Michigan Supreme Court Confirms: No Independent Cause of Action for Breach of Implied Covenant of Good Faith
Sometimes an expected result is still newsworthy. On March 27, 2025, in Kircher v Boyne USA, Inc., the Michigan Supreme Court held that there is no independent cause of action for breach of the implied covenant of good faith and fair dealing inherent in contracts. This is no surprise; lower state courts and federal courts interpreting Michigan law had consistently reached the same conclusion. Kircher represents the first such holding by the Michigan Supreme Court, however, and thus it brings certainty to this area of the law.
As Kircher explains, every contract contains an implied covenant of good faith and fair dealing. “Where a party to a contract makes the manner of its performance a matter of its own discretion, the law does not hesitate to imply the proviso that such discretion be exercised honestly and in good faith.”[1] In other words, if a party has flexibility in how it performs a contract, it must use that flexibility in good faith. If it does not, then it could be liable for breach of the contract.
The duty of performing in good faith cannot alter a contract’s terms, however. Each party to a contract is required to do only what it bargained to do, nothing more. A party to a contract that regrets the bargain it struck is not free to argue “Bad faith!” to get out of its deal.
The Kircher court decided that is what the plaintiff was trying to do. The plaintiff and defendants had agreed in a contract that the defendants would be required to purchase the plaintiff’s shares in a certain company. They settled on a mathematical formula to calculate the price at which the defendants would purchase the shares. Neither party disputed this.
Circumstances changed, though, and the share price yielded by the formula fell below $0 per share. The contract allowed the parties to change the formula if they both wished. Plaintiff sued, claiming that the duty of good faith required defendants to agree to a different formula that would yield a result above $0 per share. The Supreme Court disagreed. The formula the parties had selected gave defendants no flexibility in how the share price was to be calculated, and thus there was no question of “good” or “bad” faith in the computation. The fact that parties could change the formula if they so agreed did not mean that they must do so because of changed circumstances. Plaintiff had to live with the bargain as originally negotiated and could not alter it with the benefit of hindsight.
Although it may not feel “fair” that the formula to which plaintiff previously agreed now yields unfavorable results, that is the agreement the parties had struck. Had the Kircher court ruled otherwise, it would allow the fairness of a contract to be called into question whenever a party had regrets. The decision by the Kircher court thus brings a welcome dose of certainty. Parties can rely on the terms of the contracts that they draft, without concern that a court might later second guess those terms at the request of a disgruntled party.
[1] Kircher, quoting Burkhardt v City Nat’l Bank of Detroit, 57 Mich App 649, 652; 226 NW2d 678 (1975).
Trump DEI Executive Orders – Impacts on Small Businesses and Small Business Subcontracting
On January 20 and 21, 2025, President Trump signed two executive orders focused on Diversity, Equity, and Inclusion (DEI) programs: EO 14151, “Ending Radical and Wasteful Government DEI Programs and Preferencing” and EO 14173, “Ending Illegal Discrimination and Restoring Merit‐Based Opportunity” (the “EOs”). You can read more about the content of these EOs here. While the EOs have broad ranging impacts on federal contractors in a number of areas, this blog focuses on the potential impacts specific to small businesses generally and to large businesses via small business subcontracting.
At the outset, the EOs require “Each agency, department, or commission head” to “direct the deputy agency or department head to . . . recommend actions . . . to align agency or department programs, activities, policies, regulations, guidance, employment practices, enforcement activities, contracts (including set-asides), grants, consent orders, and litigating positions with the policy of equal dignity and respect identified in section 1 of this order. . . .” EO 14151 (emphasis added).
The EOs take this approach because, unlike many policies and programs that are the creature of EOs, regulations, and contract terms; the various federal set-aside programs are creatures of statute – most notably the Small Business Act of 1953. Importantly, although the Small Business Act created the small business preference categories most likely to be in the crosshairs of the EOs (women-owned small businesses and socially/economically disadvantaged small businesses), the EOs do not (and cannot legally) do away with those statutory preferences.
To remove these preferences (or other subcategories), or to eliminate small business subcontracting preferences altogether, Congress would have to amend the Small Business Act. Although the President currently controls both houses of Congress, it still may be a tough political task to eliminate a program responsible for $178.6 billion dollars (FY23) annually awarded to small businesses. Accordingly, at the moment, the various federal set-aside programs remain in place.
The Small Business Administration’s (“SBA”) “Day One” Memo
Although the Trump administration cannot unilaterally eliminate the federal set-aside programs, it certainly can reprioritize. On February 24, 2024, in what is being labeled “a new day at SBA,” newly installed SBA Administrator Kelly Loeffler outlined her top priorities for “rebuilding the SBA into an America First engine for free enterprise.”
The first six priorities are directed at supporting the President’s “America First agenda.” These are largely internal changes, which include the following:
Transforming the SBA’s Office of International Trade into the Office of Manufacturing and Trade with the goal of “promoting economic independence, job creation, and fair trade practices to power the next blue‐collar boom.”
Enforcing the President’s anti‐DEI (EO 14151), only‐two‐sexes (EO 14168), and less restrictive environmental controls (EO 14154) Executive Orders.
Supporting the Department of Government Efficiency’s (“DOGE”) cost cutting efforts by, among other things, prioritizing the elimination of fraud and waste within the agency.
Mandating SBA’s employees return to the office full‐time.
Evaluating workforce reduction (e.g., assessing opportunities for workforce reductions).
Cracking down on fraud across all SBA programs, including establishing “a Fraud Working Group” and a “Fraud Czar” ‘to identify, stop, and claw back criminally obtained funds….”
The next four priorities outlined in Loeffler’s memo are directed at eliminating waste and reducing fraud. These are more likely to have a more immediate impact on federal contractors. They include:
Conducting an independent SBA‐wide financial audit in an effort to identify and counter delinquencies, defaults, and charge‐offs on SBA loan programs.
Evaluating SBA’s lending programs to maintain the “zero‐subsidy status” of some of its programs, reviving its collection programs, and restoring its underwriting standards, among other actions.
Banning illegal aliens from receiving SBA assistance.
Restricting “hostile foreign nationals,” particularly those with ties to the Chinese Communist party, from receiving SBA assistance.
The final five priorities are identified as “Empowering Small Businesses” and likely will have the largest and most immediate impact on small businesses. They include:
Establishing a “strike force” “to identify and eliminate burdensome regulations promulgated by all federal agencies….”
Improving SBA’s customer service, technology and cybersecurity, to improve digital interfaces, response times, and customer satisfaction.
Reducing the contractual goals for contracting with 8(a) companies – i.e., Small Disadvantaged Businesses – from the current 15% down to the statutory 5%. The rationale for this change is the concern that the higher goal had been “negatively impacting many veteran‐owned small businesses.”
Changing the locations of SBA regional offices to remove them from “sanctuary cities” and relocate them to “to less costly, more accessible locations in communities that comply with federal immigration law.”
Terminating SBA funded voter registration activities.
While most of the priorities above appear relatively straightforward, the shift away from 8(a) contracting (by reducing the contracting goals), is notable for a couple of reasons. First, the rationale suggests this administration is not interested in reducing preferences for veteran-owned small businesses, so those programs and goals very likely are safe. Second, this reprioritization suggests it is likely we may see a concurrent effort to reduce 8(a) small business subcontracting goals, which will have an impact on both small and large businesses, as discussed in more detail below.
Small Business Subcontracting Plans
Most large businesses contracting with the Federal Government are required to adopt subcontracting goals, make good faith efforts to achieve those goals, and to report to the Government the contractor’s success in meeting those goals. The goals cover subcontract spending on small businesses, minority owned small businesses, women owned small businesses, and more.
As noted above, the Federal Government’s small business subcontracting program is a preference program of the sort targeted by the EOs. Like the prime contract set-aside preference programs, however, most of the small business subcontracting requirements are established by statute. Thus, here again, it would take an act of Congress to eliminate certain preference categories, or the program altogether. Although we have little doubt Congress will take steps to align the law with the EOs, that has not happened yet. Accordingly, the subcontracting rules continue to apply. That is not to say the Government will expend any effort enforcing those rules. It would be unsurprising to see a directive to the SBA and other contracting agencies (most likely General Services Administration (“GSA”), Department of Defense (“DOD”), and National Aeronautics and Space Administration (“NASA”)) not to audit or enforce the Subcontracting Plan requirements. Still, large businesses should not ignore existing compliance obligations. Indeed, while the Government may not seek to enforce the rules, whistleblowers may. As such, noncompliance with the Subcontracting Plan requirements still presents a risk to large businesses.
Time will tell how the Trump administration’s priorities (including the 15 SBA priorities) will be implemented, and, thus, what impact they will have on small—and large—businesses. In the meantime, small business would be well advised to reassess compliance programs to ensure they are in sync with all current rules, regulations, and guidelines. Additionally, small businesses may want to take steps to prepare for an audit as we are likely to see an uptick in SBA audit activities. Likewise, large business would be well advised to do some advanced planning since (a) it is likely there will be a concurrent change in the SBA’s subcontracting programs and (b) the SBA’s new priorities likely will impact the pros and cons of partnership choices on federal opportunities.
Fourth Circuit Stays Injunction on DEI Executive Orders – What Federal Grantees and Contractors Need to Know
As we shared in a previous client alert, on February 21, 2025, a U.S. District Court judge issued a preliminary injunction in National Association of Diversity Officers in Higher Education et al. v. Trump et al., Dkt. No. 1:25-cv-00333 (D. Md. Feb. 21, 2025) that blocked portions of the Trump administration’s executive orders on diversity, equity, and inclusion programming (“DEI”) by federal contractors and grantees and private sector entities. On March 10, 2025, the same U.S. District Court issued a clarified preliminary injunction, explaining that the February 21 preliminary injunction applied to all federal executive branch agencies, departments, and commissions, but not the President.
The federal government appealed the preliminary injunction to the Fourth Circuit Court of Appeals, arguing that the Executive Orders instructed agencies to enforce existing laws without violating First Amendment rights. On Friday, March 14, 2025, the Fourth Circuit issued an Order staying the preliminary injunction. This stay means that executive agencies may now enforce the portions of the January 20 and January 21, 2025 Executive Orders previously enjoined, including:
Executive agencies may terminate “equity-related grants or contracts” (the “Termination Provision”);
Executive agencies may require federal contractors or grantees to certify that they do not operate illegal programs promoting DEI and agree that they are in compliance with “all applicable Federal anti-discrimination laws” (the “Certification Provision”); and
The Attorney General may take “appropriate measures to encourage the private sector to end illegal discrimination and preferences” including by identifying “potential civil compliance investigations” to deter illegal DEI programs (the “Enforcement Provision”).
The Fourth Circuit’s order also clarifies that these Executive Orders only require the executive agencies that are enforcing these Executive Orders to enforce them consistent with current federal rules and law, which prevent the agencies impinging on protected speech rights. As a reminder, federal civil rights laws have not changed under the new administration (that would require an act of Congress or a court holding), so federal grantees and contractors that were complying with federal law in their programing prior to January 20 and 21, 2025 would still be in compliance with those laws today.
Notable for legal scholars, after the Fourth Circuit unanimously stayed the preliminary injunction, each judge offered a concurring opinion. Chief Judge Diaz reasoned that “how the administration enforces these executive orders … may well implicate cognizable First and Fifth Amendment concerns.” Judge Harris recognized the executive orders should only terminate funding as “subject to applicable legal limits,” only for “conduct that violates existing federal anti-discrimination law.” Judge Rushing stated that “the government is likely to succeed in demonstrating that [a narrow application of] the challenged provisions of the Executive Orders,” do not violate the First or Fifth Amendments.
Separately, Judge Rushing reasoned that a nationwide “scope of the preliminary injunction alone should raise red flags” as it “purported to enjoin nondefendants from taking action against nonplaintiffs.” It remains to be seen whether other Circuit Courts will take a similar stance.
What does this mean for institutions of higher education?
As shared in our prior client alert, institutions should review their policies or programs and confirm that their practices comply with existing federal discrimination law. Institutions should also review any federal agency requests for certification or changing terms and conditions related to their federal grants and contracts. Please continue to monitor developments and consult legal counsel with concerns related to compliance.
Minnesota Employment Legislative Update 2025, Part I: Breaking the Tie to Make the Law
After controlling Minnesota’s House, Senate, and governorship since 2023, the Minnesota Democratic–Farmer–Labor (DFL) Party’s legislative and gubernatorial “trifecta” at the state capitol is no more. The 2025 regular session of the Minnesota Legislature began with Democrats and Republicans tied at sixty-seven members each in the House and a slim DFL majority in the Senate, meaning no single party can push through its agenda alone.
With every vote carrying significant weight in the session, legislators must reach across the aisle to achieve the majority vote required to pass bills. The question is, who will compromise, and what will it take to break the tie?
Quick Hits
The Minnesota Legislature’s party divide creates uncertainty for employers, with amendments to key labor laws like Paid Family and Medical Leave and Earned Sick and Safe Time potentially facing delays or requiring bipartisan compromise.
Proposed amendments to Minnesota’s Earned Sick and Safe Time Law include delaying penalties for violations before January 1, 2026, making Earned Sick and Safe Time permissive, and changes to leave notice requirements and documentation for extended leave, but none have advanced past initial stages.
Various bills aim to modify or delay the Paid Family and Medical Leave Law, with some proposing exemptions for small employers and others seeking to repeal the law or delay its implementation until 2027.
This divide in the Minnesota Legislature means uncertainty for Minnesota employers. Critical issues, such as Minnesota’s Paid Family and Medical Leave and Earned Sick and Safe Time (ESST) laws, may either face delays or require bipartisan compromise to advance. Employers should stay alert until the end of the legislative session on May 19, 2025, as the legislature negotiates the future of Minnesota’s labor and employment laws.
This article previews key proposed bills that would impact employers if enacted. While it is too early to predict which bills will reach the governor’s desk, the nature of the proposed legislation offers insight into the extent of the legislative divide and the effort required by the legislature to pass any bills.
Minnesota Earned Sick and Safe Time
A handful of proposed bills would amend Minnesota’s ESST law, but none have advanced past their introduction and first reading. These bills sit in the Minnesota House of Representatives’ Workforce, Labor, and Economic Development Finance and Policy Committee and the Minnesota Senate’s Labor Committee, respectively.
House File (HF) 2025 / Senate File (SF) 2300 would create the most significant changes among the proposed bills. These companion bills, among other amendments, would:
exempt employers with fewer than fifteen employees from ESST requirements;
allow prorating ESST hours based on full-time or part-time employee status;
change employee notice for unforeseeable leave from “as soon as practicable” to “as reasonably required by the employer”;
allow employers to ask for documentation if ESST use exceeds two days;
remove certain paid time off (PTO) requirements; and
let employers ask employees to find replacements unless the leave is unforeseeable and permit employees to find replacements on their own.
Other proposed bills would exclude farm employees working for farms with five or fewer employees (HF 1057 / SF 310), Department of Transportation workers (HF 1905), and inmates of correctional facilities (SF 947) from certain requirements; exclude employees appointed to serve on boards or commissions from certain definitions (HF 758 / SF 494); and give employers the option to provide certain benefits (HF 1542 / SF 2572). HF 1325 / SF 2605 would prohibit penalties for violations before January 1, 2026, and provide various exemptions and proration options for small employers.
Paid Family and Medical Leave (Paid Leave)
Various proposed bills aim to change the Paid Leave Law, including potentially delaying its implementation for another year or repealing it altogether. Notably, HF 0011 / SF 2529 would delay the law’s implementation by one year, meaning employees would not receive benefits until January 1, 2027. Once it was sent to the House floor for debate and vote, the House laid HF0011 on the table. No further action will be taken until the House reconsiders the bill.
Other related bills to watch:
HF 1241 / SF 1771 and HF 1263 / SF 2277 would repeal the Paid Leave Law and return unspent money to the general fund.
HF 0260 / SF 1793 would exempt employers with twenty or fewer employees until January 1, 2028.
HF 2113 would exempt employers with fifty or fewer employees.
HF 2024 would exempt certain small employers; change the definition of a seasonal employee; allow private plans to provide shorter durations of leave and benefits under certain circumstances; and postpone benefits until January 1, 2027.
HF 1523 / SF 1849 would exempt certain agricultural workers.
HF 2269 would delay employer penalties for failure to notify employees of paid leave benefits until January 1, 2027.
HF 1976 / SF 2466 would exempt collective bargaining agreement employees from the definition of “covered employment” under certain conditions; remove individuals with personal relationships with employees from the definition of “Family Member”; change the definition of “small employer” to fifty or fewer employees; and require small employers to pay a 50 percent rate among other amendments.
Nondiscrimination
The legislature introduced numerous bills targeting nondiscrimination laws, which are summarized here.
HF 1672 / SF 2371 would expand nondiscrimination provisions to include medical cannabis patients.
HF 2182 / SF 200 would allow employers to justify adverse impact of discriminatory practices if related to the job or business purpose.
HF 0481 / SF 1529 would prohibit employment discrimination based on refusal of medical intervention.
HF 0282 / SF 407 would add political affiliation as a protected category under the Minnesota Human Rights Act. Similarly, SF 863 would prohibit employers from engaging in economic reprisals based on political contributions or activity.
HF 1427 / SF 1111 would require transportation network companies to make vehicles wheelchair-accessible and adopt nondiscrimination policies.
Independent Contractors
The legislature has taken up several bills related to independent contractors. Below is a summary of the key bills currently under consideration:
HF 1316 / SF 2306 would require employers to report newly hired independent contractors to the commissioner of children, youth, and families for child support purposes.
SF 2153 would expand “prohibited practices” to include “if an employer has a formal job classification and compensation plan, place an employee in a job classification or job category or provide a job title that misrepresents the employee’s experience or actual job duties and responsibilities.”
HF 2145 / SF 2361 woulddouble the potential penalty for employers that intentionally misrepresent an employee as an independent contractor in the unemployment insurance or paid family and medical leave programs.
Job Postings, Employment Agreements, and Unions
The legislature also introduced bills that would affect job posting requirements, employment agreements, and unions. Namely:
Job Postings
HF 1484 / SF 2235 would require job postings to disclose whether employee health plan options comply with cost-sharing limits.
Employment Agreements
HF 2567 / SF 2533 would prohibit stay-or-pay provisions as a condition of employment.
HF 1768 would provide more circumstances under which a covenant not to compete is valid and enforceable.
Unions
HF0107 / SF1532 would allow strikers who stop working due to a labor dispute to be eligible for unemployment benefits.
SF 1148 would allow applicants to be eligible for unemployment benefits if the employer hires a replacement worker for their position.
HF 2240 / SF 3050 would allow private employees to allocate their union dues to a local, state, or national organization of their choice.
Productively Pursuing and Maximizing Insurance Claims
Maximizing insurance claims starts with locating and notifying all potentially responsive coverages when facing a loss or claim. This article offers a 101 about what types of maritime-, transportation-, and shipping-related events insurance may cover and how to go about productively pursuing an insurance recovery when disaster strikes—even if your insurance company says “no.”
Two Overarching Types of Insurance
Without getting too far into the weeds of the many different types of insurance coverage available to policyholders, think about them as falling into one of these two broad buckets: (1) first-party insurance coverage, and (2) third-party insurance coverage.
First-party insurance describes coverages that respond to a policyholder’s losses, which do not involve any claim asserted against the policyholder (e.g., you, your business, your employer). First-party property policies such as marine property insurance and bumbershoot property insurance, for example, typically insure against loss of, or damage to, the policyholder’s property (e.g., structures, terminals (including piers, breasting dolphins, storage tanks, etc.), electronic equipment), as well as coverage for lost business revenue. These first-party property policies frequently are “all risk” policies, meaning they cover the policyholder’s losses unless caused by an expressly excluded peril that the insurer can prove (e.g., ordinary wear and tear). Property policies often include business interruption coverage and coverage for inventory or goods lost or damaged in transit. Other types of first-party policies relevant to the maritime industry include:
Inland Marine Insurance that protects movable business property for policyholders that aren’t on the seas, including trucking and construction companies, property developers, and contractors, for example;
Marine Hull and Machinery Insurance that protects from physical damage to ships, vessels, and their machinery on the water, at the dock, and under construction for most sizes of commercial vessels including tugs, barges, dredges, and passenger vessels;
Marine Cargo Insurance that protects goods while in transit, across various modes of transportation, and while in storage; and
Political Risk Insurance that protects against losses caused by “political” events in a foreign country.
Third-party insurance coverage sometimes is called liability insurance. That’s because it includes policies that provide insurance for the policyholder’s liability to third parties alleging damages. Perhaps the most well-known form of third-party insurance for policyholders in the maritime industry is maritime general liability insurance (and excess bumbershoot liability insurance), which provides broad coverage for allegations asserted against the policyholder for bodily injury, property damage, and product and completed operation for marine risks. Other types of potentially relevant third-party policies include:
Cargo Owner’s Liability Insurance to protect against the risks for property damage, bodily injury to third parties, and as a result of pollution from a cargo event in ocean transit;
Shipowners’ Liability (“SOL”) Insurance for a shipowner’s exposure arising from an alleged breach of a contract of carriage and certain liabilities that fall outside of the Protection and Indemnity (“P&I”) Club’s standard P&I rules;
Directors and Officers (“D&O”) Insurance that protects companies and their corporate officers and directors against claims alleging wrongful acts and may cover legal fees for responding to subpoenas and search warrants; and
Pollution Liability Insurance to supplement or bolster pollution coverage that may exist in other marine liability (and property) insurance; some policyholders have standalone pollution liability insurance to broadly cover allegations of property damage from an actual or threatened pollution incident (spill) including fines, penalties, criminal defense, and more.
A single event can implicate several types of coverage found in multiple different insurance policies. For example, a vessel colliding with a terminal may involve loss to:
the terminal’s structures and equipment covered by a marine property insurance policy;
the terminal owner’s profits covered by business interruption insurance (and other time element coverages);
claims by third parties (adjacent property owners or the government, for example) alleging property damage from pollutants released from the vessel or terminal’s structures that are covered by marine general liability insurance and pollution liability insurance;
claims by shareholders alleging malfeasance in allowing the collision to happen (depending on which entity was responsible for the tugs, for example) that are covered by D&O insurance; and
this does not begin to untangle the myriad insurance implications when analyzing claims against the vessel and potential subrogation claims.
It’s important to look for responsive coverage from a company’s entire insurance portfolio when facing a loss or claim.
Three Things to Keep in Mind When Pursuing Insurance
Many policyholders don’t productively or efficiently pursue all of the insurance that is provided by their insurance policies. Here are three considerations when filing claims:
Be prompt. One of the most important first steps in pursuing insurance is to make sure that notice of a loss, claim, or occurrence is prompt and otherwise meets the requirements of the insurance policy.
Be thorough. It is important to look at all potentially responsive coverages that may be located in several different insurance policies with varying notice provisions. The general rule is that notices should be given under all possible policies that might be triggered—regardless of type, year, or layer. The old adage “better safe than sorry” never rings more true than when it comes to a company giving notice to its insurers.
Be diligent. As already stressed, the notice provisions in insurance policies also may specify how, and in what form, notice should be given. The policies typically identify to whom notice should be addressed, and request a statement regarding all the particulars of the underlying claims.
After a loss or claim has occurred, the policyholder should present its claim to the insurer in a way that will maximize coverage. Many legal issues, such as trigger of coverage, number of occurrences, and allocation, can significantly affect the existence or amount of an insurance recovery. Moreover, certain causes of loss or liability may be excluded from coverage, while others are not. These are complex issues that vary by state law and require a high level of legal sophistication to be understood and applied to the facts of a particular case.
The insurer may respond to its policyholder’s notice letter with a request for information. Such requests may seek to have the policyholder characterize its claim in a way that will limit coverage. Before the policyholder engages in any such communications with its insurance company, the policyholder should know what legal issues are likely to arise, and how best to describe its claim to maximize coverage.
It’s important to get the little things right from the beginning to avoid being blindsided and enhance the likelihood of succeeding at the finish line.
Understanding the U.S. Embassy Paris Certification Requirement
Last week, the U.S. Embassy in Paris issued a letter and certification form to multiple French companies requiring companies that serve the U.S. Government to certify their compliance with U.S. federal anti-discrimination laws. This certification request was issued in furtherance of President Trump’s Executive Order 14173 on Ending illegal Discrimination and Restoring Merit-Based Opportunities, issued on January 21, 2025. This Order addresses programs promoting Diversity, Equity and Inclusion (DEI) and requires that government contractors’ employment, procurement and contracting practices not consider race, color, sex, sexual preference, religion or national origin in ways that violate the United States’ civil rights laws.
Certification Contents
The certification requires U.S. Government contractors to certify that they comply with all applicable U.S. federal anti-discrimination laws and do promote DEI in violation of applicable U.S. federal anti-discrimination laws.
While the letter was issued by the U.S. Embassy in Paris and is arguably limited to contractors serving that embassy, the requirement under the Executive Order extends to all contractors doing business with any U.S. Government agency.
Any company submitting the certification with knowledge that it is false will be deemed to have violated the U.S. False Claims Act, which imposes liability on individuals and companies who defraud governmental programs.
Implications for French Companies
This letter raises questions about the extraterritorial application of U.S. laws to foreign companies and their reach. In particular, while the Executive Order clearly applies to companies (irrespective of nationality) that directly supply or provide services to the U.S. Government, it is unclear whether, for example, the French parent of a U.S. subsidiary providing services to the U.S. Government would be subject to the certification.
The issue is complicated by the fact that French law in some ways conflicts with the provisions of the Executive Order – for instance, requiring that mid-sized and large companies have a minimum percentage of women sitting on their boards.
Neither the Executive Order nor the documents mention any exemptions or carve-outs for suppliers and service providers.
Conclusion
The U.S. Embassy’s certification requirement underscores the current complexities faced by international businesses in dealing with the U.S. Government. French companies should consider carefully assessing their DEI programs and overall compliance with U.S. federal laws while continuing to adhere to their own legal obligations, striking a careful balance as best they can.
FAR on the Chopping Block: Potential Impacts on Protests
As those in the federal contracting community wait anxiously for rumored and hinted at changes to the Federal Acquisition Regulation (“FAR”), we are beginning to evaluate how certain of those changes might most impact our clients. In the first of a series engaging in some mild—or wild, depending on your outlook—speculation about these potential changes, we take a look at how the removal of certain FAR requirements might impact bid protests.
One of the cardinal rules of bid protests is that protests not alleging solicitation improprieties must be filed no later than 10 days after the basis of protest is known or should have been known. 4 C.F.R. § 21.2(b). There is a key exception, however—for procurements under which a debriefing is requested. If requested, a debriefing is required, and the initial protest cannot be filed before the debriefing date offered and must be filed no later than 10 days after the debriefing concludes. In other words, a protester’s timeliness clock does not start ticking until the debriefing concludes.
But what does it mean for a debriefing to be “required,” and does that requirement stem primarily or exclusively from the FAR or from statute? Our understanding is that the FAR re-write currently underway is intended to eliminate non-statutory FAR requirements, which means identifying a statutory basis for FAR clauses will be key to understanding the potential scope of any pending revisions. FAR 15.506 is perhaps the most commonly cited provision creating a “requirement” for agencies to offer debriefings in certain circumstances, but the requirement for a post-award debriefing in certain circumstances is actually established by 41 U.S.C. § 3704, which provides:
When a contract is awarded by the head of an executive agency on the basis of competitive proposals, an unsuccessful offeror, on written request received by the agency within 3 days after the date on which the unsuccessful offeror receives the notification of the contract award, shall be debriefed and furnished the basis for the selection decision and contract award.
Given their statutory origin, debriefings should continue even if removed from the FAR, meaning the Government Accountability Office (“GAO”) protest deadlines would likely remain unchanged for standalone contracts.
Notably, though, 41 U.S.C. § 3704 applies only to contracts. While FAR 16.505 extends the debriefing requirements of FAR 15.506 to procurements for orders under multiple award contracts where the value of the order exceeds six million dollars, there is no statutory requirement to provide debriefings for task order procurements, regardless of their size. Accordingly, if both FAR 15.506 and 16.505 were removed, protests of task orders would have to be filed no later than 10 days from when the basis of protests was known or should have been known, while protests for standalone contracts under FAR Part 15 would continue to be governed by the debriefing-triggered timeliness requirements.
GAO has repeatedly held that only a “procurement statute or regulation” can make a debriefing “required”; agency policy is insufficient. As a result, only Congress would be able to remedy the dichotomy between timeliness triggers for contracts and task orders created by the removal of FAR 16.505, unless the administration changed course on the regulation.
This dichotomy would also extend to the contents of debriefings, at least for civilian agencies. While FAR 15.506’s minimum requirements for the contents of debriefings mirror those outlined in 41 U.S.C. § 3704, FAR 16.505 has no statutory impetus. Accordingly, agencies would not be required to provide any information to offerors after award of a task order. It is unclear if the FAR rewrite project will extend to agency supplements, including the Defense Federal Acquisition Regulation Supplement (“DFARS”), but it’s worth noting that the enhanced debriefing procedures outlined in the DFARS were statutorily mandated by the 2018 National Defense Authorization Act and therefore may be required even if cut from the DFARS.
If—again, hypothetically—Section 16.505 was removed from the FAR, there could be a drastic reduction in the number of task order-related protests or in their likelihood of succeeding. Under the Federal Acquisition Streamlining Act (“FASA”), the Court of Federal Claims (“COFC”) lacks jurisdiction to hear protests challenging the issuance or award of a task order. And unlike at COFC, protesters at GAO are not entitled to the full evaluation record in response to their protest. Rather, GAO will require the production of documents related only to the specific protest grounds filed. Without a debriefing, task order protesters may struggle to identify sufficient bases of protest to receive portions of the record that reveal errors. This could reduce their likelihood of success and generally discourage task order protests.
Of course, debriefings aren’t the only things on the chopping block for FAR 2.0. Agency-level protests could disappear entirely. While GAO and COFC each have jurisdiction established by statute, agency protests have no such basis. The agency-level protest process was established by FAR 33.103 in a response to Executive Order 12979 issued by President Clinton in 1995. If FAR 33.103 did not survive into the next iteration of the regulations, protesters would have no option to raise their challenges with the procuring agency. Although agency protests may be at risk, GAO is both statutorily mandated and has its governing regulations located in a different section of the Code of Federal Regulations from the FAR—which would likely spare it from significant shakeup.
Navigating Emission Control Areas: Operational, Legal, and U.S. Enforcement Risks of MARPOL Annex VI’s Low Sulphur Fuel Requirements
The North American Emissions Control Area (“ECA”), which has been in force well over a decade, is one of four existing ECAs around the world. Effective May 1, 2025, the Mediterranean Sea ECA will become the fifth. In March 2026, pursuant to MARPOL Annex VI, Regulation 13, the Canadian Arctic and Norwegian Sea will also be designated as ECAs, increasing the global total to seven. These two ECAs will become enforceable on March 1, 2027. In addition to these ECAs, other port States around the world have separately implemented domestic emissions control regulations in their territorial seas, with China being a prominent example.
The establishment of these new ECAs and similar emissions control regimes throughout the world will result in an increasing number of vessels crossing ECA boundaries—sometimes multiple times on a single voyage—and on a more frequent basis. The use of different fuel types has in more and more cases led to operational and safety challenges, which has inevitably translated into heightened legal and enforcement risks. Given this expansion of ECAs worldwide, and the growing patchwork of other related port State emissions requirements, it is more important than ever to revisit the various legal and operational risks that have emerged over time, particularly those in the United States, to ensure compliance and mitigate potential risks.
Background
Among other requirements, vessels subject to the International Convention for the Prevention of Pollution from Ships (“MARPOL”) must comply with low sulphur requirements set forth in Regulation 14 of Annex VI. These requirements mandate that ships use fuel with a sulphur content of no more than 0.5 percent when operating outside an ECA, and no more than 0.1 percent when operating inside an ECA. Alternatively, ships can install approved exhaust gas cleaning systems (“EGCS” or “scrubbers”) to meet these standards. EGCS remove sulphur from engine exhaust, achieving an equivalent reduction in sulphur emissions as required by the regulations.
Fuel Switching While Underway
Some estimates suggest approximately 10-15 percent of existing vessels subject to MARPOL are equipped with scrubbers, though that percentage is rising as many newbuild orders include installation of these systems.
Vessels not fitted with scrubbers may not carry onboard high sulphur fuel oil or other bunkers with a sulphur content exceeding the global cap of 0.5 percent. If a vessel transits through an ECA, it must consume ultra-low sulphur fuel oil, marine gas oil, or other fuel with a sulphur content no more than 0.1 percent. Vessels equipped with scrubbers may consume any combination of fuels, so long as the EGCS is fully operational and reduces the sulphur content to a level at or below applicable limits.
Whether or not a vessel is fitted with scrubbers, fuel oil changeover procedures are required by MARPOL Annex VI for vessels entering an ECA. The fuel oil changeover procedure must allow sufficient time for the fuel oil service system to be fully purged of all fuel oil exceeding the applicable sulphur limit before entering an ECA. Outside of ECAs, most ships that do not have scrubbers fitted primarily operate on very low sulphur fuel oil to meet the 0.50 percent global sulphur requirement. Upon approaching a designated ECA, such vessels undergo fuel switching to meet the more stringent emission requirements within the ECA of 0.1 percent sulphur content. Upon leaving the ECA, this process is essentially reversed.
Vessels fitted with scrubbers must also comply with local port State discharge prohibitions or other requirements for scrubber washwater, such as the U.S. Environmental Protection Agency’s Vessel General Permit or other state discharge regulations in the United States, such as California, where the use of scrubbers is not permitted.
Operational Risks—ECA Transits
The process of switching from higher sulphur fuels to lower sulphur fuels, and vice versa, must be undertaken with meticulous attention to detail by crew, following clear, standardized procedures to avoid operational failures.
Fuel changeovers, while necessary for regulatory compliance, pose safety considerations. The process typically involves a series of operations, including adjusting fuel systems, purging lines, and ensuring compatibility between the fuels. These challenges are well known, including the potential for fuel contamination, failure to properly control the temperature and viscosity of the marine fuel during transition, potential EGCS malfunction, and human error, among others. Experience has shown that these challenges can, under some circumstances, lead to loss of propulsion, loss of electrical power, engine damage, and other operational disruptions and mishaps.
Legal Risks Under U.S. Law—Reporting and Compliance
When these challenges materialize into operational disruptions or other incidents, this inevitably triggers a variety of potential reporting requirements, particularly in the United States, and the attendant significant legal risks of not reporting when required by law to do so. In addition, any non-compliance with low sulphur fuel standards—and failure to maintain accurate records in connection with these and related emissions requirements—can also result in civil or criminal penalties under applicable U.S. law.
Key reporting requirements for owners and operators of vessels, and their crews, when calling on U.S. ports include:
Marine Casualty Reporting: Depending on the facts and circumstances, failure of or damage to ship’s equipment, loss of propulsion, loss of electrical power, or other similar occurrence associated with fuel changeovers and ECA compliance may be considered a reportable “marine casualty” under 46 CFR § 4.05-1.
Hazardous Condition Reporting: Apart from the marine casualty reporting requirement, depending on the facts and circumstances, such incidents and occurrences could also potentially be considered a reportable “hazardous condition” under the Ports and Waterways Safety Act (“PWSA”). A “hazardous condition” is defined in 33 CFR § 160.2020 as “any condition that may adversely affect the safety of any vessel, bridge, structure, or shore area or the environmental quality of any port, harbor, or navigable waterway of the United States. It may, but need not, involve collision, allision, fire, explosion, grounding, leaking, damage, injury or illness of a person aboard, or manning-shortage.”
Determining whether a particular incident qualifies as a reportable “marine casualty” and/or “hazardous condition” under U.S. law is a fact-specific determination. This evaluation is influenced by the nature and severity of the incident, its location, the conditions, the circumstances surrounding it, and various other relevant factors. The U.S. Coast Guard issued guidance on marine casualty and other reporting requirements in Navigation and Vessel Inspection Circular 01-15. Since these reports must generally be made “immediately,” it is often prudent to report the incident right away, along with any necessary response actions being undertaken by the vessel to address the situation. Penalties can be significant for failure to report in a timely manner.
Failure to report a “marine casualty” can result in civil penalties for both individuals and corporate vessel owners and operators. Failure to report a “hazardous condition” under PWSA regulations can result in both civil and criminal penalties.
Submitting a prompt written or verbal report to the U.S. Coast Guard when an occurrence happens typically fulfills both regulatory requirements. In the event of a reportable “marine casualty,” the regulation also mandates the submission of CG Form 2692 within five days. This form serves as the method to report to the U.S. Coast Guard the specifics of what occurred.
Conclusion
The implementation of the Mediterranean Sea ECA and the upcoming designations of the Canadian Arctic and Norwegian Sea as ECAs underscore the continued global commitment to reducing vessel emissions. However, using low sulphur fuels in ECAs may present operational challenges, safety concerns, and legal risks, especially in the United States. As the decarbonization of shipping evolves, the use of alternative fuels and changes to vessel design may exacerbate these risks over time.
To mitigate legal and enforcement risks, vessel owners and operators should review their Safety Management Systems and operational procedures to ensure they align well with U.S. reporting and other regulatory requirements and policies cited above.
FedRAMP 20x – Major Overhaul Announced to Streamline the Security Authorization Process for Government Cloud Offerings
On March 24, 2025, the Federal Risk and Authorization Management Program (“FedRAMP”) announced a major overhaul of the program, which is being called “FedRAMP 20x.” The FedRAMP 20x announcement stated there are no immediate changes to the existing authorization path based on agency sponsorship and assessment against the FedRAMP Rev 5 baseline.[1] However, once the initiative kicks off, we expect major changes to speed up and streamline that authorization path that likely will be welcomed by industry partners and cloud service providers participating in the program. Below are key points based on the recent FedRAMP 20x announcement.
The primary goals of the FedRAMP 20x initiative include:
Seeking to implement the use of automated validation for 80% of FedRAMP requirements, which would leave about 20% of narrative as opposed to the current 100% narrative explanations required in the document submission package.
Leaning on industry partners to provide continuous simple standardized machine-readable validation of continuous monitoring decisions.
Fostering trust between industry and federal agencies to promote direct relationships between cloud service providers and customers. Note, this appears to indicate that the FedRAMP Program Management Office (“PMO”) will have a much smaller role moving forward with respect to the authorization process and assessments.
Replacing annual assessments with simple automated checks.
Replacing the significant change process with an approved business process that will not require additional oversight to be developed in collaboration with industry.
FedRAMP 20x is an initiative that will be implemented in phases. The timeline for Phase 1 has not been announced but, once it is open, Phase 1 seeks to streamline the authorization process for eligible participants and authorized cloud service offerings in weeks rather than months. Phase 1 will focus on Software-as-a-Service offerings with the following characteristics:
Deployed on an existing FedRAMP Authorized cloud service offering using entirely or primarily cloud-native services;
Minimal or no third party cloud interconnections with all services handling federal information FedRAMP Authorized;
Service is provided only via the web (browser and/or APIs);
Offering supports a few standard customer configured features needed by federal agencies (or the cloud provider willing to build that capability quickly); and
Existing adoption of commercial security frameworks are a plus (SOC 2, ISO 27000, CIS Controls, HITRUST, etc.).
The practical implications of Phase 1 appear to be positive. Cloud service providers will be able to submit fewer pages for authorization submissions (i.e., less narrative, and more standard configuration choices for documentation). The documentation required for Phase 1 includes (1) documentation of security controls implemented by the cloud service provider and (2) materials demonstrating the cloud service provider’s existing commercial security framework to the extent it overlaps with FedRAMP requirements (e.g., a Security & Privacy Policy). There will be an automated validation component for Phase 1 authorizations, which may involve making configuration changes as needed to meet certain security controls. Following the assessment process, the cloud service offering will receive a score related to Confidentiality, Integrity, and Availability of federal information, and federal agencies will review this information to make risk assessments prior to adoption. Lastly, there will be changes to continuous monitoring with the replacement of annual assessments with simple automated checks and a new significant change process that will not require additional oversight.
Overall, with less documentation and narrative explanation, a more automated process with quicker authorization timelines, and less burdensome continuous monitoring activities due to enhancements through automation, the goal of FedRAMP 20x changes is to establish more efficient authorization and continuous monitoring processes. This should make it easier for cloud providers to sell their offerings to the government. Industry participation is a major focus of the new initiative. There are community engagement groups planning to begin meeting immediately and there will be opportunities for public comment as new ideas and documentation are rolled out. The community group meetings are focused on four topics: (1) Rev 5 Continuous Monitoring, (2) Automating Assessments, (3) Applying Existing Frameworks, and (4) Continuous Reporting. For those in this space, it will be important to participate to ensure industry partners are involved in shaping the program. The schedule for the meetings can be found here.
FOOTNOTES
[1] The FedRAMP Rev. 5 baseline aligns with National Institutes of Standards and Technology (“NIST”) Special Publication (“SP”) 800-53, Security and Privacy Controls for Federal Information Systems and Organizations, Revision 5.
VHA and DLA Enter Into Another Interagency Agreement: Déjà Vu All Over Again?
In March 2025, the Defense Logistics Agency (“DLA”) and the Veterans Health Administration (“VHA”) entered into another interagency agreement. The agencies announced that the purpose of the 10-year, $3.6 billion agreement is to align supply chain requirements and centralize logistical support DLA will provide to all VHA healthcare facilities nationwide.
The 2025 agreement follows three DLA and VHA interagency agreements entered into between 2018 and 2020. In 2018, DLA and VHA entered into an agreement under which VHA began transitioning its medical supplies purchasing to DLA’s Electronic Catalog (“ECAT”). In 2019, the agencies entered into another interagency agreement which allowed VHA to access medical and surgical items by leveraging the DLA supply chain and provided for creating a centralized ordering system, rather than using the separate VHA and DLA systems.
In December 2020, the agencies expanded their 2019 agreement. The 2020 agreement created a strategic partnership allowing VHA to pilot adoption of the DLA Defense Medical Logistics Standard Support (“DMLSS”) inventory management system. DMLSS serves as the primary system for DLA’s Medical Surgical Prime Vendor (“MSPV”) program. In 2021, the agencies announced plans to merge their MSPV programs. The plan was for the VA MSPV program to wind down and transition to the DLA MSPV program by September 2023. However, the merger was scuttled because of a bid protest filed at the U.S. Court of Federal Claims.
Companies selling medical and surgical supplies to the federal government might wonder whether the March 2025 agreement is nothing more than another interagency agreement between DLA and VHA extending their partnership. Alternatively, because we currently are living in a Department of Government Efficiency (“DOGE”) government contracts streamlining environment, the March 2025 agreement could mean DLA and VHA are getting ready to take another run at consolidating their MSPV programs.
More States Ban Foreign AI Tools on Government Devices
Alabama and Oklahoma have become the latest states to ban from state-owned devices and networks certain AI tools with links to foreign governments.
In a memorandum issued to all state agencies on March 26, 2025, Alabama Governor Kay Ivey announced new policies banning from the state’s IT network and devices the AI platforms DeepSeek and Manus due to “their affiliation with the Chinese government and vast data-collection capabilities.” The Alabama memo also addressed a new framework for identifying and blocking “other harmful software programs and websites,” focusing on protecting state infrastructure from “foreign countr[ies] of concern,” including China (but not Taiwan), Iran, North Korea, and Russia.
Similarly, on March 21, 2025, Oklahoma Governor Kevin Stitt announced a policy banning DeepSeek on all state-owned devices due to concerns regarding security risks, regulatory compliance issues, susceptibility to adversarial manipulation, and lack of robust security safeguards.
These actions are part of a larger trend, with multiple states and agencies having announced similar policies banning or at least limiting the use of DeepSeek on state devices. In addition, 21 state attorneys general recently urged Congress to pass the “No DeepSeek on Government Devices Act.”
As AI technologies continue to evolve, we can expect more government agencies at all levels to conduct further reviews, issue policies or guidance, and/or enact legislation regarding the use of such technologies with potentially harmful or risky affiliations. Likewise, private businesses should consider undertaking similar reviews of their own policies (particularly if they contract with any government agencies) to protect themselves from potential risks.
Maritime Chokepoints and Freedom of Navigation The US Federal Maritime Commission Investigation Into “Transit Constraints”
On March 14, 2025, the US Federal Maritime Commission (FMC) announced the initiation of a nonadjudicatory investigation into transit constraints at international maritime “chokepoints.”
The Federal Register notice initiating the investigation identified the following seven global maritime passageways that may be subject to such constraints: (1) the English Channel, (2) the Malacca Strait, (3) the Northern Sea Passage, (4) the Singapore Strait, (5) the Panama Canal, (6) the Strait of Gibraltar and (7) the Suez Canal. The FMC announcement is another sign of the continued merger of national security, trade issues and global shipping and transportation issues.
The FMC has a statutory mandate to monitor and evaluate conditions affecting shipping in US foreign trade. 46 U.S.C.42101(a) provides that the commission “shall prescribe regulations affecting shipping in foreign trade … to adjust or meet general or special conditions unfavorable to shipping in foreign trade,” when those conditions are the result of a foreign country’s laws or regulations or the “competitive methods, pricing practices, or other practices” used by the owners, operators or agents of “vessels of a foreign country.” The FMC is also required under 46 U.S.C. 46106 to report to Congress on potentially problematic practices of ocean common carriers owned or controlled by foreign governments, e.g., China. The FMC will conduct this investigation in accordance with its procedures for a nonadjudicatory investigation set forth in 46 CFR Part 502, Subpart R.
The FMC is conducting this investigation into any actions by a foreign country or other maritime interests that might constitute anticompetitive practices, irregular pricing or pricing that is deemed prejudicial to US foreign trade interests, and any other practices of government authorities, vessel owners, operators or agents affecting transit through such passageways. That is an incredibly broad mandate, and there is complete uncertainty as to what “remedies” or “proposed actions” the FMC might recommend so as to remediate any perceived constraints on transit.
However, given the potentially severe and disruptive impact of the proposed actions currently being considered by the Office of the US Trade Representative (USTR) in relation to the ongoing Section 301 investigation into “China’s Targeting of the Maritime, Logistics, and Shipbuilding Sectors for Dominance,” 1 this new FMC investigation bears careful monitoring and engagement by affected parties.
Some commentators have already concluded that this new FMC investigation is simply a new front in the trade war the US is waging on the Chinese maritime and shipbuilding industries. Seatrade Maritime News claims that the FMC investigation is “not about trade at all,” but rather a continuation of the “China witch hunt” that started with the USTR Section 301 investigation.2 Others see the inclusion of the Panama Canal in the FMC investigation as an extension of the Trump administration’s stated desire to “take back” the canal, although in truth, the recent controversy over the Panama Canal was in part related again to China, and concerns over the involvement of the Panama Ports Company, a subsidiary of Hong Kong-based Hutchison Port Holdings.3 The references in the FMC notice of initiation to “other maritime interests” and “other practices of government authorities,” including irregular pricing or “pricing that is deemed prejudicial to US foreign trade interests,” appear to be a veiled reference to the Panama Maritime Authority and allegations that US vessels were being treated differently. Most commentators now agree that the FMC investigation is another element or tool that the administration intends to use to reduce US reliance on foreign-owned cargo vessels, and indeed force cargo interests to use US vessels.4 In this context, the focus on the Suez Canal may actually be a US ploy to target and extract concessions out of Egypt;5 the English Channel may be more about targeting the UK and France.
The FMC summarizes its individual concerns about (1) the English Channel, (2) the Malacca Strait, (3) the Northern Sea Passage, (4) the Singapore Strait, (5) the Panama Canal (6) the Strait of Gibraltar, and (7) the Suez Canal in the Federal Register notice. In summary, the concerns range from congestion, limited passing opportunities, an elevated risk of collisions, navigational challenges, variable weather conditions, environmental risks, geopolitical tensions, security threats and, in some areas, piracy and smuggling.
With respect to the Northern Sea Passage, the FMC notes that this is emerging as a critical maritime chokepoint as the region’s waters become ice free for longer periods, with it offering a shortcut between Europe and Asia 6. Reference is made to Russia seeking control over the route and its strategic importance being amplified by increased military activity from Russia, China and NATO forces.
In the section on the Panama Canal, while noting that Panama’s ship registry is one of the world’s largest, the FMC notes that remedial measures it can take include “refusing entry to US ports by vessels registered in countries responsible for creating unfavorable conditions.” In addition to Panama, states that control other areas in which chokepoints are located operate some of the world’s other largest ship registries, such as Singapore, Malaysia and Indonesia. If this investigation leads to the US refusing entry to, or imposing penalties on, vessels flagged in these states, or on vessels owned by interests from these states, it could have very farreaching implications.
As is foreseen in the impact of the Section 301 proposed actions, these measures could have the potential to significantly raise the costs of calling at US ports (either by way of reduced availability of tonnage or the imposition of direct penalties) with these costs being passed down the charterparty chain and then ultimately to customers and consumers.
The FMC notes that other significant constraints affecting US shipping may arise quickly in the global maritime environment. For example, when the Singapore-flagged containership Dali struck a bridge in Baltimore, Maryland in March 2024, six people were killed and maritime access to the Port of Baltimore was blocked, a situation that persisted for many weeks and led to losses that have been estimated to reach as high as US$4 billion.
Interested parties are permitted to submit written comments by May 13, 2025, with experiences, arguments and/or data relevant to the above-described maritime chokepoints, particularly concerning the effects of laws, regulations, practices or other actions by foreign governments, and/or the practices of owners or operators of foreign-flag vessels, on shipping conditions in these chokepoints.
The FMC states that it welcomes comments not only from government authorities and container shipping interests, but also from tramp operators, bulk cargo interests, vessel owners, individuals and groups with relevant information on environmental and resource-conservation considerations, and anyone else with relevant information or perspectives on these matters.
In particular, the FMC has expressed an interest in information and perspectives on the following six questions:
What are the causes, nature and effects, including financial and environmental effects, of constraints on one or more of the maritime chokepoints described above?
To what extent are constraints caused by or attributable to the laws, regulations, practices, actions or inactions of one or more foreign governments?
To what extent are constraints caused by or attributable to the practices, actions or inactions of owners or operators of foreign-flag vessels?
What will likely be the causes, nature and effects, including financial and environmental effects, of any continued transit constraints during the rest of 2025?
What are the best steps the FMC might take, over the short term and the long term, to alleviate transit constraints and their effects?
What are the obstacles to implementing measures that would alleviate the above transit constraints and their effects, and how can these be addressed?
It will be interesting, and indeed imperative, for global shipping interests to monitor the comments received and how the proposed measures are developed accordingly.
A recent Bloomberg News article went so far as to indicate that the “Billion-Dollar US Levies on Chinese Ships Risk a ‘Trade Apocalypse’.”
Interestingly, there are some notable exclusions from the list of the seven “chokepoints,” including some that are significantly more problematic and/or more important to global trade flows, including the Black Sea and the Bosphorus, the Strait of Hormuz, and the Bab Al Mandeb Strait.
The Carnegie Endowment for International Peace published a February 19, 2025 article examining the US motivations behind the Panama Canal gambit.
TradeWinds posits in one article that the FMC may try to ban or detain ships from the “maritime chokepoint” countries, or restrict or ban service to the US by shipping lines or vessel operators that are said to contribute to issues relating to transit through these passageways.
For example, this may be about the US getting preferential deals for US vessels; e.g., US-flagged vessels being given free Suez transits by the Egyptian government, under threat of measures against Egypt being imposed if not.
Although consultant Darron Wadey at Dynaliners in the Netherlands has expressed a view, quoted in Seatrade Maritime News, that this route is “an outlier” in the list and has “zero relevance” to US foreign trade.