▶ 0:19:18Subcommittee on the Coast Guard Maritime Transportation will come to order. I ask unanimous consent that the chairman be authorized to declare a recess at any time during today's hearing. Without objection, so ordered. I also ask unanimous consent that members not on the subcommittee be permitted to sit with the subcommittee at today's hearing and ask questions. Without objection, so ordered.
▶ 0:19:42As a reminder, if members wish to insert a document into the record, please also email it to documents I now recognize myself for the purpose of an opening statement for five We meet today to review the president's fiscal year 2026 budget request for the Federal Maritime Commission or FMC.
▶ 0:20:07The FMC is an independent agency responsible for the regulation of oceanborn transportation in the Foreign Commerce of the United States. They also protect shippers and carriers from unfair practices of foreign flag carrier alliances. The president's fiscal year 2026 budget request includes 40 million to fund the salaries, operations, and capital needs of the FMC. Today we welcome our witness commissioner Rebecca Dye.
▶ 0:20:36Welcome Commissioner of the Federal Maritime Commission to discuss the president's fiscal year 2026 budget request as well as the state of the ocean shipping industry and their ongoing work implementing the ocean shipping reform act of 2022 also known as OSHA OSH.
▶ 0:20:56The FMC has worked diligently since the enactment of OSR to implement its enhanced authorities and I look forward to hearing from Commissioner Dial today on the status of FMC's efforts. Earlier this year, the FMC announced an investigation into vessel flagging laws, regulations, and practices of foreign countries. I fear these so-called flags of convenience create unfavorable shipping conditions in the foreign trade of the United States.
▶ 0:21:25Many vessels conducting international trade fly flags that differ from the nation where the ownership is based. The FMC is examining whether certain flag states may have standards that provide vessels with lower cost and oversightes at the expense of reliability and safety.
▶ 0:21:42I look forward to hearing from Commissioner D on the progress of the In line with President Trump's executive order to restore American maritime dominance, we are working to bolster our domestic maritime capabilities, which are paramount to both the security and economic growth of our nation. I look forward to hearing from our witnesses on how the FMC plans to make United States maritime great again. Commissioner Dy, thank you for being here today.
▶ 0:22:12I now recognize ranking member Carbajal for five minutes for an opening statement. Thank you, Mr. Chairman. Uh, as usual, I'll defer to um my time to ranking member Larson. Uh, thank you, uh, Mr. Chair, and thank you, ranking member, for scheduling this hearing, uh, on the fiscal year budget for the Federal Maritime Commission. While a small agency, the FMC has a big role.
▶ 0:22:38It protects shippers and consumers by monitoring and taking action against unfair and uncompetitive foreign shipping practices. Ocean shipping is dominated by foreign shipping companies with US flight operations comprising less than 2% of imports and exports. The supply chain crisis associated with the pandemic and ongoing international conflicts demonstrate the need for robust oversight to ensure there is a fair playing field.
▶ 0:23:04Fluctuations in service and pricing are normal, but it is the role of the FMC to ensure these fluctuations are justified in a competitive market. The president's fiscical year 2026 budget request for the FMC is flat. I look forward to hearing from our witness how the agency can ensure fair shipping with flat The FMC has begun to use its new investigative and prosecu prosecutotorial authorities provided under um uh osa uh of 2022.
▶ 0:23:34Look forward to hearing an update on the implementation of these new authorities. And since the passage of the reform act, container prices have fallen and cues at ports have evaporated. The FMC has also improved its reporting process, leading to an increase in charge complaints from American businesses, one of which resulted in a $2 million settlement over findings that the shipping company knowingly and will willfully violated the shipping act.
▶ 0:24:00This means lower costs for consumers thanks to the quick action and passage of this bill by Congress and signature by President Biden. These are positive trends, but I'm concerned this will be shortlived if the administration neglects the FMC. The FMC has lost nearly 20% of its workforce due to due to the deferred resignation program and the ongoing hiring freeze. This means fewer investigators finding unfair unfair shipping practices and fewer attorneys prosecuting cases.
▶ 0:24:28The FMC is also operating without two commissioners and currently there is no chair. As a bipartisan independent agency, the FMC's critical functions cannot be understated. I look forward to hearing from Commissioner Dye about ways to ensure a fair and competitive maritime supply chain and to build upon the successes we've seen so far. With that, I yield back.
▶ 0:24:51Gentleman yields back. I would once again like to welcome our witness and thank her for being here today. Briefly, I'd like to take a moment to explain our lighting system to our witness. There are three lights in front of you. Green means go. Yellow means you're running out of time. Red means put on brakes. I ask unanimous consent uh that the witness's full statements be
▶ 0:25:15Oh, okay. Mr. Mr. Carbal, did did you want to Sure. I chair and I recognize Mr. Carbal. Thank you, Chair Azelle, and uh for scheduling today's hearing on the future of United the United States Maritime Maritime Part One review of the fiscal year 2026 Federal Maritime Commission budget request.
▶ 0:25:37I look forward to hearing from Commissioner D of the Federal Maritime Commission or FMC as we know it on the president's budget request and their agency's priorities for the upcoming year. In 2022, we worked hard to pass the Ocean Shipping Reform Act out of this subcommittee, which subsequently became law. I am particularly eager to hear about its implementation and how its new authorities have helped maintain a resilient and efficient supply chain.
▶ 0:26:06As a federal agency tasked with ensuring fairness for American shippers, carriers, and consumers, the FMC plays a crucial role in safeguarding transparency and enforcing equitable maritime commerce. According to the UN to the UN, over 80% of the world trade volume is carried over the ocean.
▶ 0:26:27In 2024, over 11% of the total US GDP came from ocean shipping, which translates into over 4 trillion. In a global economy, the FMC is often our only referee for a fair shipping market.
▶ 0:26:47We know from recent history that weaknesses in our supply chain were exposed as landside port congestion and unfair shipping practices by foreign ocean carriers led to backlogs and price increases. This contributed to higher prices for Americans on almost everything they buy. The reforms in our bill strengthen the FMC's authority to investigate unfair fees and help facilitate the efficient movement of cargo through US ports.
▶ 0:27:17I am proud to say that since the passage of the OS, vessel congestion at ports has decreased and in three years since the enactment in 2022 and more than 5.8 8 million in fees have been waved or refunded in undue charges by carriers. In May of this year, the FMC launched an investigation into flagging practices of foreign governments, otherwise known as flags of convenience.
▶ 0:27:45These practices severely undermine flag states that employ rigorous standards, ensure fair pay, and provide basic human rights. I hope that the FMC will leverage every authority they have to address this systematic global problem. Further, the FMC is currently undertaking a rule making aimed at ensuring that exporters are given fair access to cargo space.
▶ 0:28:11It is important that the FMC is sufficiently funded so that it can properly carry out these reforms which will greatly benefit American businesses and the American consumer. While I am pleased to hear about all the su success that FMC has been having, I would be remiss if I did not mention my growing concern with the shortage of the loss of employees to the deferred resignation program, and the lack of a chair for the agency.
▶ 0:28:40The absence of leadership threatens the positive momentum they have had so far. I look forward to a robust discussion about the FMC's ongoing actions, how they will ensure a strong maritime industry. Mr. Chairman, I yield back. Gentleman yields. I ask unanimous consent that the witness full statements be included in the record. Without objection, so ordered.
▶ 0:29:04I ask unanimous consent that the record of today's hearing remain open until such time as our witness has provided answers to any questions that may be submitted to them in writing. Without objection, so ordered. I also ask unanimous consent that the record remain open for 15 days for any additional comment and information submitted by members or witnesses to be included in the record of today's hearing. Without objection, so ordered.
▶ 0:29:29As your written testimony has been made part of the record, the subcommittee asks that you limit your oral remarks to five minutes. With that, Commissioner D, you are recognized for five minutes for your testimony.
▶ 0:29:43Thank you very much, Mr. Chairman, Ranking Member Carbajal, members of the subcommittee. It's like coming home for me. And I very much appreciate you're holding this hearing. And thank you so much for your interest in the responsibilities of the Federal Maritime Commission.
▶ 0:30:08As you're aware, my friend and colleague Luke Solah departed on June 30th, and we look forward to news of his future There's been a smooth transition at the Federal Maritime Commission and there will be consistency in dealing with shipping issues of importance to you and your constituents. I fully support the president's FY26 budget of $40 million for the Federal Maritime Commission.
▶ 0:30:36This will fund the FMC's mission and statutoily driven activity as well as important technology investments. This level of funding reflects no change from the 25 enacted budget.
▶ 0:30:51As in past years, our budget is straightforward with the majority of funding going to personnel, office space, and important information We've budgeted $25.8 million for employee salary and benefits, a reduction from FY25 of $2 million. The commission had 13 employees depart under the deferred resignation program, the voluntary retirement program.
▶ 0:31:20They'll be paid from the FMC budget until the end of 25. We're working with OPM for six exemptions to hire critical attorneys and economists in our flagship competition and enforcement programs in line with the administration's 4:1 hiring ratio.
▶ 0:31:43Finally, that leaves rent and security services of $4.2 million, a slight increase of $150,000 from FY25. Also, $6 million has been budgeted for badly needed core IT operations and The remainder of consists of all other budget requirements to support essential operational needs.
▶ 0:32:08This $40 million allows us to effectively carry out our mission identifying and assertively investigating conduct that unlawfully US interests. essential to protect marketplace integrity.
▶ 0:32:26Ozra 22 has has better prepared the FMC to meet the demands for its services and to respond to developments in the Commission issued two OSA 22 mandated final rules in 2024. Detention and demuring demerge building and unreasonable refusal to deal with respect to vessel space.
▶ 0:32:50The two rulemakings remain to be completed are shipping exchange registry and certain outstanding elements of unfair or unjustly discriminatory Although the two final rules are operational today, we're still involved in litigation over the final outcome. Section 10 of the Ocean Shipping Reform Act of 22 established a new way for shippers to submit complaints to the commission.
▶ 0:33:19These are regarding charges assessed by common carriers and to receive a refund or waiver for non-compliant charges. Those charge complaints were voluntarily resolved during the investigations phase. We're pleased to say next year the FMC will propose a rule making for fast resolution of disputed charges in which the ocean carrier is ordered to demonstrate the lawfulness of a charge.
▶ 0:33:47The commission is guided by the purposes of this one of the sections of the shipping act including encourage an economically sound and efficient liner fleet of vessels of the United States capable of meeting national security needs. I applaud President Trump for emphasizing the importance of both the US military, US Coast Guard, US and commercial maritime sectors.
▶ 0:34:13We appreciate the Congress and the commission's support and the Congress's support to fund the FMC at $40 million for FY26. Thank you. I'll be glad to answer your
▶ 0:34:27Thank you for your testimony. We'll now turn to questions from the panel. I will recognize myself for five minutes for questions. The global ocean shipping market is increasingly dominated by foreign state bad actors, bad carriers, particularly from China, which raises concerns about unfair competition and potential harm to US mariners, shippers, and long-term supply chains operations.
▶ 0:34:54Does the commission have enough resources to protect US mariners and shippers from unfair practices by foreign state sponsored carriers like those backed by the Chinese government?
▶ 0:35:07Thank you, Mr. Chairman. We do um uh we have one of the advantages of a small agency I have found is that we are able to pivot much more quickly than giant organizations.
▶ 0:35:22And we have reorganized our competition um to combine our economists with our attorneys working on competition and um I've I've long supported this approach and it will make us much more effective.
▶ 0:35:41Um and as are we've also re focused our enforcement regime uh to make sure that we are using those resources effectively. So thank you very much. I'm I'm confident that we'll be effective.
▶ 0:35:59Very good. The Ocean Shipping Reform Act OSHRA expanded the FMC's authority to regulate detention and demerge practices, investigate discriminatory behavior by car carriers, and enhance protections for shippers. Where is the FMC on OSR implementation? When do you expect full implementation of OS?
▶ 0:36:27How have shippers benefited since the OS's passage?
▶ 0:36:32As I uh as I reported, we have completed um the two of the most important regulations. Um and we're awaiting to see the final court action on those. Um but but today ocean carriers are complying with those regulations and we get good reports about the operation of those.
▶ 0:36:58Um we still are working um on uh the exchange registry um and the small remainder of um the um regulation that we'll complete.
▶ 0:37:14Um, we're also going to complete the new um, charge complaint regulation to make sure the public understands the approach and we're uh, in good shape uh, in compliance with all the reports in OSA as well.
▶ 0:37:29Very good. The FMC recently launched an investigation into whether foreign vessels flagging laws, regulations, and practices create unfavorable conditions for US trade. What prompted this investigation? What practices are you concerned about that could undermine fair maritime trade?
▶ 0:37:49Thank you. Um, these authorities that I outlined in my statement for the record um are advantageous to US flagships and um we believe that it could provide a good grounding for a US vessel registry to know that if there are problems, the United States will go to bat for you.
▶ 0:38:16Um and this is um this is one of them. Um this flags of convenience are really open Um Panama, Marshall Islands, Liberia, and they accept registrations from owners of vessels who are outside their residence. Uh the United States has a closed registry.
▶ 0:38:45um and many other major ones are closed registries. Um there there has been a concern that the open registries, flags of convenience are not as effective in regulations and then in some ways the their um enforcement has been pushed off port states like the United States.
▶ 0:39:17this these fact findings this regul these investigations are very flexible. Uh they can be stood up quickly. They do not have on their own uh um to require violations or anything like that. Um but we'll get to the bottom of this and then of course we'll inform the Coast Guard.
▶ 0:39:43Thank you very much. I yield back.
▶ 0:39:45Thank you.
▶ 0:39:47Now recognize
▶ 0:39:52Mr. Larson.
▶ 0:39:54Thank you, Mr. Chair. Commissioner Dy, according to the budget request, uh most of the rulemakings have been completed as part of the um OSRA. Can you report on the progress of the remaining
▶ 0:40:09on on the remaining rulemakings?
▶ 0:40:11Remaining rulemakings. Um we have um made good progress on exchanges. Um we have a couple things to check out before we can complete this registration process. Um and the remaining um parts that still that were not addressed in the refusal to deal rule um have we we've begun those as well.
▶ 0:40:40And do you have a timeline uh a prospective timeline, a hopeful
▶ 0:40:46Um I I I was I would say as soon as soon as we can turn our attention to it.
▶ 0:40:52Yeah. Um related to that uh um we know the FMC's lost employees and by by our count it's about 20% and whether it's 20% or 19% or 21% it's a lot. Um doesn't make much difference. um has that uh could you outline the impacts the loss of those folks and not then replacing folks has had on the work of the FMC?
▶ 0:41:15Well, as as I reported, we are working with OPM um on an exception um for six for six employees um uh not new hires um but um to replace people who have left.
▶ 0:41:37we believe with with those um that we'll be in good shape.
▶ 0:41:41Yeah. And what is the pro do you sense there's progress on getting those new hires in play or getting them
▶ 0:41:52that we want authority to hire those six
▶ 0:41:56to replace as they say we're not we don't really consider those new hires okay because they're um
▶ 0:42:02I understand I'm not I'm not arguing that point. It's more about whether OPM is um being helpful in in very much moving that forward.
▶ 0:42:10Very much.
▶ 0:42:11And are there people at OPM uh enough people at OPM to help you do that? Do you feel like you're getting the service you need from OPM to get that done?
▶ 0:42:20They they will grant us the exemption to
▶ 0:42:28of course, of course, the the head of agency, um, which which my general counsel informs me that we have plenty of authority, the three of us, uh, to make decisions, um, and to operate um, and we'd have to, of course, um, we'd have to oversee any hirings.
▶ 0:42:52Yeah. Are you Lynn looking at whether or not the um uh the la the being short that number of folks is impacting the length of time it takes you to do an invest any one investigation the length of time it takes you to manage your
▶ 0:43:05No. No. I'm I I think that we're um I I and and I think my colleagues agree that we're um we're in good shape.
▶ 0:43:15Yeah. Um finally uh section 10 of the um OSRA established the charge complaint process. Right.
▶ 0:43:22And according to budget requests, the FMC has ordered uh to return over two and a half millions in refunds or canceled fees. Is that accurate?
▶ 0:43:31Okay. Can you um talk a little bit about why you you're returning those?
▶ 0:43:38Well, we had we had I think a little five five a little over $5 million that was returned. But as I said, the good news is that um when the process began um uh many of the thieves were returned
▶ 0:43:57Um how would you rate that as a marker of the success of the enforcement program in general? How would you rate the success of the enforcement program? I think I think that um uh some people believe they write a regulation or you pass a law and it's effective and people obey it. And if that were true then there wouldn't need to be any law enforcement agencies. Um uh so it takes especially when there's a big change.
▶ 0:44:28It takes time and resources and commitment. Um, dear detention charges are internationally despised.
▶ 0:44:40And when we waited in on this, we knew it would be a hard slog. Um, it's not over, but um I think that we've had remarkable compliance so far and we'll keep at it. Um, I honestly I've said to my advisory committee, can't you think of a better way to get fluidity or encourage fluidity than these awful charges?
▶ 0:45:10There must be a better approach um because um it's um it's the clunky type of
▶ 0:45:20Thank you.
▶ 0:45:21service. I'm I'm sure that I'm I'm sure one of the parents of uh OSA 22 will have more questions. Mr. G, many have more questions.
▶ 0:45:28I look forward to it.
▶ 0:45:29I'll yield back.
▶ 0:45:30Gentlemen yields. Chair now recognize Mr. McDow for five minutes of
▶ 0:45:34Thank you, Mr. Chairman, and thank you, Commissioner Dy for being here. It's good to have another North Carolinian uh in the room today. Um, but Commissioner, you you stated that the the FMC's budget request for for FY 2026 is $40 million, which is level funding from fiscal year 25. Yes.
▶ 0:45:52And so within that budget, uh can you explain why you've set aside more uh funding for rent and security uh services and and why your resources needs are different from last year? Well, the biggest change in this budget is that we are dedicating more resources to it.
▶ 0:46:13Um, we h we were in the in the position that we literally could not buy parts for our system because they weren't made And so we're we're pleased that we were able to devote more um to those systems that will also benefit our shipping
▶ 0:46:36Sure. Um
▶ 0:46:37but the one you mean the $150,000.
▶ 0:46:41Um well uh security costs have gone up. Um and um I I think that's I think I they went up.
▶ 0:46:53Sure. um
▶ 0:46:54prices increased.
▶ 0:46:55Yeah. How does your commitment to carrying out the commission's core objectives play into your budgeting
▶ 0:47:05I I I support the $40 million. Um as I said, this is level funding. We didn't get cut. Um which I think um speaks well for our mission um and our approach. Um and um I I I'm convinced that with our reorganizations and refocusing that we've done that that we will be fine. Thank you.
▶ 0:47:32Can you explain further how the Ocean Shipping Reform Act changed the FMC's Well, we we had we had a couple couple of rulemakings um to um to to accomplish um some of the reports we have we have learned some very valuable information um and um I I support the bill and I'm I I
▶ 0:48:02think that the uh the reform act has helped us especially with charge the charged complaints um have helped the shipping public deal with a lot of the
▶ 0:48:13gentle lady will suspend. Will you suspend? Could you speak into the microphone just a little more, please?
▶ 0:48:20I'm I'm hard of hearing and I I can't hear you.
▶ 0:48:22Oh, I understand.
▶ 0:48:25Thank you.
▶ 0:48:28Well, there you are. Is that better?
▶ 0:48:31Well, good. I hear myself better, too. Thank you. Uh just to um I'll ask you another question, but can the commission has relatively broad authority to investigate unfavorable or shipping practices of foreign flag vessels generally? What are the most common scenarios that require the commission to intervene?
▶ 0:48:57Well, I think that by I I I um not able to talk a lot about the existing Um but um those examples in my statement were were good ones.
▶ 0:49:13Um any any any time that the US flag is disadvantaged um then I as as we have uh interveneed for the Great Lakes carriers um certain carriers who were who were uh denied entry into Spanish ports um I and I'm I I support those and this factf finding authority has
▶ 0:49:43has proved to be very valuable for us.
▶ 0:49:48So, has the number of complaints increase or decrease since since um the open shipping ocean shipping reform act of of 22? Well, we allowing the the charge complaints has been has been very valuable and um it's allowed um the our our shipping public um an avenue to quickly resolve uh some some charges uh with the FMC
▶ 0:50:18overseeing it and that's been effective.
▶ 0:50:22Well, thank you ma'am and Mr. Chairman I yield back.
▶ 0:50:25Thank you.
▶ 0:50:25Gentleman yields. Mr. Carbour Hall is recognized. Five minutes.
▶ 0:50:30Thank you, Mr. Chair. Commissioner Dye, uh, I'm a strong supporter of the FMC and want to focus all my questions today on the recently announced Flag of Convenience investigation. Why did the FMC decide to initiate the investigation? In other words, what is the potential risk to Americans?
▶ 0:50:50And this is which which one? uh the investigation that you recently opened,
▶ 0:50:55the flag of convenience. Oh, I I think that um I without without about the reasoning or um but but I think that one uh as well as the others um is um the facts that we develop will be worth any argument um on the on the issue.
▶ 0:51:25What's the potential risk to Americans
▶ 0:51:29the reason why you opened up this
▶ 0:51:32Oh, for the the risk is to any US flag or the the detriment.
▶ 0:51:44Thank you. And what practices have foreign countries participated in that have resulted in the degradation of US flag shipping? Wait. And I'm I'm so sorry. I'm I'm having trouble um hearing you discuss.
▶ 0:52:02Okay. Let let me say that again. What practices have foreign countries participated in that have resulted in the degradation of US flag shipping? The um uh investigation in Spain of course has been um there have been vessels, US flag vessels that have been turned away.
▶ 0:52:27Um and the other fact findings um are obviously the we had a good result with the Great Lakes carriers um and they were um most pleased uh that we got involved. Our our general counsel was able to work with the state department and that was an excellent result for them.
▶ 0:52:53Um then the others are facts that may be useful in the future to US flag vessels, especially concerning our registry and how we may decide to change a US flag registry in the future.
▶ 0:53:17As a strong supporter of the US merchant marine and the US flag vessels, what actions are available to the FMC should you find that the use of flags of convenience have resulted in unfair shipping practices?
▶ 0:53:33Yes. Well, the the um at some point even the president could become involved in taking action against foreign country. the these the remedies are slightly different for each of these vi if if a violation is found and of course the fact findings that we're conducting now I don't have preceding authority um but
▶ 0:54:03at this stage we're we're finding facts in preparation for another If we develop the evidence,
▶ 0:54:17but what are some of the actions that you can take?
▶ 0:54:21Um the um the their ships um could be prohibited from our ports. Um uh there there are some monetary Um, but they're and they're slightly different for for each one.
▶ 0:54:47Commissioner D, uh, I must say I'm disappointed with the administration's budget request. If Congress were to increase the FMC's budget and you were able to rehire the 26 people that have been lost, what would that mean for the effectiveness of the agency? What kind of work would they be doing? We have reorganized in a way that um we are I I shouldn't say reorganized. They tell me not to say that.
▶ 0:55:15We have in a way um that we are we are in good shape today.
▶ 0:55:24Well, I guess that feeds into the whole argument uh if this is the case, maybe we should have done this reorganization in the past. Um
▶ 0:55:33we're we're well The past past really doesn't exist. We're looking today and forward.
▶ 0:55:43Thank you very much, Mr. Chair Yilbeck.
▶ 0:55:45Thank you,
▶ 0:55:47Mr. Petronis. Recognized for five minutes question. Thank you, Mr. Chairman. Good afternoon.
▶ 0:55:54Uh, Commissioner, I'm sitt there I'm I'm reading your resume and uh you've seen a lot of activities over your your time at the commission. Thank you for your service to our nation. Thank you very
▶ 0:56:05Um I guess where where I kind of get some anxiety is thinking about how dynamic the situation is. Kind of a a tough place to be as um as much as I would like to see as much state side manufacturing. We're we're definitely there's going to be those those dependencies we have on goods coming in. And I I can't imagine the dynamics of what happened at least with y'all's concerns during COVID supply chain disruptions.
▶ 0:56:37Um and as you looked at where we're trying to at least on board predictability and then I'm looking as I'm I'm thinking about things like the games that might be played by by those other countries and their importance of getting into the US market.
▶ 0:56:53Um, do you see have you seen or if you wouldn't mind elaborating I'd love to understand even if you want to I I learned by stories if if you've got an instance of what you had seen between the United States and China where they have done um unfair practices maybe leverage or maybe even saw anything during co enlighten me I this is an opportunity for me to learn
▶ 0:57:19well I thank you we we have Now, we've added a couple of the controlled um owned or owned um or subsidized um by um foreign countries.
▶ 0:57:36Um five of the six are Chinese. Um, we're a competition agency primarily and so we're looking to make sure to continually look at their look at their price structure
▶ 0:57:53to make sure that if there are subsidies then they don't they aren't used to below price
▶ 0:58:02to the detriment of other carriers that are not owned or controlled um by foreign countries. And um we'll be uh watching even more carefully um in I think October um when the trade rep charges uh begin that that doesn't cause the control carriers to
▶ 0:58:32make some decisions or some pricing decisions that we think are a problem. So, did you say that five of the six controlled carriers are subsidized by
▶ 0:58:45Five of the six are controlled.
▶ 0:58:49Or controlled.
▶ 0:58:50And I I'm assuming one, they they probably want that type of influence in order to continue their goods getting out of market. But, um, that also gets me super concerned of what type of dependence and we've got when they've got that much control over the products that we depend upon. Well, there are um there are plenty of carriers.
▶ 0:59:12Um and um we're we're we we watch each of them. Um we don't have authority over actual mergers. Um be we watch other combinations among the carriers and unlike a merger um we watch them all the time. continuous
▶ 0:59:35as as of other countries having influence over ownership over carriers of this nature. Who's number two? Who's number three?
▶ 0:59:46Which other countries?
▶ 0:59:47Really? We have one uh one other one that is um Korean.
▶ 0:59:53And those are the only ones to date. It's been different in the past.
▶ 0:59:58Sure. Sure. and and sudden with no control over the mergers are any of the carriers that China has influence over were those acquired through um was the uh the Hong Kong company um was acquired.
▶ 1:00:20Sure. Sure. Um well again thank you for your service. Appreciate your answers and your time being here today.
▶ 1:00:27Thank you very much,
▶ 1:00:28Mr. Chairman. I yield. Gentleman yields. Chair recognizes Mr. Shelton for five
▶ 1:00:33Thank you so much, Chair Isel and Ranking Member Carbajal. And welcome, Commissioner Dy. We appreciate you being here. Um, so the FMC's responsibility of protecting the US shipping industry from from foreign government's unfair practices is particularly important to the Great Lakes region where I hail from, uh, from from Michigan.
▶ 1:00:57um a $ 36 billion a year industry that creates good paying jobs and keeps our nation's supply chains moving. Uh when visiting the ports of Moskegan and Grand Haven and my district, the constituents frequently stress the need for strong but navigable ballast water regulations has had a huge impact uh on on our our waterways.
▶ 1:01:22So, Commissioner D, I understand that the FMC has investigated how Canada's ballast water regulations have impacted US Lakers. FMC's actions have resulted in the Canadian government providing limited relief for American shippers. Can you talk us through specifically how you plan to stay on top of that issue, especially as we're continuing to see some pretty significant roll backs on regulations around water protection across the board? of course.
▶ 1:01:53Um and we'll be following the Canadian response um to ensure that it's effective um as as we expect it to be. Um but um but no, this is not this is this is not this is not over if that if that is not if that is if that approach is not
▶ 1:02:19But we've been we've been very pleased Okay. Um, well, you know, appreciate continued engagement on, you know, what you and and your administration will continue to do, uh, going forward. We think this is a, you know, important issue to stay on top of, uh, not just simply a, you know, a oneanddone response. Um, I have a couple questions, so I want to keep moving on.
▶ 1:02:43But while I don't always see eye to eye with the current administration, I am very pleased to see the president focused on bolstering our maritime industry. That is one area we do agree on. Um, I'm willing to collaborate with the FMC uh to actualize this goal. Again, uh the the industry very important to the Great Lakes. This starts with appropriately reviewing and responding to complaints through the FMC's formal process.
▶ 1:03:08However, I'm concerned with two FMC commissioner vacancies, uh, recent staff cuts to the tune of 20% and flat funding requests. We aren't doing every I'm concerned that we aren't doing everything we can to make good under obligations under the Ocean Shipping Reform Act uh, of 2022, something you of course had a a big hand in in getting through initially.
▶ 1:03:33Um, can you speak to how the FMC has intentionally internally reorganized, excuse me, if at all, um, to ensure that flat funding and reduced staff will not hinder its ability to appropriate appropriately respond to um, and review the complaints that are filed?
▶ 1:03:48I appreciate it. Thank you. You can be sure that the FMC is Um, we have um, under existing law, we still have a quorum. my general counsel tells me. Um, and so I don't think anyone should be concerned that the FMC is not on the job.
▶ 1:04:12I think what what this committee is looking for though is more than just a a a functioning uh FMC, one that can make sure robust response to these complaints when they're received. You know, once we have an invasive species entering our waterways, it's very hard to turn back the clock. So simply showing up for quorum, you know, respectfully may not be enough at this point.
▶ 1:04:34And this and the concern with significantly reduced staffing, you know, does raise alarms about whether or not you're able to respond in an appropriate fashion. And I will say simply showing up for quorum doesn't seem, you know, to to get to the heart of having enough, you know, enough people there. I I have one more question I'll go to and um if you have a more robust response we would love to take one for the record because it is it is of concern.
▶ 1:05:00Um so continuing on there the budget the president's budget request of 40 million for the FMC the same enacted amount as fiscal year 2025 and 20% less than the the previous budget request. Um it reduces the workload significantly assuming Congress flat funds the FMC as the president has requested.
▶ 1:05:21How else can this committee continue to support the FMC's efforts to reduce port congestion, boost transparency in the ocean shipping industry um beyond annual I think that we showed showed there was no dimmenution last year and there will be no dimmonition next year.
▶ 1:05:47Um, we were we we will continue to enforce the law um and use our authorities to the fullest, but no more. And um I'm I'm I'm confident that you will be you will be satisfied.
▶ 1:06:03Well, thank you. We would love to uh have you back uh perhaps uh towards the end of the year or next year to to continue to check in on that progress. Uh I see that my time has expired, but we'll yield back. Thank you.
▶ 1:06:16Gentle lady yields. Chair recognizes Mr. Bandrew for five minutes.
▶ 1:06:20Thank you, Mr. Chairman. Uh, Commissioner, thank you for being here. We appreciate your time.
▶ 1:06:25Thank you.
▶ 1:06:26The Coast Guard, as you know, and you know all this already, has recently accelerated the removal of navigational aids uh under Eton modernization plan. 350 buoys are currently slated for removal as you also know across the northeast with expand with plans to expand this effort as we move along. I support the innovation. I support the Coast Guard. I support all of you.
▶ 1:06:51But I'm concerned that we might be moving too quickly and that we at least should have some more local input on this issue. And I'm going to tell you why. We already are seeing some consequences. I have my district is a coastal district in the state of New Jersey. We're seeing some grounding on shors, near misses involving commercial and recreational vessels, and increasing uncertainty in waterways that were once considered safe. And now there are some concerns among real people that I talked to that are out in the water. They're not isolated.
▶ 1:07:21They really exist. They're happening now. And I think we can prevent them. I think the work you're doing is good. The focus is good, but we have to make sure that we're doing this in a careful and circumspect way. In my district, many of the small manners, including commercial operators, do not have advanced, believe it or not, electronic and navigation systems, uh, that the modernization effort assumes. And I think that's something we have to keep in mind as well. And some of them will not have it even into the near future.
▶ 1:07:50Even when the systems are available, you've got shifting tides, narrow passages, bad weather, you know the deal. It's no longer just a safety issue. It's also a commerce issue, a commercial issue. If commercial or fishing lanes become less predictable, we have more commercial problems. And I guess, you know, the committee included a provision in the Coast Guard Authorization Act, I don't guess. I know we did um to study the effects of removing these buoys, and that's a good thing. And that's going to pass this week on house suspension.
▶ 1:08:20Commissioner, until that point, have you been coordinating with the Coast Guard on this initiative? Could you fill us in a little bit on it? We have not on those on those issues. Okay. Um but I I was six years on active duty with the Coast Guard. Um and um I I still have um at one point some of my um students were admirals on the highest level.
▶ 1:08:46You can be sure that on anything that involves them uh we will we will uh we'll work with them.
▶ 1:08:54Good. And and that's what I would hope and I would say the same thing to started for there too. Sometimes the intention is good and I think the result will be good but I think we just have to be a little bit careful as we go about it. Make sure like everything else we do in government make sure we get it right. Thank you for your time.
▶ 1:09:10I yield back.
▶ 1:09:12Gentleman yields. Chair recognizes Mr. Five minutes. I'm working on it.
▶ 1:09:22I'm having one of those mornings. I'm not sure I can pronounce my own name. Ger Mendi,
▶ 1:09:27you know, I think what I'd like to do, um, if I might, my colleague at the far end of the dis here, Mr. Johnson, uh, is the lead on the Ocean Shipping Reform improvement that is. So, if I might yield to Mr. Johnson my time and then I'll follow up since he is the lead on the new bill.
▶ 1:09:52Oh, that is unbelievably gracious. I think I'm next in the queue, John. So, if you want to go, I'm just going to spend at least two minutes talking about how great you and Commissioner Dye are.
▶ 1:10:04I yield to you.
▶ 1:10:05Very good. Well, I would I am going to note your try I'll I'll echo what uh Mr. Patronis said. I mean, your service to our country, Commissioner, is incredible. I mentioned that when you were in the office the other day to have the steady hand of somebody who understands this committee, understands these issues, who doesn't cycle out of government because you get some shinier object somewhere, but you stay president after president trusts you to do this work. It's incredible. And then John I mean, everybody in this town likes to fight.
▶ 1:10:36Somehow, John, you and I have figured out how to get uh the Ocean Shipping Reform Act done, Ocean Shipping Reform implementation act, and uh we've gotten a lot of good things done. So, with that, I will I will yield back to you, sir. Thank you.
▶ 1:10:49Well, you didn't do what I hoped you would do, which is really go through the detail, but you're kind to to mention all of the work that's been done. Um, we've actually come a very very long way in providing the commission with the tools it needs to deal with the reality of the international trade on the oceans. Uh, and the new piece of legislation, the reauthorization act, which Mr. Johnson is the lead uh on it this year.
▶ 1:11:20Um is going to further provide the necessary tools and strengthen the existing tools that the FMC needs to deal with a very rapidly changing environment.
▶ 1:11:36Uh when we started the 2022 bill really came about uh in part because of the pandemic and all of the changes that occurred there. The the s the situation that is the ocean shipping uh situation remains very very volatile. So the new legislation uh will provide additional tools.
▶ 1:11:59I want to commend the commission for taking up the 2022 bill and using it uh to deal with practices that are simply not fair. It took a while to do it. We've had discussions about this in previous hearings. I remember one in California not so long ago.
▶ 1:12:19Uh that you were in the process of trying to understand the new law and then implement it in the regulatory processes using the u uh rather difficult but necessary process of putting in place regulations and rules. I want to commend you for having done that. I see uh your colleague commissioner back there who is interested in having done this piece of work.
▶ 1:12:46So we're going to carry forward the new piece of legislation provides some additional clarity and additional strength to um the work you do. Also authorizes a higher level of funding and that's been talked about back and forth here of 49 million uh looks like you're probably going to if we can hold at 40 million in this we ought to be quiet, take the money
▶ 1:13:17and run and go back to work. Uh but the future is out there. So if we can put in place a authorization of 49 and then ramp it up over the years ultimately in four years to 57 million, you'll be able to bring back on board the necessary staff and deal with a very rapidly changing. Uh the tariff issues are out there. They're going to have an effect. If you'd like to speak to that, Miss D, I would urge you to do so. Um be careful.
▶ 1:13:46You don't want to go jump into that uh um snake pit. But uh
▶ 1:13:52thank you.
▶ 1:13:53And just with the effect that it may
▶ 1:13:55I um t I talked um um and corresponded um with several of our major ports recently. Um the reasons for port congestion are I've done now four major factf findings during periods of extreme The results are always the same.
▶ 1:14:25Well, here's
▶ 1:14:26and so I it's why I I I look to encouraging more processes that are clear and predictable. Um but um you the volatility is um
▶ 1:14:43well we're going to be in a very volatile situation certainly for the remainder of this year and perhaps on into next year and it'll have some significant also the continued consolidation and as you said earlier uh five of the six biggest are really government controlled carriers and so the FMC the re original reform and then the new reauthoriz ization act will provide you with additional tools tools to deal with that. Uh I know that Mr.
▶ 1:15:11Johnson will undoubtedly add to this and provide more clarity along the way. Thank you for your service uh and your colleague who's
▶ 1:15:22there in the in the front row to the far
▶ 1:15:26that would be to the far right or the far left right down the middle.
▶ 1:15:31I yield back. Oh, one more if I might.
▶ 1:15:33Yes, sir. I want to thank the chairman of the committee and the ranking member of the committee. The reauthorization act is your work as well as Mr. Johnson and mine. So, thank you both of you for your support and for your insight and the development of the bill. Thank you.
▶ 1:15:50Thank you very much. The chair recognizes Mr. Johnson for five minutes.
▶ 1:15:54Thank you, Mr. Chairman. I'll pick up where Mr. Garendi left off, which is on the FMC reauthorization. Uh, Commissioner, I'm not number one, thank you to your team providing for providing um technical assistance. So, I'm not really talking about the the the tweaks and the edits they suggested. More big picture. Uh, when you reviewed uh the FMC reauthorization bill, what were your general observations? Did you think we hit the center of the target?
▶ 1:16:20I think so. I think so. I think that um we had suggestions. be glad to sit down and talk with you um about those um and um um work anything out. But I don't think we had any extreme changes um and there were um things that the FMC had recommended. We appreciate it very much. Thank you.
▶ 1:16:44And one of the and listen it's not an earthshattering reauthorization but all the more reason for Congress and again I I'll echo what Mr. Garmeny said. Thank you to the leadership of the committee for doing our regular blocking and tackling work. Sometimes we wait so long uh we are driven by crisis that we don't take care of the dayto-day year-to-year maintenance. Reauthorizing solid agencies like FMC on in a timely manner is helpful.
▶ 1:17:11It's not going to transform the nature of your work, but I would think it provides some additional stability, additional predictability for you, the other two commissioners currently in place as well as uh the staff that okay, we've got Congress is once again give us an impromater that they want our work to continue. So again, not earthshattering, but commissioner, I think you'd probably agree helpful nonetheless.
▶ 1:17:32Oh, I I I I had a couple of suggestions. uh the staff had uh had seen some other things but um I think in short order um we can um discuss those. I don't see any major problems. I appreciate it. Thank
▶ 1:17:47So moving back to OSRA, you had mentioned in your testimony that of course that brought the the number of complaints up. Your experience with that is causing the commission to enter into a rule promulgation on a more permanent uh process. put a little talk to us a little bit more about the lessons learned and how that may translate into uh into a new process.
▶ 1:18:10I think the thing that surprised me uh pleased me um that with the FMC's involvement, people suddenly decided that they would refund money, right? Um and um so it went much more smoothly than uh than I had anticipated.
▶ 1:18:31Um so uh the overall I think the overall um is doesn't really represent the effectiveness of the approach.
▶ 1:18:45Well, and I'm reminded, Commissioner, when then Chairman Mafay was in my office before OSRA had passed, he had observed that just that the the spectre of the bill, spectre is maybe a more ominous uh definition than I intend, but clearly it was bipartisan. Clearly, Mr. Garandi and I were engaged in a real lawmaking exercise that we wanted to get done. The writing was on the wall. We were going to get this done.
▶ 1:19:12Chair Mafay had uh had mentioned that behavior was already changing in the marketplace. Yes. In anticipation of that. And I think it's one good reminder that when y'all of course y'all are the day-to-day cops on the beat. And yet Congress when we're doing good oversight, when we're engaged in making sure that y'all have the tools needed to do your job, we do get a healthier, fairer, and more robust marketplace. What am I getting wrong?
▶ 1:19:37No, I think that you're right. Um and as we just discussed, enforcement's never right? Um but we don't expect it to be. Um there are all um always um different approaches uh to uh to color outside the lines. Um but um I I'm I'm I'm very pleased with the way things are going.
▶ 1:20:07Um we have um I think I had recommended in fact finding 29 that all these companies have compliance officers people that we can call up immediately and that's working out well and I think that that's that's shown some pay dirt
▶ 1:20:24so I would close by saying this Mr. Chairman this might be the le the least sexy hearing going on on Capitol Hill today. No disrespect to Commissioner Dy,
▶ 1:20:34but it is just responsible management of
▶ 1:20:40And I one of the reasons that I fought to get on this committee is because I knew it would be populated uh by people like Mr. Larson and Mr. Graves who'd worked together to get there even though they're different parties and Mr. Eel and Mr. Carbajal and uh Mr. Mafay and Miss Dy and Mr. Garami and Mr. Johnson. people who do not take the same perverse joy in fighting. Instead, they just want an America that works. Thank you for being a part of that solution, Mr. Chairman. I would yield.
▶ 1:21:08Thank you.
▶ 1:21:09That was a gentleman yields. That was uh that was pretty good there, Mr. Johnson. Thank you.
▶ 1:21:15All right. Thank you. Uh the gentleman yields back. Are there any further questions from any members of the subcommittee who have not been Seeing none, that concludes our hearing today. I would like to thank you, Miss D, for being here today. And that concludes the subcommittee hearing. Stands adjourned.
▶ 1:21:36Thank you very much.