The U.S. Federal Maritime Commission (FMC) has launched a non-adjudicatory investigation into the use of “flags of convenience” and other flag-state practices. The Commission aims to examine whether foreign vessel registration practices are creating unfavorable conditions in U.S. foreign trade.
Scope and Rationale of the Investigation
In late May 2025, the FMC initiated an investigation into whether the registration practices—including so-called flags of convenience—of foreign entities are undermining the efficiency and reliability of the U.S. international ocean transportation system. These practices may facilitate lax regulatory enforcement, including diminished safety, environmental, and labor standards.
Legal Authority and Investigation Mechanism
The investigation is authorized under the FMC’s Section 19 trade authority from the Merchant Marine Act, which empowers the agency to address conditions adversely affecting U.S. foreign trade. As a non-adjudicatory inquiry, the FMC can request information, hold hearings, issue subpoenas, and gather written or oral evidence, without initiating formal legal proceedings.
Public Engagement and Feedback
A public comment period, running from May through August 20, 2025, invited stakeholders to provide insight into both responsible and unfavorable flagging practices.
The FMC has already received submissions detailing issues such as seafarer welfare, environmental compliance, and the increasing prevalence of a so-called “dark fleet”—a loosely regulated group of vessels operating outside conventional oversight.
Concerns Driving the Investigation
Key areas of concern highlighted by the FMC include:
- The lowering—or “race to the bottom”—of standards due to less stringent or poorly enforced flagging laws.
- The use of flag-state registries that enable vessels to evade accountability, including potential facilitation of illicit activities or sanctions circumvention.
- Risks posed by an unmonitored “shadow fleet,” with vessels not held to consistent operational or safety norms.
Although no specific flags or nations are targeted at this stage, the FMC may recommend or implement remedial measures, such as new regulatory standards, monitoring requirements, or trade restrictions—contingent on the investigation’s findings.
Stakeholders—including vessel operators, seafarer groups, and maritime labor organizations—are advised to monitor developments closely, given the potential for significant regulatory shifts.
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Source: Seatrade Maritime News
