S3.E9 - FMC's FY2025 Congressional Budget Justification - what's on deck for 2025?

Topic of the Week (3/15/24):

This week the Federal Maritime Commission released their FY25 Congressional Budget Justification – what’s in it? What clues can we take from the document? What do they have planned for 2024 and even into 2025?? Well hang tight and I’ll tell ya!

The Maritime Professorᵀᴹ presents By Land and By Sea - an attorney breaking down the week in supply chain

with Lauren Beagen (Founder of The Maritime Professorᵀᴹ and Squall Strategies)

Let's dive in...

1 - The Federal Maritime Commission is still working through the other two rulemakings: Unreasonable Refusal to Deal or Negotiate and Unfair or Unjustly Discriminatory Methods.

2 - 346 high ranking officials sign a letter to the United States Senate encouraging the ratification of the United Nations Convention on the Law of the Sea

Admiral Thad Allen's LinkedIn post:
https://lnkd.in/gHv5tWjT

3 - United Steelworkers (USW) submitted a petition to USTR calling for an investigation into China's shipbuilding practices.

Financial Times:
https://lnkd.in/gBQFN_KR

Pennsylvania Capital-Star:
https://lnkd.in/gENZfefw

-------------------------------
The Maritime Professorᵀᴹ is an e-learning/educational based company on all things maritime and supply chain - we provide employee trainings, e-content/e-courses, general trainings/webinars, and executive recruiting. Make sure to sign up for the email list so that you will be alerted to when the e-learning content is available, but also, being on the email list will give you exclusive access to promo/discount codes!

Sign up for our email list at https://lnkd.in/eqfZJShQ

Look for our podcast episodes - NOW AVAILABLE:
https://lnkd.in/g4YUbxjs

** As always the guidance here is general and for educational purposes only, it should not be construed to be legal advice and there is no attorney-client privilege created by this video. If you need an attorney, contact an attorney. **

#ByLandAndBySea

Transcript

Lauren Beagen: 0:56

This week of the Federal Maritime Commission released their FY 2025 Congressional Budget Justification. So what's in it? What clues can we take in the document? What are they? A plan for the rest of 24 and even into 2025? There's some tidbits in here. Well, hang tight and I'll tell you.

Lauren Beagen: 1:15

Hi, welcome to By land and by Sea, an attorney breaking down the weekend supply chain presented by the Maritime Professor, me. I'm Lauren Beagen, founder of Maritime Professor and Squall Strategies, and I'm your favorite maritime attorney. Join me every week as we walk through both ocean transport and surface transport topics in the wild world of supply chain. As always, the guidance here is general and for educational purposes only. It should not be considered to be legal advice and there is no attorney-client privilege created by this video or this podcast. If you need an attorney, contact an attorney. But before we get into the discussion of the day, let's go through my top three stories of the week. All right, story number one we're keeping it on here. We're always watching the FMC closely, obviously, for any release of any movement of the open rule makings. We have one right the detention demerge rulemaking that we talked quite a bit about. We will continue to talk about it, and we have two others that we're still waiting on. Right. So we have defining unreasonable refusal to dealer negotiate with respect to vessel space accommodations provided by an ocean common carrier. That's one that we're waiting on. The last we saw movement was a supplemental notice of proposed rulemaking that came out July 2023. Obviously, they've been working on the D&D rulemaking. They got that out, but we're still waiting on something that will conclude, probably a final rule on this.

Lauren Beagen: 2:36

I've heard a few different times in a few different public forums, different commissioners and even the chairman saying they expect this in the next short term, probably the next few months. I would say before the one year, since the supplemental would be my guess. I would guess. I keep saying I'm guessing, like May on that. I don't know, that's a total guess, but they do say in the congressional budget justification that they expect this to be concluded by July or not by July, by 2024 or by the conclusion of 2024. So we'll see. It's coming. That's the unreasonable or feasible to deal and negotiate. Remember this is the one that had some definitions in it that I wanted you to take a look at. I also think that there's some other maybe overflow effects that this could have. So even if you don't think that you have much to do with unreasonable or feasible to deal and negotiate with respect to vessel space accommodations, take a look at it anyways.

Lauren Beagen: 3:30

This should be getting as much attention it probably won't, but as much attention as the D&D. Obviously, we have the D&D rule out. The effective date is May 28th. It's coming. Get your systems ready. It's on its way.

Lauren Beagen: 3:45

A lot of the industry already took those movements. Over the summer, when we started to see some language, or when language came out last December, some of the industry was already starting to make some changes. Right now is the time. It's a 90-day effective date, so it was released on the 23rd. Published in the Federal Register the 26th. The 26th of May is a Sunday, so it comes out May 28th, which is actually a Tuesday. It's coming out May 28th. Well, it's effective May 28th.

Lauren Beagen: 4:16

I should say the third rule that we're waiting on that. We haven't seen any language on independently, although we have been told that the FMC considers some of this to be covered by the unreasonable, feasible to deal and negotiate. This third rule is the defining unfair, unjust to discriminatory methods, still waiting on language here. We're going to talk about that in a few minutes, though, because they talk about that a little bit in the budget justification document. The other thing that we're waiting on is the Maritime Transportation Data Initiative, and I say waiting on, right, we're all just kind of watching these things and I'm helping to keep you apprised of everything that's happening there. So, maritime Transportation Data Initiative there's been a few different times that there's been talk of another RFI, a request for information round coming. It hasn't been released yet. So I'm going to keep watching this stuff. I'm probably going to take this off of my top one story of the week just because I don't expect any movement in the next few weeks on this. So we'll clear that up for another news piece. Rest assured, I'm going to be watching these, obviously All right. Story number two I previously reported that the US had submitted their US extended continental shelf claim at the end of 2023.

Lauren Beagen: 5:25

Again, remember the extended continental shelf claim. So that's the subsoil. That's like you have the water column and then you have the soil underneath. You can extend beyond 200 nautical miles for an extended continental shelf if you comply with Article 76 of the United Nations Convention on the Law of the Sea. The United States has said that the Law of the Sea this is close. The United Nations Convention on the Law of the Sea is customary international law. We have signed it, but we have not ratified it yet. There's been a lot of efforts through the years to ratify it, but we haven't yet. We've only technically signed it, but we're not signatories to it in the official sense. So Law of the Sea is back in the news. Like I said, we talked about that extended continental shelf in December. I believe we talked about it maybe in January, but it was at the end of 2023 that that became a new announcement.

Lauren Beagen: 6:20

But you look at my past and present law students of my Law of the Sea class. I teach Law of the Sea at Roger Williams University School of Law. They are probably so excited because they say you'll never really notice Law of the Sea unless you're in it, right, obviously, or until you take that class or a class, because it actually is all around, but this is kind of exciting. So a whole slew of high-ranking officials. I mean we have admirals, generals, secretary of Defense, secretary of Homeland Security, secretary of the Navy, we have ambassadors on this list I mean it's like, I mean it's everybody. It's a pretty impressive list.

Lauren Beagen: 6:55

It's 346 individuals signed on to this letter. It's a letter encouraging that the US Senate ratify the US Assessions to the United Nations Convention on the Law of the Sea. So what does all that mean? Like I said, we've signed it but we haven't ratified it. And how do we ratify it? We have to get advice and consent of the Senate. In the letter they state that, despite support from presidents of both parties and that's true, this has not necessarily been one party or the other there's been support of both parties and strong support from the actual business community, the private sector. Despite all of that, what the letter says is that it has yet to be voted on by the full Senate. And that's true too. Sometimes it's gotten through subcommittees but never actually brought to the full Senate. And that's what we need is the advice and consent of the full Senate to vote on this. So if it hasn't even been brought. It hasn't been shot down yet either. Look like I said, we've signed it technically but without the full advice and consent of the Senate, we haven't ratified it and so we can't be considered a party to this convention.

Lauren Beagen: 8:01

It does seem like maybe every seven to 10 years there's like a renewed push for joining Unclose, the United Nations Convention on the Law of the Sea. Unclose. This has some pretty good weight to it, this effort I feel I mean over 346, really high ranking, really high ranking people are signing on to this. And certainly the defense side of things I mean, if we're having different Department of Defense, highest ranking officials, joint Chiefs of Staff are on here, I mean that's pretty weighty right. That's some pretty good weight to it. So who knows, perhaps this will be the year, perhaps this letter will start up that conversation. You know what I talk about in my class is that it's the freedom of navigation for me. That keeps me most concerned here, and it's the United Nations Convention on the Law of the Sea, this Unclose, that has remedied some of the most well. So it really kind of provides that freedom of navigation, right, and that's what I feel.

Lauren Beagen: 9:00

And there was concerns when it was first drafted, first drafted, but those have been remedied. All those, the controversial parts that former President Reagan objected to, and even his ambassador at the time has said, look, they've been remedied. The reason that we were cautious and decided not to sign it as we were negotiating it, because we were part of the negotiation. The US was part of those negotiations. There were three different conferences of the United Nations Convention on the Law of the Sea, three different conferences, and then ultimately the language came out. But there was a little part that we didn't like. That's been remedied, and the ambassador, who was part of those negotiations, has said it himself. He's actually signed on to this letter as well. So the objections have fallen away that were present at the beginning. So I don't know. So we'll see. Look, that was the prohibitive part then. It has since been remedied. Maybe the US should have no objection now, but we'll see. We're still waiting on this. We'll see how this goes, all right, well, story number three I'm going to link two different articles on this. I think both the Financial Times and Pennsylvania Capital Star cover this pretty well, and I actually like some of the information from the Penn Capital Star here.

Lauren Beagen: 10:14

But so this week the United States. The United Steelworkers Union submitted a petition to the United States Trade Reps Office. So that's USTR. So who is USTR? We don't talk about USTR that often, but I want to make sure that everybody's on the same page, right? We always do that.

Lauren Beagen: 10:31

The Office of the US Trade Rep is USTR. The Trade Representative is an agency of the United States federal government. They're responsible for developing and promoting American trade policy. So, developing and promoting American trade policy. So USTR is a little different from the State Department, right? Because when you think about foreign things, you're thinking about, maybe, the State Department. So the State Department is the Department of the US government responsible for the country's foreign policy and relations, but it's not necessarily exclusively focused on trade, right, and so it's going to be the broader range and it's going to be the foreign policy and relations. That's State Department. Ustr, the United States Trade Representative's office, is really focused on that trade piece. Obviously it's in the name for developing and promoting American trade policy. Okay, so that's where this petition went.

Lauren Beagen: 11:25

So what happened this week? Well, the steel workers said in their petition that they're concerned about China's growing prominence in the shipbuilding industry. There's been a lot of talk about US shipbuilding lagging behind US shipbuilding being woefully underfunded. If you want more information on this, I think Dr Salmar Cogliano does a great job talking about the US shipbuilding capabilities. But what they're saying in this steel workers petition is that they're worried about China filling that void, and they're growing prominence. So in the Financial Times, I think this stat came from, china went from producing roughly 12% of global commerce ships by tonnage to producing more than 50%. It went from only producing about 12% of global commercial ships by tonnage to now 50%. So in the Pennsylvania's Capital Star article it said according to the petition filed Tuesday with USTR, in 2012, the Communist Party of China elevated the construction of a strong maritime country as a national goal. So that was in 2012. And the following year, president Xi Jinping announced a Maritime Silk Road initiative aimed at increasing China's influence over maritime corridors across the globe. That was 12 years ago. Math, that was 12 years ago 2012.

Lauren Beagen: 12:46

Key aspects continuing on from the article, key aspects of the program include promoting state owned shipping and logistics companies, investing in strategically located foreign ports and terminals, dominating the supply of cranes used at ports around the globe. And promoting a government sponsored logistics platform, lodz Inc. The petition states as a result, chinese companies, primarily state owned companies, have become leaders in financing, building, operating and owning port terminals around the world. So that was sub quoted in this article from the petition itself. So we've talked a little bit about I think we've talked about lodging, and the cranes have now come into forefront right. There being talked about a lot in different news articles saying that potentially there might be some security concerns with them. I can tell you from what I understand is that the cranes are thoroughly looked at, thoroughly scrubbed, I think pretty on a routine basis they are looked at there. So I mean that's good, but it's still the piece of this is it's coming from the steelworkers and so their concern is really that the dominance happening here. So last year so continuing on with the article last year McCall said Tuesday the US Okay, that was a little bit strangely worded.

Lauren Beagen: 14:07

So the petition and the president of the union said the US produced fewer than 10 oceanic vessels while China produced more than 1000. If we do not act, we will soon be dependent on China, not only for the products their vessels bring to our ports but also for the ships themselves. And that's where the steelworker piece comes in. Right. Steelworkers are obviously part of the shipbuilding process. So they're saying not only are we going to be dependent on China for the products, but potentially the ships themselves. And he's seeing that that is a shift. So continuing on with this with this article snippet here, casey said China's practices in the meantime in the maritime sector also pose grave national security implications. Us shipyards and suppliers do not have the capability to replace ships lost in combat or the ability to supply our own needs, much less those of friends and allies, he said, citing the petition.

Lauren Beagen: 14:57

The petition outlined steps the unions want the US TR to take beyond simply eliminating China's practices. So here's some of the additional things that the petition is saying that they're asking for as a remedy. They're asking for a port fee on Chinese built ships that dock at US ports and the creation of a shipbuilding revitalization fund to help the domestic industry and its workers compete. So the second part, right, shipbuilding revitalization fund to help the domestic industry and its workers compete, isn't necessarily aimed at China. That's just probably good practice for the US. We really, really, really, really, really, really need to get back into shipbuilding, and we certainly do, but we need to expand our shipbuilding capabilities, and so this shipbuilding revitalization fund could help do that. That's going to be a little bit insulated from anything that China is doing. But certainly the point being, maybe we need to get kind of moving on this.

Lauren Beagen: 15:54

The port fee on Chinese built ships that dock at US port, that one is interesting. I'm going to be following that to see what they do with that. So there's a piece that the FMC can play, a role that they can play in this, in that there's Section 19 Act of the Merchant Marine Act of 1920, foreign Shipping Practices Act, which give the FMC, the Federal Maritime Commission, the authority to issue penalties per voyage if they find that countries are being discriminatory toward. Well, and it's not. I can't remember if it's exactly clear on whether it's discriminatory towards US efforts or interests or just generally discriminatory, and I think I don't know if that's ever actually been fully tested, but don't hold me to that. Again, none of this is legal information. This is kind of educational discussion. So it's possible the FMC might get looped in here. It's also possible that maybe USTR didn't know about the Section 19, foreign Shipping and the Foreign Shipping Practices Act, so maybe now they will be looped in.

Lauren Beagen: 17:00

But that port fee on Chinese built ships that dock at US ports, I don't see how that would actually go into implementation, right, because they're saying Chinese built ships, which aren't necessarily Chinese owned or operated, that could be just out in the general commercial world. So what they're trying to do is disincentivize commercial activity from purchasing and using Chinese built ships. I just don't think that that one's probably going to fly, but I'm going to be interested to see the discussion around it and where, if anywhere, they ultimately land, them being, I guess, the federal authorities. That one's going to be interesting. I think a shipbuilding revitalization fund is probably a good idea. That's going to be something that will be interesting to see take effect and come into play, because we need ships. Right, it still remains A maritime presence, is an important presence. So continuing on.

Lauren Beagen: 17:58

They also said other measures to stimulate demand for and the capacity to construct commercial vessels built in the United States. The steel workers are saying look, we need more vessels. Continuing on on this article. Just finishing up real quick. The commercial shipbuilding and repair industry in the US can compete and grow in the massive market distortions that the government of China has created or remedy. The petition states we have seen the people's Republic of China create dependencies and vulnerabilities in multiple sectors like steel, aluminum, solar batteries and critical minerals, harming American workers and businesses and creating real risk for our supply chains.

Lauren Beagen: 18:32

Ustr this is from the USTR trade rep themselves. So USTR trade rep tie. So they said USTR and the Biden Harris administration are fighting every day to put working families first, rebuild American manufacturing and strengthen our supply chains. And they said I'll look forward to reviewing this petition in detail. So we'll see. We're going to be getting this just came out this week so we're going to be getting probably a little bit more info on this. We're going to see discussions. I mean steelworkers. Obviously, if the union and it's supported by a few other unions, this will be a topic that is certainly going to be coming up again, I think, especially because it's in an election year. I think this is going to be something that will probably enter into the political rhetoric at least partially. And with the US trade rep saying that they're going to be looking at this, I think we're going to get more information here. So we'll see. Shipbuilding and funding for shipbuilding is probably going to be a great idea here. So whether we're going to be assessing penalties on US or Chinese built vessels servicing our ports, I don't see that one as flying, but we'll see too. I'll keep watching, all right, well, let's get into the meat and potatoes of the day. We went through the three stories at length, but we're going to hit.

Lauren Beagen: 19:47

The FMC release their fiscal year 2025 congressional budget justification and you know I love a good overview mission statement. So we're going to go with what they put right at the beginning of this document. So the FMC, the Federal Maritime Commission, is an independent agency with jurisdiction in the US over competition practices and service in the ocean shipping industry. Our mission this is quoted from the document our mission is to ensure a competitive and reliable international ocean transportation system that supports the US economy and protects the public from unfair and deceptive practices. Facilitating commerce and protecting US shippers remains the essential focus of the FMC. The commission requires additional resources to carry out its responsibilities to ensure vigilant industry oversight, enhance enforcement and improve service to shippers and consumers. Love a good mission, they're saying, as we've seen kind of in different iterations over the years to ensure a competitive and reliable international ocean transportation supply system that supports the US economy. It used to say for the benefit of the US importer, exporter and consumer. Now it just says supports the US economy. Little changes there, mission and priorities. So under priorities for OSRA, they have a priority on ocean shipping and form act of 2022.

Lauren Beagen: 21:04

They said implementing OSRA 22 is a leading priority of the commission. Obviously because Congress told them to do it by fiscal year 2025, the majority of OSRA 22's enhanced authority and provisions for revised regulations will be implemented and fully integrated in support of our mission. There were a lot of different things that were part of that right, and they were. The rule makings were part of that. There was a little bit of restructuring and employee expansion right. They hired more people. They also said that there are going to be some additional rule makings required under OSRA 22 that are going to continue in fiscal year 2024. So they're saying, look, we're continuing to finish this up.

Lauren Beagen: 21:45

They said OSRA 22 require the commission to develop a process for charge complaint investigations and adjudication. The FMC said, right, they developed and posted interim guidance on its website in 23, along with an accompanying webinar to help the public understand the process. In less than 18 months since the enactment of OSRA and the enactment of the charge complaints, they said more than $2 million has been voluntarily waived or refunded under the new process. So that's under the charge complaints process at the FMC. We've talked about that a few times. They've been able to affect I guess I'll say affect more than $2 million in charge complaints. So the way that they affect that is they go through the charge complaints process. Those invoices, those charges, can either voluntarily be waived or voluntarily refunded and for the most part I think it was like I don't know the staff will like over 90%. That's how it happened. They also said that they increased investigations and enforcement.

Lauren Beagen: 22:45

The FMC protects the US public through its investigatory and enforcement programs that identify, deter and stop unlawful activities of regulated entities ocean carriers, marine terminal operators and ocean transportation intermediaries. Those are the regulated entities. New enforcement priorities established by the chairman focus on unlawful practices that negatively impact significant portions of the maritime industry or appear to cause market distortion. As a result of these changes, the enforcement program this is the enforcement program has been successful in legal actions, collecting $2.8 million in civil penalties for violations in the law of fiscal year 2023. So that's $2,896,332 is the exact. That's what they did in enforcement this year. That is a significant increase from, I mean, even five or 10 years ago. They have significantly increased their civil penalties. We'll talk about that again kind of hitting the overview here. Compliance the commission's statutory and regulatory authorities are applicable to the international waterborne commerce, valued at trillions of dollars, as well passenger vessel operations embarking at US ports. Vigilant oversight of industry activity by FMC program offices includes compliance in addition to investigations and enforcement. They said increased compliance efforts will continue in fiscal year 2025, with outreach to regulated entities, including webinars and other educational materials, and revised IT systems to provide advanced analytical capabilities to drive targeted compliance efforts.

Lauren Beagen: 24:21

One thing that the FMC has been doing and while the consumer facing side or the public facing side can feel a little clunky in its IT or in its platforms, it looks like from this budget justification that that's something that the FMC is going to continue to try to modernize. They've been modernizing on the internal side, on the FMC kind of platform side that they use, and certainly when I was there, we got all new computers. So they have been. I mean, it was it was needed. It's not like we got the best of the best. It was and we did at the time, but we were a little bit old school in the computers and I, you know, I was there in the 2010s, so it was time since net then right Since then, I'm sure that they've been taking more steps. And now what we're going to see is more webinars, more education materials, and they're saying revised IT systems provide advanced analytical capabilities. So I mean that's. I think that's all going to be great. They're going to have more of a handle because their workload has certainly increased and so by having some of these more automated processes or certainly more IT driven capabilities, it's going to be great. And they said this is to drive targeted compliance efforts.

Lauren Beagen: 25:36

So, getting down to the budget, what are they asking for? They're asking for $48.4 million. That's not a lot. That's really not a lot If you think about it. Some of these other agencies give out $48 million in grant funding, and here the FMC, an entire agency, is asking for $48 million. So it's $48 million. $452,000. That's an increase of $4.7 million over last year's authorization. So last year they got $43.72 million. This year they're asking for a. I mean it's millions, right, but it's a mild increase of 4,732,000. That's not a lot. That's really not a lot.

Lauren Beagen: 26:27

167 full-time positions is what that covers, in addition to the IT applications, and they're saying the IT development tools are gonna be $2 million. The full-time positions are, I mean that's about $35.8 million. We have also listed here 10.5 million allocated to other operating expenses, including rent, building, security, administrative services. I mean it's a pretty lean agency when you break it down. If you were to look at any of these other agencies, especially when they go out for their authorization I mean they're up with Merrad or with Coast Guard or anybody else dealing with maritime stuff I mean they're a line item for most other agencies. I say this every year when we go through this. I mean 48 million, 48.5 million is not much. So hopefully that's fully funded and maybe even I don't know if this is true but maybe even Congress will give them extra. But, like I said, I think that the FMC runs a very lean operation, so we'll see Investigations and enforcement.

Lauren Beagen: 27:35

We were kind of talking about this, but so the piece that I want to highlight here is that they also mentioned their priorities for 2025. So they say that they are covering all sorts of penalties and one thing that I do wanna note so, even though I mentioned that they recovered $2 million over $2 million in civil penalties, civil penalties collected by the FMC don't go back to the FMC, so they don't actually have a personal reason to be collecting these civil penalties. They're collecting these civil penalties on behalf of the industry, but that money doesn't go to the FMC for them to use. It goes to the US Treasury. It doesn't go right into the bank for the FMC. It goes to the US Treasury, totally bypasses the FMC, to be honest. So, if anything, it makes their civil penalties and their violations when they go after them probably a little bit more neutral, because it's not their interest in getting that money. So what are their priorities for 2025?

Lauren Beagen: 28:38

They say a failure to establish, observe and enforce just and reasonable regulations and practices relating to or connected with receiving, handling, storing or delivering property. That's probably one of the big ones, right. They also have unlawful demerge and detention practices and improper use of merchant clauses to impose liability on non-contract parties. They have unreasonable if you're able to deal or negotiate that potentially violate the Shipping Act. Right, that's gonna be coming back in right Cause it's already unreasonable if you're able to negotiate is part of the Shipping Act, but they're going to be defining it in that rulemaking. Unreasonable or feasible to deal, refusals of cargo, space, accommodations or other unfair, unjust to discriminatory conduct that potentially violates the Shipping Act. So that's where we're going to get a little bit more clarity from that rulemaking that we're waiting on, but this is already a rule under the Shipping Act Unreasonable or feasible of cargo space accommodations or other unfair, unjust to discriminatory conduct. You're also gonna be focusing on retaliation that potentially violates the Shipping Act, which is the section 46, usc 41102D, and tariff and service contract activity that potentially violates the Shipping Act.

Lauren Beagen: 29:44

So, in like we said, in FY 2023, the enforcement program collected a combined total of $2.65 million in civil penalties to resolve allegations of misconduct. What they broke this down at, which I thought was interesting that they broke this down but they said two large ocean common carriers and an additional 246,000 in other civil penalties. So they switched over to charge complaints. The commission will review the interim procedure and draft a new rulemaking in 2024. We've talked about this before too. So charge complaints that was a creation of OSRA. Osra 2022 was an interim creation. The FMC had to kind of quickly create a process that they were gonna use, because as soon as OSRA 22 was signed June 16, 2022, it became law, and so, all of a sudden, charge complaints were a thing. The FMC had to build the parachute, as they had already been told to jump out of the plane but now that they can breathe a little bit, that they have a good charge complaints process in place, this kind of interim process, they're saying now it's time to do the official rulemaking. So that's what they're saying. In 2024, we will see another rulemaking. I'm gonna add it to my list. Charge complaints will be a rulemaking. The procedure for charge complaints will be a rulemaking in 2024. And they're saying charge complaints procedure is gonna require additional resources. So they're saying that two full-time employees are projected to be hired in 2024 and 25 to process and investigate the complaints. In 2025, the final procedure will be established and fully operational.

Lauren Beagen: 31:22

They also said OSRA 22 mandated rulemaking for unfair and just the discriminatory methods relating to cargo space accommodations and shipping exchange registries. This is the third one this is probably the first time I've seen the title this long and include shipping exchange registries. So take note of that. This is the unfair and just the discriminatory methods. Usually that's all we say. It's always kind of said related cargo space accommodations. Like I said, I just don't think that I've seen this shipping exchange registries, although it was in OSRA 22,. But this is the first time that I've seen this third rulemaking and perhaps I missed it, perhaps I got too casual with the name, but this shipping exchange registries. The commission anticipates reviewing the use of shipping exchange registries in FY 2024. That will be interesting to watch too, to see where they go with that.

Lauren Beagen: 32:13

The FMC audit program. We don't talk about this very often, but it is something that is present. They said the need for clear communications between the commission and carriers is the underpinning of the VOCC audit program initiated by Chairman Mephane July 2021. In fiscal year 23, the FMC expanded the program to include marine terminal operators and ports. In 23, they expanded it. So the FMC audit program provides a forum for senior FMC staff to communicate directly with representatives from the largest carriers, as well as, under as of 2023, port authorities and marine terminal operators. The agendas for these regular meetings are topical to issues in the supply chain. Past issues have included congestion and movement of empty containers, fees and billing practices, export strategies and challenges faced by the industry. Under the program, the commission has tracked trends, policies and procedures relating to D&D billing and identified best practices for carriers related to communicating their practices to the shipping public. What the justification says is that this was actually created under fact-finding.

Lauren Beagen: 33:15

29, led by commissioner die, included a recommendation that all carriers and MTOs identify FMC compliance officers. The idea there was to increase communication right. Having these points of contact, as the report says, has increased communication, so it's worked between the FMC and carriers and terminal operators and helped ensure that carriers and MTOs are aware of, and are adhering to, commission policies. So another area that they highlight here that I wanna make sure we spend a little bit of time on here is cater, so the office of consumer affairs and dispute resolution services. This is the informal dispute process for informal dispute assistance that the FMC provides. In CATARS, this Consumer Affairs and Dispute Resolution Services, they have, as they say, experienced analysts and attorneys on staff who assist the public in finding solutions to their commercial disputes commercial disputes without bringing formal legal actions. When assistance is requested, catars staff will work with parties to identify solutions that will get cargo moving whenever possible, avoiding further delays and increase in charges.

Lauren Beagen: 34:20

Other services offered by CATARS include mediation and arbitration. All CATARS assistance is provided without charge and all communications are kept confidential. This is a free service with CATARS. It's free. You can do mediation and arbitration at the FMC under this Office of Consumer Affairs and Dispute Resolution. So in 2023, they broke down CATARS requests. I mean this is free, a free system for commercial disputes. They only had 199 requests for cargo assistance. They had 75 requests for passenger vessel or cruise assistance and they had 34 requests for household goods. That's not a lot. That's like 200 requests in the year. This is free. I mean it's up to you. This is not legal advice, but I do want you to know that this is a service that's out there. It is mediation or arbitration or other just general Consumer Affairs and Dispute Resolution Services. You can ask for assistance in finding solutions to commercial disputes by contacting CATARS. I want you to know that that's available.

Lauren Beagen: 35:29

The Commission also talks about a couple of Commission decisions that were key decisions. I'm only going to highlight two here. So we have the Evergreen case. This is the TCW Incorporated versus Evergreen Shipping Agency. This is the one where I'm just going to read off what they said. The Commission have held the small claims officer's decision that the charging of per DM when a port was closed for a weekend and equipment could not be returned was unjust and unreasonable in the absence of extenuating circumstances. This case is now adjudicatory filings before the FMC. The volume of filings and oh well, all right, that's pulling in the wrong information. I'm just going to tell you. So, basically, this is the case that they have kind of hailed as the case that says you can't have detention to merge charges, and I'm paraphrasing here, and this is not legal advice you can't have detention to merge charges on a weekend or a holiday or when you can't return. They're saying, as of this case, that that was unjust and unreasonable, but this case is not final yet. It's before the US Court of Appeals for the District of Columbia Circuit. So what they did mention though and this is reading back off of their summary here the case could significantly impact how the industry deals with charges related to weekends, holidays and other times when containers or chassis cannot be returned. They said some companies are waiving D&D charges in light of the commission's decision. This is still pending, though right, this is on appeals at the DC Circuit.

Lauren Beagen: 36:53

The other case that they mentioned is the chassis decision that we were talking about just the other day. Intermodal Motor Carrier Conference American Trekking Association, versus OSIMA Ocean Carrier Equipment Management Association, initial decision partially granting summary decision. Complainant IMCC, a Conference of American Trekking Association, alleges that OSIMA and CCM those are VOCC backed equipment management groups which have FMC filed agreements have engaged in unreasonable practices related to chassis chassis choice in gray pools and nearly every port in the US. As a result and this is reading off of what the FMC summary of this is as a result, imcc maintains motor carriers, shippers in the downstream public, have paid higher chassis prices and suffered inefficiencies and thus OSIMA CCM actions violate the shipping act. Imcc requests cease and desist relief from these practices.

Lauren Beagen: 37:43

The factually and legally complex case is now pending with the commission on review of respondents' exceptions to the initial decision. They didn't mention that. Basically, the initial decision said that the exclusivity was contrary to the shipping act, but this is on exception, so it's not final. We talked about it. There was a lot of oh, this is great, but this isn't final because exceptions have been filed, which exceptions means appeal. So that's why I think that they haven't said too much about what was decided, because it is on appeal, but they noted that as a marquee case, it will be a marquee case. There was also discussion over whether chassis is under the purview or the jurisdiction of the FMC. There's a lot that's going to be happening on this case, but TBD right to be continued.

Lauren Beagen: 38:34

So this document, this congressional budget justification. I love to look at it, even though it's a little bit boring, right, it might be a little bit nerdy looking through all this. I love to look at it because I think that it gives some glimpses of what the FMC finds important. Maybe what the FMC wants to tell Congress is important, but also it gives you some timelines and some expectations, and if they put it in this congressional document, they're most likely going to adhere to it. So the 2024 procedure for charge complaints I really think that we're going to see that this year. I think that they are going to conclude the unreasonable physical dealer. Negotiate the unjust or discriminatory, unfair or unjustly discriminatory with the shipping exchanges. That's going to be interesting, right. That was a little nugget from here, so take a look. I haven't linked. If you want to check out what the FMC thinks are its priorities for fiscal year 2025, it's a great document to review.

Lauren Beagen: 39:32

So, as always, though, the guidance here is general, for educational purposes only, should not be construed by legal advice directly related to your matter. You need an attorney, contact an attorney, but if you do have specific legal questions, feel free to reach out to make my legal company skull strategies. Otherwise, for the non-legal questions that you're learning and the general industry information and insights. Come find me at the Maritime Professor. If you like these videos, let me know, comment, like and share. If you want to listen to these episodes on demand, or if you missed any previous episodes, check out the podcast by Landon by Sea. If you prefer to see the video, they live on my YouTube page by Landon by Sea, presented by the Maritime Professor. And, while you're at it, check out our website, maritimeprofessorcom. So until next week, this is Lauren Began, the Maritime Professor, and you've just listened to by Landon by Sea. See you next time.