FMC Official: More Funding Needed to Boost Enforcement
The Federal Maritime Commission needs more employees and funding to investigate and penalize violators of shipping laws, especially for costly cases that move to U.S. courts, the commission’s enforcement division director told the FMC this week. Commissioners also said the FMC is closely scrutinizing ocean carriers and terminal operators accused of unfair surcharge practices stemming from the recent labor strikes at U.S. East and Gulf coast port terminals.
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
John Crews, director of the FMC’s Bureau of Enforcement, Investigations and Compliance, said his division and other offices within the commission “would certainly benefit from some additional resources.” He said it’s “significantly expensive” for the commission to interview witnesses, conduct depositions and pay for legal fees, particularly if one of its cases moves to a federal court. The FMC may need a bigger budget and more employees to litigate those cases, he said.
“You all don't have the bandwidth to hear three weeks of testimony,” Crews told the commissioners during a public FMC meeting this week. “But to have a record that will sustain itself on appeal in front of a circuit court, our bureau is going to have to provide you with that record, and that's going to cost money, travel money, deposition money, all of those things.”
Crews said his division specifically needs a “discrete line item that has significantly more money so that I can go, ‘Yes, hire a $25,000 expert’” for a trial.
He added that the FMC’s investigators are often tasked with “document-intensive, lengthy and difficult” cases that involve complex supply chain and shipping issues. Despite that workload, the FMC employs just six investigators, Crews said, and “the position of the director of investigations is currently vacant.”
Maffei called Crews’ comments “sobering” but “important for the commission to hear, because we do want you to be successful.” He added that the FMC is looking to hire more investigators “at some point.”
In its FY 2025 budget request, released in March, the commission said it planned to double its enforcement staff and hire more employees to process and investigate charge complaints (see 2403120033). It also announced this month the addition of two temporary administrative law judges to help the FMC tackle a surge in complaints and disputes (see 2410090009).
Maffei said enforcement is a top priority for all five commissioners. “The fact is, on enforcement matters, this is one of the most united commissions probably in the history of the Federal Maritime Commission,” he said, “if not federal commissions as a whole.”
The FMC is particularly focused on enforcing the anti-retaliation provisions of its shipping laws, Maffei said. It warned carriers and terminal operators earlier this month that it will pursue serious penalties against carriers and terminal operators that retaliate against shippers for questioning an invoice or filing a complaint with the FMC (see 2410090013).
“We need to go after all these cases, but retaliation is the worst sin,” Maffei said. “It's the closest thing to a mortal sin that we would ever investigate or prosecute.”
He added that the FMC depends on information from shippers in order to hold carriers and terminal operators accountable, but “this fear of retaliation is real in the importer-exporter community.”
Crews also said he takes those cases “very seriously,” acknowledging that some shippers are “afraid” to submit a complaint to the FMC about their carrier. “Our ability to do our job is absolutely tied to our ability to get information,” Crews said, calling enforcement against retaliators “our absolute priority.”
He also said his enforcement division and other FMC staff have been speaking with ocean shipping industry officials about challenges lingering from the recent labor strikes at U.S. East and Gulf coast port terminals (see 2410010048). The strike ended in early October after the International Longshoremen's Association and the United States Maritime Alliance reached a tentative agreement on wages, though that truce could end Jan. 15 if they can’t hash out outstanding issues (see 2410040038).
FMC Commissioner Rebecca Dye said she recently heard from shippers who are “extremely concerned” about how carriers and MTOs will re-implement surcharges that they suspended during the work stoppages. Dye said they’re asking: “Is a 30 day [notice] period still required? Do the surcharges apply to cargo that's been loaded or already on the water?”
Commissioner Carl Bentzel agreed, saying the FMC needs “to take a firm look” at those surcharge issues.
Crews said the FMC will review “all reports of misconduct” related to the strikes. “We're fully prepared to investigate such allegations and to prosecute any violations to the fullest extent possible under the law," he said.
If the port workers and the United States Maritime Alliance can’t solidify an agreement before Jan. 15, Commissioner Louis Sola noted that the new U.S. administration could “inherit a port strike that would be affecting the entire U.S. economy.” He asked Crews how the enforcement division is “gearing up” to enforce shipping laws under that scenario.
Crews stressed that the FMC is largely dependent on shippers that notify the commission about possible violations.
“We can't be everywhere all at once,” he said. “We will do the very best we can, but we are dependent on people to make us aware of charges that are being imposed upon them, and then we can begin our investigative efforts.”
The FMC hears about many of those cases through charge complaints from shippers, which are submitted under an “interim procedure” that was put in place by the commission in December 2022 as it worked to put in place a permanent filing process as required by the Ocean Shipping Reform Act (see 2407160042 and 2212010058). Tara Nielsen, an FMC lawyer, said the commission hopes to make progress “in early 2025” on a rule to put in place a permanent filing process.
She also told the commission that the FMC has received 602 charge complaints from the time of OSRA’s enactment in 2022 through the end of September 2024. About half of those complaints “met the base threshold for investigation,” Nielsen said, and 208 were voluntarily resolved by a carrier issuing a refund or a waiver. She said those refunds and waivers have so far totaled just under $3.3 million.
Sola applauded that figure. “I think that there's no better measuring stick than giving people back their money,” he said, “and $3 million to date, I think, is a great success.”