"Future of United States Maritime Part 1: Review of Fiscal Year 2026 Federal Maritime Commission Budget Request"

1[House Hearing, 119 Congress]2[From the U.S. Government Publishing Office]34                   FUTURE OF UNITED STATES MARITIME,5                   PART 1: REVIEW OF FISCAL YEAR 20266                      FEDERAL MARITIME COMMISSION7                             BUDGET REQUEST89=======================================================================1011                                (119-27)1213                                HEARING1415                               BEFORE THE1617                            SUBCOMMITTEE ON18                COAST GUARD AND MARITIME TRANSPORTATION1920                                 OF THE2122                              COMMITTEE ON23                   TRANSPORTATION AND INFRASTRUCTURE24                        HOUSE OF REPRESENTATIVES2526                    ONE HUNDRED NINETEENTH CONGRESS2728                             FIRST SESSION2930                               __________3132                             JULY 22, 20253334                               __________3536                       Printed for the use of the37             Committee on Transportation and Infrastructure3839[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]4041     Available online at: https://www.govinfo.gov/committee/house-42     transportation?path=/browsecommittee/chamber/house/committee/43                             transportation4445                                __________4647                   U.S. GOVERNMENT PUBLISHING OFFICE4861-683 PDF                  WASHINGTON : 20254950-----------------------------------------------------------------------------------5152             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE5354  Sam Graves, Missouri, Chairman55 Rick Larsen, Washington, Ranking56              Member57Eleanor Holmes Norton,               Eric A. ``Rick'' Crawford,58  District of Columbia               Arkansas,59Jerrold Nadler, New York               Vice Chairman60John Garamendi, California           Daniel Webster, Florida61Henry C. ``Hank'' Johnson, Jr., Georgiaomas Massie, Kentucky62Andre Carson, Indiana                Scott Perry, Pennsylvania63Dina Titus, Nevada                   Brian Babin, Texas64Jared Huffman, California            David Rouzer, North Carolina65Julia Brownley, California           Mike Bost, Illinois66Frederica S. Wilson, Florida         Doug LaMalfa, California67Mark DeSaulnier, California          Bruce Westerman, Arkansas68Salud O. Carbajal, California        Brian J. Mast, Florida69Greg Stanton, Arizona                Pete Stauber, Minnesota70Sharice Davids, Kansas               Tim Burchett, Tennessee71Jesus G. ``Chuy'' Garcia, Illinois   Dusty Johnson, South Dakota72Chris Pappas, New Hampshire          Jefferson Van Drew, New Jersey73Seth Moulton, Massachusetts          Troy E. Nehls, Texas74Marilyn Strickland, Washington       Tracey Mann, Kansas75Patrick Ryan, New York               Burgess Owens, Utah76Val T. Hoyle, Oregon                 Eric Burlison, Missouri77Emilia Strong Sykes, Ohio,           Mike Collins, Georgia78  Vice Ranking Member                Mike Ezell, Mississippi79Hillary J. Scholten, Michigan        Kevin Kiley, California80Valerie P. Foushee, North Carolina   Vince Fong, California81Christopher R. Deluzio, Pennsylvania Tony Wied, Wisconsin82Robert Garcia, California            Tom Barrett, Michigan83Nellie Pou, New Jersey               Nicholas J. Begich III, Alaska84Kristen McDonald Rivet, Michigan     Robert P. Bresnahan, Jr.,85Laura Friedman, California           Pennsylvania86Laura Gillen, New York               Jeff Hurd, Colorado87Shomari Figures, Alabama             Jefferson Shreve, Indiana88Vacancy                              Addison P. McDowell, North89                                     Carolina90                                     David J. Taylor, Ohio91                                     Brad Knott, North Carolina92                                     Kimberlyn King-Hinds,93                                       Northern Mariana Islands94                                     Mike Kennedy, Utah95                                     Robert F. Onder, Jr., Missouri96                                     Jimmy Patronis, Florida97                                ------                                79899        Subcommittee on Coast Guard and Maritime Transportation100101                   Mike Ezell, Mississippi, Chairman102             Salud O. Carbajal, California, Ranking Member103Daniel Webster, Florida              Chris Pappas, New Hampshire104Brian J. Mast, Florida               Marilyn Strickland, Washington105Jefferson Van Drew, New Jersey       Hillary J. Scholten, Michigan106Nicholas J. Begich III, Alaska       Robert Garcia, California,107Addison P. McDowell, North             Vice Ranking Member108    Carolina,                        John Garamendi, California109  Vice Chairman                      Rick Larsen, Washington (Ex110Jimmy Patronis, Florida                  Officio)111Sam Graves, Missouri (Ex Officio)112113                                CONTENTS114115                                                                   Page116117Summary of Subject Matter........................................     v118119                 STATEMENTS OF MEMBERS OF THE COMMITTEE120121Hon. Mike Ezell, a Representative in Congress from the State of122  Mississippi, and Chairman, Subcommittee on Coast Guard and123  Maritime Transportation, opening statement.....................     1124    Prepared statement...........................................     2125Hon. Rick Larsen, a Representative in Congress from the State of126  Washington, and Ranking Member, Committee on Transportation and127  Infrastructure, opening statement..............................     3128    Prepared statement...........................................     4129Hon. Salud O. Carbajal, a Representative in Congress from the130  State of California, and Ranking Member, Subcommittee on Coast131  Guard and Maritime Transportation, opening statement...........     4132    Prepared statement...........................................     6133134                                WITNESS135136Hon. Rebecca F. Dye, Commissioner, Federal Maritime Commission,137  oral statement.................................................     7138    Prepared statement...........................................     8139140                                APPENDIX141142Questions to Hon. Rebecca F. Dye, Commissioner, Federal Maritime143  Commission, from Hon. John Garamendi...........................    29144145                             July 18, 2025146147    SUMMARY OF SUBJECT MATTER148149    TO:      LMembers, Subcommittee on Coast Guard and Maritime150Transportation151    FROM:  LStaff, Subcommittee on Coast Guard and Maritime152Transportation153    RE:      LSubcommittee Hearing on ``Future of United States154Maritime Part 1: Review of Fiscal Year 2026 Federal Maritime155Commission Budget Request''156_______________________________________________________________________157158                               I. PURPOSE159160    The Subcommittee on Coast Guard and Maritime Transportation161of the Committee on Transportation and Infrastructure will meet162on Tuesday, July 22, 2025, at 2:00 p.m. ET in 2167 Rayburn163House Office Building to receive testimony on the President's164Fiscal Year (FY) 2026 Budget Request for the Federal Maritime165Commission (FMC) and FMC reauthorization issues. The166Subcommittee will hear testimony from the FMC.167168                             II. BACKGROUND169170FEDERAL MARITIME COMMISSION171172    The FMC was established in 1961 as an independent agency173that regulates ocean-borne transportation in the foreign174commerce of the United States.\1\ The FMC protects shippers and175carriers from restrictive or unfair practices of ocean176carriers, including foreign-flagged carrier alliances. The FMC177also enforces laws related to cruise vessel financial178responsibility to ensure cruise vessel operators have179sufficient resources to pay judgments to passengers for180personal injury or death or for nonperformance of a voyage.\2\181---------------------------------------------------------------------------182    \1\ 46 U.S.C. Sec.  46101.183    \2\ FMC. Federal Maritime Commission FY 2026 Budget Justification,184(May 2025), available at https://www.fmc.gov/wp-content/uploads/2025/18505/FY2026CongressionalBudgetJustification1862025.pdf.187---------------------------------------------------------------------------188    The FMC is composed of five commissioners appointed for189five-year terms by the President with the advice and consent of190the Senate. The Commission currently has two vacancies. The191Honorable Rebecca Dye serves as a Commissioner.\3\192---------------------------------------------------------------------------193    \3\ FMC. Rebecca Dye, available at https://www.fmc.gov/about/194commissioner-archive/rebecca-f-dye/.195---------------------------------------------------------------------------196197IMPLEMENTATION OF THE OCEAN SHIPPING REFORM ACT OF 2022198199    The Ocean Shipping Reform Act of 2022 (P.L. 117-146) was200signed into law on June 16, 2022, and strengthened FMC201authorities to promote the growth and development of United202States exports through an ocean transportation system that is203competitive, efficient, and economical. The law authorizes204appropriations for the FMC through FY 2025; sets standards that205detention and demurrage charges must comply with and penalties206for charges deemed inaccurate; allows the FMC to set minimum207contract standards for ocean shipping service contracts to208protect United States shippers from actions that leave export209cargoes stranded at United States ports; and increases210protections for United States shippers from retaliation by211foreign ocean carriers. The Commission has been working to212implement the legislation since its passage more than two years213ago and has signaled that the majority of all statutorily214mandated requirements will be implemented by the end of FY2152025.\4\216---------------------------------------------------------------------------217    \4\ The Ocean Shipping Reform Act of 2022, Pub. L. No. 117-146, 136218Stat. 1272.219---------------------------------------------------------------------------220221FMC INVESTIGATION ON FLAGGING PRACTICES222223    On May 21, 2025, the FMC announced a ``nonadjudicatory224investigation into whether the vessel flagging laws,225regulations, or practices of foreign countries, including so-226called flags of convenience, or competitive methods employed by227the owners, operators, agents, or masters of foreign-flagged228vessels, are creating unfavorable shipping conditions in the229foreign trade of the United States.'' \5\ Many vessels in the230international trade fly flags that differ from the nation where231the ownership is based. The FMC is concerned that certain flag232states may have standards that provide vessels with lower costs233and oversight at the expense of reliability and safety.\6\ The234FMC has a public comment period open through August 20, 2025.235---------------------------------------------------------------------------236    \5\ Investigation Into Flags of Convenience and Unfavorable237Conditions Created by Certain Flagging Practices, 90 Fed. Reg. 21926238(May 22, 2025).239    \6\ Id.240---------------------------------------------------------------------------241242                          III. BUDGET FOR FMC243244    The President's FY 2025 budget request for the FMC \7\245compares to the FY 2024 enacted funding level \8\ as shown246here:247---------------------------------------------------------------------------248    \7\ Supra, note 2.249    \8\ Consolidated Appropriations Act, 2024, Pub. L. No. 118-42, 138250Stat. 25.251252                      FMC FY 2025 Enacted to FY 2026 President's Budget Request Comparison253                                             (Dollars in Thousands)254----------------------------------------------------------------------------------------------------------------255                                                                  President's FY   FY 2025 to FY   FY 2025 to FY256                     Account                          FY 2025      2026 Budget      2026 Change     2026 Change257                                                      Enacted        Request            ($)             (%)258----------------------------------------------------------------------------------------------------------------259Operations and Administrative Program............      $ 40,000         $ 40,000             $ 0              0%260----------------------------------------------------------------------------------------------------------------261262    The President requests $40 million in FY 2026 for the263activities of the FMC, an amount equal to the FY 2025 enacted264level.\9\ The request includes $25,869,320 for salaries and265expenses to support 120 full-time equivalent positions, which266represents a $2 million decrease from current levels. The267remainder of the funding request includes operational expenses,268including rent and technology upgrades. The funding would allow269the Commission to continue its efforts to enforce antitrust270exceptions for ocean carriers and ensure a competitive ocean271transportation system.\10\272---------------------------------------------------------------------------273    \9\ Id.274    \10\ Id.275---------------------------------------------------------------------------276277                              IV. WITNESS278279     The Honorable Rebecca Dye, Commissioner, Federal280Maritime Commission281282 FUTURE OF UNITED STATES MARITIME, PART 1: REVIEW OF FISCAL YEAR 2026283               FEDERAL MARITIME COMMISSION BUDGET REQUEST284285                              ----------286287                         TUESDAY, JULY 22, 2025288289                  House of Representatives,290                    Subcommittee on Coast Guard and291                           Maritime Transportation,292            Committee on Transportation and Infrastructure,293                                                    Washington, DC.294    The committee met, pursuant to call, at 2 p.m., in Room2952167, Rayburn House Office Building, Hon. Mike Ezell (Chairman296of the subcommittee) presiding.297    Mr. Ezell. The Subcommittee on Coast Guard and Maritime298Transportation will come to order.299    I ask unanimous consent that the chair may be authorized to300declare a recess at any time during today's hearing.301    Without objection, so ordered.302    I also ask unanimous consent that Members not on the303subcommittee be permitted to sit with the subcommittee at304today's hearing and ask questions.305    Without objection, so ordered.306    As a reminder, if Members wish to insert a document into307the record, please also email it to DocumentsTI@mail.house.gov.308    I now recognize myself for the purpose of an opening309statement for 5 minutes.310311OPENING STATEMENT OF HON. MIKE EZELL OF MISSISSIPPI, CHAIRMAN,312    SUBCOMMITTEE ON COAST GUARD AND MARITIME TRANSPORTATION313314    Mr. Ezell. We meet today to review the President's fiscal315year 2026 budget request for the Federal Maritime Commission,316or FMC. The FMC is an independent agency responsible for the317regulation of oceanborne transportation in the foreign commerce318of the United States. They also protect shippers and carriers319from unfair practices of foreign-flagged carrier alliances.320    The President's fiscal year 2026 budget request includes321$40 million to fund the salaries, operations, and capital needs322of the FMC.323    Today, we welcome our witness, Commissioner Rebecca Dye--324welcome, Commissioner--of the Federal Maritime Commission, to325discuss the President's fiscal year 2026 budget request, as326well as the state of the ocean shipping industry and their327ongoing work implementing the Ocean Shipping Reform Act of3282022, also known as OSRA, O-S-R-A.329    The FMC has worked diligently since the enactment of OSRA330to implement its enhanced authorities, and I look forward to331hearing from Commissioner Dye today on the status of FMC's332efforts.333    Earlier this year, the FMC announced an investigation into334vessel flagging laws, regulations, and practices of foreign335countries. I fear these so-called flags of convenience create336unfavorable shipping conditions in the foreign trade of the337United States.338    Many vessels conducting international trade fly a flag that339differs from the nation where the ownership is based. The FMC340is examining whether certain flag states may have standards341that provide vessels with lower cost and oversight at the342expense of reliability and safety. I look forward to hearing343from Commissioner Dye on the progress of the investigation.344    In line with President Trump's Executive order to restore345American maritime dominance, we are working to bolster our346domestic maritime capabilities, which are paramount to both the347security and economic growth of our Nation. I look forward to348hearing from our witness on how the FMC plans to make United349States maritime great again.350    Commissioner Dye, thank you for being here today.351    [Mr. Ezell's prepared statement follows:]352353    Prepared Statement of Hon. Mike Ezell of Mississippi, Chairman,354        Subcommittee on Coast Guard and Maritime Transportation355    We meet today to review the President's fiscal year 2026 budget356request for the Federal Maritime Commission (FMC).357    The FMC is an independent agency responsible for the regulation of358ocean-borne transportation in the foreign commerce of the United359States. They also protect shippers and carriers from unfair practices360of foreign-flagged carrier alliances. The President's fiscal year 2026361budget request includes $40 million to fund the salaries, operations,362and capital needs of the FMC.363    Today, we welcome our witness, Commissioner Rebecca Dye of the364Federal Maritime Commission, to discuss the budget request, as well as365the state of the ocean shipping industry and their ongoing work366implementing the Ocean Shipping Reform Act of 2022 (OSRA).367    The FMC has worked diligently since the enactment of OSRA to368implement its enhanced authorities, and I look forward to hearing from369Commissioner Dye today on the status of FMC's efforts.370    Earlier this year, the FMC announced an investigation into vessel371flagging laws, regulations, and practices of foreign countries. I fear372these so called ``flags of convenience'' create unfavorable shipping373conditions in the foreign trade of the United States.374    Many vessels conducting international trade fly flags that differ375from the nation where the ownership is based. The FMC is examining376whether certain flag states may have standards that provide vessels377with lower costs and oversight at the expense of reliability and378safety. I look forward to hearing from Commissioner Dye on the progress379of the investigation.380    In line with President Trump's executive order to restore American381maritime dominance, we are working to bolster our domestic maritime382capabilities, which are paramount to both the security and economic383growth of our nation. I look forward to hearing from our witness on how384the FMC plans to make United States maritime great again.385386    Mr. Ezell. I now recognize Ranking Member Carbajal for 5387minutes for an opening statement.388    Mr. Carbajal. Thank you, Mr. Chairman. As usual, I will389defer my time to Ranking Member Larsen.390391 OPENING STATEMENT OF HON. RICK LARSEN OF WASHINGTON, RANKING392     MEMBER, COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE393394    Mr. Larsen of Washington. Thank you, Mr. Chairman, thank395you, Ranking Member, for scheduling this hearing on the fiscal396year budget for the Federal Maritime Commission.397    While a small agency, the FMC has a big role. They protect398shippers and consumers by monitoring and taking action against399unfair and uncompetitive foreign shipping practices.400    Ocean shipping is dominated by foreign shipping companies,401with U.S.-flagged operations comprising less than 2 percent of402imports and exports. The supply chain crisis associated with403the pandemic and ongoing international conflicts demonstrate404the need for robust oversight to ensure there is a fair playing405field. Fluctuations in service and pricing are normal, but it406is the role of the FMC to ensure these fluctuations are407justified in a competitive market.408    The President's fiscal year 2026 budget request for the FMC409is flat. And I look forward to hearing from our witness how the410agency can ensure fair shipping with flat funding.411    The FMC has begun to use its new investigative and412prosecutorial authorities provided under OSRA of 2022. I look413forward to hearing an update on the implementation of these new414authorities.415    And since the passage of the reform act, container prices416have fallen and queues at ports have evaporated.417    The FMC has also improved its reporting process, leading to418an increase in charge complaints from American businesses, one419of which resulted in a $2 million settlement over findings that420the shipping company knowingly and willfully violated the421shipping act.422    This means lower costs for consumers, thanks to the quick423action and passage of this bill by Congress and signature by424President Biden.425    These are positive trends, but I am concerned this will be426short-lived if the administration neglects the FMC. The FMC has427lost nearly 20 percent of its workforce due to the deferred428resignation program and the ongoing hiring freeze. This means429fewer investigators finding unfair shipping practices and fewer430attorneys prosecuting cases.431    The FMC is also operating without two Commissioners, and432currently there is no Chair. As a bipartisan, independent433agency, the FMC's critical functions cannot be understated.434    I look forward to hearing from Commissioner Dye about ways435to ensure a fair and competitive maritime supply chain and to436build upon the successes we have seen so far.437    With that, I yield back.438    [Mr. Larsen of Washington's prepared statement follows:]439440 Prepared Statement of Hon. Rick Larsen of Washington, Ranking Member,441             Committee on Transportation and Infrastructure442    Mr. Chairman, thank you for scheduling this afternoon's hearing to443review the Fiscal Year 2026 budget request for the Federal Maritime444Commission.445    While a small agency, the Federal Maritime Commission has an446important role. It protects shippers and consumers by monitoring and447taking action against unfair and uncompetitive foreign shipping448practices.449    Ocean shipping is dominated by foreign shipping companies with450U.S.-flagged operations comprising less than 2 percent of imports and451exports. The supply chain crisis associated with the pandemic and452ongoing international conflicts demonstrate the need for robust453oversight to ensure a fair playing field.454    Fluctuations in service and pricing are normal, but it is the role455of the FMC to ensure that those fluctuations are justified in a456competitive market.457    The President's fiscal year 2026 budget request for the Federal458Maritime Commission--is flat. I look forward to hearing from our459witness how the agency can ensure fair shipping with flat funding.460    The FMC has begun to use its new investigative and prosecutorial461authorities provided under the Ocean Shipping Reform Act of 2022. I462look forward to hearing an update on the implementation of these new463authorities.464    Since passage of the Ocean Shipping Reform Act of 2022, container465prices have fallen and queues at ports have evaporated.466    The FMC has also improved its reporting process leading to an467increase in charge complaints from American businesses. One of which468resulted in a $2 million settlement over findings that the shipping469company knowingly and willfully violated the Shipping Act.470    This means lower costs for consumers thanks to quick action by471Congress and President Biden.472    These are positive trends. But, I am concerned this will be short473lived if the Administration neglects the FMC. The FMC has lost nearly47420 percent of its workforce due to the Deferred Resignation Program and475the ongoing hiring freeze. This means fewer investigators finding476unfair shipping practices and fewer attorneys prosecuting cases.477    The FMC is also operating without two Commissioners and there's478currently no chair. As a bipartisan, independent agency, the FMC's479critical functions cannot be overstated.480    I look forward to hearing from Commissioner Dye about ways to481ensure a fair and competitive maritime supply chain and to build upon482the success we have seen so far.483    I yield back.484485    Mr. Ezell. The gentleman yields back.486    I would once again like to welcome our witness and thank487her for being here today.488    Briefly, I would like to take a moment to explain our489lighting system to our witness. There are three lights in front490of you. Green means go, yellow means you are running out of491time, red means put on brakes.492    I ask unanimous consent that the witness' full statement493be--Mr. Carbajal, did you want to?494    Mr. Carbajal. Sure.495    Mr. Ezell. The Chair now recognizes Mr. Carbajal.496497  OPENING STATEMENT OF HON. SALUD O. CARBAJAL OF CALIFORNIA,498   RANKING MEMBER, SUBCOMMITTEE ON COAST GUARD AND MARITIME499                         TRANSPORTATION500501    Mr. Carbajal. Thank you, Chair Ezell, for scheduling502today's hearing on the ``Future of United States Maritime, Part5031: Review of Fiscal Year 2026 Federal Maritime Commission504Budget Request.''505    I look forward to hearing from Commissioner Dye of the506Federal Maritime Commission, or FMC as we know it, on the507President's budget request and their agency's priorities for508the upcoming year.509    In 2022, we worked hard to pass the Ocean Shipping Reform510Act out of this subcommittee, which subsequently became law. I511am particularly eager to hear about its implementation and how512its new authorities have helped maintain a resilient and513efficient supply chain.514    As a federal agency tasked with ensuring fairness for515American shippers, carriers, and consumers, the FMC plays a516crucial role in safeguarding transparency and enforcing517equitable maritime commerce. According to the U.N., over 80518percent of the world trade volume is carried over the ocean. In5192024, over 11 percent of the total U.S. GDP came from ocean520shipping, which translates into over $4 trillion.521    In a global economy, the FMC is often our only referee for522a fair shipping market.523    We know from recent history that weaknesses in our supply524chain were exposed as landside port congestion and unfair525shipping practices by foreign ocean carriers led to backlogs526and price increases. This contributed to higher prices for527Americans on almost everything they buy.528    The reforms in our bill strengthen the FMC's authority to529investigate unfair fees and help facilitate the efficient530movement of cargo through U.S. ports. I am proud to say that531since the passage of the OSRA, vessel congestion at ports has532decreased. And in the 3 years since the enactment in 2022, more533than $5.8 million in fees have been waived or refunded in undue534charges by carriers.535    In May of this year, the FMC launched an investigation into536flagging practices of foreign governments, otherwise known as537flags of convenience. These practices severely undermine flag538states that employ rigorous standards, ensure fair pay, and539provide basic human rights. I hope that the FMC will leverage540every authority they have to address this systemic global541problem.542    Further, the FMC is currently undertaking a rulemaking543aimed at ensuring that exporters are given fair access to cargo544space. It is important that the FMC is sufficiently funded so545that it can properly carry out these reforms, which will546greatly benefit American businesses and the American consumer.547    While I am pleased to hear about all the success that FMC548has been having, I would be remiss if I did not mention my549growing concern with the shortage of Commissioners, the loss of550employees through the deferred resignation program, and the551lack of a Chair for the agency. The absence of leadership552threatens the positive momentum they have had so far.553    I look forward to a robust discussion about the FMC's554ongoing actions and how they will ensure a strong maritime555industry.556    Mr. Chairman, I yield back.557    [Mr. Carbajal's prepared statement follows:]558559  Prepared Statement of Hon. Salud O. Carbajal of California, Ranking560    Member, Subcommittee on Coast Guard and Maritime Transportation561    Thank you, Chair Ezell, for scheduling today's hearing on the562``Future of United States Maritime, Part 1: Review of Fiscal Year 2026563Federal Maritime Commission Budget Request.''564    I look forward to hearing from Commissioner Dye of the Federal565Maritime Commission, or FMC, on the President's budget request and566their agency priorities for the upcoming year.567    In 2022, we worked hard to pass the Ocean Shipping Reform Act out568of this subcommittee which subsequently became law. I am particularly569eager to hear about its implementation, and how its new authorities570have helped maintain a resilient and efficient supply chain.571    As the federal agency tasked with ensuring fairness for American572shippers, carriers, and consumers, the FMC plays a crucial role in573safeguarding transparency and enforcing equitable maritime commerce.574According to the U.N., over 80 percent of world trade volume is carried575over the ocean. In 2024, over 11 percent of the total U.S. GDP came576from ocean shipping--which translates into over $4 trillion dollars.577    In a global economy, the FMC is often our only referee for a fair578shipping market.579    We know from recent history that weaknesses in our supply chain580were exposed as landside port congestion and unfair shipping practices581by foreign ocean carriers led to backlogs and price increases. This582contributed to higher prices for Americans on almost everything they583buy.584    The reforms in our bill strengthened the FMC's authority to585investigate unfair fees and help facilitate the efficient movement of586cargo through U.S. ports. I am proud to say that since the passage of587the OSRA, vessel congestion at ports has decreased and in the three588years since the enactment in 2022, more than $5.8 million in fees have589been waived or refunded in undue charges by carriers.590    In May of this year, the FMC launched an investigation into591flagging practices of foreign governments, otherwise known as ``Flags592of Convenience.'' These practices severely undermine flag states that593employ rigorous standards, ensure fair pay, and provide basic human594rights. I hope that the FMC will leverage every authority they have to595address this systemic global problem.596    Further, the FMC is currently undertaking a rulemaking aimed at597ensuring that exporters are given fair access to cargo space. It is598important that the FMC is sufficiently funded so that it can properly599carry out these reforms, which will greatly benefit American businesses600and the American consumer.601    While I am pleased to hear about all the success that FMC has been602having, I would be remiss if I did not mention my growing concern with603the shortage of commissioners, the loss of employees to the deferred604resignation program, and the lack of a Chair of the agency. The absence605of leadership threatens the positive momentum they have had so far.606    I look forward to a robust discussion about how the FMC's ongoing607actions will ensure stronger maritime industry.608    I yield back.609610    Mr. Ezell. The gentleman yields.611    I ask unanimous consent that the witness' full statement be612included in the record.613    Without objection, so ordered.614    I ask unanimous consent that the record of today's hearing615remain open until such time as our witness has provided answers616to any questions that may be submitted to her in writing.617    Without objection, so ordered.618    I also ask unanimous consent that the record remain open619for 15 days for any additional comments and information620submitted by Members or witnesses to be included in the record621of today's hearing.622    Without objection, so ordered.623    As your written testimony has been made part of the record,624the subcommittee asks that you limit your oral remarks to 5625minutes.626    With that, Commissioner Dye, you are recognized for 5627minutes for your testimony.628629    TESTIMONY OF HON. REBECCA F. DYE, COMMISSIONER, FEDERAL630                      MARITIME COMMISSION631632    Ms. Dye. Thank you very much. Mr. Chairman, Ranking Member633Carbajal, members of the subcommittee, it is like coming home634for me. And I very much appreciate your holding this hearing.635And thank you so much for your interest in the responsibilities636of the Federal Maritime Commission.637    As you are aware, my friend and colleague Lou Sola departed638on June 30, and we look forward to news of his future639endeavors.640    There has been a smooth transition at the Federal Maritime641Commission, and there will be consistency in dealing with642shipping issues of importance to you and your constituents.643    I fully support the President's FY 2026 budget of $40644million for the Federal Maritime Commission. This will fund645FMC's mission and statutorily driven activity, as well as646important technology investments. This level of funding647reflects no change from the 2025 enacted budget.648    As in past years, our budget is straightforward, with the649majority of funding going to personnel, office space, and650important information technology. We have budgeted $25.8651million for employee salaries and benefits, a reduction from FY6522025 of $2 million.653    The Commission had 13 employees depart under the deferred654resignation program, the voluntary retirement program. They655will be paid from the FMC budget until the end of 2025.656    We are working with OPM for six exemptions to hire critical657attorneys and economists in our flag ship competition and658enforcement programs in line with the administration's 4-to-1659hiring ratio.660    Finally, that leaves rent and security services of $4.2661million, a slight increase of $150,000 from FY 2025.662    Also, $6 million has been budgeted for badly needed core IT663operations and modernization. The remainder consists of all664other budget requirements to support essential operational665needs.666    This $40 million allows us to effectively carry out our667mission, identifying and assertively investigating conduct that668unlawfully disadvantages U.S. interests essential to protect669marketplace integrity.670    OSRA 22 has better prepared the FMC to meet the demands for671its services and to respond to developments in the marketplace.672The Commission issued two OSRA 22 mandated final rules in 2024:673detention and demurrage billing practices; and unreasonable674refusal to deal with respect to vessel space.675    Two rulemakings remain to be completed: our Shipping676Exchange Registry; and certain outstanding elements of unfair677or unjustly discriminatory methods.678    Although the two final rules are operational today, we are679still involved in litigation over the final outcome.680    Section 10 of the Ocean Shipping Reform Act of 2022681established a new way for shippers to submit complaints to the682Commission. These are regarding charges assessed by common683carriers, and to receive a refund or waiver for noncompliant684charges. Those charge complaints were voluntarily resolved685during the investigations phase, we are pleased to say.686    Next year, the FMC will propose a rulemaking for fast687resolution of disputed charges in which the ocean carrier is688ordered to demonstrate the lawfulness of a charge.689    The Commission is guided by the purposes of one of the690sections of the shipping act, including ``encourage an691economically sound and efficient liner fleet of vessels of the692United States capable of meeting national security needs.'' I693applaud President Trump for emphasizing the importance of both694the U.S. military, U.S. Coast Guard, and commercial maritime695sectors.696    We appreciate the Congress and the Commission's support and697the Congress' support to fund the FMC at $40 million for FY6982026.699    Thank you. I will be glad to answer your questions.700    [Ms. Dye's prepared statement follows:]701702   Prepared Statement of Hon. Rebecca F. Dye, Commissioner, Federal703                          Maritime Commission704    Chairman Ezell, Ranking Member Carbajal, Members of the705Subcommittee, thank you for holding this hearing and for your interest706in the responsibilities of the Federal Maritime Commission (FMC or707Commission).708    As you are aware, my friend and colleague, Louis E. Sola, departed709on June 30, 2025, and we look forward to news of his future endeavors.710There is a smooth transition and there will be consistency in dealing711with the international ocean supply chain and shipping issues of most712importance to each of you and your constituents.713    The Commission will continue to emphasize strong enforcement and714compliance, protecting exporters and importers from potential715anticompetitive behavior, supporting port and marine terminal process716improvements to strengthen our international ocean freight delivery717system, and revitalizing the American merchant marine industry.718    I applaud President Trump for emphasizing the criticality of both719the U.S. military and commercial maritime sectors and prioritizing the720growth of the maritime industry. The President is taking the actions721necessary to develop a vibrant maritime industry that creates economic722security for many and national security benefits for us all.723    I support the President's FY 2026 budget of $40 million for the724Federal Maritime Commission, which will fully fund the FMC's mission725and statutory-driven activity, as well as important technology726investments. This level of funding reflects no change from the FY 2025727enacted budget.728    As in past years, our budget is straightforward, with the majority729of funding going to personnel, office space, and important information730technology (IT). We have budgeted $25.8 million for employee salary and731benefits, a reduction from FY 2025 of $2 million. That leaves rent and732security services at $4.2 million, a slight increase of $150,000 from733FY 2025. Finally, $6 million has been budgeted for core IT operations734and modernization. The remainder consists of all other budget735requirements to support essential operational needs.736    The $40 million budget allows us to effectively carry out our737mission: identifying and assertively investigating conduct that738unlawfully disadvantages U.S. interests is essential to protect739marketplace integrity.740                        I. Statutory Authorities741OSRA 2022742    The most recent update to the Commission's statutory authorities743took place when the Ocean Shipping Reform Act (OSRA 2022) was enacted,744positioning the Commission to be even better prepared to meet the745demand for its services and to respond to developments in the746marketplace. The Commission issued two OSRA 2022 mandated final rules747in 2024:748      Detention and Demurrage Billing Practices; and749      Unreasonable Refusal to Deal With Respect to Vessel Space750Accommodations.751752    With both of these rules now in force, only two rulemakings remain753to be completed: the Shipping Exchange Registry and completing any754elements of Unfair or Unjustly Discriminatory Methods that were not755included as part of the Final Rule on Unreasonable Refusal to Deal.756      Elements of both the Final Rule on Detention and Billing757Practices and the Final Rule on Unreasonable Refusal to Deal With758Respect to Vessel Space Accommodations are being legally challenged by759the World Shipping Council.760      Oral arguments in the Detention and Demurrage case has761been heard before the U.S. Court of Appeals for the D.C. Circuit and we762are awaiting the court's ruling. Oral arguments in the Refusal to Deal763case is scheduled for September 9, 2025.764765    The Commission is guided by the purposes section of the Shipping766Act: to ``encourage an economically sound and efficient liner fleet of767vessels of the United States capable of meeting national security needs768and supporting commerce [,]'' 46 United States Code (U.S.C.) Sec.76940101(3). The Commission is using all its authorities to meet this770goal.771    Here are other statutory authorities of the Federal Maritime772Commission that support commerce:773Unfavorable Conditions in Foreign Trade, Section 19 Authority774(Chapter 421 of Title 46, United States Code) (46 U.S.C. Sec. Sec.775        42106, 42107)776    The Commission may investigate and address general or special777conditions unfavorable to shipping in the foreign trade when the778conditions are attributable to laws or regulations of a foreign779country, or competitive methods, pricing practices, or other practices780of foreign vessel operating common carriers, including container781vessels. The Commission has very broad authority under this provision,782including over entities it does not typically regulate under the783Shipping Act, such as vessel owners, and over a wider scope of784activities, including other services and activities integral to785transportation systems. The Commission may initiate an investigation on786its own, or in response to a petition.787Foreign Shipping Practices Act788(Chapter 423 of Title 46, United States Code) (46 U.S.C. Sec. Sec.789        42304, 42305)790    This authority is narrower than the Commission's Section 19791authority. It is tailored to address laws, regulations, or practices of792a foreign government, or practices of a foreign carrier, that adversely793affect U.S.-flag common carriers and that do not exist for foreign-flag794carriers. The Commission has extensive authority to address these795conditions by imposing restrictions or fines on foreign-flag vessel-796operating common carriers.797Foreign-to-Foreign Jurisdiction798(Chapter 411 of Title 46, United States Code) (46 U.S.C. Sec.799        41108(d))800    The FMC has jurisdiction over actions by foreign governments or801foreign carriers that impair access of U.S.-flag vessels to ocean trade802between foreign ports. The FMC's authority to respond to these803conditions is extensive, mirroring that under the Foreign Shipping804Practices Act. This statutory provision refers to U.S.-flag vessels and805is broader than the statute's definition of a common carrier. It806empowers the Commission to address access restrictions imposed on bulk,807tramp, tanker, or other kinds of vessels so long as they are U.S.-808flagged. This results in the scope of the Commission's foreign-to-809foreign jurisdiction being broader than its jurisdiction under the810Foreign Shipping Practices Act.811Controlled Carrier Act812(Chapter 407 of Title 46, United States Code) (46 U.S.C. Sec.  40701)813    Ocean carriers may benefit from different forms of direct and814indirect governmental support. In instances where that subsidization815goes from support to control, the Commission designates the shipping816company as a Controlled Carrier. A Controlled Carrier is an ocean817common carrier operating in the U.S.-foreign trades that is, or whose818operating assets are, directly or indirectly owned or controlled by a819foreign government. Controlled carriers are subject to enhanced820regulatory oversight by the Commission.821    By statute, the Commission monitors government-controlled carriers,822whose marketplace decision-making can be influenced by foreign823governmental priorities or by their access to non-market sources of824capital, to ensure that they do not engage in unreasonable below-cost825pricing, which would disrupt trade or harm privately owned shipping826companies.827    Since 2024, the Commission has added four companies to the828Controlled Carrier list. Today, six are from the People's Republic of829China (COSCO, OOCL, OOCL Europe, HEDE, ANJI, and Chipolbrok) and one is830from the Republic of Korea (HMM).831    Additionally, pursuant to section 14 of OSRA 2022 (section 46106(b)832of Title 46, United States Code), the Commission is required to833identify otherwise concerning practices by ocean carriers, particularly834controlled carriers, that are:835    (A)  State-owned or State-controlled enterprises; or836    (B)  Owned or controlled by a subsidiary of, or related legally or837financially to a corporation in a nonmarket economy country, identified838by the U.S. Trade Representative as a priority foreign country or839subject to monitoring by the U.S. Trade Representative.840841    The Commission is currently developing a methodology to identify842otherwise concerning practices by ocean carriers in the above-mentioned843countries.844                      II. Supporting U.S. Commerce845    Using the above referenced statutory authorities, the Federal846Maritime Commission carries out enforcement matters and investigations.847Below are some of the Commission's ongoing investigations.848    Lake Carriers Investigation (Investigation Into Conditions849Affecting United States Carriers in Connection With Canadian Ballast850Water Regulation in the United States/Canada Great Lakes Trade, 89 FR85144979 (May 22, 2024))852      The Commission is statutorily authorized to investigate853and take remedial measures to address laws or policies of foreign854governments that discriminate against U.S.-flag vessels.855      The Commission has been investigating and monitoring the856impacts of Canadian ballast water regulations on U.S.-flag vessels857since 2020. The core issue is whether Canadian regulations would858require U.S.-flag vessels to install new, expensive, and unnecessary859ballast water management systems.860      The Commission initiated a targeted Chapter 423861investigation in May 2024 of the impact of the Canadian regulations on862specific U.S.-flag vessels built after a certain date. In response,863Canada developed a process for U.S.-flag vessels to request exemptions864from the regulations, and all covered vessels were exempted. Due to865this successful outcome, the Commission closed its Chapter 423866investigation in December 2024.867      The Chapter 421 Investigation remains open. FMC continues868to investigate and monitor the impact of Canada's ballast water869regulations on all U.S.-flag vessels, regardless of build date, in870anticipation of Canada's planned 2030 full implementation of its871ballast water rules.872873    Spain Investigation (Investigation Into Conditions Affecting874Shipping in the Foreign Trade and Denial of Entry of Vessels Into875Spanish Ports, 89 FR 96973 (Dec. 6, 2024))876      FMC is authorized by statute to investigate and take877remedial measures to address laws or policies of foreign governments878that discriminate against U.S.-flag vessels.879      FMC initiated an investigation in December 2024 because880reports that the Government of Spain had denied port entry to U.S.-flag881vessels participating in the U.S. Department of Transportation's882Maritime Administration's (MARAD) Maritime Security Program.883      Comment period closed on December 26, 2024. The FMC884received 8,323 comments. The Government of Spain filed a comment that885focused on their sovereignty rather than on their reasons for refusing886port access.887      The Commission continues to investigate and will make888public findings this year.889890    Chokepoints Investigation (Order of Investigation Into Transit891Constraints at International Maritime Chokepoints, 90 FR 12158 (March89214, 2025))893      The Commission is authorized by statute to investigate894unfavorable shipping conditions caused by the laws, regulations, or895practices of foreign governments or the practices of foreign-flag896vessel owners or operators.897      FMC initiated an investigation of conditions at seven key898global chokepoints--the English Channel, the Malacca Strait, the899Northern Sea Passage, the Singapore Strait, the Panama Canal, the900Strait of Gibraltar, and the Suez Canal.901      The comment period closed on May 13, 2025. Thirteen902comments were filed, including from the Panama Canal Authority and the903Government of Singapore.904      The Commission continues this investigation and may reach905out to specific governments or commercial entities for additional906information.907908    Flags of Convenience Investigation (Investigation Into Flags of909Convenience and Unfavorable Conditions Created by Certain Flagging910Practices, 90 FR 21926 (May 22, 2025))911      The Commission is statutorily authorized to investigate912unfavorable shipping conditions caused by the laws, regulations or913practices of foreign governments or the practices of foreign-flag914vessel owners or operators.915      The Commission initiated an investigation of the flagging916rules and practices of foreign governments in May 2025. The 90-day917public comment period will close on August 20, 2025.918      Initial indications are that vessel registration919practices of certain foreign countries, so-called flags of convenience,920are creating unfavorable shipping conditions in the foreign trade of921the United States. These flags enable unsafe vessels to operate, and922further enable shadow fleet activity and the evasion of sanctions.923      There has been a race to the bottom--a situation where924flag states compete by lowering standards and easing compliance925requirements, lowering the cost of flagging vessels beyond a point926where the efficiency, reliability, and safety of the vessels used in927the ocean shipping supply chain can be assured. The use of these flags928of convenience endangers the U.S. ocean shipping supply chain.929      The Commission will review all filed comments and930determine next steps later this year.931932    Unfortunately, not all foreign ship registries share a commitment933with the United States to ocean shipping integrity and accountability.934This lack of ship registry accountability not only disadvantages U.S.-935flag shipping, but also presents a problem in addressing smuggling936operations, sanctions evasion, disguised ownership, and other937irregularities.938    Aggressively investigating and enforcing the law against foreign939conduct that disadvantages U.S.-flag interests is an incentive to940registering ships under the United States flag, as the United States is941prepared to intervene legally on behalf of U.S.-flag vessels.942    Shipowners have a multitude of options to register their vessels,943and the ability of the Federal Maritime Commission to take direct944action to enforce the law against discriminatory behavior of other945foreign governments or foreign-flag carriers, with the involvement of946the President, Federal agencies, and Federal courts, is a unique947benefit to U.S.-flagged vessels.948                      III. Competition Enforcement949    The FMC's Competition Enforcement Program monitors filed agreements950to ensure that collaboration between vessel-operating common carriers951(VOCCs) and/or marine terminal operators, which compete against each952other in the market, do not result in a reduction in competition that953produces unreasonable increases in transportation costs or unreasonable954decreases in transportation services. (46 U.S.C. Sec.  41307 (b)(1)).955    The number of major carriers in the U.S. transpacific and956transatlantic trades has decreased from 20 in 2015 to 11 by 2022, due957to ocean carrier mergers and the bankruptcy of one major carrier.958    The Federal Maritime Commission and the U.S. Department of Justice959(DOJ) have a statutory division of competition authority over960international liner shipping in the U.S. trades. The DOJ reviews and961approves mergers of ocean carriers. The FMC analyzes the competitive962market effects of collaborative agreements among competitors, such as963vessel sharing agreements (alliances are vessel sharing agreements that964operate globally) or joint ventures. It is noted that market965concentration results from mergers, not from the market effects of966collaborative agreements among competitors.967    While it may be characterized as an exemption, the Shipping Act of9681984 is not an exemption from the antitrust laws, but an alternative969competition regime put in place by Congress in recognition of the970multinational nature of international ocean shipping and importance of971working with our international trading partners in this arena.972    The FMC, with its specialized knowledge and expertise, is the973agency responsible for administering this alternative competition law.974The basic framework for initial analysis aligns with established975guidelines used for evaluating collaboration among competitors and is976performed by attorneys, economists, and industry analysts who are977experts in the ocean transportation system.978    Agreements that may pose competitive concerns are subject to979continuous monitoring by Commission staff. The Commission validates the980data and information collected through our monitoring with external981sources of information on ship schedules, capacity, and measures of982cargo moved. The FMC also regularly reviews and revises monitoring data983to ensure that the data collected aligns with the realities of the984industry.985    During the pandemic, blank sailings were a particular concern986because of their potential to be used for anti-competitive purposes.987Our monitoring, however, indicated that this reduced service by ocean988carriers was driven by port congestion rather than a desire to reduce989capacity, and delays and skipped ports have been a frequent occurrence.990The Commission staff have reviewed the data collected on blank sailings991to assess the factors driving schedule delays and blanked sailings.992    Protecting the integrity of the marketplace is one of the key993missions of the FMC and the linchpin of these efforts is our994competition program. Accurate, insightful, in-depth analysis is995essential to monitoring the behavior of carrier agreements, especially996shipping alliances. The Commission took two important actions in 2024997to bolster its abilities to review newly filed agreements and monitor998filed agreements for anticompetitive effects.999      First, the Commission issued a policy statement in July10002024 announcing that it may use its investigatory authorities,1001including fact finding investigations, when reviewing the competitive1002effects of some cooperative agreements among ocean carriers or marine1003terminal operators.1004      Separately, in December 2024 the Commission moved primary1005responsibility for its monitoring program from the Bureau of Trade1006Analysis economists to the Office of the General Counsel attorneys, a1007realignment I strongly supported. The consolidation fosters greater1008efficiency and integration in the legal and economic review of1009competition analysis. As a result, the Commission will be able to1010conduct more extensive reviews of filed agreements and ensure that1011there are no current anticompetitive effects regarding agreements that1012are in effect.1013                         IV. Alliance Structure1014    Most large VOCCs participate in alliances, which are agreements1015between competitors to rationalize vessel utilization and trade lanes.1016Alliance members are expressly prohibited from agreeing on pricing and1017agreeing on prices within an alliance carries severe criminal1018consequences. In 2025, the world's largest VOCC, Swiss-based1019Mediterranean Shipping Company (MSC), determined to operate independent1020of its previous alliance, although it currently cooperates with the1021Premier Alliance.1022    As it currently stands, there are three alliances:1023    1)  Gemini (Hapag-Lloyd and Maersk);1024    2)  Ocean (COSCO, OOCL, CMA, and Evergreen); and1025    3)  Premier (HMM, ONE, and Yang Ming)).10261027    The three alliances comprise 70% of U.S. trade, and MSC, which on1028its own covers 15% of U.S. trade. The remaining 15% of U.S. trade is1029served by smaller carriers.1030    The alliance system benefits U.S. trade by helping maintain a1031larger number of VOCCs in U.S. trades and disincentivizing further1032mergers and consolidation. VOCCs can join together to create1033efficiencies and economies of scale without the permanence of a merger.1034The system also promotes a steady level of service and shipping options1035in the U.S.1036    The withdrawal of MSC from the now dissolved 2M Alliance (Maersk1037and MSC) resulted in the filing of two new alliance agreements: the1038Gemini Cooperation Agreement and the Premier Alliance Agreement. In1039both alliances, the Commission issued a Request for Additional1040Information (RFAI) to obtain documents and verifiable information1041necessary to achieve clarity on matters that were not addressed by1042filing parties or where insufficient information was provided in the1043originally filed agreements. The Gemini and Premier agreements are now1044fully in effect.1045                         V. Commission Matters1046    In addition to all the previously described enforcement activities1047and responsibilities of the FMC above, the Commission's jurisdiction1048covers many areas across the supply chain. For example, one notable1049investigation was in regard to OCEMA Box Rules. In a complaint case1050filed by an association of truckers, the Commission found that in four1051national transportation markets, ocean common carriers' restrictions1052limiting truckers and shippers to the carriers' designated chassis1053provider violate the Shipping Act, and ordered those practices to1054immediately cease so truckers and shippers can negotiate and deal with1055chassis providers they choose. Ocean carriers had benefited financially1056from the restrictions they imposed on truckers and shippers.1057      Reports that ocean carriers continued to enforce their1058unlawful restrictions in violation of the cease and desist order led1059the Commission to launch an investigation, subpoena documents and1060testimony from the carriers and other transportation providers and1061conduct in-person site visits at facilities servicing the Memphis1062region to document actual practices and barriers to truckers and1063shippers using chassis providers they choose.1064      The Commission's Bureau of Enforcement, Investigations,1065and Compliance (BEIC) concluded its investigation and reported its1066findings earlier this year. BEIC concluded that carriers have changed1067their practices, as ordered by the Commission, so that truckers and1068shippers in the markets covered by the order are no longer restricted1069to carriers' designated chassis providers and can choose other options.1070      After the Commission ordered certain restrictive1071practices to cease, the parties continued to litigate other claims1072raised by the truckers' association, and the Commission's Chief1073Administrative Law Judge dismissed as moot those remaining claims1074because intervening changes in the chassis market, including increased1075reliance on trucker-owned chassis, alleviated conditions the truckers1076sued to remedy. A motion by the ocean common carriers asking the1077Commission to reconsider and vacate the cease and desist order is1078pending before the Commission.10791080    Additionally, the Commission reviewed a proposed amendment to the1081New York Shipping Exchange (NYSHEX) Agreement, which initially became1082effective on December 2, 2017. The Agreement intended to offer an1083American-based shipping index. Upon review of the proposed amendment1084that was filed in January 2025, the Commission issued an RFAI. The1085amendment to the NYSHEX agreement is now in effect.1086                       VI. Significant Litigation1087    In addition to ongoing investigations, the Commission has cases1088pending in the U.S. Court of Appeals for the District of Columbia1089Circuit:1090      World Shipping Council v. FMC (D.C. Cir. No. 24-1088)--1091World Shipping Council, a trade association for ocean carriers,1092challenged the Commission's OSRA 2022-based demurrage and detention1093billing rule as it applies to the billing of truckers. The case was1094argued on March 13, 2025, and is pending a decision.1095      World Shipping Council v. FMC (D.C. Cir. No. 24-1298)--1096World Shipping Council challenged FMC's OSRA 2022-based rulemaking on1097unreasonable refusal to deal. The case has been briefed and is awaiting1098oral argument.1099      Evergreen Shipping Agency (America) Corp. v. FMC (D.C.1100Cir. No. 25-1104)--Evergreen, a Taiwan-based VOCC, challenged the FMC's1101decision that it could not bill demurrage to a motor carrier on certain1102days when a port was closed and equipment could not be returned, and1103the equipment was not available for pickup until the port's closure.1104The case is currently in briefing.11051106    Recently, on June 24 2025, the U.S. Court of Appeals for the1107District of Columbia Circuit issued its decision in Mediterranean1108Shipping Co. v. FMC (D.C. Cir. No. 24-1262). MSC, a Swiss-headquartered1109VOCC, had challenged FMC's decision in a private complaint case, in1110which the FMC ruled against the company because it refused to1111participate in discovery. The D.C. Cir. Court denied MSC's petition and1112determined that it was reasonable for the Commission to find that MSC's1113actions undermined the agency's authority.1114                    VII. Informal Dispute Resolution1115    The Commission is a venue for resolving disputes related to ocean1116shipping. This can be done informally and cooperatively though the1117Office of Consumer Affairs and Dispute Resolution Services (CADRS) or1118adjudicated through more structured, formal, and traditional litigation1119options. Across the board, the demand for Commission services remains1120strong.1121    In FY 2025 to date, CADRS has received more than 1,000 requests for1122assistance, resulting in more than 300 cases being opened.1123    Section 10 of the Ocean Shipping Reform Act 2022 established a new1124way for shippers to submit complaints to the Commission regarding1125charges assessed by common carriers and to receive a refund or waiver1126for non-compliant charges, 46 U.S.C. Sec.  41310. From the start of FY11272025 to date, the FMC received 209 charge complaints. Of those, 1181128were appropriate for the charge complaint process and assigned for1129investigation. Since OSRA 2022, the total amount of charge complaints1130refunded or waived during this period has been over $5 million.1131    While most charge complaints were voluntarily resolved during the1132investigation phase, the FMC's process also provides for fast1133resolution of non-compliant charges disputed by the parties through a1134proceeding before the Commission where the carrier is ordered to1135demonstrate the lawfulness of a charge. This temporary process has1136provided practical experience the Commission will include in a1137rulemaking that it will initiate to establish a permanent procedure for1138administering Charge Complaints. A rulemaking regarding the Charge1139Complaint process will begin in FY 2026.1140                     VIII. Adjudicatory Proceedings1141    Adjudicatory proceedings at the FMC have increased dramatically in1142recent years, and this increased pace is expected to continue in1143upcoming years. FY 2024 was the Office of the Administrative Law1144Judge's (OALJ) busiest year on record with the highest caseload in1145decades. In FY 2024, the OALJ both received and resolved more cases1146than in prior years. We anticipate finishing FY 2025 with a significant1147number of new cases.1148    To address this additional demand, the Commission now has five1149Administrative Law Judges (three permanent, two detailed from the U.S.1150Department of Health and Human Services (HHS)) presiding over cases1151involving multiple parties in which potential damages can run into the1152millions of dollars. The Commission has seen a sharp increase in the1153motions practice before its ALJs.1154    The Commission's Small Claims Officer, located within the OALJ, has1155the highest number of pending cases ever recorded, and is on a pace to1156double.1157    Formal complaints, small claims, and CADRS activity demonstrate1158that the Commission is serving the U.S. shipper community.1159    The Commission continues to carry out its mission critical1160statutory responsibilities, making it a vital agency serving the1161American public. From helping small shippers informally resolve1162shipping disputes to adjudicating cases that establish precedent to1163resolve shipping disputes in the future, the FMC provides a wide range1164of services and resources to all parties involved in international1165ocean freight delivery. The FMC continued its critical mission to1166ensure coemption and integrity for America's oceanic supply chain. We1167have appreciated the President and Congress' support to fund the FMC at1168$40 million for FY 2026.11691170    Mr. Ezell. Thank you for your testimony. We will now turn1171to questions from the panel.1172    I will recognize myself for 5 minutes for questions.1173    The global ocean shipping market is increasingly dominated1174by foreign state bad actors, bad carriers, particularly from1175China, which raises concerns about unfair competition and1176potential harm to U.S. mariners, shippers, and long-term supply1177chain operations.1178    Does the Commission have enough resources to protect U.S.1179mariners and shippers from unfair practices by foreign state-1180sponsored carriers like those backed by the Chinese Government?1181    Ms. Dye. Thank you, Mr. Chairman. We do. One of the1182advantages of a small agency, I have found, is that we are able1183to pivot much more quickly than giant organizations. And we1184have reorganized our competition office to combine our1185economists with our attorneys working on competition.1186    And I have long supported this approach. And it will make1187us much more effective. And we have also refocused our1188enforcement regime to make sure that we are using those1189resources effectively.1190    So, thank you very much. I am confident that we will be1191effective.1192    Mr. Ezell. Very good.1193    The Ocean Shipping Reform Act of 2022, OSRA, expanded the1194FMC's authority to regulate detention and demurrage practices,1195investigate discriminatory behavior by carriers, and enhance1196protections for shippers.1197    Where is the FMC on OSRA implementation? When do you expect1198full implementation of OSRA? How have shippers benefited since1199OSRA's passage?1200    Ms. Dye. As I reported, we have completed two of the most1201important regulations. And we are waiting to see the final1202court action on those. But today, ocean carriers are complying1203with those regulations.1204    Mr. Ezell. Very good.1205    Ms. Dye. We get good reports about the operation of those.1206We still are working on the Exchange Registry and a small1207remainder of the discriminatory regulation that we will1208complete.1209    We are also going to complete the new charge complaint1210regulation to make sure the public understands the approach.1211And we are in good shape in compliance with all the reports in1212OSRA as well.1213    Mr. Ezell. Very good. The FMC recently launched an1214investigation into whether foreign vessel flagging laws,1215regulations, and practices create unfavorable conditions for1216U.S. trade. What prompted this investigation?1217    What practices are you concerned about that could undermine1218fair maritime trade?1219    Ms. Dye. Thank you. These authorities that I outlined in my1220statement for the record are advantageous to U.S.-flag ships.1221And we believe that it could provide a good grounding for a1222U.S. vessel registry to know that if there are problems, the1223United States will go to bat for you. And this is one of them.1224    Flags of convenience are really open registries. Panama,1225Marshall Islands, and Liberia accept registrations from owners1226of vessels who are outside their residence. The United States1227has a closed registry. And many other major ones are closed1228registries.1229    There has been a concern that the open registries, flags of1230convenience, are not as effective in enforcing regulations. And1231then, in some ways, their enforcement has been pushed off onto1232core states like the United States.1233    These fact findings, these investigations are very1234flexible, they can be stood up quickly. They do not have, on1235their own, authority to require violations or anything like1236that.1237    But we will get to the bottom of this. And then, of course,1238we will inform the Coast Guard.1239    Mr. Ezell. Thank you very much.1240    I yield back.1241    Ms. Dye. Thank you.1242    Mr. Ezell. I now recognize Mr. Larsen.1243    Mr. Larsen of Washington. Thank you, Mr. Chair.1244    Commissioner Dye, according to the budget request, most of1245the rulemakings have been completed as part of the OSRA. Can1246you report on the progress of the remaining rulemakings?1247    Ms. Dye. On the remaining rulemakings?1248    Mr. Larsen of Washington. The remaining rulemakings.1249    Ms. Dye. We have made good progress on exchanges. We have a1250couple things to check out before we can complete this1251registration process. And the remaining discrimination parts1252that were not addressed in the refusal to deal rule have--we1253have begun those as well.1254    Mr. Larsen of Washington. And do you have a timeline,1255prospective timeline, a hopeful timeline?1256    Ms. Dye. I would say as soon as we can turn our attention1257to it.1258    Mr. Larsen of Washington. Yes. Related to that, we know the1259FMC has lost employees. And by our count, it's about 201260percent. And whether it's 20 percent, or 19 percent, or 211261percent, it's a lot; it doesn't make much difference.1262    Could you outline the impacts of the loss of those folks1263and then not replacing folks has had on the work of the FMC?1264    Ms. Dye. Well, as I reported, we are working with OPM on an1265exception for six employees, not new hires, but to replace1266people who have left.1267    Mr. Larsen of Washington. Mm-hmm.1268    Ms. Dye. We believe that with those that we will be in good1269shape.1270    Mr. Larsen of Washington. Yes. And do you sense there's1271progress in getting them hired?1272    Ms. Dye. That we want authority to hire those six.1273    Mr. Larsen of Washington. Okay.1274    Ms. Dye. To replace. I say--so we don't really consider1275those new hires, because they are----1276    Mr. Larsen of Washington [interrupting]. I understand. I'm1277not arguing that point, it's more about whether OPM is being1278helpful in moving that forward.1279    Ms. Dye. Very much.1280    Mr. Larsen of Washington. And are there people at OPM,1281enough people at OPM to help you do that?1282    Do you feel like you are getting the service you need from1283OPM to get that done?1284    Ms. Dye. They will grant us the exemption to hire. Of1285course, the head of the agency, which my general counsel1286informs me that we have plenty of authority, the three of us,1287to make decisions and to operate. And we have to--of course, we1288have to oversee any hirings.1289    Mr. Larsen of Washington. Yes. Are you then looking at1290whether or not being short that number of folks is impacting1291the length of time it takes you to do any one investigation,1292the length of time it takes to manage a rulemaking?1293    Ms. Dye. I think that we are, and I think my colleagues1294agree that we are in good shape.1295    Mr. Larsen of Washington. Yes.1296    Finally, section 10 of the OSRA established the charge1297complaint process.1298    Ms. Dye. Right.1299    Mr. Larsen of Washington. And according to the budget1300request, the FMC has ordered to return over $2.5 million in1301refunds or canceled fees. Is that accurate?1302    Ms. Dye. Yes.1303    Mr. Larsen of Washington. Yes. Can you talk a little bit1304about why you are returning those?1305    Ms. Dye. Well, we had, I think, a little over $5 million1306that was returned. But as I said, the good news is that when1307the process began, many of the fees were returned voluntarily.1308    Mr. Larsen of Washington. Mm-hmm. How would you rate that1309as a marker of the success of the enforcement program? In1310general, how would you rate the success of the enforcement1311program?1312    Ms. Dye. I think that some people believe, you know, we1313write a regulation, we pass a law, and it is effective, and1314people obey it. And if that were true, then there wouldn't need1315to be any law enforcement agencies.1316    So, it takes--especially when there is a big change, it1317takes time, and resources, and commitment. Demurrage and1318detention charges are internationally despised.1319    Mr. Larsen of Washington. Yes.1320    Ms. Dye. And when we weighed in on this we knew it would be1321a hard slog. It is not over. But I think that we have had1322remarkable compliance so far. And we will keep at it.1323    Honestly, I've said to my advisory committee, can't you1324think of a better way to get fluidity or encourage fluidity1325than these awful charges? There must be a better approach.1326    Mr. Larsen of Washington. Right.1327    Ms. Dye. Because it's the clunky type of service.1328    Mr. Larsen of Washington. Thank you. I am sure one of the1329parents of OSRA 2022 will have more questions. Mr. Garamendi1330will have more questions.1331    Ms. Dye. I will look forward to it.1332    Mr. Larsen of Washington. I will yield back.1333    Mr. Ezell. The gentleman yields.1334    The Chair now recognizes Mr. McDowell for 5 minutes of1335questioning.1336    Mr. McDowell. Thank you, Mr. Chairman.1337    And thank you, Commissioner Dye, for being here. It is good1338to have another North Carolinian in the room today.1339    Ms. Dye. Absolutely.1340    Mr. McDowell. But, Commissioner, you stated that the FMC's1341budget request for FY 2026 is $40 million, which is level1342funding from fiscal year 2025.1343    Ms. Dye. Yes.1344    Mr. McDowell. So, within that budget, can you explain why1345you have set aside more funding for rent and security services,1346and why your resources needs are different from last year?1347    Ms. Dye. Well, the biggest change in this budget is that we1348are dedicating more resources to IT. We were in the position1349that we literally could not buy parts for our system because1350they weren't made anymore.1351    And so, we are pleased that we were able to devote more to1352those systems that will also benefit our shipping public.1353    Mr. McDowell. Sure.1354    Ms. Dye. But the one, you mean the $150,000?1355    Mr. McDowell. Yes.1356    Ms. Dye. Well, security costs have gone up. And I think1357that's--they went up.1358    Mr. McDowell. Sure.1359    Ms. Dye. The prices increased.1360    Mr. McDowell. Yes. How does your commitment to carrying out1361the Commission's core objectives play into your budgeting1362process?1363    Ms. Dye. I support the $40 million. As I said, this is1364level funding. We didn't get cut, which I think speaks well for1365our mission and our approach. And I am convinced that with our1366reorganizations and refocusing that we have done that we will1367be fine.1368    Thank you.1369    Mr. McDowell. Can you explain further how the Ocean1370Shipping Reform Act changed the FMC's operations?1371    Ms. Dye. Well, we had a couple of rulemakings to1372accomplish. Some of the reports we have learned some very1373valuable information. And I support the bill. I think that the1374reform act has helped us, especially with charge complaints,1375have helped the shipping public deal with a lot of the----1376    Mr. Ezell [interrupting]. The gentlelady will suspend.1377    Will you suspend?1378    Could you speak into the microphone just a little more,1379please? I am hard of hearing, and I can't hear you.1380    Ms. Dye. Oh, I understand, sir. Right.1381    Mr. Ezell. There you go. Thank you.1382    Ms. Dye. Well, there you are. Is that better? Well, good. I1383hear myself better, too. Thank you.1384    Mr. McDowell. Just to ask you another question, but the1385Commission has relatively broad authority to investigate1386unfavorable or anticompetitive shipping practices of foreign-1387flagged vessels. Generally, what are the most common scenarios1388that require the Commission to intervene?1389    Ms. Dye. Well, I think that I am not able to talk a lot1390about the existing investigations.1391    Mr. McDowell. Sure.1392    Ms. Dye. But those examples in my statement were good ones.1393Any time that the U.S. flag is disadvantaged, then I--as we had1394intervened for the Great Lakes carriers, certain carriers who1395were denied entry into Spanish ports. And I support those. And1396this fact finding authority has proved to be very valuable for1397us.1398    Mr. McDowell. So, has the number of complaints increased or1399decreased since the Ocean Shipping Reform Act of 2022?1400    Ms. Dye. Well, allowing the charge complaints has been very1401valuable. And it has allowed our shipping public an avenue to1402quickly resolve some charges, with the FMC overseeing it. And1403that has been effective.1404    Mr. McDowell. Thank you, ma'am.1405    And, Mr. Chairman, I yield back.1406    Ms. Dye. Thank you.1407    Mr. Ezell. The gentleman yields.1408    Mr. Carbajal is recognized for 5 minutes.1409    Mr. Carbajal. Thank you, Mr. Chair.1410    Commissioner Dye, I am a strong supporter of the FMC. And I1411want to focus all my questions today on the recently announced1412flag of convenience investigation.1413    Why did the FMC decide to initiate the investigation? In1414other words, what is the potential risk to Americans?1415    Ms. Dye. And this is which one?1416    Mr. Carbajal. The investigation that you recently opened,1417the flag of convenience.1418    Ms. Dye. Oh. I think that, without talking about the1419reasoning or--but I think that one, as well as the others, is1420the facts that we develop will be worth any argument on the1421issue.1422    Mr. Carbajal. What is the potential risk to Americans?1423    Ms. Dye. For?1424    Mr. Carbajal. The reason why you opened up this1425investigation.1426    Ms. Dye. Oh. The risk is to any U.S.-flagged vessel, or the1427detriment.1428    Mr. Carbajal. Thank you.1429    And what practices have foreign countries participated in1430that have resulted in the degradation of U.S.-flagged shipping?1431    Ms. Dye. I am so sorry. I am having trouble hearing you.1432    Mr. Carbajal. Okay, let me say that again.1433    What practices have foreign countries participated in that1434have resulted in the degradation of U.S.-flagged shipping?1435    Ms. Dye. The investigation in Spain, of course, has been--1436there have been vessels, U.S.-flagged vessels, that have been1437turned away. And the other fact findings are, obviously, we had1438a good result with the Great Lakes carriers. And they were most1439pleased that we got involved. Our general counsel was able to1440work with the State Department. And that was an excellent1441result for them.1442    And the others are facts that may be useful in the future1443to U.S.-flagged vessels, especially concerning our registry and1444how we may decide to change a U.S.-flag registry in the future.1445    Mr. Carbajal. As a strong supporter of the U.S. merchant1446marine and the U.S.-flagged vessels, what actions are available1447to the FMC should you find that the use of flags of convenience1448has resulted in unfair shipping practices?1449    Ms. Dye. Yes, well, at some point, even the President could1450become involved in taking action against foreign countries. The1451remedies are slightly different for each of these if a1452violation is found. And, of course, the fact findings that we1453are conducting now don't have proceeding authority.1454    At this stage, we are finding facts in preparation for1455another proceeding if we develop the evidence.1456    Mr. Carbajal. But what are some of the actions that you can1457take?1458    Ms. Dye. Their ships could be prohibited from our ports.1459There are some monetary penalties.1460    But they are slightly different for each one.1461    Mr. Carbajal. Commissioner Dye, I must say I am1462disappointed with the administration's budget request. If1463Congress were to increase the FMC's budget, and you were able1464to rehire the 26 people that have been lost, what would that1465mean for the effectiveness of the agency? What kind of work1466would they be doing?1467    Ms. Dye. We have reorganized in a way that we are--I1468shouldn't say reorganized. They tell me not to say that. We1469have refocused in a way that we are in good shape today.1470    Mr. Carbajal. Well, I guess that feeds into the whole1471argument. If this is the case, maybe we should have done this1472reorganization in the past.1473    Ms. Dye. Well, the past really doesn't exist. We are1474looking today and forward.1475    Mr. Carbajal. Thank you very much, Mr. Chair.1476    I yield back.1477    Ms. Dye. Thank you.1478    Mr. Ezell. Mr. Patronis is recognized for 5 minutes of1479questions.1480    Mr. Patronis. Thank you, Mr. Chairman.1481    Good afternoon.1482    Ms. Dye. Hello.1483    Mr. Patronis. Commissioner, I am sitting here, I am reading1484your resume. And you have seen a lot of activities over your1485time at the Commission. Thank you for your service to our1486Nation.1487    Ms. Dye. Thank you very much.1488    Mr. Patronis. I guess where I kind of get some anxiety is1489thinking about how dynamic the situation is. Kind of a tough1490place to be, as much as I would like to see as much stateside1491manufacturing, we are definitely--there is going to be those1492dependencies we have on goods coming in. And I can't imagine1493the dynamics of what happened at least with y'all's concerns1494during COVID, supply chain disruptions, and as you looked at1495where we are trying to at least onboard predictability.1496    And then I am looking and I am thinking about the games1497that might be played by those other countries and their reports1498of getting into the U.S. market.1499    Do you see, have you seen--if you wouldn't mind1500elaborating, I would love to understand, even if you want to--I1501learn by stories--if you have got an instance of what you have1502seen between the United States and China where they have done1503unfair practices, maybe leverage, or maybe if you saw anything1504during COVID, enlighten me. This is an opportunity for me to1505learn.1506    Ms. Dye. Well, thank you. We have added a couple of the1507controlled carriers owned or subsidized by foreign countries.1508    Mr. Patronis. Mm-hmm.1509    Ms. Dye. Five of the six are Chinese. We are a competition1510agency primarily. And so, we are looking to make sure to1511continually look at their price structure to make sure that if1512there are subsidies, then they aren't used to below price, to1513the detriment of the other carriers that are not owned or1514controlled by foreign countries.1515    And we will be watching even more carefully in, I think,1516October when the Trade Representative charges begin then that1517doesn't cause the controlled carriers to make some decisions or1518some pricing decisions that we think are a problem.1519    Mr. Patronis. So, did you say that five of the six1520controlled carriers are subsidized by China?1521    Ms. Dye. Yes. Five of the six are controlled.1522    Mr. Patronis. Wow.1523    Ms. Dye. Owned or controlled.1524    Mr. Patronis. And I am assuming, one, they probably want1525that type of influence in order to continue their goods getting1526out to market. That also gets me super concerned of what type1527of dependence we have got when they have got that much control1528over the products that we depend upon.1529    Ms. Dye. Well, there are plenty of carriers.1530    Mr. Patronis. Okay.1531    Ms. Dye. And we watch each of them. We don't have authority1532over actual mergers. We watch other combinations among the1533carriers. And unlike a merger, we watch them all the time.1534Continuous.1535    Mr. Patronis. Okay.1536    Ms. Dye. Continuous.1537    Mr. Patronis. Of other countries having an influence over1538ownership, over carriers of this nature, who is number two, who1539is number three? Which other countries?1540    Ms. Dye. Really, really we have one, one other one that is1541Korean.1542    Mr. Patronis. Okay.1543    Ms. Dye. And those are the only ones to date.1544    It has been different in the past.1545    Mr. Patronis. Sure. Sure. And, so, with no control over the1546mergers, are any of the carriers that China has influence over,1547were those acquired through acquisitions?1548    Ms. Dye. OOCL was the Hong Kong company, was acquired.1549    Mr. Patronis. Sure. Sure. Well, again, thank you for your1550service. I appreciate your answers and your time being here1551today.1552    Ms. Dye. Thank you very much.1553    Mr. Patronis. Mr. Chairman, I yield.1554    Mr. Ezell. The gentleman yields.1555    The Chair recognizes Ms. Scholten for 5 minutes.1556    Ms. Scholten. Thank you so much, Chair Ezell, and Ranking1557Member Carbajal.1558    And welcome, Commissioner Dye. I appreciate you being here.1559    So, the FMC's responsibility of protecting the U.S.1560shipping industry from foreign governments' unfair practices is1561particularly important to the Great Lakes region where I hail1562from, from Michigan.1563    Ms. Dye. Yes.1564    Ms. Scholten. A $36 billion a year industry that creates1565good-paying jobs and keeps our Nation's supply chains moving.1566    When visiting the ports of Muskegon and Grand Haven in my1567district, the constituents frequently stress the need for1568strong but navigable ballast water regulations has had a huge1569impact on our waterways.1570    So, Commissioner Dye, I understand that the FMC has1571investigated how Canada's ballast water regulations have1572impacted U.S. lakers. FMC's actions have resulted in the1573Canadian Government providing limited relief for American1574shippers.1575    Can you talk us through specifically how you plan to stay1576on top of that issue, especially as we are continuing to see1577some pretty significant rollbacks on regulations around water1578protection across the board?1579    Ms. Dye. Of course. And we will be following the Canadian1580response to ensure that it is effective, as we expect it to be.1581But no, this is not over if that approach is not effective.1582    Ms. Scholten. Yes.1583    Ms. Dye. But we have been very pleased.1584    Ms. Scholten. Okay. Well, I appreciate continued engagement1585on what you and your administration will continue to do going1586forward. We think this is an important issue to stay on top of,1587not just simply a one-and-done response.1588    I have a couple questions, so I want to keep moving on.1589    But while I don't always see eye to eye with the current1590administration, I am very pleased to see the President focus on1591bolstering our maritime industry. That is one area we do agree1592on. I am willing to collaborate with the FMC to actualize this1593goal. Again, the industry is very important to the Great Lakes.1594    This starts with appropriately reviewing and responding to1595complaints through the FMC's formal process.1596    However, I am concerned with two FMC Commissioner1597vacancies, recent staff cuts to the tune of 20 percent, and1598flat funding requests. I am concerned that we aren't doing1599everything we can to make good under obligations under the1600Ocean Shipping Reform Act of 2022, something you, of course,1601had a big hand in getting through initially.1602    Can you speak to how the FMC has internally reorganized, if1603at all, to ensure that flat funding and reduced staff will not1604hinder its ability to appropriately respond to and review the1605complaints that are filed?1606    Ms. Dye. I appreciate it. Thank you.1607    You can be sure that the FMC is functioning. We have under1608existing law, we still have a quorum, my general counsel tells1609me. And so, I don't think anyone should be concerned that the1610FMC is not on the job.1611    Ms. Scholten. I think what this committee is looking for,1612though, is more than just a functioning FMC, one that can make1613sure of a robust response to these complaints when they are1614received. Once we have an invasive species entering our1615waterways, it is very hard to turn back the clock.1616    So, simply showing up for quorum, respectfully, may not be1617enough at this point. And the concern with significantly1618reduced staffing does raise alarms about whether or not you are1619able to respond in an appropriate fashion. And I will say1620simply showing up for quorum doesn't seem to get to the heart1621of having enough people there.1622    I have one more question I will go to. And if you have a1623more robust response, we would love to take one for the record,1624because it is of concern.1625    So, continuing on there, the President's budget request of1626$40 million for the FMC is the same enacted amount as fiscal1627year 2025, and 20 percent less than the previous budget1628request. It reduces the workload significantly.1629    Assuming Congress flat funds the FMC, as the President has1630requested, how else can this committee continue to support the1631FMC's efforts to reduce port congestion, boost transparency in1632the ocean shipping industry beyond annual appropriations?1633    Ms. Dye. I think that we showed there was no diminution1634last year. And there will be no diminution next year. We were,1635we will continue to enforce the law and use our authorities to1636the fullest, but no more.1637    And I am confident that you will be satisfied.1638    Ms. Scholten. Well, thank you. We would love to have you1639back perhaps towards the end of the year or next year to1640continue to check in on that progress.1641    I see that my time has expired but will yield back.1642    Ms. Dye. Thank you.1643    Mr. Ezell. The gentlelady yields.1644    The Chair recognizes Mr. Van Drew for 5 minutes.1645    Dr. Van Drew. Thank you, Mr. Chairman.1646    Commissioner, thank you for being here. We appreciate your1647time.1648    Ms. Dye. Thank you.1649    Dr. Van Drew. The Coast Guard, as you know--and you know1650all this already--has recently accelerated the removal of1651navigational aids under the ATON modernization plan. Three1652hundred fifty buoys are currently slated for removal, as you1653also know, across the Northeast, with plans to expand this1654effort as we move along.1655    I support the innovation. I support the Coast Guard. I1656support all of you. But I am concerned that we might be moving1657too quickly and that we at least should have some more local1658input on this issue. And I am going to tell you why.1659    We already are seeing some consequences. I have--my1660district is a coastal district in the State of New Jersey. I1661have seen some grounding on shoals, near-misses involving1662commercial and recreational vessels, and increasing uncertainty1663in waterways that were once considered safe. And now there are1664some concerns among real people that I talk to that are out on1665the water.1666    They are not isolated. They really exist. They are1667happening now. And I think we can prevent them.1668    I think the work you are doing is good. The focus is good.1669But we have to make sure that we are doing this in a careful1670and circumspect way.1671    In my district, many of the small mariners, including1672commercial operators, do not have advanced--believe it or not--1673electronic navigation systems that the modernization effort1674assumes. And I think that's something we have to keep in mind1675as well. And some of them will not have it even into the near1676future.1677    Even when the systems are available, you have got shifting1678tides, narrow passages, bad weather. You know the deal. It is1679no longer just a safety issue. It is also a commerce issue, a1680commercial issue. If commercial or fishing lanes become less1681predictable, we have more commercial problems.1682    And I guess the committee included a provision in the Coast1683Guard Authorization Act--I don't guess, I know we did--to study1684the effect of removing these buoys. And that is a good thing.1685And that is going to pass this week on House suspension.1686    Commissioner, until that point, have you been coordinating1687with the Coast Guard on this initiative? Could you fill us in a1688little bit on it?1689    Ms. Dye. We have not on those issues.1690    Dr. Van Drew. Okay.1691    Ms. Dye. But I was 6 years on Active Duty with the Coast1692Guard. And I still have--at one point, some of my students were1693admirals in the highest level. You can be sure that on anything1694that involves them we will work with them.1695    Dr. Van Drew. Good. And that is what I would hope. And I1696would say the same thing to the Coast Guard, too.1697    Ms. Dye. Absolutely.1698    Dr. Van Drew. The intention is good. And I think the result1699will be good. But I think we just have to be a little bit1700careful as we go about it.1701    Ms. Dye. Of course.1702    Dr. Van Drew. Make sure, like everything else we do in1703Government----1704    Ms. Dye [interposing]. Of course.1705    Dr. Van Drew [continuing]. We have to make sure we get it1706right.1707    Thank you for your time.1708    Ms. Dye. Thank you.1709    Dr. Van Drew. I yield back.1710    Mr. Ezell. The gentleman yields.1711    The Chair recognizes Mr. Garamendi for 5 minutes.1712    I am working on it.1713    Mr. Garamendi. I am having one of those mornings. I am not1714sure I can pronounce my own name. Garamendi.1715    I think what I would like to do, if I might, my colleague1716at the far end of the dais here, Mr. Johnson, is the lead on1717the Ocean Shipping Reform Act improvement.1718    So, if I might yield to Mr. Johnson my time, then I will1719follow up, since he is the lead on the new bill.1720    Mr. Johnson of South Dakota. Well, that is unbelievably1721gracious. I think I am next in the queue, John. So, if you want1722to go, I am just going to spend at least 2 minutes talking1723about how great you and Commissioner Dye are, so.1724    Mr. Garamendi. I yield to you.1725    Mr. Johnson of South Dakota. Very good.1726    Well, I'm going to note, I will echo what Mr. Patronis1727said, I mean, your service to our country, Commissioner, is1728incredible. I mentioned that when you were in the office the1729other day. To have the steady hand of somebody who understands1730this committee, understands these issues, who doesn't cycle out1731of Government because you get some shinier object somewhere,1732but you stay. President after President trusts you to do this1733work. It's incredible.1734    And then John Garamendi, I mean, everybody in this town1735likes to fight. Somehow, John, you and I have figured out how1736to get the Ocean Shipping Reform Act done, Ocean Shipping1737Reform Implementation Act. And we have gotten a lot of good1738things done.1739    So, with that I will, I will yield back to you, sir. Thank1740you.1741    Mr. Garamendi. Well, you didn't do what I hoped you would1742do, which is really go through the detail. But you are kind to1743mention all of the work that has been done.1744    We have actually come a very, very long way in providing1745the Commission with the tools it needs to deal with the reality1746of the international trade on the ocean. And the new piece of1747legislation, the reauthorization act, which Mr. Johnson is the1748lead on it this year, is going to further provide the necessary1749tools and strengthen the existing tools that the FMC needs to1750deal with a very rapidly changing environment.1751    When we started, the 2022 bill really came about in part1752because of the pandemic and all of the changes that occurred1753there. The situation--that is, the ocean shipping situation--1754remains very, very volatile. So, the new legislation will1755provide additional tools.1756    I want to commend the Commission for taking up the 20221757bill and using it to deal with practices that are simply not1758fair. It took a while to do it. We've had discussions about1759this in previous hearings. I remember one in California not so1760long ago that you were in the process of trying to understand1761the new law and then implement it in the regulatory processes1762using the rather difficult, but necessary, process of putting1763in place regulations and rules. I want to commend you for1764having done that.1765    I see your colleague Commissioner back there who is1766interested in having done this piece of work.1767    So, we are going to carry forward. The new piece of1768legislation provides some additional clarity and additional1769strength to the work you do.1770    It also authorizes a higher level of funding, as has been1771talked about back and forth here, $49,200,000. It looks like1772you are probably going, if we can hold it, $40 million. In this1773environment, we ought to be quiet and take the money and run1774and go back to work.1775    But the future is out there. So, if we can put in place an1776authorization of $49 million and then ramp it up ultimately in17774 years to $57 million, you will be able to bring back on board1778the necessary staff and deal with the very rapidly changing.1779    The tariff issues are out there. They are going to have an1780effect. If you would like to speak to that, Ms. Dye, I would1781encourage you to do so. Be careful, you don't want to go jump1782into that snakepit.1783    Ms. Dye. Thank you.1784    Mr. Garamendi. But just the effect that it may have on1785this.1786    Ms. Dye. I talked and corresponded with several of our1787major ports recently. The reasons for port congestion are1788different.1789    I have done now four major fact findings during periods of1790extreme dislocations. The results are always the same.1791    Mr. Garamendi. Well----1792    Ms. Dye [interrupting]. And that's why I look to1793encouraging more port processes that are clear and predictable.1794But the volatility is----1795    Mr. Garamendi [continuing]. Well, we are going to be in a1796very volatile situation certainly for the remainder of this1797year, and perhaps on into the next year. It will have some1798significance.1799    Also, the continued consolidation, and as you said earlier,1800five of the six biggest are really Government-controlled1801carriers. So, the FMC, the original reform and then the new1802reauthorization act will provide you with additional tools to1803deal with that.1804    I know that Mr. Johnson will undoubtedly add to this and1805provide more clarity along the way.1806    Thank you for your service, and your colleague there in the1807front row----1808    Ms. Dye [interposing]. Thank you very much.1809    Mr. Garamendi [continuing]. That would be to the far right1810or the far left. Right down the middle.1811    I yield back.1812    Oh, one more, if I might.1813    Mr. Ezell. Yes, sir.1814    Mr. Garamendi. I want to thank the chairman of the1815committee and the ranking member of the committee. The1816reauthorization act is your work as well as Mr. Johnson's and1817mine. Thank you, both of you, for your support and for your1818insight in the development of the bill.1819    Thank you.1820    Mr. Ezell. Thank you very much.1821    The Chair recognizes Mr. Johnson for 5 minutes.1822    Mr. Johnson of South Dakota. Thank you, Mr. Chairman. I1823will pick up where Mr. Garamendi left off, which is on the FMC1824reauthorization.1825    Commissioner, I am not--number one, thank you to your team1826for providing technical assistance. I am not really talking1827about the tweaks and the edits they suggested, but more big1828picture.1829    When you reviewed the FMC reauthorization bill, what were1830your general observations? Did you think we hit the center of1831the target?1832    Ms. Dye. I think so. I think so.1833    I think that we had suggestions. Be glad to sit down and1834talk with you about those and work anything out.1835    I don't think we had any extreme changes. And there were1836things that the FMC had recommended.1837    We appreciate it very much. Thank you.1838    Mr. Johnson of South Dakota. And one of the things, and,1839listen, it's not an earth-shattering reauthorization, but all1840the more reason for Congress--and, again, I will echo what Mr.1841Garamendi said, thank you to the leadership of the committee1842for doing our regular blocking and tackling work.1843    Sometimes we wait so long, we are driven by crisis, that we1844don't take care of the day-to-day, year-to-year maintenance.1845Reauthorizing solid agencies like FMC in a timely manner is1846helpful.1847    It's not going to transform the nature of your work, but I1848would think it provides some additional stability, additional1849predictability for you, the other two Commissioners currently1850in place, as well as the staff.1851    But, okay, we have got Congress has once again given us an1852imprimatur. They want our work to continue. So, we get not1853earth shattering but, Commissioner, I think you would probably1854agree, helpful nonetheless?1855    Ms. Dye. Oh, I had a couple suggestions. The staff had seen1856some other things. I think in short order, we can discuss1857those. I don't see any major problems. I appreciate it. Thank1858you.1859    Mr. Johnson of South Dakota. So, moving back to OSRA, you1860had mentioned in your testimony that, of course, that brought1861the number of complaints up. Your experience with that is1862causing the Commission to enter into a rule promulgation on a1863more permanent process.1864    Talk to us a little bit more about the lessons learned and1865how that may translate into a new process?1866    Ms. Dye. I think the thing that surprised me, pleased me,1867that with the FMC's involvement, people suddenly decided that1868they would refund money. And so, it went much more smoothly1869than I had anticipated.1870    So, I think the overall revenue doesn't really represent1871the effectiveness of the approach.1872     Mr. Johnson of South Dakota. And I am reminded,1873Commissioner, when then-Chairman Maffei was in my office,1874before OSRA had passed, he had observed that just the specter1875of the bill--specter may be a more ominous definition than I1876intend--but clearly it was bipartisan, clearly Mr. Garamendi1877and I were engaged in a real lawmaking exercise. We wanted to1878get done. And the writing was on the wall, we were going to get1879this done.1880    Chair Maffei had mentioned that behavior was already1881changing in the marketplace----1882    Ms. Dye [interposing]. Yes.1883    Mr. Johnson of South Dakota [continuing]. In anticipation1884of that.1885    And I think it is one good reminder that when you all, of1886course you all are the day-to-day cops on the beat, and yet1887Congress, when we are doing good oversight, when we are engaged1888in making sure that you all had the tools needed to do your1889job, we do get a healthier, fairer, and more robust1890marketplace.1891    What am I getting wrong?1892    Ms. Dye. No. I think that you are right. And as we just1893discussed, enforcement is never over. Right? And we don't1894expect it to be. There are always different approaches to color1895outside the lines.1896    But I am very pleased with the way things are going. We1897have--I think I had recommended in fact finding 29 that all1898these companies have compliance officers, people that we could1899call up immediately. And that is working out well.1900    And I think that that has shown some paydirt, too.1901    Mr. Johnson of South Dakota. So, I would close by saying1902this, Mr. Chairman. This might be the least sexy hearing going1903on on Capitol Hill today. No disrespect to Commissioner Dye.1904    But it is just responsible management of Government. And1905one of the reasons that I fought to get on this committee is1906because I knew it would be populated by people like Mr. Larsen1907and Mr. Graves who have worked together to get--even though1908they are different parties--and Mr. Ezell and Mr. Carbajal, and1909Mr. Maffei and Ms. Dye, Mr. Garamendi and Mr. Johnson, people1910who do not take the same perverse joy in fighting. Instead,1911they just want an America that works.1912    Thank you for being a part of that solution.1913    Mr. Chairman, I would yield.1914    Ms. Dye. Thank you.1915    Mr. Ezell. The gentleman yields.1916    That was pretty good there, Mr. Johnson, thank you.1917    All right. Thank you. The gentleman yields back.1918    Are there any further questions from any members of the1919subcommittee who have not been recognized?1920    Seeing none, that concludes our hearing today.1921    I would like to thank you, Ms. Dye, for being here today.1922    That concludes the subcommittee hearing, we stand1923adjourned.1924    [Whereupon, at 3:03 p.m., the subcommittee was adjourned.]19251926                                Appendix19271928                              ----------19291930   Questions to Hon. Rebecca F. Dye, Commissioner, Federal Maritime1931                  Commission, from Hon. John Garamendi19321933    Question 1. According to the McCown Container Volume Observer: ``It1934is now most likely there will be a decline in overall annual inbound1935volume in 2025 . . . I'm only aware of two periods of annual decline--1936during the financial crisis and the pandemic--and both proved to be1937short lived. . . . The downturn in 2025 will be due to tariffs and1938unfortunately there is nothing at present that suggests it will be1939short-lived.'' Volumes are also reduced at smaller points like the Port1940of Oakland in California. Drastic, unpredictable swings in tariff1941policies have the potential to seriously strain supply chains and1942maritime commerce.1943    Question 1.a. Commissioner Dye, given the Commission's mission to1944ensure a competitive and reliable international ocean transportation1945system, how do significant fluctuations in port volumes complicate your1946work?1947    Answer. The U.S. international ocean shipping supply chain is a1948complex system, much like an ecosystem or the human brain. For this1949reason, the potential for negative consequences of government1950regulation in the interconnecting networks of the international ocean1951supply system is great. I have served as a Commission Fact Finding1952Officer for four major investigations, two of which specifically1953addressed international ocean supply chain bottlenecks. Those1954investigations serve as a reminder of the complexity of the ocean liner1955system and its inherent unpredictability. The causes for fluctuations1956in demand for ocean liner shipping, and thus port volumes, vary but the1957impacts are similar.1958    My approach to improving efficient seaport operations is to focus1959attention on the bottlenecks that occur in certain marine terminals and1960seaports during every cargo surge or peak season: particularly,1961container availability, container return, and export earliest return1962date. I do not support regulation of seaport or marine terminal1963processes, because I believe that marine terminals and seaports should1964compete on the best processes to serve the users of their services. The1965Commission assists marine terminals and seaports using the FMC Supply1966Chain Innovation Teams to produce effective improvements to reduce1967bottlenecks and improve smooth operation of the U.S. freight delivery1968system.1969    Through those four major Fact Finding investigations, I have1970recommended, and the Commission has approved, various approaches to1971address supply chain disruptions, including incentivizing practices of1972ocean carriers, ports, and marine terminal operators to change behavior1973in the marketplace.1974    Moreover, after an extensive Commission investigation of U.S.1975seaport and marine terminal practices on demurrage and detention1976charges, the Commission developed an interpretative rule to address1977unreasonable demurrage and detention charges. This rule is based on1978section 41102(c) of title 46, United States Code, that prohibits1979unreasonable practices of ocean carriers and marine terminals and1980seaports. The charge complaint provisions in the Ocean Shipping Reform1981Act 2022 provided a source of relief for U.S. importers and exporters1982from unreasonable demurrage and detention charges under the1983interpretative rule.1984    The Commission is charged with ensuring competition in1985international liner shipping in U.S. markets and among U.S. seaports1986and marine terminals. To carry out the mission, we follow international1987ocean shipping market conditions, including supply of and demand for1988ocean carrier service. In this regard, significant fluctuations of U.S.1989import volumes are not complications for the Commission, but a routine1990part of the supply and demand assessment we continuously conduct to1991ensure a competitive international ocean shipping service for the1992United States. If, and when, unreasonable practices under the Shipping1993Act come to the attention of the Commission, we take all appropriate1994action.19951996    Question 1.b. What resources does the Commission need to ensure1997efficient operations at U.S. ports amid such volatility?1998    Answer. As I testified before the U.S. House Committee on1999Transportation and Infrastructure, Subcommittee on Coast Guard and2000Maritime Transportation, I support the President's Budget for the2001Commission for Fiscal Year 2026, and I believe it is sufficient for the2002Commission to carry out our responsibilities in these and other areas.2003We appreciate the support of the Subcommittee and look forward to2004working with you to ensure the benefits of a competitive ocean shipping2005industry and an efficient container freight delivery system for the2006United States.20072008                                 [all]