we don't really consider
those new hires, because they are----
Mr. Larsen of Washington [interrupting]. I understand. I'm
not arguing that point, it's more about whether OPM is being
helpful in moving that forward.
Ms. Dye. Very much.
Mr. Larsen of Washington. And are there people at OPM,
enough people at OPM to help you do that?
Do you feel like you are getting the service you need from
OPM to get that done?
Ms. Dye. They will grant us the exemption to hire. Of
course, the head of the agency, which my general counsel
informs me that we have plenty of authority, the three of us,
to make decisions and to operate. And we have to--of course, we
have to oversee any hirings.
Mr. Larsen of Washington. Yes. Are you then looking at
whether or not being short that number of folks is impacting
the length of time it takes you to do any one investigation,
the length of time it takes to manage a rulemaking?
Ms. Dye. I think that we are, and I think my colleagues
agree that we are in good shape.
Mr. Larsen of Washington. Yes.
Finally, section 10 of the OSRA established the charge
complaint process.
Ms. Dye. Right.
Mr. Larsen of Washington. And according to the budget
request, the FMC has ordered to return over $2.5 million in
refunds or canceled fees. Is that accurate?
Ms. Dye. Yes.
Mr. Larsen of Washington. Yes. Can you talk a little bit
about why you are returning those?
Ms. Dye. Well, we had, I think, a little over $5 million
that was returned. But as I said, the good news is that when
the process began, many of the fees were returned voluntarily.
Mr. Larsen of Washington. Mm-hmm. How would you rate that
as a marker of the success of the enforcement program? In
general, how would you rate the success of the enforcement
program?
Ms. Dye. I think that some people believe, you know, we
write a regulation, we pass a law, and it is effective, and
people obey it. And if that were true, then there wouldn't need
to be any law enforcement agencies.
So, it takes--especially when there is a big change, it
takes time, and resources, and commitment. Demurrage and
detention charges are internationally despised.
Mr. Larsen of Washington. Yes.
Ms. Dye. And when we weighed in on this we knew it would be
a hard slog. It is not over. But I think that we have had
remarkable compliance so far. And we will keep at it.
Honestly, I've said to my advisory committee, can't you
think of a better way to get fluidity or encourage fluidity
than these awful charges? There must be a better approach.
Mr. Larsen of Washington. Right.
Ms. Dye. Because it's the clunky type of service.
Mr. Larsen of Washington. Thank you. I am sure one of the
parents of OSRA 2022 will have more questions. Mr. Garamendi
will have more questions.
Ms. Dye. I will look forward to it.
Mr. Larsen of Washington. I will yield back.
Mr. Ezell. The gentleman yields.
The Chair now recognizes Mr. McDowell for 5 minutes of
questioning.
Mr. McDowell. Thank you, Mr. Chairman.
And thank you, Commissioner Dye, for being here. It is good
to have another North Carolinian in the room today.
Ms. Dye. Absolutely.
Mr. McDowell. But, Commissioner, you stated that the FMC's
budget request for FY 2026 is $40 million, which is level
funding from fiscal year 2025.
Ms. Dye. Yes.
Mr. McDowell. So, within that budget, can you explain why
you have set aside more funding for rent and security services,
and why your resources needs are different from last year?
Ms. Dye. Well, the biggest change in this budget is that we
are dedicating more resources to IT. We were in the position
that we literally could not buy parts for our system because
they weren't made anymore.
And so, we are pleased that we were able to devote more to
those systems that will also benefit our shipping public.
Mr. McDowell. Sure.
Ms. Dye. But the one, you mean the $150,000?
Mr. McDowell. Yes.
Ms. Dye. Well, security costs have gone up. And I think
that's--they went up.
Mr. McDowell. Sure.
Ms. Dye. The prices increased.
Mr. McDowell. Yes. How does your commitment to carrying out
the Commission's core objectives play into your budgeting
process?
Ms. Dye. I support the $40 million. As I said, this is
level funding. We didn't get cut, which I think speaks well for
our mission and our approach. And I am convinced that with our
reorganizations and refocusing that we have done that we will
be fine.
Thank you.
Mr. McDowell. Can you explain further how the Ocean
Shipping Reform Act changed the FMC's operations?
Ms. Dye. Well, we had a couple of rulemakings to
accomplish. Some of the reports we have learned some very
valuable information. And I support the bill. I think that the
reform act has helped us, especially with charge complaints,
have helped the shipping public deal with a lot of the----
Mr. Ezell [interrupting]. The gentlelady will suspend.
Will you suspend?
Could you speak into the microphone just a little more,
please? I am hard of hearing, and I can't hear you.
Ms. Dye. Oh, I understand, sir. Right.
Mr. Ezell. There you go. Thank you.
Ms. Dye. Well, there you are. Is that better? Well, good. I
hear myself better, too. Thank you.
Mr. McDowell. Just to ask you another question, but the
Commission has relatively broad authority to investigate
unfavorable or anticompetitive shipping practices of foreign-
flagged vessels. Generally, what are the most common scenarios
that require the Commission to intervene?
Ms. Dye. Well, I think that I am not able to talk a lot
about the existing investigations.
Mr. McDowell. Sure.
Ms. Dye. But those examples in my statement were good ones.
Any time that the U.S. flag is disadvantaged, then I--as we had
intervened for the Great Lakes carriers, certain carriers who
were denied entry into Spanish ports. And I support those. And
this fact finding authority has proved to be very valuable for
us.
Mr. McDowell. So, has the number of complaints increased or
decreased since the Ocean Shipping Reform Act of 2022?
Ms. Dye. Well, allowing the charge complaints has been very
valuable. And it has allowed our shipping public an avenue to
quickly resolve some charges, with the FMC overseeing it. And
that has been effective.
Mr. McDowell. Thank you, ma'am.
And, Mr. Chairman, I yield back.
Ms. Dye. Thank you.
Mr. Ezell. The gentleman yields.
Mr. Carbajal is recognized for 5 minutes.
Mr. Carbajal. Thank you, Mr. Chair.
Commissioner Dye, I am a strong supporter of the FMC. And I
want to focus all my questions today on the recently announced
flag of convenience investigation.
Why did the FMC decide to initiate the investigation? In
other words, what is the potential risk to Americans?
Ms. Dye. And this is which one?
Mr. Carbajal. The investigation that you recently opened,
the flag of convenience.
Ms. Dye. Oh. I think that, without talking about the
reasoning or--but I think that one, as well as the others, is
the facts that we develop will be worth any argument on the
issue.
Mr. Carbajal. What is the potential risk to Americans?
Ms. Dye. For?
Mr. Carbajal. The reason why you opened up this
investigation.
Ms. Dye. Oh. The risk is to any U.S.-flagged vessel, or the
detriment.
Mr. Carbajal. Thank you.
And what practices have foreign countries participated in
that have resulted in the degradation of U.S.-flagged shipping?
Ms. Dye. I am so sorry. I am having trouble hearing you.
Mr. Carbajal. Okay, let me say that again.
What practices have foreign countries participated in that
have resulted in the degradation of U.S.-flagged shipping?
Ms. Dye. The investigation in Spain, of course, has been--
there have been vessels, U.S.-flagged vessels, that have been
turned away. And the other fact findings are, obviously, we had
a good result with the Great Lakes carriers. And they were most
pleased that we got involved. Our general counsel was able to
work with the State Department. And that was an excellent
result for them.
And the others are facts that may be useful in the future
to U.S.-flagged vessels, especially concerning our registry and
how we may decide to change a U.S.-flag registry in the future.
Mr. Carbajal. As a strong supporter of the U.S. merchant
marine and the U.S.-flagged vessels, what actions are available
to the FMC should you find that the use of flags of convenience
has resulted in unfair shipping practices?
Ms. Dye. Yes, well, at some point, even the President could
become involved in taking action against foreign countries. The
remedies are slightly different for each of these if a
violation is found. And, of course, the fact findings that we
are conducting now don't have proceeding authority.
At this stage, we are finding facts in preparation for
another proceeding if we develop the evidence.
Mr. Carbajal. But what are some of the actions that you can
take?
Ms. Dye. Their ships could be prohibited from our ports.
There are some monetary penalties.
But they are slightly different for each one.
Mr. Carbajal. Commissioner Dye, I must say I am
disappointed with the administration's budget request. If
Congress were to increase the FMC's budget, and you were able
to rehire the 26 people that have been lost, what would that
mean for the effectiveness of the agency? What kind of work
would they be doing?
Ms. Dye. We have reorganized in a way that we are--I
shouldn't say reorganized. They tell me not to say that. We
have refocused in a way that we are in good shape today.
Mr. Carbajal. Well, I guess that feeds into the whole
argument. If this is the case, maybe we should have done this
reorganization in the past.
Ms. Dye. Well, the past really doesn't exist. We are
looking today and forward.
Mr. Carbajal. Thank you very much, Mr. Chair.
I yield back.
Ms. Dye. Thank you.
Mr. Ezell. Mr. Patronis is recognized for 5 minutes of
questions.
Mr. Patronis. Thank you, Mr. Chairman.
Good afternoon.
Ms. Dye. Hello.
Mr. Patronis. Commissioner, I am sitting here, I am reading
your resume. And you have seen a lot of activities over your
time at the Commission. Thank you for your service to our
Nation.
Ms. Dye. Thank you very much.
Mr. Patronis. I guess where I kind of get some anxiety is
thinking about how dynamic the situation is. Kind of a tough
place to be, as much as I would like to see as much stateside
manufacturing, we are definitely--there is going to be those
dependencies we have on goods coming in. And I can't imagine
the dynamics of what happened at least with y'all's concerns
during COVID, supply chain disruptions, and as you looked at
where we are trying to at least onboard predictability.
And then I am looking and I am thinking about the games
that might be played by those other countries and their reports
of getting into the U.S. market.
Do you see, have you seen--if you wouldn't mind
elaborating, I would love to understand, even if you want to--I
learn by stories--if you have got an instance of what you have
seen between the United States and China where they have done
unfair practices, maybe leverage, or maybe if you saw anything
during COVID, enlighten me. This is an opportunity for me to
learn.
Ms. Dye. Well, thank you. We have added a couple of the
controlled carriers owned or subsidized by foreign countries.
Mr. Patronis. Mm-hmm.
Ms. Dye. Five of the six are Chinese. We are a competition
agency primarily. And so, we are looking to make sure to
continually look at their price structure to make sure that if
there are subsidies, then they aren't used to below price, to
the detriment of the other carriers that are not owned or
controlled by foreign countries.
And we will be watching even more carefully in, I think,
October when the Trade Representative charges begin then that
doesn't cause the controlled carriers to make some decisions or
some pricing decisions that we think are a problem.
Mr. Patronis. So, did you say that five of the six
controlled carriers are subsidized by China?
Ms. Dye. Yes. Five of the six are controlled.
Mr. Patronis. Wow.
Ms. Dye. Owned or controlled.
Mr. Patronis. And I am assuming, one, they probably want
that type of influence in order to continue their goods getting
out to market. That also gets me super concerned of what type
of dependence we have got when they have got that much control
over the products that we depend upon.
Ms. Dye. Well, there are plenty of carriers.
Mr. Patronis. Okay.
Ms. Dye. And we watch each of them. We don't have authority
over actual mergers. We watch other combinations among the
carriers. And unlike a merger, we watch them all the time.
Continuous.
Mr. Patronis. Okay.
Ms. Dye. Continuous.
Mr. Patronis. Of other countries having an influence over
ownership, over carriers of this nature, who is number two, who
is number three? Which other countries?
Ms. Dye. Really, really we have one, one other one that is
Korean.
Mr. Patronis. Okay.
Ms. Dye. And those are the only ones to date.
It has been different in the past.
Mr. Patronis. Sure. Sure. And, so, with no control over the
mergers, are any of the carriers that China has influence over,
were those acquired through acquisitions?
Ms. Dye. OOCL was the Hong Kong company, was acquired.
Mr. Patronis. Sure. Sure. Well, again, thank you for your
service. I appreciate your answers and your time being here
today.
Ms. Dye. Thank you very much.
Mr. Patronis. Mr. Chairman, I yield.
Mr. Ezell. The gentleman yields.
The Chair recognizes Ms. Scholten for 5 minutes.
Ms. Scholten. Thank you so much, Chair Ezell, and Ranking
Member Carbajal.
And welcome, Commissioner Dye. I appreciate you being here.
So, the FMC's responsibility of protecting the U.S.
shipping industry from foreign governments' unfair practices is
particularly important to the Great Lakes region where I hail
from, from Michigan.
Ms. Dye. Yes.
Ms. Scholten. A $36 billion a year industry that creates
good-paying jobs and keeps our Nation's supply chains moving.
When visiting the ports of Muskegon and Grand Haven in my
district, the constituents frequently stress the need for
strong but navigable ballast water regulations has had a huge
impact on our waterways.
So, Commissioner Dye, I understand that the FMC has
investigated how Canada's ballast water regulations have
impacted U.S. lakers. FMC's actions have resulted in the
Canadian Government providing limited relief for American
shippers.
Can you talk us through specifically how you plan to stay
on top of that issue, especially as we are continuing to see
some pretty significant rollbacks on regulations around water
protection across the board?
Ms. Dye. Of course. And we will be following the Canadian
response to ensure that it is effective, as we expect it to be.
But no, this is not over if that approach is not effective.
Ms. Scholten. Yes.
Ms. Dye. But we have been very pleased.
Ms. Scholten. Okay. Well, I appreciate continued engagement
on what you and your administration will continue to do going
forward. We think this is an important issue to stay on top of,
not just simply a one-and-done response.
I have a couple questions, so I want to keep moving on.
But while I don't always see eye to eye with the current
administration, I am very pleased to see the President focus on
bolstering our maritime industry. That is one area we do agree
on. I am willing to collaborate with the FMC to actualize this
goal. Again, the industry is very important to the Great Lakes.
This starts with appropriately reviewing and responding to
complaints through the FMC's formal process.
However, I am concerned with two FMC Commissioner
vacancies, recent staff cuts to the tune of 20 percent, and
flat funding requests. I am concerned that we aren't doing
everything we can to make good under obligations under the
Ocean Shipping Reform Act of 2022, something you, of course,
had a big hand in getting through initially.
Can you speak to how the FMC has internally reorganized, if
at all, to ensure that flat funding and reduced staff will not
hinder its ability to appropriately respond to and review the
complaints that are filed?
Ms. Dye. I appreciate it. Thank you.
You can be sure that the FMC is functioning. We have under
existing law, we still have a quorum, my general counsel tells
me. And so, I don't think anyone should be concerned that the
FMC is not on the job.
Ms. Scholten. I think what this committee is looking for,
though, is more than just a functioning FMC, one that can make
sure of a robust response to these complaints when they are
received. Once we have an invasive species entering our
waterways, it is very hard to turn back the clock.
So, simply showing up for quorum, respectfully, may not be
enough at this point. And the concern with significantly
reduced staffing does raise alarms about whether or not you are
able to respond in an appropriate fashion. And I will say
simply showing up for quorum doesn't seem to get to the heart
of having enough people there.
I have one more question I will go to. And if you have a
more robust response, we would love to take one for the record,
because it is of concern.
So, continuing on there, the President's budget request of
$40 million for the FMC is the same enacted amount as fiscal
year 2025, and 20 percent less than the previous budget
request. It reduces the workload significantly.
Assuming Congress flat funds the FMC, as the President has
requested, how else can this committee continue to support the
FMC's efforts to reduce port congestion, boost transparency in
the ocean shipping industry beyond annual appropriations?
Ms. Dye. I think that we showed there was no diminution
last year. And there will be no diminution next year. We were,
we will continue to enforce the law and use our authorities to
the fullest, but no more.
And I am confident that you will be satisfied.
Ms. Scholten. Well, thank you. We would love to have you
back perhaps towards the end of the year or next year to
continue to check in on that progress.
I see that my time has expired but will yield back.
Ms. Dye. Thank you.
Mr. Ezell. The gentlelady yields.
The Chair recognizes Mr. Van Drew for 5 minutes.
Dr. Van Drew. Thank you, Mr. Chairman.
Commissioner, thank you for being here. We appreciate your
time.
Ms. Dye. Thank you.
Dr. Van Drew. The Coast Guard, as you know--and you know
all this already--has recently accelerated the removal of
navigational aids under the ATON modernization plan. Three
hundred fifty buoys are currently slated for removal, as you
also know, across the Northeast, with plans to expand this
effort as we move along.
I support the innovation. I support the Coast Guard. I
support all of you. But I am concerned that we might be moving
too quickly and that we at least should have some more local
input on this issue. And I am going to tell you why.
We already are seeing some consequences. I have--my
district is a coastal district in the State of New Jersey. I
have seen some grounding on shoals, near-misses involving
commercial and recreational vessels, and increasing uncertainty
in waterways that were once considered safe. And now there are
some concerns among real people that I talk to that are out on
the water.
They are not isolated. They really exist. They are
happening now. And I think we can prevent them.
I think the work you are doing is good. The focus is good.
But we have to make sure that we are doing this in a careful
and circumspect way.
In my district, many of the small mariners, including
commercial operators, do not have advanced--believe it or not--
electronic navigation systems that the modernization effort
assumes. And I think that's something we have to keep in mind
as well. And some of them will not have it even into the near
future.
Even when the systems are available, you have got shifting
tides, narrow passages, bad weather. You know the deal. It is
no longer just a safety issue. It is also a commerce issue, a
commercial issue. If commercial or fishing lanes become less
predictable, we have more commercial problems.
And I guess the committee included a provision in the Coast
Guard Authorization Act--I don't guess, I know we did--to study
the effect of removing these buoys. And that is a good thing.
And that is going to pass this week on House suspension.
Commissioner, until that point, have you been coordinating
with the Coast Guard on this initiative? Could you fill us in a
little bit on it?
Ms. Dye. We have not on those issues.
Dr. Van Drew. Okay.
Ms. Dye. But I was 6 years on Active Duty with the Coast
Guard. And I still have--at one point, some of my students were
admirals in the highest level. You can be sure that on anything
that involves them we will work with them.
Dr. Van Drew. Good. And that is what I would hope. And I
would say the same thing to the Coast Guard, too.
Ms. Dye. Absolutely.
Dr. Van Drew. The intention is good. And I think the result
will be good. But I think we just have to be a little bit
careful as we go about it.
Ms. Dye. Of course.
Dr. Van Drew. Make sure, like everything else we do in
Government----
Ms. Dye [interposing]. Of course.
Dr. Van Drew [continuing]. We have to make sure we get it
right.
Thank you for your time.
Ms. Dye. Thank you.
Dr. Van Drew. I yield back.
Mr. Ezell. The gentleman yields.
The Chair recognizes Mr. Garamendi for 5 minutes.
I am working on it.
Mr. Garamendi. I am having one of those mornings. I am not
sure I can pronounce my own name. Garamendi.
I think what I would like to do, if I might, my colleague
at the far end of the dais here, Mr. Johnson, is the lead on
the Ocean Shipping Reform Act improvement.
So, if I might yield to Mr. Johnson my time, then I will
follow up, since he is the lead on the new bill.
Mr. Johnson of South Dakota. Well, that is unbelievably
gracious. I think I am next in the queue, John. So, if you want
to go, I am just going to spend at least 2 minutes talking
about how great you and Commissioner Dye are, so.
Mr. Garamendi. I yield to you.
Mr. Johnson of South Dakota. Very good.
Well, I'm going to note, I will echo what Mr. Patronis
said, I mean, your service to our country, Commissioner, is
incredible. I mentioned that when you were in the office the
other day. To have the steady hand of somebody who understands
this committee, understands these issues, who doesn't cycle out
of Government because you get some shinier object somewhere,
but you stay. President after President trusts you to do this
work. It's incredible.
And then John Garamendi, I mean, everybody in this town
likes to fight. Somehow, John, you and I have figured out how
to get the Ocean Shipping Reform Act done, Ocean Shipping
Reform Implementation Act. And we have gotten a lot of good
things done.
So, with that I will, I will yield back to you, sir. Thank
you.
Mr. Garamendi. Well, you didn't do what I hoped you would
do, which is really go through the detail. But you are kind to
mention all of the work that has been done.
We have actually come a very, very long way in providing
the Commission with the tools it needs to deal with the reality
of the international trade on the ocean. And the new piece of
legislation, the reauthorization act, which Mr. Johnson is the
lead on it this year, is going to further provide the necessary
tools and strengthen the existing tools that the FMC needs to
deal with a very rapidly changing environment.
When we started, the 2022 bill really came about in part
because of the pandemic and all of the changes that occurred
there. The situation--that is, the ocean shipping situation--
remains very, very volatile. So, the new legislation will
provide additional tools.
I want to commend the Commission for taking up the 2022
bill and using it to deal with practices that are simply not
fair. It took a while to do it. We've had discussions about
this in previous hearings. I remember one in California not so
long ago that you were in the process of trying to understand
the new law and then implement it in the regulatory processes
using the rather difficult, but necessary, process of putting
in place regulations and rules. I want to commend you for
having done that.
I see your colleague Commissioner back there who is
interested in having done this piece of work.
So, we are going to carry forward. The new piece of
legislation provides some additional clarity and additional
strength to the work you do.
It also authorizes a higher level of funding, as has been
talked about back and forth here, $49,200,000. It looks like
you are probably going, if we can hold it, $40 million. In this
environment, we ought to be quiet and take the money and run
and go back to work.
But the future is out there. So, if we can put in place an
authorization of $49 million and then ramp it up ultimately in
4 years to $57 million, you will be able to bring back on board
the necessary staff and deal with the very rapidly changing.
The tariff issues are out there. They are going to have an
effect. If you would like to speak to that, Ms. Dye, I would
encourage you to do so. Be careful, you don't want to go jump
into that snakepit.
Ms. Dye. Thank you.
Mr. Garamendi. But just the effect that it may have on
this.
Ms. Dye. I talked and corresponded with several of our
major ports recently. The reasons for port congestion are
different.
I have done now four major fact findings during periods of
extreme dislocations. The results are always the same.
Mr. Garamendi. Well----
Ms. Dye [interrupting]. And that's why I look to
encouraging more port processes that are clear and predictable.
But the volatility is----
Mr. Garamendi [continuing]. Well, we are going to be in a
very volatile situation certainly for the remainder of this
year, and perhaps on into the next year. It will have some
significance.
Also, the continued consolidation, and as you said earlier,
five of the six biggest are really Government-controlled
carriers. So, the FMC, the original reform and then the new
reauthorization act will provide you with additional tools to
deal with that.
I know that Mr. Johnson will undoubtedly add to this and
provide more clarity along the way.
Thank you for your service, and your colleague there in the
front row----
Ms. Dye [interposing]. Thank you very much.
Mr. Garamendi [continuing]. That would be to the far right
or the far left. Right down the middle.
I yield back.
Oh, one more, if I might.
Mr. Ezell. Yes, sir.
Mr. Garamendi. I want to thank the chairman of the
committee and the ranking member of the committee. The
reauthorization act is your work as well as Mr. Johnson's and
mine. Thank you, both of you, for your support and for your
insight in the development of the bill.
Thank you.
Mr. Ezell. Thank you very much.
The Chair recognizes Mr. Johnson for 5 minutes.
Mr. Johnson of South Dakota. Thank you, Mr. Chairman. I
will pick up where Mr. Garamendi left off, which is on the FMC
reauthorization.
Commissioner, I am not--number one, thank you to your team
for providing technical assistance. I am not really talking
about the tweaks and the edits they suggested, but more big
picture.
When you reviewed the FMC reauthorization bill, what were
your general observations? Did you think we hit the center of
the target?
Ms. Dye. I think so. I think so.
I think that we had suggestions. Be glad to sit down and
talk with you about those and work anything out.
I don't think we had any extreme changes. And there were
things that the FMC had recommended.
We appreciate it very much. Thank you.
Mr. Johnson of South Dakota. And one of the things, and,
listen, it's not an earth-shattering reauthorization, but all
the more reason for Congress--and, again, I will echo what Mr.
Garamendi said, thank you to the leadership of the committee
for doing our regular blocking and tackling work.
Sometimes we wait so long, we are driven by crisis, that we
don't take care of the day-to-day, year-to-year maintenance.
Reauthorizing solid agencies like FMC in a timely manner is
helpful.
It's not going to transform the nature of your work, but I
would think it provides some additional stability, additional
predictability for you, the other two Commissioners currently
in place, as well as the staff.
But, okay, we have got Congress has once again given us an
imprimatur. They want our work to continue. So, we get not
earth shattering but, Commissioner, I think you would probably
agree, helpful nonetheless?
Ms. Dye. Oh, I had a couple suggestions. The staff had seen
some other things. I think in short order, we can discuss
those. I don't see any major problems. I appreciate it. Thank
you.
Mr. Johnson of South Dakota. So, moving back to OSRA, you
had mentioned in your testimony that, of course, that brought
the number of complaints up. Your experience with that is
causing the Commission to enter into a rule promulgation on a
more permanent process.
Talk to us a little bit more about the lessons learned and
how that may translate into a new process?
Ms. Dye. I think the thing that surprised me, pleased me,
that with the FMC's involvement, people suddenly decided that
they would refund money. And so, it went much more smoothly
than I had anticipated.
So, I think the overall revenue doesn't really represent
the effectiveness of the approach.
Mr. Johnson of South Dakota. And I am reminded,
Commissioner, when then-Chairman Maffei was in my office,
before OSRA had passed, he had observed that just the specter
of the bill--specter may be a more ominous definition than I
intend--but clearly it was bipartisan, clearly Mr. Garamendi
and I were engaged in a real lawmaking exercise. We wanted to
get done. And the writing was on the wall, we were going to get
this done.
Chair Maffei had mentioned that behavior was already
changing in the marketplace----
Ms. Dye [interposing]. Yes.
Mr. Johnson of South Dakota [continuing]. In anticipation
of that.
And I think it is one good reminder that when you all, of
course you all are the day-to-day cops on the beat, and yet
Congress, when we are doing good oversight, when we are engaged
in making sure that you all had the tools needed to do your
job, we do get a healthier, fairer, and more robust
marketplace.
What am I getting wrong?
Ms. Dye. No. I think that you are right. And as we just
discussed, enforcement is never over. Right? And we don't
expect it to be. There are always different approaches to color
outside the lines.
But I am very pleased with the way things are going. We
have--I think I had recommended in fact finding 29 that all
these companies have compliance officers, people that we could
call up immediately. And that is working out well.
And I think that that has shown some paydirt, too.
Mr. Johnson of South Dakota. So, I would close by saying
this, Mr. Chairman. This might be the least sexy hearing going
on on Capitol Hill today. No disrespect to Commissioner Dye.
But it is just responsible management of Government. And
one of the reasons that I fought to get on this committee is
because I knew it would be populated by people like Mr. Larsen
and Mr. Graves who have worked together to get--even though
they are different parties--and Mr. Ezell and Mr. Carbajal, and
Mr. Maffei and Ms. Dye, Mr. Garamendi and Mr. Johnson, people
who do not take the same perverse joy in fighting. Instead,
they just want an America that works.
Thank you for being a part of that solution.
Mr. Chairman, I would yield.
Ms. Dye. Thank you.
Mr. Ezell. The gentleman yields.
That was pretty good there, Mr. Johnson, thank you.
All right. Thank you. The gentleman yields back.
Are there any further questions from any members of the
subcommittee who have not been recognized?
Seeing none, that concludes our hearing today.
I would like to thank you, Ms. Dye, for being here today.
That concludes the subcommittee hearing, we stand
adjourned.
[Whereupon, at 3:03 p.m., the subcommittee was adjourned.]
Appendix
----------
Questions to Hon. Rebecca F. Dye, Commissioner, Federal Maritime
Commission, from Hon. John Garamendi
Question 1. According to the McCown Container Volume Observer: ``It
is now most likely there will be a decline in overall annual inbound
volume in 2025 . . . I'm only aware of two periods of annual decline--
during the financial crisis and the pandemic--and both proved to be
short lived. . . . The downturn in 2025 will be due to tariffs and
unfortunately there is nothing at present that suggests it will be
short-lived.'' Volumes are also reduced at smaller points like the Port
of Oakland in California. Drastic, unpredictable swings in tariff
policies have the potential to seriously strain supply chains and
maritime commerce.
Question 1.a. Commissioner Dye, given the Commission's mission to
ensure a competitive and reliable international ocean transportation
system, how do significant fluctuations in port volumes complicate your
work?
Answer. The U.S. international ocean shipping supply chain is a
complex system, much like an ecosystem or the human brain. For this
reason, the potential for negative consequences of government
regulation in the interconnecting networks of the international ocean
supply system is great. I have served as a Commission Fact Finding
Officer for four major investigations, two of which specifically
addressed international ocean supply chain bottlenecks. Those
investigations serve as a reminder of the complexity of the ocean liner
system and its inherent unpredictability. The causes for fluctuations
in demand for ocean liner shipping, and thus port volumes, vary but the
impacts are similar.
My approach to improving efficient seaport operations is to focus
attention on the bottlenecks that occur in certain marine terminals and
seaports during every cargo surge or peak season: particularly,
container availability, container return, and export earliest return
date. I do not support regulation of seaport or marine terminal
processes, because I believe that marine terminals and seaports should
compete on the best processes to serve the users of their services. The
Commission assists marine terminals and seaports using the FMC Supply
Chain Innovation Teams to produce effective improvements to reduce
bottlenecks and improve smooth operation of the U.S. freight delivery
system.
Through those four major Fact Finding investigations, I have
recommended, and the Commission has approved, various approaches to
address supply chain disruptions, including incentivizing practices of
ocean carriers, ports, and marine terminal operators to change behavior
in the marketplace.
Moreover, after an extensive Commission investigation of U.S.
seaport and marine terminal practices on demurrage and detention
charges, the Commission developed an interpretative rule to address
unreasonable demurrage and detention charges. This rule is based on
section 41102(c) of title 46, United States Code, that prohibits
unreasonable practices of ocean carriers and marine terminals and
seaports. The charge complaint provisions in the Ocean Shipping Reform
Act 2022 provided a source of relief for U.S. importers and exporters
from unreasonable demurrage and detention charges under the
interpretative rule.
The Commission is charged with ensuring competition in
international liner shipping in U.S. markets and among U.S. seaports
and marine terminals. To carry out the mission, we follow international
ocean shipping market conditions, including supply of and demand for
ocean carrier service. In this regard, significant fluctuations of U.S.
import volumes are not complications for the Commission, but a routine
part of the supply and demand assessment we continuously conduct to
ensure a competitive international ocean shipping service for the
United States. If, and when, unreasonable practices under the Shipping
Act come to the attention of the Commission, we take all appropriate
action.
Question 1.b. What resources does the Commission need to ensure
efficient operations at U.S. ports amid such volatility?
Answer. As I testified before the U.S. House Committee on
Transportation and Infrastructure, Subcommittee on Coast Guard and
Maritime Transportation, I support the President's Budget for the
Commission for Fiscal Year 2026, and I believe it is sufficient for the
Commission to carry out our responsibilities in these and other areas.
We appreciate the support of the Subcommittee and look forward to
working with you to ensure the benefits of a competitive ocean shipping
industry and an efficient container freight delivery system for the
United States.
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