FMC Fact Finding 30 Innovation Teams Examining Financial Responsibility Requirements

Cruise lines, marine terminal operators, and port authorities participating on Innovation Teams established by Commissioner Louis Sola as part of his Fact Finding 30 investigation are taking positive steps to address the sufficiency of agency administered financial responsibility requirements to protect consumers purchasing cruise tickets and passengers on cruise vessels in the wake of the COVID-19 pandemic.  The Innovation Teams are also examining the related impact of COVID-19 on ports, marine terminals, and suppliers of services to the cruise lines.

One issue individual team members have raised is the need to assess the viability of Commission performance bonding requirements that passenger vessel operators must meet.  This review will examine in particular whether the existing standards remain sufficient for protecting passengers and those who purchase cruise tickets.  Once a thorough review is complete, recommendations, as part of a final report to the Commission, will follow as to whether the performance bonding requirement ought to be enhanced or reduced.  The full Commission will vote to accept or reject any recommendations made by Commissioner Sola as Fact Finding Officer.

Once the Fact Finding investigation has grappled with the bonding and financial issues, the next step will be to review the issue of ticket refund policies of the cruise industry.  “This is the logical next step as ticket refunds go hand in hand with the performance bonding issue” said Commissioner Sola. “We have already made initial inquires and are pleased with the willingness of the lines to quickly answer our questions.  The ability of certain lines to be able to compensate consumers without the need to call upon the bonds filed with the Commission is of great interest and we are watching it closely,”  Commissioner Sola continued.

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FMC Orders Investigation into Alleged Discriminatory Canadian Regulations

The Federal Maritime Commission has voted unanimously to accept a petition filed by the Lake Carriers’ Association (LCA) that alleges the ballast water regulations, as proposed by the Government of Canada, will discriminate against the U.S. flag vessel operators.

In accepting the LCA petition, the Commission voted to initiate an investigation of the specific allegations set forth in their petition, to gather information and to solicit public comments. Based on that investigation, the Commission will consider all options, statutory remedies, and sanctions that are available under Section 19(1)(b) of the Merchant Marine Act, 1920, as amended (Section 19), codified in 46 U.S.C. ch. 421.

The investigation will examine the detriment and harm to the U.S. flag fleet resulting from the proposed regulations.

The Commission has long been concerned about the proposed Canadian ballast water regulations and the effect it will have on the U.S. flag Laker fleet. These concerns have been expressed to Transport Canada in meetings and phone conferences for several years.

By accepting the LCA petition and initiating the investigation, the Commission is not making a current determination that the proposed Transport Canada regulations are discriminatory; however, if the LCA petition allegations are substantiated through the Commission investigation, then the Commission will be in position to act expeditiously.

Section 19 of the Merchant Marine Act, 1920, provides the Commission with authority to investigate and sanction discriminatory conditions caused by laws, rules, or regulations of foreign governments. If the Commission finds that such regulations result in conditions unfavorable to shipping in a U.S.-foreign trade, then Section 19 provides the FMC with several remedies that include: levying fines on vessels calling at U.S. ports, prohibiting vessel calls at U.S. ports, and restricting cargos that may be carried between the U.S. and the foreign country.

The Commission will publish a Federal Register notice in the coming weeks that will provide additional details about this Commission action.

Fact Finding 29 Innovation Teams Identify Information Helpful to Mitigating COVID-19 Impacts on Supp

Ocean carriers, marine terminal operators, and port authorities participating on Supply Chain Innovation Teams established by Commissioner Rebecca Dye as part of her Fact Finding 29 investigation are taking positive steps to address COVID-19-related impacts to the supply chain as well as to prepare for the return of stronger ocean cargo volumes.

One early finding of the Innovation Teams is that marine terminal operators (MTOs) will be better able to manage cargo flows if they receive the following simple, clear information from shippers:

• Identify shipments that contain Personal Protective Equipment. These commodities must move first and MTOs need to know which containers to prioritize.

• Identify containers shippers want to accept and can be prepared to be picked-up.

• Identify containers that shippers are not able to accept or pick-up.

Commissioner Dye believes there is a similarly short list of key steps ocean carriers can take related to customer communications, business processes, and equipment logistics that will increase the efficiencies of the freight delivery system. As part of her efforts on Fact Finding 29, Commissioner Dye has initiated on-going conversations with the most senior United States-based executives for each container shipping company involved in a carrier alliance. As a result of these discussions, Commissioner Dye reports that each of these executives has committed to working with their terminal operators to eliminate or change practices that undermine supply chain performance at this critical time. They have also committed to examining their own processes and procedures to identify what improvements they can make to their own operations. Commissioner Dye noted her encouragement at the cooperative approach the shipping lines have signaled and looks forward to working with each of them to implement operational changes.

“Now is the time to prepare for the volumes of trade we expect in the post-COVID economy and Fact Finding 29 has gotten off to a strong start in identifying what will be needed across the supply chain. The Innovation Teams members are serious minded about protecting the capabilities and competitiveness of America’s cargo delivery system” said Commissioner Dye.

Since the Federal Maritime Commission issued the Fact Finding 29 Order on March 31, Commissioner Dye has focused the discussions of diverse groups of supply chain actors on problems that need immediate attention, such as cargo storage. Commissioner Dye pointed to carriers, MTOs, and port authorities offering a variety of container storage options as just one example of how supply chain participants can move quickly to address trends before they become problematic.

“I want to commend our industry officials for addressing the storage needs of American shippers whose supply chains are disrupted. They are working to mitigate the effects of COVID-19 on their customers and I applaud their efforts.”