FMC Increases Penalties for Shipping Act Violations

The Federal Maritime Commission has increased the maximum penalties assessed for statutory violations effective January 15, 2021, as required by the Federal Civil Penalties Inflation Adjustment Act of 2015. The increases are tied to the rate of inflation. Maximum penalties for knowing and willful violations of the Shipping Act increased to USD 61,820, from USD 61,098. Maximum penalties for violations that are not knowing and willful increased to USD 12,363 from USD 12,219.

One of the largest maximum penalties FMC can assess increased to USD 1,950,461 per voyage. This is the penalty authorized by the Shipping Act which is provided in 46 U.S.C. 42106 as follows.

“If the Federal Maritime Commission finds that conditions unfavorable to shipping in foreign trade as described in section 42101 of this title exist, the Commission may —

1. limit voyages to and from United States ports or the amount or type of cargo carried;
2. suspend, in whole or in part, tariffs and service contracts for carriage to or from United States ports, including a common carrier’s right to use tariffs of conferences and service contracts of agreements in United States trades of which it is a member for any period the Commission specifies;
3. suspend, in whole or in part, an ocean common carrier’s right to operate under any agreement filed with the Commission, including any agreement authorizing preferential treatment at terminals, preferential terminal leases, space chartering, or pooling of cargo or revenue with other ocean common carriers;
4. impose a fee not to exceed USD 1,000,000. per voyage; or
5. take any other action the Commission finds necessary and appropriate to adjust or meet any condition unfavorable to shipping in the foreign trade of the United States.”

The penalty fee of USD 1,000,000 shown in (4) is the amount provided in the Shipping Act of 1984 which has been increased due to inflation adjustments many times and now stands at USD 1,950,461. The FMC has also increased the fees for nine other penalties as specified in the Shipping Act. The complete list of penalties was published in FMC Docket No. 21-01 in the Federal Register and on the Commission’s website.