Constitutional Challenge to the FMC

Since the 2020-2022 supply chain congestion, ocean carriers have faced a wave of Shipping Act claims from customers seeking to recover elevated import costs incurred during the pandemic-driven surge in U.S. consumer demand. Broadly speaking, these complaints have been brought by multinational big-box chains seeking to recover some of the steep costs they incurred to import their goods during the pandemic era’s unprecedented surge in U.S. consumer demand. A handful of these claims have progressed to initial adjudication before the Federal Maritime Commission (FMC), resulting in administrative decisions with sizable damage awards against the carrier. This week, for the first time, an ocean carrier has taken square aim at the source of those decisions: the Federal Maritime Commission itself. 

On May 5, 2026, Orient Overseas Container Line Limited and its Europe and USA affiliates (collectively, OOCL) filed suit in a Texas federal court seeking a temporary restraining order and injunction against enforcement of an April 24, 2026 FMC ruling. In that ruling, Chief Administrative Law Judge (ALJ) Erin Wirth (also named as a defendant in OOCL’s new Texas lawsuit) found OOCL liable under the Shipping Act (46 U.S.C. 41102) for unreasonable practices involving service commitments, failure to perform its services in accordance with service contracts, refusal to deal, and retaliation against the complainant Bed, Bath & Beyond. In the initial decision, ALJ Wirth awarded approximately $45.6 million in reparations. 

In the May 2026 federal complaint, OOCL advances both jurisdictional and constitutional arguments. First, it frames the FMC ruling as deciding contractual disputes rather than statutory violations.  OOCL argues the FMC lacked jurisdiction to adjudicate claims regarding service and space allocation, price terms, or the reasonableness of OOCL’s demurrage and detention charges because those are breach-of-contract claims relating to the service contracts between ocean carriers and their customers. OOCL contends that the Shipping Act gives the FMC jurisdiction over statutory violations, but it does not extend jurisdiction to contract enforcement.

Second, OOCL asserts that all  FMC proceedings are unconstitutional to the extent they involve ‘executive’ function (i.e., enforcement of the Shipping Act in the form of civil reparations) rather than ‘administrative’ functions.  OOCL contends that because the FMC ALJs are insulated by two ‘for-cause’ removal layers, they are impermissibly restricted from presidential oversight. Specifically, an FMC ALJ can only be removed for good cause by the Merit Systems Protection Board (MSPB), and, in turn, the MSPB members themselves can only be removed for cause. OOCL argues that this violates Article II of the constitution by restricting presidential oversight over executive branch officers. 

While there is a circuit split, this argument has been successful in obtaining preliminary injunctions against ALJ rulings from the National Labor Review Board, the Securities and Exchange Commission, and Department of Labor in the Fifth Circuit. OOCL also contends that this constitutional argument is supported by the current Department of Justice. A 2025 memorandum from the DOJ explains, “the Department of Justice has concluded that the multiple layers of removal restrictions for … ALJs … violate the Constitution, [and] the Department will no longer defend them in court[.]” If the court adopts OOCL’s arguments, the FMC’s scope and power could be curtailed.

The lawsuit is a big swing, and a consequential one. If successful, OOCL’s challenge would impact roughly a dozen proceedings currently pending before the FMC, with claims totaling billions of dollars at stake.  Attacking the FMC and its individual ALJs is its own risk. To borrow a phrase: 

“You come at the king, you best not miss.” Omar Little, The Wire.