FEDERAL MARITIME COMMISSION 

2004 

MANAGEMENT DISCUSSION AND ANALYSIS 
1

Table of Contents 

A Message from the Chairman 1 

 

Commission at a Glance 2 

Organizational Chart 3

A message from the CFO 4 

Finance in Focus 5 

 • Appropriations 

 • Assets 

 • Personnel Strength History 

 • Appropriation History 

Strategic Focus and Program Performance 9 

Mission and Vision Statements 10 

Strategic Goals and Linkage between Mission Statement and Strategic Goals 11 

FY 2004 Highlights 13

Formal Proceedings Program 14 

 • Office of the Commissioners 

 • Office of the Secretary 

 • Office of Consumer Affairs and Dispute Resolution Services 

 • Office of the General Counsel 

 • Office of Administrative Law Judges 

Operations Program 20

 • Office of Operations 

 • Bureau of Enforcement 

 • Bureau of Trade Analysis 

 • Office of Agreements 

 • Office of Economics and Competition Analysis 

 • Office of Service Contracts and Tariffs 

 • Bureau of Certification and Licensing 

 • Office of Transportation Intermediaries 

 • Office of Passenger Vessels and Information Processing 

Administrative Program 29 

 • Office of Administration

 • Office of Budget and Financial Management 

 • Office of Human Resources

 • Office of Information Technology 

 • Office of Management Services

Equal Employment Opportunity Program and Inspector General Program 31 

Systems, Controls, and Legal Compliance 32 

Independent Auditor Reports, Notes, and Financial Statements 34 
1

A MESSAGE FROM THE CHAIRMAN 

 It is my pleasure to present the Federal Maritime Commission's Management 

Discussion and Analysis for FY 2004.

Our great country was founded on trade. A defining moment occurred in 1773, 

when the Boston Tea Party was the colonists’ response to preferential tax

treatment of a British company at the expense of colonial importers and

merchants. Today, such an issue likely would fall under the Commission’s jurisdiction as a foreign shipping 

practice. The United States, recognizing the vital importance of fair shipping practices, created the 

Commission’s predecessor agency in 1916 to oversee international waterborne commerce. Since 1961, the 

Commission has effectively administered Congress’s directives for the ocean transportation industry, and its 

long-standing expertise and experience have been recognized by Congress, as well as by the industry the 

Commission oversees, courts, and other Nations. 

As a transportation/trade regulatory agency, we do not drive changes in the marketplace and we aim not to

create new challenges for the industry: the drivers are the industry and its customers. Working with the 

industry, we have developed a regulatory system that allows for necessary oversight with minimal disruption

to the efficient flow of U.S. imports and exports. The FMC’s mission is generally to ensure that fair 

competition exists in the ocean transportation industry. We do so by ensuring that there are no undue 

controls, influences, or non-market barriers imposed by any nation, carrier, cargo owner or intermediary, 

which can adversely affect U.S. oceanborne trade. Our mandate is to help remove impediments to fair 

competition and thereby allow the industry to conduct business as effectively as possible. 

Developing greater management accountability within the context of a more fully collaborative strategic 

planning process was an integral focus during FY 2004. I am also pleased to advise that the Commission 

completed implementation of an agency realignment in August 2004, which you will see reflected in this 

report. The new organizational structure allocates agency resources to maximize the effectiveness of the 

staff and facilitate agency efforts to better serve the ocean transportation industry. 

The Commission remains committed to rigorously pursuing its goal to attain better government business 

practices and to improve the services it provides to the public and our stakeholders. 

 

Sincerely, 

Steven R. Blust 

Chairman, Federal Maritime Commission 
2

Commission at a Glance 

The Federal Maritime Commission was established as an independent regulatory agency by Reorganization

Plan No. 7, effective August 12, 1961. Prior to that time, the Federal Maritime Board was responsible for 

both the regulation of ocean commerce and the promotion of the United States Merchant Marine. Under the 

reorganization plan, the shipping laws of the U.S. were separated into two categories -- regulatory and 

promotional. The newly created FMC was charged with the administration of the regulatory provisions of 

the shipping laws. The Commission is responsible for the regulation of ocean-borne transportation in the 

foreign commerce of the U.S. The passage of the Shipping Act of 1984 brought about a major change in

the regulatory regime facing shipping companies operating in the U.S. foreign commerce. The subsequent 

passage of the Ocean Shipping Reform Act of 1998, with its deregulatory amendments and modifications to 

The 1984 Act, further signaled a significant paradigm shift in shipping regulations. 
Commission Functions 

• Monitor activities of ocean common carriers, 

marine terminal operators, conferences, ports, and 

ocean transportation intermediaries (OTIs) who 

operate in the U.S. foreign commerce to ensure they 

maintain just and reasonable practices. 

• Maintain a trade monitoring and enforcement 

program designed to assist regulated entities in 

achieving compliance, and to detect and 

appropriately remedy malpractices and violations set 

forth in section 10 of the 1984 Act. 

• Monitor the laws and practices of foreign 

governments which could have a discriminatory or 

otherwise adverse impact on shipping conditions in 

the U.S. 

• Enforce special regulatory requirements applicable 

to carriers owned or controlled by foreign 

governments. 

• Process and review agreements and service

contracts. 

• Review common carriers’ privately published tariff 

systems for accessibility and accuracy. 

• Issue licenses to qualified OTIs in the U.S. and 

ensure all maintain evidence of financial 

responsibility. 

• Ensure passenger vessel operators demonstrate

adequate financial responsibility for casualty and 

non-performance. 

Principle Statutes or Statutory Provisions 

Administered by the Commission 

• The Shipping Act of 1984

• The Foreign Shipping Practices Act of 1988

• Section 19 of the Merchant Marine Act, 1920 

• Public Law 89-777 

• The Ocean Shipping Reform Act of 1998 

Current Picture 

• The Commission: The Chairman and four 

Commissioners are appointed by the President with 

the advice and consent of the Senate. 

• Commission Employees: The Commission has 

130 full time employees, and is headquartered in

Washington D.C. with area representatives in Los 

Angeles, New Orleans, Miami, Seattle, and New 

York. 

• Website: The Commission Homepage can be 

found at www.fmc.gov

 

3
Federal Maritime Commission Organizational Chart 

As of 09/30/04 

Office of Equal

Employment

Opportunity

Office of the

Inspector General

Office of the

Secretary

Office of

Operations

Office of

Administration

Office of the

General Counsel

Commissioner

(DYE)

Commissioner

(BRENNAN)

Chairman

(BLUST)

Commissioner

(CREEL)

Commissioner

(ANDERSON)

Bureau of

Certification

 and Licensing

Bureau of

Enforcement

Bureau of Trade

Analysis

Office of

Administrative

Law Judges

Office of

Consumer Affairs

and Dispute

Resolution

Services

Area

Representatives

New York

Los Angeles

New Orleans

Seattle

South Florida

Office of Budget

and Financial

Management

Office of Human

Resources

Office of

Information

Technology

Office of

Management

Services

 

4
A Message from the CFO 

I am pleased to share the Federal Maritime Commission’s FY 2004 audited financial 

statements, as required under the Accountability of Tax Dollars Act. 

This is the second year the Commission has prepared a Management Discussion

and Analysis. In FY 2002 the agency entered into an agreement with the Bureau of 

Public Debt to provide accounting and financial services beginning in FY 2003.

While the Bureau of Public Debt operates a JFMIP-approved accounting system, the Commission’s previous 

provider did not. Thus, in FY 2003, even though granted a waiver by OMB, and with only one year’s data able 

to be audited, the Commission determined to comply with the spirit of the Accountability of Tax Dollars Act and 

submit a report. In that year, the accounting firm of Clifton Gunderson LLP, which audited our financial 

statements, issued an opinion on our balance sheet only. Still, we were very pleased that the agency achieved 

an unqualified opinion from the accounting firm for FY 2003. In FY 2004, for the first time, the Commission has 

two years of data in our JFMIP-approved accounting system, and the auditor, which is again Clifton 

Gunderson LLP, has been able to issue an opinion on all of the Commission’s financial statements. (Add line 

to acknowledge outcome of audit)

During FY 2004, for the first time in the Commission’s history, the agency’s budget was allocated among its 

bureaus and offices. This process has both enhanced management accountability for expenditures and led to 

a deeper involvement by management officials in the full range of the budget and planning process. Further, 

during FY 2004 the Commission began shifting the focus of its strategic planning process, making FY 2004 

the last year in which the agency’s performance plan goals were primarily program activity-specific. The 

Commission’s Revised Final FY 2005 and Initial FY 2006 Performance Plans are based on agency-wide goals 

and cover one hundred percent of agency activities, i.e., both specific goals and steady state activities. As we 

begin FY 2005, the agency looks forward to achieving another important step in its continuing efforts to link 

planning, budgeting and performance. 

The Commission looks forward to the challenge of achieving unqualified opinions for all financial statements in 

FY 2005 and in the years that follow. 

 

 Sincerely, 

 

Bruce A. Dombrowski 

Chief Financial Officer, Federal Maritime Commission

5
 FINANCE in FOCUS 

APPROPRIATIONS 

The Federal Maritime Commission (“FMC”) receives 

funding through an annual (single year) appropriation. 

The FMC is not authorized to use any multi-year 

funding, no-year funding, revolving funding, or 

borrowing funds. The FMC does not engage in grants, 

loans, or securities. The funding the FMC receives 

cannot be rolled over, or used in subsequent fiscal 

years. The FMC, like all Government entities/agencies, 

maintains records for the current fiscal year, as well as 

the prior four, as required by law. On September 30th of each calendar year, the financial books are closed for 

any new activity. 

The average increase in appropriations received by the FMC from one fiscal year to the next is 5.6%. As

depicted in the following graph, the FMC received a .025% reduction in appropriations from FY99 to FY00, a 

9.71% increase over FY00 in FY01, a 6.34% increase over FY01 in FY02, a .88% increase over FY02 in

FY03, and lastly an 11.33% increase over FY03 in FY04. 

 

14 ,13 3 14 ,097

15,466

16 ,447 16 ,59 1

18 ,4 71

11,50 0

12 ,50 0

13 ,50 0

14 ,50 0

15,50 0

16 ,50 0

17,50 0

18 ,50 0

Federal M aritime Commission

Changes in Appropriations

 (000's)

 FY 19 9 9 FY 2000 FY 2001 FY 2 002 FY 200 3 FY 2 0 0 4

6
7

Federal Maritime Commission Assets

Fiscal Year 2003

$1,527,633

$150,977

$494 $4,106

Fund Balance with Treasury

Accounts Receivable

Property Plant and Equipment

Other

ASSETS 

The assets with which the Federal Maritime Commission is entrusted are a combination of Intragovernmental 

funds (fund balance with Treasury), Intragovernmental accounts receivable resulting from reimbursable

agreements with other Governmental agencies, general property plant and equipment (capitalized, 

depreciable assets), as well as accounts receivable from non-Governmental entities. The assets itemized on

the Consolidated Balance Sheet are a summation of the four prior fiscal years, and the reported year. A brief 

description of asset types follows: 

• Fund Balance with Treasury is the remaining balance of the appropriation received by the 

 FMC. For FY04 the balances contain FY04 as well as FY00, FY01, FY02, and FY03. 

• The Intragovernmental accounts receivable, or reimbursable agreements, are vehicles for 

 one Government agency to receive reimbursement from another agency for services. These 

 resources, when received, will become available for the FMC’s use. 

• General property plant and equipment are those assets that make up the capitalized and 

 depreciable assets belonging to the FMC. The FMC uses a straight line, five-year 

 depreciation schedule for all capitalized assets. The dollar value threshold for all 

 capitalized assets was $5,000.00, and has been increased to $25,000.00 in FY 2005. 

• The non-Governmental accounts receivable represent monies owed to the FMC by the 

 private sector. These entities are billed in accordance with the FMC’s user fee schedule 

 for goods or services rendered, which is located on our web site Although the receivables are 

 considered assets on the balance sheet, the FMC does not have the use of these funds. 

 When payments are received, the FMC deposits these funds to the General Fund of the 

 U.S. Treasury. 
PERSONNEL STRENGTH HISTORY 

The Commission is

composed of five 

Commissioners 

appointed for five-year 

terms by the President 

with the advice and 

consent of the Senate. 

The President 

designates one of the 

Commissioners to serve 

as Chairman. The 

Chairman is the chief 

executive and 

administrative officer of 

the agency. 

8

The Commission’s 

organizational units 

consist of the Office of 

the Secretary; Office of 

the General Counsel; 

Office of the Inspector 

General; Office of Administrative Law Judges; Office of Equal Employment Opportunity; Office of 

Administration; and Office of Operations. These offices are responsible for the Commission’s regulatory

programs or provide administrative support. 

Federal Maritime Commission FTE Strength

128

129

127

121

128

139 139

143

197

159

100

125

150

175

200

225

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Fiscal Year

Strength

Authorized FTE Strength

In recent fiscal years, the Commission has been authorized a total of 180 full-time equivalent positions. Due to 

appropriation levels, the Commission has been required to maintain full time personnel levels much lower than 

authorized. The majority of the Commission’s personnel are located in Washington, D.C., with area 

representatives in New York, New Orleans, Los Angeles, Miami and Seattle. During FY 2004, the Commission

completed an agency-wide realignment to maximize the effectiveness of the staff and facilitate agency efforts 

to better serve its stakeholders. 
APPROPRIATION HISTORY 

Appropriations are expensed in three main categories: salaries and benefits, travel, and administrative 

expenses. Of the total appropriation, salaries and benefits average 74.2%, administrative expenses average 

25.1%, and travel expenses average .7%. 

Federal Maritime Commission 

Appropriation 

(000s)

18531

18471

16591 16447

15466

14000 14000 14133 14097

14836

8000

10000

12000

14000

16000

18000

20000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Fiscal Year

Appropriation Level

The Commission’s appropriation in FY95 was $18,531,000. In FY96, the Commission experienced a 

considerable reduction in appropriations, with a funding level of $14,836,000. Despite this 20% decrease in 

funding, the FMC lost no statutorily mandated programs or functions. To accommodate the dramatically lower 

funding level, the FMC took a number of actions, including closing its field offices and taking reduction-in-force 

actions, affecting a number of employees. 

After several fiscal years of near straight-line budgets, the Commission, working with OMB and the Congress, 

has achieved incrementally larger appropriations which have allowed the agency to re-establish a presence in

major port cities and to conduct more outreach, as well as to assist the maritime industry in achieving and

maintaining compliance with statutory requirements. 

9
Strategic Focus and Program Performance 

The Federal Maritime Commission is committed to its mission statement and strategic goals. In order to best 

accomplish these, the Commission is divided into five program areas: Formal Proceedings, Equal Employment

Opportunity, Inspector General, Operational, and Administrative. Below are charts showing the budgeted 

amount and number of FTEs per program area. The following section outlines the Commission’s Mission

Statement, Strategic Goals, highlights of FY2004, and performance breakdown by program. 

Program By Activities 2004 Cost ($000) 2004 Actual FTE 

Formal Proceedings 4,431 30 

EEO 136 1 

Inspector General 443 3 

Operational 3,579 68 

Administrative 2,812 26 

Total Direct Program 16,591 128 

10
11

MISSION STATEMENT 

Advance the Nation's interests by fostering an 

efficient, competitive, secure, market-driven, and 

nondiscriminatory ocean transportation system 

that is free of unfair foreign maritime trade 

practices and market-distorting activities. 

VISION STATEMENT 

Fairness and efficiency in U.S. maritime 

commerce.

 
12

Looking Ahead: Strategic Goals 

OSRA had a significant impact on the ocean shipping industry. As the 

industry continues to restructure its operations to adapt to economic 

conditions, emerging trends, and maritime security efforts, international 

trade remains dependent upon an efficient ocean transportation system. 

Therefore, it is imperative for the FMC to ensure that its oversight activities

produce a competitive trading environment in U.S. ocean commerce that is

in harmony with and responsive to international shipping practices, and 

permits fair and open commerce. We focus our energies and efforts on this 

mission, and assure that the agency operates in a manner best suited to 

accomplish it with a minimum of government intervention and regulatory cost. Accordingly, the FMC 

established the following five strategic goals to carry out its statutory mandates: 

“Our mandate is to help 

remove impediments to 

fair competition and 

thereby allow [the 

industry] to conduct 

business as effectively as 

possible.” 

~ Steven R. Blust, 

Chairman 

1. Efficient Regulatory Process: Provide a timely, efficient and decisive regulatory process, including

alternative dispute resolution, to enable all segments of the industry to operate more effectively, with a 

minimum of regulatory costs.

 

2. Compliance: Promote efficiency and fairness in U.S. foreign waterborne commerce through various 

means, including outreach and monitoring, to protect the public and assist stakeholders in achieving 

compliance with ocean transportation statutes administered by the FMC. 

 

3. Balanced Enforcement: Foster economic efficiencies, reliance on marketplace factors and maritime 

security by administering U.S. shipping statutes in a balanced and equitable manner to redress excessive 

anticompetitive actions and other unlawful activities. 

4. Technological Efficiencies: Employ technological enhancements to improve efficiency and to facilitate

the exchange of information.

5. Management Capabilities: Ensure the FMC has the appropriate organizational framework and

management systems to carry out its statutory mandates. 

Linkage Between Strategic Goals and Mission Statement 

Our strategic goals address essential FMC statutory, programmatic, and management responsibilities. They 

were developed with a specific focus on accomplishing the basic purposes of our mission and attaining the 

competitive, nondiscriminatory shipping environment envisioned by the1984 Act, as amended by OSRA. 

During the fiscal year, the FMC implemented a refocusing of its performance planning process, shifting from a 

program activity-specific process to one which is based on agency-wide goals and encompasses all agency 

activities. 

Strategic Goal #1: The primary intention of Strategic Goal 1 is to minimize regulatory costs by maintaining 

timely and decisive regulatory processes, and providing various dispute resolution services. This will render 

the FMC more effective in addressing matters that perpetuate discrimination or preclude industry efficiency, 

while reducing the costs of pursuing matters before the Commission. 
Strategic Goal #2: Strategic Goal 2 centers on achieving compliance with the substantive provisions of the 

shipping statutes the FMC administers, and protecting those involved in U.S. ocean commerce from unfair 

practices. We address this goal particularly by interacting with all sectors of the industry, and by vigilant 

monitoring of ongoing commercial activities. 

Strategic Goal #3: Strategic Goal 3 is designed to foster economic efficiencies, assist maritime security 

initiatives, promote reliance on marketplace factors, and redress excessive anticompetitive practices harmful 

to international commerce. This is a direct link to our mission statement's call for an efficient, secure, 

competitive, market-driven ocean transportation system. 

Strategic Goal #4: Strategic Goal 4 focuses on making effective use of advancements in IT to improve the 

efficiency of our operations and enhance our exchange of information with external parties. Dynamic changes 

continue to be made in this area, and the Commission intends to take advantage of any improvement that can 

enable it to perform its functions more effectively. 

Strategic Goal #5: Strategic Goal 5 addresses Commission management and operations. In order to achieve 

the objectives of our mission, we must maintain effective processes that enhance efficiency, without serving as 

ends in themselves. It is essential that we manage for results, and that we effectively tie our budget needs to 

our performance. This strategic goal serves as the internal underpinning that enables us to accomplish the 

policy objectives set forth in our mission statement. 

Photo courtesy of the Port of Tacoma's Website Photo Gallery

13
14

FY2004 Highlights 

 • Received petitions seeking relief from the Shipping Act’s restrictions on NVOCCs entering into confidential 

contracts with their customers. Several petitioners then filed a motion to allow supplemental comments which 

reflect an updated, unified version of various forms of relief requested in the original petitions. The

Commission will consider this matter early in FY 2005. 

• Continued to monitor potentially restrictive shipping practices of the Governments of the People’s Republic of 

China ("PRC") and of Japan. 

• Implemented a realignment of the agency effective August 23, 2004. 

• Continued a series of informational seminars conducted by the agency’s Area Representatives and other 

personnel at locations around the country, and invited industry leaders to Commission headquarters to

conduct briefings in order to promote the exchange of ideas and improve the agency’s understanding of 

industry business practices. 

• Issued a Notice of Proposed Rulemaking to seek comments regarding possible rules changes governing 

ocean common carrier and MTO agreements filed with the Commission. This matter will also be considered

early in FY 2005. 

• Denied as unwarranted a petition seeking implementation of truck detention regulations in the New York/New

Jersey Port District. 

• Submitted a report to Congress regarding the Commission’s current IT initiatives and long-term technology 

improvements.

• Updated the Commission’s user fee schedule. 

• Updated security features in the agency’s headquarters. 

Looking Forward 

• The petitions regarding restrictions on NVOCC contracting have cited the evolution of the ocean shipping

marketplace and concerns about the efficacy of the current regulations. The Commission will examine all 

relevant issues to ensure that its ultimate determinations are legally sound and foster equitable trading 

conditions. 
15

Formal Proceedings Program 

The Offices of Commissioners, Secretary, General Counsel and Administrative Law Judges comprise the 

Formal Proceedings Program. Within this program, the Commission conducts hearings, renders formal

decisions in the disposition of docketed cases, compiles and maintains all official documents arising from

proceedings, and conducts external representation activities before the Congress, courts of law, and other 

agencies. 

Office of the Commissioners 

Five Commissioners are appointed by the President with the advice and consent of the Senate. The 

President designates one of the Commissioners to serve as Chairman. The Chairman has exclusive 

authority over agency personnel matters, organization and supervision, distribution of business, and use of 

funds for administrative purposes. 

The Chairman and the other four Commissioners are responsible for deciding cases in which parties must 

have the opportunity to be heard. During FY04, the Commission issued 29 final decisions in formal 

proceedings. Of these, 27 were formal proceedings and 2 involved special docket applications. The 

Commission also issues rules to implement the statutes it administers. During FY 04, the Commission

instituted 3 rulemakings. One of these rulemakings was finalized during the fiscal year. 

2004 Decisions 

The following is representative of the matters decided by the 

Commission: 

• Petition of the Association of Bi-State Motor Carriers, 

Inc. to Investigate Truck Detention Practices of the New 

York Terminal Conference at the New York/New Jersey

Port District [Petition P3-02], 30 S.R.R. 104 (February 20, 

2004). The Commission denied a petition requesting 

implementation of truck detention regulations applicable to 

marine terminal operator members in the New York/New

Jersey Port District. Bi-State had claimed that New York 

Terminal Conference’s truck detention provisions were

deliberately crafted and executed to avoid the fair calculation 

of truck detention penalties, thus violating the Shipping Act. 

Bi-State had requested that the Commission initiate an

investigation, and also reconsider its 1994 decision to

eliminate truck detention penalty requirements for the port 

from Commission regulations. In the early ‘90s, the 

Commission had undertaken a review of those regulations 

and determined that technological advancements had altered 

operations in such a way that removal of the regulations was 

justified. The Commission determined that the petition failed

to establish sufficient facts to warrant the initiation of an 

investigation or reconsideration concerning the former truck

detention rules.

2004 Rulemakings 

The following is representative of 

rulemakings addressed by the Commission: 

• The Content of Ocean Common Carrier 

and Marine Terminal Operator 

Agreements Subject to the Shipping Act 

of 1984 [Docket No. 03-15], (December 1,

2003). The Commission issued a Notice of 

Proposed Rulemaking to seek comments 

from interested parties regarding possible 

changes to the Commission’s rules 

governing ocean common carrier and 

marine terminal operator agreements filed 

with the Commission in accordance with the 

1984 Act. The NPR proposed changes to 

current requirements regarding agreement 

content, information and data filed to 

enable the Commission to monitor the use 

of antitrust immunity, the filing of agreement 

meeting minutes, and the filing of 

transshipment agreements. Comments 

were received from carriers, shippers, and 

other interested parties. The staff currently 

is preparing recommendations for the 

Commission’s consideration. 
Other Activity 

The following is representative of other significant matters considered by the Commission in FY04:

• Petition of United Parcel Service, Inc. for Exemption Pursuant to Section 16 of the Shipping Act of 

1984 to Permit Negotiation, Entry and Performance of Service Contracts [Petition No. P3-03]; 

Petition of the National Customs Brokers and Forwarders Association of America, Inc. for Limited 

Exemption from Certain Tariff Requirements of the Shipping Act of 1984 [Petition No. P5-03]; 

Petition of Ocean World Lines, Inc., for a Rulemaking to Amend and Expand the Definition and 

Scope of "Special Contracts" to Include All Ocean Transportation Intermediaries [Petition No. P7-

03]; Petition of BAX Global Inc. for Rulemaking [Petition No. P8-03]; Petition of C.H. Robinson 

Worldwide, Inc. for Exemption Pursuant to Section 16 of the Shipping Act of 1984 to Permit 

Negotiation, Entry and Performance of Confidential Service Contracts [Petition No. P9-03], Petition 

of Danzas Corporation D/b/a Danmar Lines Ltd.; Danzas Aei Ocean Services and; Dhl Danzas Air 

and Ocean for Exemption from the Tariff Publishing Requirements of Section 8 of the Shipping Act 

of 1984, as Amended [Petition No. P1-04], Petition of BDP International, Inc. for Exemption from the 

Tariff Publishing Requirements of Section 8 of the Shipping Act of 1984, as amended [Petition No. 

P2-04]; Petition of FEDEX Trade Networks Transport & Brokerage, Inc. for Exemption from the Tariff

Publishing Requirements of Sections 8 and 10 of the Shipping Act of 1984, as Amended [Petition No. 

P4-04], 30 S.R.R. 30 (November 13, 2003). Seven NVOCCs and one national trade association 

representing NVOCCs filed petitions with the Commission seeking relief from the Shipping Act’s restriction 

on NVOCCs from offering service contracts in their capacity as carriers with their shipper customers and the

requirement that NVOCCs adhere to the rates published in their tariffs. The Commission sought comment

on the petitions from interested persons. On August 2, 2004, the National Industrial Transportation League,

UPS, BAX, FEDEX, Transportation Intermediaries Association, C.H. Robinson Worldwide, Inc., and BDP

International, Inc. filed a Motion for Leave to file Joint Supplemental Comments Requesting Expedited

Adoption of a Conditional Exemption from Tariff Publication. The moving parties sought acceptance of their 

Supplemental Comments into the record, as the comments reflect an updated, unified version of the various

forms of relief requested in the original individual petitions. The Commission granted the Motion for Leave 

and reopened the comment period until September 30, 2004. This matter will be addressed early in FY 

2005.

16
Office of the Secretary 

The Office of the Secretary serves as the focal point for all matters 

submitted to and emanating from the Commission. Accordingly, the Office 

is responsible for preparing and submitting regular and notation agenda

matters for consideration by the Commission, and preparing and 

maintaining the minutes of actions taken on these agenda and notation 

matters; receiving and processing formal and informal complaints 

involving violations of the shipping statutes and other applicable laws; 

receiving and processing special docket applications and applications to 

correct clerical or administrative errors in service contracts; issuing orders 

and notices of actions of the Commission; maintaining official files and records of all proceedings; receiving 

all communications, petitions, notices, pleadings, briefs, or other legal instruments in regulatory and 

quasi-judicial proceedings and subpoenas served on the Commission or members thereof; administering

the Freedom of Information, Government in the Sunshine, and Privacy Acts; responding to information 

requests from the maritime industry, the public, and Commission staff; issuing publications and 

authenticating instruments and documents of the Commission; compiling and publishing Commission

decisions; maintaining and promulgating official copies of the Commission's regulations; and maintaining the 

Commission's Library and website. The Secretary's Office also participates in the implementation of 

legislative changes to the shipping statutes. Further, the Secretary’s office oversees the administration of 

the Office of Consumer Affairs and Dispute Resolution Services. 

Looking Back: 2004 

• In FY04, the Office of the Secretary processed 29 docketed proceedings, 6 non-docketed proceedings, 

109 agenda items, 118 pages of minutes, 282 Federal Register Notices, and 50 FOIA requests. The Office 

also initiated the redesign of the agency’s website, to enhance its appearance and usability. 

Looking Ahead: 2005 

• In FY05, the Office will develop options for updating the Commission’s Rules of Practice & Procedure,

including exploring the use of technology for electronic filing. 

• The Office also will move forward with plans to create a more efficient and comprehensive website design. 

 

17
Office of Consumer Affairs and Dispute Resolution Services 

The Office of Consumer Affairs and Dispute Resolution Services ("CADRS") implements the Commission's 

Alternative Dispute Resolution ("ADR") program, and provides ombuds services and responds to inquiries 

and complaints. Under this program, parties to a dispute are encouraged to avail themselves of services

provided by the Commission to resolve disputes through mediation or ombuds services. The Director of the 

Office is the Commission's Dispute Resolution Specialist. The Director and other trained office staff serve as 

third party neutrals in proceedings in litigation. CADRS personnel provide mediation services for a broad

range of disputes, from informal, pre-litigation disputes to those involving significant matters in litigation. 

Ombuds services are provided to resolve a variety of immediate concerns involved with cargo shipments 

and cruise matters. Should a matter not be resolved through ombuds services, or through more formal 

mediation services, a claimant may choose to initiate an informal docket proceeding, alleging a 1984 Act 

violation. This is a form of arbitration, with both sides agreeing to be bound by the decision of the CADRS

settlement officer. Claimants who prefer formal docket procedures may opt to file a formal complaint and 

fully litigate the dispute before the Commission’s Administrative Law Judges. Mediation services may also 

be provided in such formal proceedings. In addition, the ADR program provides for arbitration services. 

Also, CADRS staff review and decide special docket applications, which are requests to waive or refund

charges. 

Looking Back: 2004 

• CADRS received 7,550 inquiries by phone, e-mail, 

and fax. Out of these, over 800 informal complaints 

became ombuds cases and 6 became informal 

dockets. 

• The CADRS resolved 3 informal dockets and 

issued 2 special docket decisions. 

Looking Ahead: 2005 

• A goal for FY05 is to promote the use of 

ADR and to provide conflict resolution training to 

Commission managers. 

• Another goal in FY05 is to expand outreach 

programs to make the shipping industry more aware

of the agency’s ADR services.

Photo courtesy of the Port of Tacoma's Website Photo Gallery 

18
Office of the General Counsel 

The General Counsel provides legal counsel to the Commission. This includes reviewing staff 

recommendations for Commission action for legal sufficiency, drafting proposed rules to implement 

Commission policies, and recommending and preparing final decisions, orders, and regulations for 

Commission adoption. In addition, the Office of the General Counsel provides written and oral legal 

opinions to the Commission, its staff, and the general public in appropriate cases. As described in more 

detail below, the General Counsel also represents the Commission before the courts, Congress, and other 

government agencies and administers the Commission's international affairs program.

Looking Back: 2004 

International Affairs Program 

• In FY04, General Counsel produced 35 reports, 

policy papers, briefings, or controlled carrier 

recommendations, 15 speeches, articles, or 

presentations, 30 instances of interagency and 

international group participation, and responded 

to 275 requests for information. 

• In FY04, the Commission continued to monitor 

potentially restrictive shipping practices of the

Governments of Japan and the People’s

Republic of China ("PRC"). 

2004 Legislative Activity 

• During FY04, 135 bills, proposals and

Congressional inquiries were referred to the 

Office of the General Counsel for comment. The 

Office prepared and coordinated testimony for 

one Congressional hearing. The Office also

worked closely with Congressional staffs on

proposed legislation that affected the 

Commission. 

19

Looking Ahead: 2005 

• In FY05 the Office will increase relationships 

with other agencies with responsibilities related 

to maritime security. 

•The Office also will analyze prospective changes 

in the Commission’s Rules of Practice & 

Procedure. 

2004 Litigation 

• The General Counsel represents the 

Commission in litigation before courts and other 

administrative agencies. The following is 

representative of matters litigated by the Office. 

• New Orleans Stevedoring Co. v. Federal

Maritime Commission and United States of 

America, D.C. Cir. No. 02-1259. NOS sought 

review of the Commission’s order in Docket No. 

00-11 issued on June 28, 2002, dismissing its 

complaint against the Port. NOS had alleged

that the Port had violated the Shipping Act by

unreasonably refusing to deal or negotiate and

by providing an unreasonable preference or 

advantage. The Commission participated in oral

argument before the Court of Appeals, and the 

court affirmed the Commission’s decision on

September 29th, 2003. NOS filed a petition for 

rehearing on November 13, 2003. The petition 

was denied on November 20, 2003. 
Office Of Administrative Law Judges 

Administrative Law Judges (“ALJs”) regulate the course of proceedings, conduct hearings, approve 

settlements, and render decisions in adjudicatory proceedings held after receipt of a complaint, or when 

instituted by the Commission. ALJs have authority to administer oaths and affirmations; issue subpoenas; rule 

upon motions and offers of proof; receive evidence; authorize depositions; regulate the course of hearings; 

hold pre-hearing conferences for the settlement or simplification of the issues involved; refer matters to 

mediation when appropriate; dispose of procedural requests; act as settlement judges in particular cases; and 

take any other action authorized by agency rule or the Administrative Procedure Act. In FY04, the ALJs

handled 11 formal proceedings. 

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Operations Program 

Office of Operations 

The Director of Operations is the senior staff official responsible to the Chairman for the management and 

coordination of Commission programs under the Bureau of Enforcement, the Bureau of Trade Analysis, and 

the Bureau of Certification and Licensing. 

Program accomplishments are detailed in individual bureau sections. In addition, the Office of Operations

oversees the Area Representatives. 

Area Representatives 

The Commission maintains a presence in Los Angeles, Miami, New Orleans, New York and Seattle through 

Area Representatives based in each of those cities. These representatives serve other major port cities and 

transportation centers within their respective areas. In addition to monitoring and investigative functions, Area 

Representatives represent the Commission within their jurisdictions, provide liaison between the Commission

and the maritime industry and the shipping public, collect and analyze intelligence of regulatory significance, 

and assess industry conditions. Liaison activities involve cooperation and coordination with other government 

agencies and departments, providing regulatory information and relaying Commission policy to the shipping 

industry and the public, plus handling informal complaints within each representative's area of responsibility. 

Interaction between the Commission's Area Representatives and U.S. Bureau of Customs and Border 

Protection ("Customs") with respect to the exchange of investigative information continues to be beneficial to 

both parties. Cooperation with Customs has expanded into several joint field operations to investigate entities 

suspected of violating both agencies’ statutes or regulations. Cooperative efforts also involved local police 

and the Bureau of Citizenship and Immigration Services, when necessary. 

Regulated Entities by Region*

0 200 400 600 800 1000 1200

Seattle

New Orleans

LA

South Florida

New York

 

* Seattle, New Orleans, LA, and New York are covered by 1 Area Representative each; Miami is covered by 

two Area Representatives. In addition to the area representatives under the Office of Operations, Bureau of

Enforcement staff cover the mid-Atlantic consisting of 1,436 U.S. and foreign regulated entities. 

21
Bureau of Enforcement 

The Bureau of Enforcement is the primary prosecutorial arm of the Commission. Attorneys of the 

Bureau of Enforcement participate as trial counsel in formal adjudicatory proceedings. The Bureau 

also participates in formal complaint proceedings where intervention is permitted. Bureau attorneys 

serve as legal advisors to the Director of Operations and other bureaus, and also may be 

designated Investigative Officers in non-adjudicatory fact finding proceedings. The Bureau monitors 

all other formal proceedings in order to identify major regulatory issues and to advise the Director of 

Operations and the other bureaus. The Bureau also participates in the development of Commission 

rules and regulations. Under the direction of the General Counsel, attorneys from the Bureau also 

may participate in matters of court litigation to which the Commission is a party.

Looking Back: 2004 

• At the beginning of FY04, 57 investigations were pending final resolution by the Bureau, the Bureau was

party to 9 formal proceedings, there were 41 open civil penalty cases, and there were 80 matters pending the 

Bureau’s legal advice. During the fiscal year, 50 new investigations were commenced; 60 were compromised 

and settled, administratively closed, or referred for formal proceedings; and 47 were pending resolution at

fiscal year's end. Also, the Bureau participated in 4 new formal proceedings, 7 proceedings were completed, 

and 6 formal proceedings were pending at the end of the fiscal year. Thirty civil penalty cases were initiated 

and 35 were concluded, with 30 pending at year’s end. Additionally, 50 matters involving legal advice were 

received during the fiscal year, 65 such matters were completed, and 65 were pending in the Bureau on

September 30, 2004. 

• During FY04, the Bureau worked to obtain statutory compliance in all major trades and with all segments of 

the transportation industry, i.e., carriers, carrier agreements, MTOs, PVOs, and OTIs.

• The Bureau also initiated enforcement action to address market-distorting activities such as various forms of 

secret rebates and absorptions, misdescriptions of commodities and misdeclarations or measurements, illegal 

equipment substitution, unlawful use of service contracts, as well as carriage of cargo by and for untariffed and 

22
unbonded non-vessel operating common carriers, and joint carrier activities outside of the authority of existing

agreements or pursuant to unfiled agreements. 

 

 

Looking Ahead: 2005 

• In FY05, the Bureau will continue to pursue statutory compliance by entities regulated by the Commission, 

and the elimination of market-distorting, fraudulent and anticompetitive practices. 

• The Bureau will work with vessel-operating common carriers to limit participation of unlawful entities in ocean 

transportation.

• During FY05, the Bureau will review the results of recent major enforcement actions to assess 

effectiveness of remedies.

Bureau of Trade Analysis 

The Bureau of Trade Analysis ("BTA") reviews agreements and monitors the concerted activities of common 

carriers by water under the standards of the 1984 Act. The Bureau also reviews and analyzes service 

contracts, monitors rates of government controlled carriers, reviews carrier published tariff systems under the 

accessibility and accuracy standards of the 1984 Act, and responds to inquiries or issues that arise concerning 

service contracts or tariffs. The Bureau also is responsible for competition oversight and market analysis, 

focusing on activity that is substantially anti-competitive and market 

distorting in violation of the 1984 Act. BTA strives to be an expert 

organization on the economics of international liner shipping and 

maritime agreements, especially with respect to issues of competition 

and unfair trade practices as they may affect the interests of the 

shipping public and U.S. international trade.

An integral part of BTA's responsibilities is the systematic surveillance 

of carrier activity and commercial conditions in the U.S. liner trades. 

Accordingly, BTA administers a variety of monitoring programs, and 

other research efforts, designed to apprise the Commission of current 

trade conditions, emerging commercial trends, and carrier pricing and 

service activities. 

Office of Agreements 

The Bureau's agreement program activities consist of: (1) processing carrier and marine terminal agreement 

filings under the procedures of the 1984 Act as modified by OSRA; (2) conducting a comprehensive review

and analysis of all pertinent legal and commercial facets of agreements to recommend appropriate action to 

the Commission on the disposition of filed agreements; (3) making appropriate recommendations on requests 

23
for a waiver of Information Form and Monitoring Report filing requirements; (4) maintaining the Commission's 

official agreement archives; and (5) maintaining an agreement database that contains pertinent information on

each carrier and marine terminal agreement filed with the Commission. 

Looking Back: 2004 

• During FY04, the Bureau received 211 carrier agreement filings and 31 terminal agreement filings. The 

Bureau also received and reviewed minutes of meetings and reports filed by various agreement parties. 

• As required by a settlement agreement reached between Transpacific Stabilization Agreement and the 

Commission, TSA amended their discussion agreement to, among other things, place limitations on the 

parties’ ability to discuss and agree on rates and service contracts, remove discussion of capacity 

rationalization schemes, and set limits on information sharing regarding service contracts. 

• The Commission allowed a docking and lease agreement for marine terminal facilities filed by the City of 

Portland, ME, to become effective while ordering an investigation of the agreement due to concerns about the 

probably competitive impact of the agreement. 

• During FY04, the Bureau automated its agreement library. 

Looking Ahead: 2005 

• In the future, the Bureau will continue to examine parties claiming vessel-operating common carrier status to 

ensure compliance and to develop any information regarding company relationships which may become

relevant to homeland security. 

Office of Economics and Competition Analysis 

To keep the Commission apprised of current trade conditions, emerging commercial and economic trends,

and the impact of regulations affecting waterborne liner transportation, the Bureau prepares studies and

profiles of major trades, monitoring reports, economic analyses, and agreement/carrier profiles, and

undertakes special projects to identify and track relevant competitive and economic activity in major U.S. trade

lanes. The Bureau’s monitoring activities include surveillance programs to identify: (1) concerted activity 

without an effective agreement on file with the Commission, or concerted activity exceeding the scope or

authority of an effective agreement; (2) activity contravening the mandatory conference agreement provisions

required by sections 5(b) and 5(c) of the 1984 Act; (3) the potential for, or emergence of, unreasonable

transportation service/cost impacts that contravene the section 6(g) general standard; (4) controlled carrier 

activity in areas relevant to the Commission’s administration of section 9 of the 1984 Act; (5) the occurrence of

prohibited acts proscribed under section 10; (6) economic harm associated with unfair trade practices of 

foreign governments; and (7) whether the continued operation of an effective agreement in its present form is

consistent with the statutes and current Commission decisions, rules, and policies. The Bureau develops

profiles of major trade areas to assess carrier behavior under agreements, to determine compliance with

regulatory requirements, and to ascertain the competitive posture of carriers, shippers, and shippers’

associations within each trade. 

24
Looking Back: 2004 

• The Bureau received 598 sets of minutes and 272 monitoring 

reports in FY04. 

•The Bureau produced a variety of reports and analyses, including

two editions of the Bureau’s Trade Profile for the Commission, with 

data on ocean liner cargo growth, vessel capacity, etc., in the major

U.S. trades, reports and expert witness testimony for a Commission 

enforcement proceeding involving tug franchises on the Lower 

Mississippi River, and analyses of petitions by NVOCCs requesting

relief from provisions of the Shipping Act. 

• In addition, the Bureau worked on several other projects, including 

classifying agreements to determine the monitoring report 

requirements for each agreement for the calendar year, conducting 

economic analyses of filed agreements and modifications, and 

reviewing quarterly controlled carrier reports. 

Looking Ahead: 2005 

• During FY05, the Bureau will 

assist in a review of recent major

enhancement actions which

targeted anti-competitive

practices of ports and ocean

common carriers. 

• The Bureau intends to focus on

redesigning the internal 

agreement database to enable

more efficient oversight of

agreement activities, and

updating a methodology to 

develop freight rate indices for 

major U.S. trade lanes.

U.S. Containerized Cargo Volumes* 

Year 

Total TEU 

Imports Annual Growth Total TEU Exports Annual Growth 

1999 10,061,410 12.1% 6,363,131 -0.3% 

2000 11,261,101 11.9% 6,832,463 7.4% 

2001 11,366,221 0.9% 6,614,139 -3.2% 

2002 13,134,616 15.6% 6,668,727 0.8% 

2003 14,149,145 7.7% 7,248,385 8.7% 

2004 15,239,227 7.7% 7,958,433 9.8% 

*data source: PIERS/JOURNAL OF COMMERCE, TRADE HORIZONS (SUMMER 2004) 

**2004 figures include forecasts for 2nd thru 4th quarters. 

Office of Service Contracts and Tariffs 

The 1984 Act allows ocean common carriers, either individually or through agreements, to negotiate and 

execute service contracts with one or more shippers or shippers’ associations. Under service contracts, 

shippers make a commitment to provide a certain volume or portion of cargo over a fixed period of time and 

carriers commit to a specified rate and a defined service level. These contracts are filed confidentially with the

Commission. A concise statement of certain contract terms, i.e., commodity or commodities involved,

minimum volume or portion, duration, and origin and destination port ranges, is required to be published in 

carriers’ or conferences’ tariffs. 

25

Service contracts offer an alternative to transportation under tariff terms. Contract flexibility enables

carriers to tailor their transportation services to the specific commercial and operational needs of

shippers. The confidentiality of contracts has spurred commercial innovations and brought greater
efficiencies in the movement of cargo. Overall, the use of service contracts has continued to

increase significantly due primarily to the efficiency, flexibility, and confidentiality of one-on-one

negotiation of contracts between shippers and carriers. 

The 1984 Act, as amended by OSRA, requires carriers and conferences to publish their tariffs in private

electronic systems. Tariffs are to be made available, typically

through Internet access, to any person, without time, quantity, or 

other limitation. Carriers are permitted under law to charge a

reasonable fee for providing public access to their tariffs. The 

Bureau reviews and monitors the accessibility and accuracy of the

private systems and reviews published tariff material for

compliance with the 1984 Act’s requirements. The Bureau 

continues to act upon applications for special permission to deviate from tariff publishing rules and regulations 

and will continue to recommend Commission action on specific problems and concerns regarding the 

publication of tariffs. 

26
Looking Back: 2004 Looking Ahead: 2005 

• During FY04, the Bureau received 45,100 new 

service contracts and 210,800 contract 

amendments. 

• 3,670 active/current tariff location addresses for 

carriers, conferences, and MTOs were posted on

the Commission’s homepage during FY04. A total 

of 1,480 inactive/cancelled tariff location 

addresses were posted as well. 

• The Bureau continued to monitor accessibility to 

tariffs published in carriers’ automated tariff 

systems (“CATS”). Adjustments were made to 

some CATS to bring them into compliance. 

• The Bureau intends to focus on enhancing the 

reliability and efficiency of SERVCON.

• The Bureau will continue to participate in 

activities to help identify any service contract 

provisions which may be significant to maritime

security concerns. 

 

SERVCON 

Since May 1999, due to OSRA, service contracts are filed in electronic format in the service contract filing

system SERVCON available via the Commission’s website. The statements of essential terms are published 

in the carriers’ automated tariff systems. The SERVCON system was designed to allow carriers, 

conferences and agreements to use off-the-shelf computer software such as Microsoft Word, WordPerfect, 

and others, to easily transmit their service contract filings to the Commission. Since the initial start-up of 

SERVCON, however, changes were implemented and service contract documents now can be filed into the 

system in more than one hundred different software formats. A more powerful search engine was added. 

Most recently changes were implemented to permit the correction of an erroneous service contract filing by 

using the newly promulgated "Corrected Transmission" rule. In FY04, the Commission continued to work on 

system improvements to meet the needs of the industry and the agency, and improving search capabilities 

for retrievers and enhancing the integrity of documents filed into the system. More than 1,000,000 service 

contracts and amendments are hosted in SERVCON. 

27
Bureau of Certification and Licensing

The Bureau of Certification and Licensing (“BCL”) (1) licenses and regulates OTIs, including ocean freight 

forwarders and NVOCCs; (2) issues certificates to owners and operators of passenger vessels that

evidenced financial responsibility to satisfy liability incurred for nonperformance of voyages or for death or 

injury to passengers and other persons and (3) manages programs assuring financial responsibility of OTIs 

and passenger vessel operators (“PVO”), by developing policies and guidelines, and analyzing financial 

documents. In carrying out these functions, the Bureau provides information and referrals in response to a 

wide array of informal inquiries, and provides guidance with respect to licensing and bonding. 

Office of Transportation Intermediaries

 

The Office of Transportation Intermediaries is responsible for reviewing and approving applications for OTI 

licenses, and maintaining and updating records about licensees. Without a license, an OTI may not legally 

operate in the United States. NVOCCs not domiciled in the U.S. are required to have a $150,000 bond and 

designate a U.S. resident agent. 

Looking Back: 2004 

• During FY04, the Commission received 320 new 

and 225 amended OTI applications. 210 new and 

115 amended licenses were issued, 280 licenses 

were revoked, and an additional 75 non-U.S.-based 

unlicensed NVOCC bonds were cancelled. 

• As the result of Docket No. 04-02, Options Rider 

for Proof of Financial Responsibility, OTIs may file 

an optional rider for additional proof of financial 

responsibility for U.S.-domiciled licensed NVOCCs 

servicing the U.S./PRC trade, allowing them to meet 

financial responsibility requirements imposed on 

NVOCCs by the PRC. During FY 04, the 

Commission processed 20 PRC bond riders. 

• The Commission continues its effort at outreach to

the industry to increase awareness of licensing and 

bonding requirements for OTIs. 

Looking Ahead: 2005 

• The Bureau will continue its efforts in FY05 to 

design electronic forms, especially the FMC-18,and

further explore integration of Commission databases 

and the feasibility of electronic payments, esignature and e-bond capability. 

• In FY05, the Bureau will continue its work to

achieve the target of 30 days from receipt to 

completion of license applications. The current 

backlog is being cleared and a concerted effort is 

being made to process current applications between 

30 and 45 days after receipt of all appropriate 

documentation.

• In FY05, the Bureau will enhance its efforts to 

directly inform active OTIs of licensing requirements 

and to assist small businesses in meeting the 

application and licensing requirements. 

28
Ocean Transportation Intermediary Statistics

Pre-OSRA As of 

9/30/01

As of 

9/30/02

As of 

9/30/03

As of 

9/30/04 

Freight 

Forwarders 1,700 1,331 1,294 1,262 1,242 

NVOCCs 2,200 1,251 1,298 1,317 1,401 

Freight 

Forwarder / 

NVOCC 400 844 873 900 946 

Foreign 

NVOCC 

Unlicensed 0 599 653 721 775 

Foreign 

NVOCC 

Licensed 0 38 41 40 36 

TOTAL 4,300 4,063 4,159 4,240 4,400 

 

Passenger Vessels and Information Processing (“OPVIP”) 

The OPVIP has the responsibility of implementing the Commission’s Passenger Vessel Program in

accordance with Public Law 89-777 (46 CFR 540). This program ensures that passengers are indemnified 

against casualty or non-performance from cruise lines. The OVPIP is responsible for reviewing applications 

for certificates of financial responsibility, managing all activities with respect to evidence of financial 

responsibility of passenger vessel owner/operators, and developing and maintaining all Bureau databases 

and records of OTI applicants and licensee. 

Looking Back: 2004 

• The Passenger Vessel Program received 67

applications for Performance Certificates and

processed 65, and received 83 and processed 85 

applications for Casualty Certificates. 

• In addition, OPVIP continued to work on cruise 

bankruptcies from recent years, and worked to

ensure compliance by several cruise lines. 

29

• A current list of licensed OTIs was maintained 

on the Commission’s Homepage. This protects 

carriers and individuals from dealing with an

unlicensed OTI, protects licensed 

businesses from misunderstandings by carriers, 

and is helpful to Customs. 

• Passenger Vessel Financial Responsibility

[Docket No. 02-15] (October 31, 2002). 

Comments were received on the Notice of 

Proposed Rulemaking issued by the Commission 

to amend its rules regarding the establishment of 

passenger vessel responsibility under P.L. 89-

777. The Bureau currently is working with the 

Commission to review the comments. 
Looking Ahead: 2005 

• In FY05, the Bureau intends to continue 

working with the Commission to complete the 

rulemaking to ensure that the Passenger Vessel 

Program provides adequate consumer protection 

without being unduly burdensome on the 

industry. 

• In FY05, the Bureau will work closely with the 

PVOs to implement new rules and financial 

responsibility requirements on a timely basis. 

 

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31

Administrative Program 

Office of Administration 

Office of the Director 

The Office of Administration provides administrative support or guidance to the program operations of the 

Commission. The Director of Administration is the Commission’s Chief Financial Officer, Audit Follow-up 

Management (Internal Controls) Officer, and Chief Acquisition Officer. The Deputy Director serves as the 

agency’s Chief Information Officer, and the agency’s Competition Advocate. 

Looking Back: 2004 Looking Ahead: 2005 

• In FY04, the Office coordinated administrative 

activities related to the agency’s reorganization,

including payroll changes, reconstruction and 

relocation. 

• The Office also directed preparation of an update

of the agency’s five-year strategic plan, preparation 

of the Annual Performance Plan and the Annual 

Program Performance Report. 

• Also, the Office prepared the agency’s FAIR Act 

and FMFIA reports, and coordinated development of 

the agency’s Annual Report. 

• In FY05, the Office will monitor the 

accomplishments of agency performance goals, 

guide the development of further technology

improvements to the agency’s IT infrastructure, and 

coordinate the further development of emergency 

preparedness and continuity of operations planning. 

• The Office also will ensure conformance of agency 

systems with administration and Congressional 

security mandates. 

• The Office will complete implementation of the 

strategic linkage of agency planning, budgeting and

performance.

The following administrative offices are overseen by the Director of Administration: 

• Office of Budget and Financial Management (“OBFM”) 

 The OBFM administers the Commission's financial management program and is responsible for providing 

 advice on optimal utilization of the Commission's fiscal resources. 

 In FY04, OBFM coordinated and prepared the FY05 Congressional Budget and the FY06 OMB budget 

 request, instituted a new budget allocation process, and prepared a variety of budget-related reports. 

• Office of Human Resources (“OHR”) 

 The OHR plans and administers a complete human resources management program. 

 

 Significant accomplishments in FY04 include administering completion of and request for certification of 

 candidates under the Agency’s SES Candidate Development Program and conducting a comprehensive 

 training program. 

• Office of Information Technology (“OIT”) 

 The OIT provides management support with respect to information technology to the program and 

 administrative operations of the Commission. 
 FY04 accomplishments include: initiating the upgrade of the agency’s network infrastructure and all work 

 stations, and implementation of a new help desk process. 

• Office of Management Services (“OMS”) 

 The OMS is responsible for procuring and furnishing all supplies, equipment and services necessary and 

 required to support the day-to-day operations and overall mission objectives of the Commission. 

 Some FY04 accomplishments include coordinating the renovation of the agency’s headquarters facilities, 

 including physical security upgrades, and developing emergency preparedness manuals for all agency 

 personnel.

Looking Ahead 2005: 

• In FY05 the administrative offices will advise agency management and staff on all administrative matters 

and ensure maintenance of a sound and progressive administrative program. 

Work will continue on alterations required by the agency’s August 2004 realignment; on implementation of 

electronic commerce to automate the processing of travel documents, purchase orders, obligations and

payments, and taking corrective actions to eliminate remaining weaknesses in the agency’s IT security 

program. 

32
Equal Employment Opportunity Program 

Office of Equal Employment Opportunity 

The Office of Equal Employment Opportunity ("EEO") develops, implements and manages a comprehensive

program of equal employment opportunity for the FMC. The EEO program is statutorily mandated with

required activities in complaints processing and adjudication, affirmative program planning, special 

emphasis programs, community outreach, monitoring and 

evaluation. The Director (“DOEEO”) arranges for counseling

of employees who raise allegations of discrimination; provides 

for the investigation, hearing, fact finding, adjustment, or early 

resolution/mediation of complaints of discrimination; and 

monitors and evaluates the program's impact and 

effectiveness. The DOEEO represents the agency on several 

intergovernmental committees; coordinates all affirmative 

program planning efforts; directs programs of special emphasis 

and coordinates the activities of the Selective Placement and 

Federal Equal Opportunity Recruitment Coordinators.

Looking Back: 2004 

• The EEO focused in FY04 on education of the workplace through seminars, briefings, and training for

employees. 

Looking Ahead: 2005 

• The EEO will continue to concentrate on programs to increase understanding of EEO concepts. 

33
34

Inspector General Program 

Office of the Inspector General (“OIG”) 

The IG works independently under the general supervision of the Chairman. The IG does not report to, and is 

not subject to supervision by, any other officer or employee of the FMC. The OIG has a memorandum of 

understanding ("MOU") with the FMC’s Office of the General Counsel that provides for the furnishing of legal 

services. A similar MOU with the Social Security Administration’s Office of Inspector General provides for the 

furnishing of criminal investigative assistance if the need should arise. In addition, the Office utilizes the

expertise of outside consultants to assist in performing specialized audits and reviews. 

In FY04, the OIG issued 5 audits. These included reviewing the agency’s information security program pursuant 

to FISMA, and the agency’s implementation of the Federal Acquisition Streamlining Act of 1994. 

In FY05, the OIG will continue to conduct program evaluations in order to improve agency programs and 

operations, as well as statutorily required reviews. 

Systems, Controls, and Legal Compliance 

Internal accounting and administrative controls are adequate to ensure that: 

• Transactions are executed in accordance with budgetary and financial laws and other requirements, 

consistent with the purposes authorized, and are recorded in accordance with Federal accounting 

standards; 

•Assets are properly acquired and used, safeguarded to deter theft, accidental loss or unauthorized 

disposition, and fraud; and 

•Performance measurement information is adequately supported. 

In FY03, the Commission completed its transition to a new, JFMIP-approved cross-servicing accounting 

provider, and the accounting firm of Clifton Gunderson, LLP audited our financial statements and issued an 

opinion on the balance sheet only, since only one year’s data was available to be audited. The Commission 

achieved an unqualified opinion form the accounting firm for FY 2003. In FY2004, for the first time, the 

Commission had two years of data in our accounting system, thus FY 2004 is the first year in which all of the

Commission’s financial statements were audited. 

The Federal Maritime Commission places a high level of importance on maintaining adequate controls. In line 

with requirements under the Federal Managers' Financial Integrity Act ("FMFIA"), the Commission advises that 

its financial systems provide reasonable assurance that the objectives of the FMFIA are being met, and that the

Commission is in compliance with section 4 of the FMFIA. While the Commission will discuss certain material 

weaknesses in its full FMFIA report later this calendar year, these relate to its IT program, and do not result in

waste, fraud or abuse. OMB has long held that the existence of material weaknesses does not preclude 
statements of overall compliance, so long as the weaknesses, when considered together, are not sufficiently 

serious to prevent reasonable assurance of overall compliance. For reasons iterated in our FY03 FMFIA report, 

and which will be discussed in our FY04 FMFIA report, the Commission can provide reasonable assurance that 

the objectives of the FMFIA are being met and that the Commission, as a whole, is in compliance with section 2 

of the FMFIA. 

 

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