FMC affirms adequacy of Trump’s FY 2019 budget request

Acting U.S. Federal Maritime Commission Chairman Michael Khouri told House lawmakers at a hearing Wednesday that President Donald Trump’s fiscal year 2019 budget request of $27.49 million for the agency is sufficient to maintain its operations.    Acting U.S. Federal Maritime Commission (FMC) Chairman Michael Khouri told House lawmakers at a hearing Wednesday that President Donald Trump’s fiscal year 2019 budget request of $27.49 million for the agency is sufficient to maintain its operations.
   The proposed amount provides a $264,347 bump over the fiscal year 2017 enacted budget level.
   The FMC is currently operating under The Continuing Appropriations Act of 2018 and the 2017 Supplemental Appropriations for Disaster Relief Requirements Act that provides $13.02 million, or 52 percent, of the fiscal year 2017 enacted budget level for the agency through March 23. 
   In his testimony before the House Subcommittee on Coast Guard and Maritime Transportation, Khouri explained that 86 percent of the FMC’s annual budget is consumed by office rent, staff salaries and benefits, and communications.
   He noted that due to the fact that the FMC must hire transportation economists and attorneys, it costs the agency more to recruit and retain these specialists. The FMC is already expecting the retirement of two staff economists this year and those positions will need to be filled, Khouri said.
   Khouri further pointed out in his prepared testimony that the FMC has found ways to stretch its appropriated budget dollars. For example, the agency recently entered an agreement with the Surface Transportation Board to share the services and costs of a single equal employment opportunity officer.
   In addition, Khouri outlined the various container shipping industry changes currently being monitored by the FMC, including the contraction of 21 major liner carriers to 12 through recent acquisitions and mergers, and the morphing of the carrier alliances into three. 
   When asked by Rep. Alan Lowenthal, D-Calif., about the potential for anti-competitive behavior emerging among the increasingly larger carriers and alliances, Khouri said, “We watch it like hawks, I promise you, the pricing and capacity decisions filed with the commission.”
   He assured the congressman that there’s plenty of “evidence that you still have a competitive marketplace” for international container shipping.
   Subcommittee Chairman Duncan Hunter, R-Calif., noted that pending draft FMC authorization legislation in the House will further “clarify how the commission assesses agreements and works with the industry to prevent other supply chain disruptions and maintain fair shipping practices.”
   The FMC oversees agreements that form the liner shipping alliance to ensure they adhere to the Shipping Act’s limited antitrust exemption. “Actions taken by the commission last year raised concerns with U.S. industry that the limited exemption was being misused,” Hunter said. 
   He said the proposed FMC authorization legislation is expected to put “more tools in [the FMC’s] toolbox.”
   The subcommittee’s Ranking Member John Garamendi, D-Calif., expressed concern about the dwindling number of FMC commissioners and its impact on the agency’s ability to operate. 
   The FMC has places for five commissioners to be nominated by the president for five-year terms. Since last year, the number of appointees to the commission has dwindled from a full contingent of five to three. Mario Cordero left the commission in May 2017 to become executive director of the Port of Long Beach, while William P. Doyle departed the FMC in early January to take charge of the Dredging Contractors of America. Commissioner Daniel E. Maffei’s term will expire in June, leaving just Khouri and Commissioner Rebecca Dye. Since taking office, President Trump has not presented any nominations for FMC commissioner.
   Unlike other independent federal commissions, Khouri said the FMC could effectively operate with a single commissioner, if necessary, since there are no quorum constraints within its charter.