FEDERAL MARITIME COMMMISSION 

2003 

MANAGEMENT DISCUSSION AND ANALYSIS 
Table of Contents 

A Message from the Chairman 

 4 Commission at a Glance 

 5 Organizational Chart 

 6 A message from the CFO 

 7 Finance in Focus 

 • Appropriations 

 • Assets 

 • Personnel Strength History 

 • Appropriation History 

11 Strategic Focus and Program Review 

12 Mission and Vision Statements 

13 Strategic Goals and Linkage between Mission Statement and Strategic Goals 

15 FY 2003 Highlights

16 Formal Proceedings Program 

 • Office of the Commissioners 

 • Office of the Secretary 

 • Office of the General Counsel 

 • Office of Administrative Law Judges 

19 Operational and Administrative Program

 • Office of the Executive Director 

 

20 Enforcement Program

22 Trade Analysis Program 

 • Office of Agreements 

 • Office of Economics and Competition Analysis 

 • Office of Service Contracts and Tariffs 

26 Consumer Complaints and Licensing Program 

 • Office of Ocean Transportation Intermediaries 

 • Office of Passenger Vessels and Information Processing 

 • Office of Consumer Complaints 

 • Alternative Dispute Resolution 

30 Operational and Administrative Offices 

 • Office of Budget and Financial Management 

 • Office of Human Resources

 • Office of Information Resources Management 

 • Office of Management Services

31 Equal Employment Opportunity Program and Inspector General Program 

32 Systems, Controls, and Legal Compliance

33 Independent Auditor Reports, Notes, and Financial Statements 

2
A MESSAGE FROM THE CHAIRMAN 

 

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

Discussion and Analysis for FY 2003.

Since its inception in 1916, the Commission and its predecessor agencies have effectively administered 

Congress's directives for the ocean transportation industry. Our long-standing expertise and experience 

have been recognized by Congress, as well as by the industry the Commission oversees, courts, and other 

Nations. Working with the ocean shipping 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 generally is to foster an equitable, secure, and market-driven ocean transportation 

system. We do so by addressing the disruptive activities, influences, or non-market barriers 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. 

The maritime industry and the government must work together to balance the need for secure and high

quality shipping services with the goal of an efficient and economical transportation system. Each industry 

participant has an important role to play in this effort. 

The Commission performs numerous statutorily mandated business activities within a modest budget. 

Accordingly, enhancing management accountability for expenditures has been a high priority during my

tenure as Chairman and administrative head of the agency. The Commission retains a remarkable group of 

dedicated and skilled people who rigorously pursue our goals and objectives and contribute to our ongoing

success. The reward for our efforts is more effective government practices and improved services for the

public and our stakeholders. 

Sincerely, 

Steven R. Blust 

Chairman, Federal Maritime Commission 

3
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 regulation. 

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, 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

 

 

4
Federal Maritime Commission Organizational Chart 

As of 09/30/03 

Enforcement 

 

Commissioner 

(DYE) 

Commissioner 

(BRENNAN) 

Chairman 

(BLUST) 

Commissioner 

(CREEL) 

Commissioner 

(ANDERSON) 

Office of the 

Secretary 

Office of the 

General 

Counsel 

Office of the 

Inspector 

General 

Office of the 

Executive 

Director 

Office of 

Administrative 

Law Judges 

Office of Equal

Employment 

Opportunity 

Bureau of Consumer 

Complaints and 

Licensing 

Bureau of Bureau of Trade

Analysis 

Area 

Representatives

Los Angeles 

Miami 

New Orleans 

New York 

Seattle 

 

5
A Message from the CFO

 

I am pleased to present the Federal Maritime Commission’s first ever 

Management Discussion and Analysis Report covering FY 2003 audited financial statements. The report 

reflects two major systems milestone accomplishments in FY 2003. The first was the conversion of the 

agency’s accounting systems to an Internet based Joint Financial Management Improvement 

Program (JFMIP) approved accounting and procurement system hosted by the Department of Treasury’s

Bureau of Public Debt. This conversion electronically integrates the FMC’s procurement and accounting 

systems and captures and disseminates financial information in a standardized format. The second milestone 

was the conversion of the Commission’s personnel and payroll systems to the Department of Agriculture’s 

National Finance Center system which is fed into the Bureau of Public Debt JFMIP accounting system. 

These conversions have enabled the agency to keep pace with the efficiency standards called for in the 

management of federal personnel, payroll, procurement and accounting systems. 

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

provider did not. However, 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 this report. Thus the accounting firm of Clifton Gunderson LLP, which audited our financial statements, 

has issued an opinion on the balance sheet only. For FY 2004, with two years of data in our JFMIP-approved

accounting system, the auditor will be able to issue an opinion on all of the Commission's financial statements. 

I am proud of the smooth transition to the new accounting and financial services provider that was 

accomplished by my staff and the staff of the Bureau of Public Debt. The effort was achieved in a short 

timeframe due to the diligence and professionalism of all involved. With the numerous benefits and increased 

flexibilities of the system operated by the Bureau of Public Debt, the Commission is now positioned to make 

better budget decisions for our future. The Commission looks forward to the challenge of achieving unqualified 

opinions for all financial statements in FY 2004 and in the years that follow. 

 

 Sincerely, 

 

Austin Schmitt

Chief Financial Officer, Federal Maritime Commission

6
FINANCE IN FOCUS 

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, as well as the prior 

four fiscal years 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 4.2%. As

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

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

in FY03. 

 

14,133 14,097

15,466

16,447 16,591

11,500

12,500

13,500

14,500

15,500

16,500

17,500

Federal Maritime Commission

Changes in Appropriations

 (000's)

 FY 1999 FY 2000 FY 2001 FY 2002 FY 2003

7
ASSETS 

The assets the Federal Maritime Commission is entrusted with 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 fiscal years prior to, 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 FY03 the balances contain FY03 as well as FY99, FY00, FY01, and FY02. 

• 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 is $5,000.00. 

• 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 

 located on our web site for goods or services rendered. Although the receivables are

 considered an asset 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. 

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

8
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. 

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 the Executive Director; Bureau 

of Consumer Complaints and Licensing; Bureau of Enforcement; and Bureau of Trade Analysis. These offices 

and bureaus are responsible for the Commission’s regulatory programs or provide administrative support. 

Federal Maritime Commission FTE Strength

129

127

121

128

139 139

143

197

159

100

125

150

175

200

225

1995 1996 1997 1998 1999 2000 2001 2002 2003

Fiscal Year

Strength

Authorized FTE Strength

In recent fiscal years, the Commission was 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. 

9
APPROPRIATION HISTORY 

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

expenses. Of the total appropriation, salaries and benefits average 73.9%, administrative expenses average 

25.4%, and travel 

expenses average 

.7%. 

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. 

Federal Maritime Commission 

Appropriation 

(000s)

18531

14836

14000 14000 14133 14097

15466

16447 16591

8000

10000

12000

14000

16000

18000

20000

1995 1996 1997 1998 1999 2000 2001 2002 2003

Fiscal Year

Appropriation Level

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 carry out its statutory mission and to assist the 

maritime industry in achieving and maintaining compliance with statutory requirements. 

10
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 seven program areas: Formal Proceedings, Equal 

Employment Opportunity, Inspector General, Operational and Administrative, Trade Analysis, Consumer

Complaints and Licensing, and Enforcement. 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 FY2003, and performance breakdown by program. 

Program By Activities 2003 Cost ($000) 2003 Actual FTE 

Formal Proceedings 4,431 31 

EEO 136 1 

Inspector General 443 3 

Operational and Administrative 3,579 26 

Trade Analysis 2,812 25 

Consumer Complaints and 

Licensing 2,455 23 

Enforcement 2,735 20 

Total Direct Program 16,591 129 

 

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 

The FMC will fulfill a key leadership role in 

international ocean trade, be responsive to stakeholder 

needs, support national maritime security initiatives, and 

effectively utilize information technology. 

 

 

12
Looking Ahead: Strategic Goals 

OSRA and the events of September 11th, 2001, have had significant impacts 

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. Effective use of emerging 

information technologies facilitates our efforts. Our actions also must 

encourage the development of a sound U.S.-flag liner fleet. Accordingly, the 

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

“The FMC's mission is 

generally to ensure that 

fair competition exists in 

the ocean transportation 

industry... 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.

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. 

13
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. 

 

14
FY 2003 Highlights 

 • Entered into a settlement agreement with the major ocean carrier agreements and their members who 

serve the inbound waterborne U.S. trades with Asia, resolving concerns investigated in Fact Finding 

Investigation No. 25- Practices of Transpacific Stabilization Agreement Members Covering the 2002-2003

Service Contract Season. The settlement improved the competitive environment in the Transpacific trades

through immediate structural changes in the TSA agreement which end problematic carrier practices in these 

trades. 

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

China ("PRC") and of Japan. 

• Approved a settlement agreement which resolved two docketed proceedings involving tug practices at 

Canaveral Port Authority ("CPA"). 

• Filed, with the Department of Justice, a joint brief with the United States Court of Appeals for the District of 

Columbia Circuit in the proceeding New Orleans Stevedoring Co. v. Federal Maritime Commission and United

States of America. This case was an appeal from the Commission’s determination to deny the complaint in 

Docket No. 00-11, New Orleans Stevedoring Company v. Board of Commissioners of the Port of New 

Orleans. On September 29, 2003, the U.S. Court of Appeals for the District of Columbia Circuit unanimously 

affirmed the Commission’s decision. 

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

personnel at strategic locations around the country. 

• Participated in several groups that were formed to address maritime homeland security issues 

post-September 11, 2001. 

• Conducted an economic analysis of an amendment to the Trans-Atlantic Conference Agreement which 

authorized the parties temporarily to withdraw vessels from service during a specified period of time. 

• Assisted the public in matters relating to claims for refunds for non-performance of transportation after Regal 

Cruises, Inc., a passenger cruise line, ceased operations. 

• Continued development of an electronic version of the Commission’s Form FMC-18 to accept applications for 

OTI licenses via the Internet. 

Looking Forward 

• Several petitions were filed late In FY03 seeking regulatory changes which, among other things, 

would permit NVOCCs to enter into confidential contracts with their customers, as well as relieve 

OTIs from the requirement to publish tariffs. The agency is in the process of reviewing comments 

and evaluating the merits of these petitions for appropriate action.

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 FY03, the Commission issued 22 final decisions in formal 

proceedings. Of these, 15 were docketed proceedings and 7 involved special docket applications. The

Commission also issues rules to implement the statutes it administers.

2003 Decisions 

The following is representative of the matters

decided by the Commission: 

• Canaveral Port Authority - Possible 

Violations of Section 10(b)(10), Unreasonable 

Refusal to Deal or Negotiate (Order to Show 

Cause) [Docket No. 02-02], 29 S.R.R. 484 

(February 25, 2002)- The Commission approved

a settlement on July 8, 2003, after both the 

Commission in Docket No. 02-02 and the 

Administrative Law Judge in Docket No. 02-03 

found Canaveral Port authority (CPA) violated

various sections of the Shipping Act relating to 

CPA’s operation of a tug franchise system at Port 

Canaveral that resulted in one tug provider having 

sole franchise for the port. The settlement 

agreement provides that (1) CPA shall pay a civil 

penalty, (2) CPA shall eliminate the tug franchise 

system and shall permit vessels calling at the port 

to select the tug company of their choice, provided

that the tug company has obtained and maintains 

a towing permit from CPA based upon evidence of 

certain insurance and payment of permit fees, and 

(3) both proceedings shall be discontinued and 

any further claims by the Commission based on 

the violations found in Docket No.’s 02-02 and 02-

03 will be barred. 

2003 Rulemakings 

The following are 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. 99-13], 

(August 3, 1999). The Commission previously 

had issued a Notice of Inquiry to seek comments 

from interested parties regarding possible 

changes to the Commission’s rules governing the

content of ocean common carrier and marine

terminal operator agreements that are filed with 

the Commission in accordance with the 1984 Act. 

Comments were received from carriers, shippers, 

and other interested parties. The Commission 

currently is reviewing this matter to determine 

what further action may be warranted. 

• Passenger Vessel Financial Responsibility 

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

Commission issued a Notice of Proposed

Rulemaking to amend its rules regarding

establishment of passenger vessel responsibility 

under Public Law 89-777. Comments were 

received from passenger vessel operators, 

associations, travel agents, and other interested 

persons. A hearing on the proposed rule was held 

in May 2003. The Commission currently is 

reviewing comments on this matter. 

16
Other Activity 

The following are representative of other significant matters completed by the Commission in FY03:

• Fact Finding Investigation No. 25 - Practices 

of Transpacific Stabilization Agreement 

Members Covering the 2002-2003 Service 

Contract Season. The Commission initiated a 

fact-finding proceeding in August 2002, to 

investigate whether service contract practices of 

the Transpacific Stabilization Agreement ("TSA") 

during negotiation of service contracts for 

2002/2003 violated the anti-discrimination 

provisions and other prohibited acts of the 1984

Act. The Commission also issued two Section 15 

orders to secure additional information on the

activities of TSA and several related agreements. 

The Commission entered into a settlement 

agreement with TSA on September 11, 2003, 

which brought about structural changes in the TSA 

agreement, payment in lieu of civil penalty, and 

termination of the related agreements. Changes 

will result in increased carrier competition in the 

largest U.S. trade lane, as well as significantly 

increasing shipper options in the Indian

subcontinent/U.S. trade lane. 

• Petition No. P2-02-Petition of the South 

Florida NVOCC-NAOCC Association, Inc. for 

an Investigation of the Service Contracting and 

Rating Practices of the Caribbean Shipowners 

Association. In January, 2003, the Commission

denied the petition to initiate an investigation into 

whether certain activities of CSA constitute a

violation of the Shipping Act. The Petitioner, a 

trade association representing OTIs, alleged that

CSA and its members “engaged in practices 

intentionally and unlawfully harmful to OTIs”. The

Petitioner further maintained that CSA’s actions 

caused a reduction of competition and 

transportation services in the trades served by 

CSA’s members, as well as produced 

unreasonable increases in transportation costs. 

The Commission found that CSA had not 

established sufficient facts to warrant the initiation 

of an investigation.

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 formal

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. The Secretary's Office also participates in the implementation of legislative changes 

to the shipping statutes. 

In FY03, the Office of the Secretary processed 22 docketed proceedings, 8 non-docketed proceedings, 1

service contract correction application, 130 agenda items, 142 pages of minutes, 257 Federal Register 

Notices, 59 FOIA requests, and 12 certifications. 

17
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.

International Affairs Program 

• In FY03 General Counsel produced 34 reports, 

policy papers, briefings, or controlled carrier 

recommendations, 15 speeches, articles, or 

presentations, 20 instances of interagency and 

international group participation, and responded 

to 225 requests for information. 

• In FY03, the Commission continued to monitor 

potentially restrictive shipping practices of the

Governments of Japan and the People’s

Republic of China ("PRC"). 

2003 Legislative Activity 

• During FY03, 115 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. The Office also collaborated with 

the Office of General Counsel of the U.S. 

Department of Transportation to prepare a 

codification of title 46 of the U.S. Code as it 

relates to shipping. 

2003 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. 

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 prehearing 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 FY03, the ALJs handled 12 formal proceedings. 

18
Operational and Administrative Program 

Office of the Executive Director 

The Executive Director 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 Consumer Complaints and Licensing, as well as providing administrative guidance to all other 

program areas within the Commission. The Executive Director is the Commission's Chief Operating Officer, 

Senior Procurement Executive, and Audit Follow-up and Management (Internal) Controls Officer. The Deputy 

Executive Director serves as the agency’s Chief Financial Officer ("CFO"), Competition Advocate, and is the 

representative, as Principal Management Official, to the Small Agency Council. 

Program accomplishments are detailed in individual bureau and administrative office sections. In addition, the

Operational and Administrative Program contains four additional offices overseen by the Executive Director. 

These are discussed further on page 30. 

 

19
Enforcement Program 

The Bureau of Enforcement is the primary investigatory and 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 Executive Director and other bureaus, and also may be designated Investigative Officers in 

nonadjudicatory fact finding proceedings. The Bureau monitors all other formal proceedings in order to

identify major regulatory issues and to advise the Executive Director 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. 

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. 

Two Area Representatives operate from Commission headquarters in an “at large” capacity, dealing with other 

U.S. regulated entities, foreign regulated entities, and assisting the other areas as necessary.

 

New York

Miami

L.A.

At Large**

New Orleans

Seattle

0 200 400 600 800 1000 1200 1400

Regulated Entities by Region*

 

 * Seattle, New Orleans, and New York are covered by 1 Area Representative each; L.A., Miami, and the At Large are 

 covered by 2 Area Representatives. 

** “At large” representatives are responsible for 391 U.S. regulated entities and 970 foreign regulated entities. 

2003 Enforcement Activities 

• At the beginning of FY03, 43 enforcement cases were pending final resolution by the Bureau, the Bureau 

was party to 14 formal proceedings, and there were 83 matters pending which the Bureau was monitoring or 

20
for which it was providing legal advice. During the fiscal year, 41 new enforcement actions were commenced; 

37 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 6 new formal proceedings, 6 proceedings were completed,

and 14 formal proceedings were pending at the end of the fiscal year. 

Additionally, 70 matters involving monitoring or legal advice were received

during the fiscal year, 80 such matters were completed, and 73 were

pending in the Bureau on September 30, 2003. 

• During FY03, 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 unbonded non-vessel operating

common carriers, and joint carrier activities outside of the authority of 

existing agreements or pursuant to unfiled agreements.

• Also during FY03, the Bureau participated in major fact finding 

investigations into alleged anticompetitive and discriminatory practices by 

certain Florida ports, and by certain ocean carriers in the inbound 

Transpacific trades from Asia. Both investigations resulted in settlement 

agreements that will enhance competition and curtail further discrimination. 

• 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. A revision of the Memorandum of Understanding to 

enhance cooperation between the agencies also is in progress. Cooperative

efforts also involved local police and the Bureau of Citizenship and 

Immigration Services, when necessary. 

Looking Ahead: 2004 

• In FY04, the Bureau will continue to pursue the elimination of marketdistorting, fraudulent and anticompetitive practices. 

• The Bureau will continue expanding its public outreach program to educate maritime transportation users

and providers with regard to FMC statutes and regulations; and will coordinate the use of available database

systems with other agencies or government groups engaged in homeland security to improve identification of 

entities providing and utilizing maritime transportation services. 

21
Trade Analysis Program 

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

carriers by water under the standards of the Shipping Act of 1984 (“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 

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: 2003 

• During FY03, the Bureau received 197 carrier 

agreement filings and 34 terminal agreement

filings. The Bureau also received and reviewed 

minutes of meetings and reports filed by various 

agreement parties. 

• The Bureau received a complex series of four 

related vessel-sharing agreements in the U.S.-

Australia/New Zealand trades involving six 

carriers taking space on 22 vessels operating on 

eastbound and westbound around-the-world

services. 

•In a significant consolidation of services, 

COSCO Container Lines, Hanjin Shipping, KLine, Yang Ming Marine Transport, and Senator 

Lines incorporated their various services under 

several agreements into one alliance-type

agreement. 

• Two agreements to discuss maritime security 

issues were filed by marine terminal operators 

and ocean common carriers.

Looking Ahead: 2004 

• 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. 

• In early FY04, the Bureau plans to complete 

the programming and the updating of various

database links to provide direct public access to 

its library of carrier agreements via the agency’s 

Homepage. 

22
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. 

Looking Back: 2003 

• The Bureau received 457 sets of minutes and

312 monitoring reports in FY03. 

•The Bureau produced a variety of reports and

analyses, including an analysis and memorandum

on rate levels of certain controlled carriers, an 

economic analysis of newly filed agreements 

under the 6(g) standard, and an economic

analysis related to the Commission’s Fact Finding

Investigation No. 25. 

• In addition, the Bureau worked on several other 

projects including preparing recommendations for 

proposed changes of rules governing the filing of 

minutes, information forms, and monitoring

reports, conducting an economic analysis of an

amendment to the Trans-Atlantic Conference 

Agreement, classifying agreements, and reviewing 

quarterly monitoring data.

Looking Ahead: 2004 

• The Bureau intends to focus on refining its

controlled carrier monitoring program,

implementing a more streamlined monitoring

program, developing a prototype for a confidential,

semi-annual Commission trade profile on

economic and liner trade conditions in major U.S. 

trade lanes, and refining and updating a 

methodology to develop freight rate indices for 

major U.S. trade lanes. 

• The Bureau will also continue to provide support 

and assistance to Commission investigative and 

enforcement initiatives, including providing expert 

testimony. 

 

U.S. Containerized Cargo Volumes* 

Year Total TEU Imports Annual Growth Total TEU Exports Annual Growth 

1998 8,977,303 16.1% 6,380,478 -5.5%

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

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

2001 11,362,010 0.9% 6,615,846 -3.2%

2002 13,150,259 15.7% 6,668,727 0.8%

2003** 13,942,892 6.0% 7,418,904 11.2%

*data source: PIERS/JOURNAL OF COMMERCE, TRADE HORIZONS (WINTER 2001, SUMMER 

2003) 

**2003 figures include forecasts for 2nd thru 4th quarters. 

23
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’ tariffs or conferences. 

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. 

Looking Back: 2003 Looking Ahead: 2004

• During FY03, the Bureau received 50,594 new 

service contracts and 211,000 contract 

amendments. 

• 3,450 active/current tariff location addresses for 

carriers, conferences, and MTOs were posted on

the Commission’s homepage during FY03. A total 

of 1,200 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 will continue to participate in 

activities to help identify any service contract 

provisions which may be significant to maritime

security concerns. 

 

24
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, AltaVista, 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. More than 700,000 service contracts and 

amendments are hosted in SERVCON. 

25
Consumer Complaints and Licensing Program 

The program is carried out by the Bureau of Consumer Complaints and Licensing ("BCCL"), which (1) 

licenses and regulates OTIs, including ocean freight forwarders and NVOCCs; (2) issues certificates to 

owners and operators of passenger vessels that have evidenced financial responsibility to satisfy liability 

incurred for nonperformance of voyages or for death or injury to passengers and other persons; (3) 

manages programs assuring financial responsibility of OTIs and passenger vessel operators ("PVOs"), by

developing policies and guidelines, and analyzing financial documents; (4) responds to consumer and other 

inquiries and complaints, acting as an intermediary to resolve difficulties encountered by users of 

transportation services with respect to cruises and shipments of cargo; and (5) has responsibility for 

implementing the Commission’s alternative dispute resolution ("ADR") program, arranging for and providing 

mediation and other dispute resolution services as appropriate. In carrying out these functions, the Bureau

provides information and referrals in response to a wide array of informal inquiries, provides guidance with 

respect to licensing and bonding, and, where appropriate, advises inquiring persons about various means 

available to resolve complaints, both informally and formally. The Bureau emphasizes dispute resolution

through informal and non-binding approaches in an effort to minimize litigation expenses and expedite

resolution for those involved in a dispute. 

Office Of Transportation Intermediaries 

The Office of Ocean 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. 

Looking Back: 2003 

• During FY03, the Commission received 350

new and 250 amended OTI applications. 230

new and 250 amended licenses were issued, 

350 licenses were revoked, and 100 other OTIrelated actions were taken. An additional 100

non-U.S.-based unlicensed NVOCC bonds were

cancelled.

Looking Ahead: 2004 

• In FY04, the Bureau will continue to 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 60 days after receipt of all 

appropriate documentation. 

• As per a FY03 performance goal, an internal 

audit of the files of current OTI licensees and of 

non-licensed foreign NVOCCs was completed. 

The files were compared to the Regulated 

Persons Index and discrepancies were identified. 

This resulted in a significant number of 

surrendered licenses, revoked licenses, and 

additional applications. 

• The Commission continues its effort at outreach 

to the industry to increase awareness of licensing 

and bonding requirements for OTIs. 

26
Ocean Transportation Intermediary Statistics

Pre-OSRA As of 9/30/00 As of 9/30/01 As of 9/30/02 As of 9/30/03 

Freight Forwarders 

1,700 1,396 1,331 1,294 1,262

NVOCCs 2,200 1,287 1,251 1,298 1,317

Freight Forwarder / 

NVOCC 

400 761 844 873 900

Foreign NVOCC 

Unlicensed

01 575 599 653 721

Foreign NVOCC 

Licensed 

01 35 38 41 40

TOTAL 4,300 4,054 4,063 4,159 4,240

Since OSRA was enacted, the number of OTIs has increased, the largest increases occurring in 

non-U.S.-based NVOCCs and OTIs that provide both ocean freight forwarder and NVOCC services. The 

number of OTIs that are only freight forwarders continues to decline. 

 

27

1Foreign-based NVOCCs included in NVOCC figure and not disaggregated pre-OSRA.
Office of 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: 2003 

• The Passenger Vessel Program received 40

applications for Performance Certificates and

processed 45, and received and processed 30 

applications for Casualty Certificates. 

• In FY03, the Passenger Vessel Program was 

re-evaluated to determine any necessary 

changes based on industry growth and change in

the past 40 years. From the accomplishment of 

this performance goal came a proposed rulemaking. The Bureau currently is reviewing public 

comments. 

• In addition, OPVIP conducted an analysis of the 

Protection and Indemnity Club agreement with

the Commission, continued to work on cruise 

bankruptcies from recent years, and worked to

ensure compliance by several cruise lines. 

• A current list of licensed OTIs was posted and 

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 Responsibility [Docket 

No. 02-15] (October 31, 2002). The Bureau

worked 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. Comments

were received from various interested parties and 

a public hearing was held in May 2003. The 

Bureau currently is working with the Commission

to review the comments. 

Looking Ahead: 2004 

• In FY04, the Bureau intends to complete the 

rulemaking to ensure that the Passenger Vessel 

Program provides adequate consumer protection 

without being unduly burdensome on the 

industry. 

• The Bureau will also continue its efforts in FY04 

to design electronic forms, especially the FMC18, and further explore integration of Commission 

databases. 

 

28
Office of Consumer Complaints (“OCC”) 

The Office of Consumer Complaints provides ombuds services and responds to inquiries and complaints, 

acting as an intermediary to resolve difficulties encountered with respect to cruises and shipments of cargo. 

Most disputes can be resolved through an informal process, with both sides reaching an agreement with

OCC assistance. When an agreement is not reached, in certain cases 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. In addition, the OCC reviews and decides special docket applications, 

which are requests to waive or refund charges. The office also assists in the implementation of the ADR 

program.

Looking Back: 2003 

• The OCC received 2,355 inquiries by phone, email, and fax. Out of these, 601 became informal

complaints and 3 became informal dockets. 

• The OCC resolved 7 informal dockets and

issued 4 special docket decisions. 

• In accordance with FY03 performance goals, 

the OCC created a new list of data codes for the 

complaint database to provide more information 

on types of complaints against cruise operators. 

Looking Ahead: 2004 

• Based on current industry trends, the OCC

estimates that inquiries and complaints will 

increase in FY04. 

• A goal for FY04 is to increase the use of ADR to 

result in faster, less expensive resolution.

Alternative Dispute Resolution (“ADR”) 

Under this program, parties to a dispute are encouraged to avail themselves of services provided by the 

Commission to resolve disputes, primarily through mediation or ombuds services. The Commission makes 

trained neutrals available to facilitate the resolution of shipping disputes at all stages. The Bureau’s Deputy is 

the Commission’s Dispute Resolution Specialist and serves as a third party neutral in complex proceedings 

already in litigation. Staff personnel within the Bureau’s Office of Consumer Complaints also provide 

mediation services. Mediation services are provided for a broad range of disputes, from informal, 

pre-litigation disputes to those involving significant matters in litigation. Mediation is the most frequently 

chosen method of dispute resolution for matters being litigated in formal Commission adjudicatory 

proceedings. 

During FY03, Commission provided formal mediation services that assisted parties in arriving at settlements of 

two major proceedings. 

29
Operational and Administrative Program 

The following administrative offices also are under the 

Executive Director: 

• 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 FY03, OBFM coordinated and prepared the FY04 Congressional Budget and the FY05 OMB budget 

 request, instituted a new accounting cross-servicing arrangement, 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 FY03 include administering the Agency’s SES Candidate Development

 Program, conducting a comprehensive training program in accordance with the agency’s strategic and

 annual performance plans, and concluding transitioning efforts for the new cross servicing-arrangement. 

• Office of Information Resources Management (“OIRM”) 

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

 administrative operations of the Commission 

 FY03 accomplishments include: conducting a Commission-wide systems security assessment, 

 developing the FMC IT systems inventory, and maintaining and enhancing the FMC Homepage. 

• 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 FY03 accomplishments include implementing an automated procurement system, executing a new 

 building lease for Headquarters, and arranging for the printing of 2 FMC brochures.

Looking Ahead: 

• In FYO4, 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 the integration of BPD’s Prism procurement system with the Oracle-based 

 accounting system, and an IT capital planning investment control process will be developed and 

 implemented as part of improving the overall agency IT program. 

30
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: 2003 

• The EEO focused in FY03 on education of the

workplace through seminars, briefings, and

training for employees. 

• The EEO instituted an Advisory Committee on

Women’s Issues. 

Looking Ahead: 2004 

• The EEO will continue to concentrate on 

programs to increase understanding of EEO 

concepts. 

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 FY03, the OIG issued 5 audits. These included reviewing the Alternative Dispute Resolution Program,

verifying the agency’s progress in meeting 2001 Annual Performance Plan goals, and reviewing the 

Commission’s Westlaw contract. 

In FY04, the OIG will continue to follow up on agency progress in relation to performance goals and ensure that 

new payroll and personnel services systems are implemented in an efficient, orderly manner. 

31
Systems, Controls, and Legal Compliance 

The Commission’s 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. 

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

provider. Our financial management/accounting systems now conform to generally accepted accounting 

principles and the relevant financial management system requirements and information objectives of OMB, 

including implementation of the Standard General Ledger. 

The Commission's Inspector General conducted audits and/or reviews of aspects of the agency's financial 

system or financial processes. While auditing the agency's contract for online research services, the Inspector 

General found that certain funds (approximately $24,000) obligated might not be allowed to be used due to 

inadvertent errors in the contract. The Commission subsequently addressed this issue and recovered the use of 

the funds. 

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 cite 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 FY02 FMFIA report, 

and which will be reiterated in our FY03 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. 

 

32