90 FR 98 pgs. 21926-21929 - Investigation Into Flags of Convenience and Unfavorable Conditions Created by Certain Flagging Practices
Type: NOTICEVolume: 90Number: 98Pages: 21926 - 21929
Pages: 21926, 21927, 21928, 21929Docket number: [Docket No. FMC-2025-0009]
FR document: [FR Doc. 2025-09236 Filed 5-21-25; 8:45 am]
Agency: Federal Maritime Commission
Official PDF Version: PDF Version
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FEDERAL MARITIME COMMISSION
[Docket No. FMC-2025-0009]
Investigation Into Flags of Convenience and Unfavorable Conditions Created by Certain Flagging Practices
AGENCY:
Federal Maritime Commission.
ACTION:
Order of investigation and request for comments.
SUMMARY:
The Federal Maritime Commission (Commission) is initiating a nonadjudicatory investigation into whether the vessel flagging laws, regulations, or practices of foreign countries, including so-called flags of convenience, or competitive methods employed by the owners, operators, agents, or masters of foreign-flagged vessels, are creating unfavorable shipping conditions in the foreign trade of the United States. The Commission invites the public to submit comments for its consideration.
DATES:
Submit comments on or before August 20, 2025.
ADDRESSES:
You may submit comments, identified by Docket No. FMC-2025-0009, by the method listed below. The Commission orders that all comments shall be public under 46 CFR 502.291, unless confidential treatment is specifically requested for good cause.
Federal eRulemaking Portal: Your comments must be written and in English. You may submit your comments electronically through the Federal Rulemaking Portal at www.regulations.gov. To submit comments on that site, search for Docket No. FMC-2025-0009 and follow the instructions provided.
FOR FURTHER INFORMATION CONTACT:
For questions regarding submitting comments, including confidential treatment of comments, contact David Eng, Secretary; Phone: (202) 523-5725; Email: Secretary@fmc.gov.
SUPPLEMENTARY INFORMATION:
I. Introduction
The Commission intends to broadly examine whether the laws, regulations, and practices of foreign governments, or the competitive methods employed by owners, operators, agents, or masters of foreign-flagged vessels, might violate statutes administered by the Commission, including 46 U.S.C. Chapter 421, such as by creating unfavorable shipping conditions in the foreign trade of the United States. The Commission notes that it has consistently held that its statutory authorities not only protect United States flagged shipping, but that foreign governmental actions that are detrimental to third-flag carriers can also create conditions unfavorable to shipping in the United States foreign trade within the meaning of Chapter 421. Petition of Ace Line, 19 S.R.R. 481, 482 (FMC 1979).
The Commission is now soliciting comments to assist in its investigation.
II. Summary of Investigation
The Commission's statutory authority includes the mandate to monitor and evaluate conditions that affect shipping in the foreign trade of the United States. 46 U.S.C. 42101(a).
The Commission is concerned about the conditions created by the wide and uneven range of foreign vessel flagging laws, regulations, and practices. Many foreign nations take great care in creating standards for vessels flagged by their registries. These standards ensure the efficient and reliable transit of goods throughout the ocean shipping supply chain. Other foreign countries, however, have engaged in a "race to the bottom"-a situation where countries compete by lowering standards and easing compliance requirements to gain a potential competitive edge. By offering to register and flag vessels with little or no oversight or regulation, countries may compete against one another to gain revenue from the associated fees and to minimize the expenses associated with inspecting vessels and ensuring compliance with appropriate maintenance and safety requirements. In doing so, these nations compete to lower the cost of registering and flagging vessels beyond a point where they can ensure the efficiency, reliability, and safety of the vessels used in the ocean shipping supply chain. The use of these flags of convenience endangers the ocean shipping supply chain.
The International Maritime Organization (IMO) has issued policy recommendations and adopted resolutions to address flags of convenience and fraudulent registries. However, the IMO's approach has not brought about meaningful change nor deterrence to what is clearly a growing global problem. Moreover, if the IMO were to develop a policy solution to address these issues, member and cooperating countries would still be required to domestically enact such regulations, leaving room for some countries to choose their level of compliance. Patchwork policies and uneven compliance have proven ineffective in ensuring the reliability and efficiency of ocean shipping. Naming and shaming countries suspected of flagging or operating shadow fleets or using flags of convenience does not prevent such practices and often leads to further concealment of illicit activities. Additionally, the lack of standardized definitions for terms like flag of convenience, open registry, fraudulent registry and shadow/dark fleet makes problems more difficult to identify, and successfully regulate, on a global scale. Varying and unclear definitions of those terms lead to inconsistent interpretations and result in fragmented policies that do not serve as an effective deterrent to vessel owners or operators who exploit lax rules or engage in deceptive practices. A lack of clarity and consistency when different organizations classify various countries' registries leads to confusing and conflicting results. As the IMO lacks the authority to enforce vessel registry standards or penalize non-compliant nations, its efforts are unlikely to serve as an effective deterrent or bring about meaningful change to curb abuses. A comprehensive and enforceable approach is needed.
For these reasons, the Commission is hereby initiating a nonadjudicatory investigation to assess vessel flagging laws, regulations, and practices and identify "best practices" that contribute to responsible and safe operations of vessels as a critical component of a reliable and efficient ocean shipping system in the U.S. foreign trade. As part of the investigation, the Commission will also assess and identify practices that allow or contribute to unsafe conditions which endanger and imperil the reliability and efficiency of ocean shipping.
At this initial stage of the investigation, the Commission's efforts are concentrated on encouraging comments on worldwide vessel flagging practices from all interested stakeholders.
III. Global Flagging Practices
A. Responsible Flagging Practices
[top] Ships flying the flags of countries engaged in responsible flagging practices operate under strict regulatory compliance and follow robust maritime laws drafted consistent with
B. Unfavorable Flagging Practices
Ships registered under so called flags of convenience (FOC) operate under lax regulatory oversight, leading to lower safety, environmental, and labor standards. These ship owners may pay substandard wages that attract inexperienced crews who lack specialized training in operating the vessel or following strict safety protocols. Since FOC ships have no real commitment to the flagging country, or in some cases to any country, they are beyond the reach of any single national seafarers' trade union. This results in poor working conditions, less experienced mariners, and fewer labor protections for multinational crews, which contribute to unsafe conditions onboard a vessel. Additionally, FOC vessels exploit lower operational costs through reduced taxes, cheaper labor, and irregular maintenance or safety measures. Many FOC vessels also fail to fully comply with international maritime conventions like STCW, SOLAS, or MARPOL, and may avoid regular inspections or certifications. In some instances, vessels deactivate their Automatic Identification Systems (AIS) to hide their location or use fraudulent IMO numbers to disguise illicit activities. 1 A report by a leading maritime artificial intelligence company, Windward, indicates a major change in how vessels experiencing GPS jamming appear on tracking maps. The average distance vessels jump when their AIS is jammed grew from 600km in Q4 2024 to 6,300km in Q1 2025. The report concluded, "This distance completely disrupts trade and safety measures at sea, making it nearly impossible to track vessels within any realistic or relevant geographical vicinity". 2 ? 3 Disabling a ship's AIS massively increases the chance of colliding with another vessel on the open sea. The ownership and management flexibility provided by FOC registries allow shipowners to avoid national regulations, including stricter safety, working conditions, and tax laws. This lack of accountability poses significant reputational risks for FOC vessels, which are often associated with poor environmental records, substandard safety practices, and worker exploitation. Furthermore, flag-hopping or the use of false flags exacerbates these issues by undermining regulatory oversight, 4 enabling the circumvention of laws, and creating inconsistencies in enforcing environmental standards, ultimately jeopardizing both crew welfare and maritime safety.
Footnotes:
1 ? Lloyd's List describes a vessel spoofing AIS location data to enable delivery of sanctioned oil and ship-to -ship transfers off the coast of Singapore. China's Dongying Port Acts as Sanctions Bypass Valve Following Vessel Calls, Lloyd's List (Feb. 18, 2025).
2 ? Windward Tracks Change to GPS Jamming Hotspots, MarineLink (Apr. 9, 2025), https://www.marinelink.com/news/windward-tracks-change-gps-jamming-524514.
3 ?GPS is a satellite-based navigation system that provides precise location data to a receiver, while AIS is a short-range coastal tracking system that transmits a vessel's information, including position, speed, and course, to other AIS-equipped vessels and shore stations.
4 ? Off The Hook: How Flags of Convenience Let Illegal Fishing Go Unpunished, Environmental Justice Foundation (2020), https://ejfoundation.org/resources/downloads/EJF-report-FoC-flags-of-convenience-2020.pdf.
Another concerning practice is fraudulent ship registrations whereby owners or operators register vessels under a flag state without the knowledge or approval of the relevant maritime administration, often to evade regulations or conceal illicit activities. In 2019, the IMO Assembly urged governments to send the names of their ship registration authorities and field offices, along with contact details, to the IMO Secretary-General to update the Global Integrated Shipping Information System (GISIS)? 5 module. France and the Netherlands reported that as of January 15, 2025, only 62 member states responded with this information. 6 Based on this lack of responsiveness, France advocated for "an effective, concerted, and global approach."
Footnotes:
5 ?GISIS is an online system created by the IMO to share and manage important maritime information globally. It collects and provides key shipping information, such as ship details, ownership, and safety data, helping countries, companies, and organizations stay updated on regulations and track important maritime information.
6 ?Declan Bush, IMO Wonders How to Start Its Fight Against Flagging Fraud, International Maritime Organization (Mar. 25, 2025), https://www.lloydslist.com/LL1152982/IMO-wonders-how-to-start-itsfight-against-flagging-fraud/.
The "shadow fleet" refers to a group of ships that operate outside the regular or official frameworks of the global maritime industry, often engaging in illegal or illicit activities such as smuggling, sanction evasion, or transporting prohibited goods, sometimes without proper documentation to avoid international scrutiny. 2 Shadow fleets are a direct response to international or unilateral economic sanctions. The ownership and operational details of shadow fleet ships are often concealed or disguised, using false documentation or shell companies to obscure the true identity of the owner. 7 These vessels operate in secrecy, occasionally turning off their AIS or using fraudulent IMO numbers to avoid detection. Shadow fleet ships may also be unregistered, operating in international waters where oversight is minimal, which complicates enforcement efforts and regulatory compliance. By exploiting regulatory loopholes, they avoid taxes, bypass labor and environmental laws, and engage in unregulated shipping practices. In some cases, shadow fleets have been linked to organized crime and serious egregious offenses like human trafficking and arms smuggling. Shadow fleet vessels may tend to operate outside the constraints of international law to facilitate activities like illegal fishing.
Footnotes:
7 ? Russia's 'Shadow Fleet': Bringing the Threat to Light, European Parliament (Nov. 2024), https://www.europarl.europa.eu/RegData/etudes/BRIE/2024/766242/EPRS_BRI(2024)766242_EN.pdf.
C. Risks to U.S. Foreign Commerce
[top] The Commission's purposes include ensuring an efficient and economical ocean commerce transportation system and promoting the export of United States goods through a competitive and efficient system. This global race to the bottom could dramatically undermine the efficiency and reliability of the
Recent domestic incidents linked to flags of convenience highlight the urgent need to address these issues. A March 2025 National Transportation Safety Board report? 8 underscores how flags of convenience have been associated with serious safety risks, such as bridge collapses and near-misses. One example is the MV Dali, which lost power and caused the March 2024 collapse of the Francis Scott Key Bridge in Baltimore, Maryland. This vessel was registered in the Marshall Islands? 9 and flagged in Singapore, with the Marshall Islands flag being one of the most commonly used flags of convenience. Less than two weeks later, another large containership, the APL Qingdao, lost power and narrowly avoided colliding with New York City's Verrazzano Bridge. 10 The vessel had been flagged in Malta since 2021, 11 considered a flag of convenience by some organizations. The crash of the MV Dali into the Francis Scott Key Bridge highlights not only the fragility of domestic and international supply chains, but also the dangers posed to critical infrastructure by international ocean shipping vessels operating under flags of convenience. One malfunctioning vessel can incapacitate a port for weeks, or longer, and force the rerouting of global streams of commerce, a risk that increases exponentially when flagging nations eschew oversight and owners and operators ignore best practices. Responsible ship owners and operators that use registries and flags of responsible foreign nations bear these negative externalities through elevated costs created by irresponsible foreign nations and parties that cut all costs associated with flagging to an unacceptable minimum.
Footnotes:
8 ? Safeguarding Bridges from Vessel Strikes: Need for Vulnerability Assessment and Risk Reduction Strategies, National Transportation Safety Board (Mar. 18, 2025), MIR-25-10 https://www.ntsb.gov/investigations/AccidentReports/Reports/MIR2510.pdf.
9 ? Dali, Equasis, Ministry of Ecology, Sustainable Development and Energy (Mar. 27, 2024), https://www.equasis.org/EquasisWeb/restricted/ShipInfo?fs=Search&P_IMO=9697426.
10 ? Another Box ship Loses Propulsion Near an Iconic East Coast Bridge, The Maritime Executive (Apr. 8, 2024), https://maritime-executive.com/article/another-container-ship-loses-propulsion-on-approach-to-an-e-coast-bridge.
11 ?APL Qingdao, VesselFinder (Apr. 9, 2025), https://www.vesselfinder.com/vessels/details/.
Other recent events emphasize the severity of risks created when vessels operate under flags of convenience or without a flag. On March 23, 2025, the Taiwanese Coast Guard detained a Chinese ship for operating without registration, 12 and in February 2025, a Djibouti flagged oil tanker, MS Melenia, and crew were left stranded without fuel after the tanker vessel was abandoned for a third time in two years, disowned by its flag state, and sanctioned by the U.S. 13 Further, vessels tied to the shadow fleet have recently suffered explosions at sea and at berth. A vessel carrying tons of fuel and lacking adequate maintenance or safety oversight has the potential to devastate an entire port. These kinds of incidents very likely create conditions unfavorable to shipping in the foreign trade.
Footnotes:
12 ? Taiwan Detains Chinese Fuel Barge Operating Without Registration, The Maritime Executive (Mar. 24, 2025), https://www.maritime-executive.com/article/video-taiwan-detains-chinese-fuel-barge-operating-without-registration.
13 ?Paul Peachey, VLCC Crew Left Adrift Without Fuel After Sanctioned Tanker Abandoned for Third Time in Two Years, TradeWinds (Mar. 24, 2025), https://www.tradewindsnews.com/regulation/vlcc-crew-leftadrift-without-fuel-after-sanctioned-tanker-abandoned-for-third-time-in-two-years/2-1-1796938.
IV. Investigation and Initial Request for Comments
The Commission has determined that the above situation bears further scrutiny. The Commission therefore orders and initiates a nonadjudicatory investigation under 46 CFR part 502, subpart R (§§?502.281-502.291). The Commission designates the General Counsel to lead the investigation, under 46 U.S.C. 46104 and 46 CFR 502.284. 14 The Commission also orders that all comments shall be public under 46 CFR 502.291, unless confidential treatment is specifically requested for good cause.
Footnotes:
14 ?Under the authority of 46 U.S.C. 46104, the Commission delegates to the General Counsel: (1) authority under 46 CFR 502.286, 502.287 and 502.288 to compel the production of information and witnesses or evidence; (2) authority under 46 CFR 502.291 to withhold from public disclosure a response to this investigation, and (3) authority under 46 CFR 502.289 to take appropriate action against parties for failure to comply with the investigational process.
As part of the investigation, the Commission is asking interested persons to submit written comments containing evidence, experiences, and/or data relevant to the wide range of flagging practices across foreign nations. In particular, the Commission seeks:
1. Specific examples of responsible flagging laws, regulations, practices, and proposals, including how they contribute or would contribute to the efficiency and reliability of the ocean shipping supply chain.
2. Specific examples of unfavorable flagging laws, regulations, and practices that endanger the efficiency and reliability of the ocean shipping supply chain, including:
a. how irresponsible vessel flagging laws, regulations, and practices endanger the efficiency and reliability of the ocean shipping supply chain;
b. which irresponsible laws, regulations, and practices pose the greatest danger;
c. whether irresponsible vessel flagging laws, regulations, and practices foster the development of malign actors or fleets, such as the so-called shadow fleet; and
d. how irresponsible vessel flagging laws, regulations, and practices endanger maritime infrastructure, such as ports, bridges, canals, and chokepoints;
3. Practices by owners or operators of vessels that undermine the efficiency and reliability of international ocean shipping, including:
a. dangers posed by under-insured or uninsured vessels, including to other vessels, maritime infrastructure, and mariners;
b. dangers posed by vessels with poor or non-existent maintenance programs and few or no safety measures;
c. dangers posed by inexperienced vessel owners, operators, or agents;
d. dangers posed by inexperienced or unqualified mariners; and
e. dangers posed to freedom-of-navigation principles by irresponsible vessels owners and operators, such as dragging anchors damaging undersea cables/infrastructure, or through turning off, jamming, or spoofing? 15 AIS/GPS.
Footnotes:
15 ?Jamming involves broadcasting a strong signal to interfere with the reception of legitimate navigation signals, effectively blocking them. Spoofing, on the other hand, involves sending false navigation signals to trick the receiver into believing it is in a different location.
4. The benefits to international ocean shipping of responsible vessel registration and flagging practices, including:
a. potential benefits to ocean shipping efficiency and reliability of standards for flagging laws, regulations, and practices;
b. the most important responsible flagging laws, regulations, and practices that contribute to the efficiency and reliability of ocean shipping;
c. how Commission regulations could support responsible flagging laws, regulations, and practices; and
d. how Commission regulations could deter irresponsible flagging laws, regulations, and practices.
5. The burdens to foreign nations and vessel operators or owners of irresponsible flagging practices.
[top] The Commission's jurisdiction is broad, and the agency welcomes comments from all members of the public, including shippers, carriers,
As the Commission proceeds with this investigation, the General Counsel or the Commission may decide to request additional comments or gather information through other means as authorized under 46 U.S.C. 40104, 42104, 42109, and 46 CFR part 550.
By the Commission.
David Eng,
Secretary.
[FR Doc. 2025-09236 Filed 5-21-25; 8:45 am]
BILLING CODE 6730-02-P