By Land and By Sea

S4.E7 - New Leadership, New Direction: What a New President and Political Shift Mean for the FMC

• Lauren Beagen, The Maritime Professorᵀᴹ • Season 4 • Episode 7

Topic of the Week (11/8/24):

What happens to Federal Maritime Commission and U.S. Department of Transportation and Maritime Administration (MARAD) leadership and political appointees now that we have a change in political party in the Executive Office of the President... 🚢💼

Plum Book:
https://www.opm.gov/about-us/open-government/plum-reporting/plum-data/

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

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

Let's dive in...

1 - Federal Maritime Commission - Rulemaking Round-Up

2 - FMC Final Rule Petitions Updates

3 - FMC's Request for Comments on Premiere Alliance
https://www.fmc.gov/articles/fmc-seeks-public-comments-on-premier-alliance-agreement/


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Speaker 1:

I got soul coming through, flying free. Skies are blue, all the waves are mixing room. I got soul coming through, won't stop in the beat. And on top of the world, yeah, walk to the beat when you see me coming. Nixon room oh, everywhere I go, I'm in the spotlight. This is a good life. Oh, I'm living bold. This is what good life I'm living bold. This is what it looks like. I'm a ticket out of the world.

Speaker 1:

Well, america, the votes are counted and we have a new president. But, most importantly, congratulations. Election season is over. I know I'm happy about that, but with the change of administration and a political party here, there's a big question hanging over political appointees and federal agency. It's left a lot of people wondering who's staying, who's going and which roles will be handpicked by the incoming president. Some of the most powerful decision makers in transportation and maritime could be on the move, curious about what happens next. Stick around as we dive into the high stakes shakeup ahead.

Speaker 1:

Hi, welcome to, by Land and by Sea, an attorney breaking down the weakened supply chain presented by the Maritime Professor. Me, I'm Lauren Began, founder of Maritime Professor and Squall Strategies, and I'm your favorite maritime attorney, vegan. 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 construed with legal advice and there's no attorney-client privilege created by this video or this podcast. If you need an attorney, contact an attorney. So 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 going to be doing this for a little bit, but there is something that I want to talk about.

Speaker 1:

We've been checking in on the FMC's rulemakings. We have the final rules out. So we have the defining billing practices of detention and demurrage. That went into effect May 28th. There is a petition filed against that one. We have the defining unreasonable refusal to deal or negotiate with respect to vessel space accommodations provided by an Ocean Common carrier. That final rule was released July 2024 and went into effect September 23rd 2024. Don't sleep on this one. It kind of got snowed in with the port strike. Go check this one out, find out how this applies to you, this defining unreasonable refusal to negotiate with respect to vessel space accommodations provided by an ocean common carrier. This also has a petition filed in front of it, but go check this one out. Make sure that you understand this one.

Speaker 1:

The last rule that we're still waiting on and we'll see I was hoping that perhaps the last FMC meeting they would have mentioned this rule and what's happening. But the last one that we are kind of that's on my list that we're waiting for is the defining unfair, unjust and discriminatory methods. Like I said, we're still waiting on language. It's been talked about that. It was folded into that unreasonable refusal to negotiate, but I'm kind of still waiting for them to have a direct mention of this unfair, unjust, discriminatory methods. Are they going to be attacking it as a standalone, finishing up everything that maybe they missed when they released the unreasonable refusal to negotiate, or do they feel like they covered everything in that unreasonable refusal to negotiate? Or do they feel like they covered everything in that unreasonable refusal to deal and negotiate Again in 2025,?

Speaker 1:

We talked about this last week we are watching for charge complaints to have a formal adjudicatory process For this one. We, under OSRA 2022, we were. We saw that Congress told the FMC that they had to create this charge complaints process. So they created an interim process, but they always had turned it into a rulemaking, and so we have this now interim process that will now be codified as a formal regulation reg under the FMC. So this is the charge complaints formal adjudicatory process. Look for it in 2025. The commission said that, you know.

Speaker 1:

One thing that I will note is when President Trump was president during his first term, he quickly required that for all one new rule being made by an agency, two rules had to be repealed. So it was like one forward, two back. The thought here was that it would either cause the agency to really decide if a new rule was worth it and perhaps concurrently reduce the overall government red tape that's often discussed. So I'm not sure who knows right, but I would expect a similar approach this time around and that applies everywhere, certainly not at the FMC only, but it does apply to the FMC, or certainly it did previously. So while we have two rulemakings on the book that Congress has required the FMC to undertake, the defining on reasonable, unfair, unjustly discriminatory practices perhaps, as we just talked about and the formal adjudicatory process for charge complaints, we may see the agency have to eliminate a few other rules off the books. So I bring that up as a historical information right. So it used to be under President Trump's first term. It was for every one rule forward, put forward or final rule, you had to eliminate two rules. So we'll see if that comes into play this time around. I mean maybe it'll be one to three, who knows? But something to think about, something to just kind of I'll pay attention to that Story.

Speaker 1:

Number two as I mentioned, I'm following these petitions against both the final detention to merge rule and the unreasonable refusal to negotiate. We haven't had much movement. The last thing that we saw and we've reported on this was October 16th. The World Shipping Council filed their opening brief that outlined some of their arguments presented. We haven't had an update other than the FMC filed a request for an extension of time to file their brief. So their brief is now due December 2nd. That was agreed to by the World Shipping Council. So not a lot to see there. Then the World Shipping Council brief reply brief will be due January 13th and then the final briefs are due January 27th. So this one still has some time ahead of it. I'm going to keep watching it, but the two petitions are still out there where. That's kind of what we're seeing so far. It doesn't go very fast, but I'll keep watching it.

Speaker 1:

Story number three. Story number three this week is that the FMC is seeking public comments on the premier alliance agreement. So from the announcement out of the FMC, the Federal Maritime Commission has opened a 15-day comment period for members of the public to comment in response to a newly filed vessel sharing agreement between Ocean Network Express, o&e, hyundai Merchant Marine, hmm and Yang Ming Marine Transportation. Yang Ming, o&e, hmm and Yang Ming are parties to the alliance agreement that is currently in effect. The agreement, titled the Premier Alliance Agreement, authorizes the three ocean common carriers to share vessels, charter or exchange vessel space, discuss and agree on the size, number and operational characteristics of vessels operated under this agreement and engage in other related activities. The Premier Alliance agreement is publicly is available for public inspection in the Commission's online agreement library. So we've talked about this online agreements library. You can go check out these agreements. They are listed there If they are publicly filed agreements. So service contracts aren't publicly filed, but pretty much all the other agreements are, so you can go take a look at them. But this Premier Alliance agreement right, this was previously the alliance, and now, with Hoppeg-Lloyd going over and joining Marist to form the Gemini cooperation, we see the remaining members form the Premier Alliance.

Speaker 1:

Look, I say it all the time when the FMC opens up opportunities for comments, this is your opportunity to have a conversation with the agency. You certainly don't have to, but if you do feel strongly about alliances and it's honestly, most obviously most helpful if you keep it targeted to the specific alliance that's in front of us here that the FMC is requesting feedback on then draft your comments and submit them. And I only say that I'm not necessarily encouraging people to submit comments, other than if you feel strongly or if there's something that, if you want engagement with the agency, these open comment periods are your opportunity. I just want to remind you. They're asking for feedback, and really federal agencies don't get a ton of feedback, and so this is your opportunity. In general, when comments are open, I will note, though, the comments here are submitted through their confidential and exempt from public disclosure and subject to the exceptions noted, so we won't get a docket, we won't get to see what the comments were submitted, so it really is important to keep them.

Speaker 1:

If you have comments, to keep them targeted right, make them helpful to the FMC, because they're doing their best to review all of this agreement and all of its potential anti-competitive effects before its 45-day initial review period. They might request a request for additional information and if they do that the RFAI. That's what we saw with the Gemini cooperation they'll have an additional 45 days before this goes into effect. If you're filing comments that are not necessary, you're eating into those 45 days, and they've already said under the Gemini cooperation that they found it difficult to turn around their reviews in that amount of time. So I say that look open. Comment periods are a time to talk to the agency, but make sure that you're doing it judiciously and when it really matters, because especially in this moment the rulemakings they have more time. This one, they really are under a time crunch. So if you have information that could help them or that's helpful or relevant, certainly by all means, but just keep that in mind. So this is for the premier alliance, all right.

Speaker 1:

So let's get into the meat and potatoes of the day here. So, with a change of administration, what does that mean for maritime agencies? I'm going to help you find out where to look it up yourself, but then also break it down pretty quickly for you. So if you're not familiar and you probably aren't because, honestly, I had forgotten about this until it just popped into my head today and I think I'd only seen it once or twice when I was actually working for the federal government there's this thing called the Plum Book. Have you heard of it, the Plum Book? Okay, so it's published by the Senate Committee on Homeland Security and Government Affairs and House Committee on Government Reform, alternatively, after each presidential election.

Speaker 1:

So the Plum Book lists over 7,000 federal civil service leadership and support positions in the legislative and executive branches of the federal government that may be subject to non-competitive appointments. Nationwide Data covers positions such as agency heads and their immediate subordinates, policy executives and advisors and aides who report to these officials. The duties of many such positions may involve advocacy of administration policies and programs, and the incumbents usually have a close and confidential working relationship with the agency or other key officials. So this plum book, basically, is a listing of what most relevant part are the political appointees, right? That's why you're looking at this plum book to see is this position a political appointee or are they categorized under a different category? So the major categories, and I'm reading off of the website, the OPM website. Now this is hosted on OPM. It used to be GAO but now it's with the Office of Personnel Management. So I'm going to link the link so that you can look up the Plumb book. You can look it up by agency, you can look it up by position, you can look it up by actual person's last or first name, but continue to read off of the kind of introduction of this plum book.

Speaker 1:

The major categories of positions listed in the US government policy and supporting positions include executive schedule and salary equivalent positions paid at the rates established for levels I through V of the executive schedule, senior executive service general positions and senior foreign service positions. Schedule C positions accepted from the competitive service by the president or by the director OPM or other positions at the GS-14 and above level accepted from the competitive service civil service by law. Okay, look, that's getting to me too much. Basically, if it's a GS, so general schedule, I think is what that means. Um, it is um 15 is where you max out and then usually if you unless you're the securities and exchange commission they go beyond 15 and there might be others Um, but GS 15 means that you're the highest level category of I'm going to roughly equate this to like the worker B level, right? I mean, um, you, you could if you're GS-15, you are high up within the government.

Speaker 1:

You're not a political appointee, you're a career person. For the most part, schedule C positions tend to have some sort of kind of a targeted appointment system and so there might be some relation to, maybe a support to a political appointee. And these are broad generalizations. I'm just kind of breaking it down for you. So that's what this plum book kind of identifies is those, it sounds like those high GS level positions. It's not everybody in the government, but it's those high GS level positions and kind of all positions higher. So senior executive service is above that, and then you get to schedule C and there's a couple of different schedules and then you have PAS political appointed service there's a couple of different acronyms. So if you look at this plum book you can see they break down kind of all the different acronyms. And actually if you want to go see a position and then you want to find out what the acronym looks, what the acronym means, then you can kind of Google that acronym next to that person's name to see what category they are. So continuing off of the overview here.

Speaker 1:

The Plum Book is used to identify presidentially appointed positions within the federal government. The list originated in 1952, during the Eisenhower administration. For 22 years prior, the Democrats controlled the federal government. When President Eisenhower took office, the Republican Party requested a list of government officials that President Eisenhower could fill. The next edition of the Plum Book appeared in 1960 and has since been published every four years just after the presidential election. So why is it called the Plum Book, right? Like what does the plum have to do with anything? So, according to the Partnership for Public Service, in 1952, like I said, president Dwight Eisenhower requested a list of positions he would be responsible for filling in his new administration. Thus began the tradition of the Plum Book nicknaming for its listing of plum top jobs in the government and the plum-colored cover page of the printed version Reflecting the principles of today's government. Recent plum books list more than 4,000 political appointees, about 1,200 of whom are subject to Senate confirmation, along with thousands of other jobs filled by senior career officials in the federal civil service.

Speaker 1:

The Plum Book should be what President Eisenhower envisioned a key tool for presidential training, presidential transition planning, moreover, as the information age increasingly raises expectations for government transparency and accessibility. The Plum Book should provide up-to-date information to the public on the leadership and organization of federal agencies. The Plum Book has failed on both accounts, and again, this is the Partnership for Public Service. Look, I am not following. The Plum Book has failed on both accounts and again, this is the Partnership for Public Service. Look, I am not following the Plum Book, so I'm not trying to get into the conversation of whether it's good or it's bad. I'm just letting you know that it's out there. But what this Partnership for Public Service is saying is that there was a bipartisan group in Congress in 2022 that took up the cause of modernizing the Plum Book in a cleverly named, periodically listed listing updates to management the Plum Act and so they passed that act, and so there it went that there was a kind of more commemorative listing of this Plum Book.

Speaker 1:

So all that to say, look, it's not an exact science. The Partnership for Public Service goes on to say it does not have this near real-time frequency. That was kind of desired, though it does seem to have a yearly update, so that's certainly a good start, but now that we've uncovered the source for you to go look up political positions in the federal government. So I mean you can just Google OPM Plum Book or you can check the show notes and I'll put the link there. But in case you're interested in a position for yourself or if you want to see what positions actually are political appointees, but let's talk about it. I'm not going to make you go do that work right off the bat. That's why you tuned in who's changing roles based on this change of political party.

Speaker 1:

We're going to start with the Federal Maritime Commission, of course right. So the Federal Maritime Commission is required to have three of one party and two of the other. Currently there are three Dems and two Republicans. Obviously, we just came from a Democratic run executive administration. So the Dems are Chairman Dan Maffei, commissioner Carl Bensel, commissioner Max Beckich. Those are the three Dems on the FMC right now. The Republicans are Commissioner Rebecca Dye. She's the longest serving commissioner and she's actually grandfathered in that two-term limit that otherwise is required. She predated the COBOL Act that's what it was called that changed that and created a two-term limit. So it's Commissioner Dye and Commissioner Lou Sola. Those are the two Republicans currently serving at the FMC.

Speaker 1:

So what happens now? Well, chairman Dan Ruffet will not continue to serve as chairman. Right, he's a Dem, so that will be changed over to the Republican Party, though I would say that he is really well regarded as being a very fair chairman and not necessarily making decisions along party lines. Actually, I think the same can be said for all the commissioners. But regardless, he still has the D by his name, and so this is going to have to go to somebody who has that R by their name. So Chairman Maffei won't necessarily leave, but he is certainly of the three Democrats that needs to be. He's certainly one of the three Democrats that needs to be knocked down to two. So, said another way, the Republicans will need to nominate a Republican to serve on the commission, and the commission can only have five people. So the three Dems will now drop down to two Dems and the two Republicans will now have to plus up to three Republicans. So it's going to be a presidential nomination, but then it's going to have to also have a Senate confirmation. So, like I said, that will knock off one of the Democrat commissioners, which is Maffei.

Speaker 1:

Bensler, vekic I'm not really hearing anything now on which commissioner it'll be that leaves. I think that they all bring really really valuable things to the table. I think that the five commissioners that we have now at the commission are all very valuable in their own regard, but we'll see it's likely to start becoming a little bit more clear as we close in on the start date of the new administration in January. One thing that I will note, though, is the five commissioners each have a five year term that are staggered, and so they fill terms based on the start date of that term. It doesn't start when they start, when they get sworn in, so sometimes they fill partial positions and partial terms, and so it kind of doesn't matter which one of those Dems is replaced or leaves, because the new Republican will take over their term, which might only have a year or two or three left on it, which also goes to why I say that the FMC tends to be kind of insulated from politics, because it's not an entirely new slate. That happens when there's a change in president and certainly a change in political party, because you kind of it's every five years per commissioner, and so that's, that's what we're we're looking at here, so it's not like we're going to see a whole new slew of all five of them getting kicked off, and it's less about the kickoff, it's more about, I believe, they have to be removed for purpose. If they are removed, but when we have this imbalance of Republican versus Democrat, that's where I think we have a little bit more leeway to the president to replace somebody. But I'm not exactly sure how they choose who leaves, but I think traditionally I think it's somebody tends to leave instead of somebody gets kicked out. But I think traditionally I think it's somebody tends to leave instead of somebody gets kicked out. But we're going to see, kind of, how this all plays out. Yeah, so then who becomes the next chairman? Right, I mean? So now we're looking at it's going to be a Republican chairman. So who do we have? We have Commissioner Dye and we have Commissioner Sola.

Speaker 1:

Commissioner Dye has been on that commission for enough time that she has had plenty of opportunity to become the next chairman through the years. But perhaps now is the time. I mean, who knows? She's often in the FMC public meetings and she'll joke that she uses the threat of retirement, to which everybody usually protests. Because she has such institutional knowledge and such a firm grasp of the supply chain ecosystem and the FMC's proper role in it, she's seen as a commissioner who prefers to let the industry solve problems and the government should be proper role in it. She's seen as a commissioner who prefers to let the industry solve problems and the government should be the facilitator. That's kind of her approach to it, but she really likes the federal government to have more of a limited role and have the industry take over. My take is that while she's not opposed to new rulemakings, they do need to serve a justifiable purpose that's in line with the FMC statutory authority. So I think that she would be. She's a great commissioner. I think that she would be a great chairman and I think that that lines up, perhaps, with what the industry wants too. But if she does take this chairmanship's role, is this her swan song Like? Is this her last act? I hope not. I think that she's such a great commissioner. Dr Sal Mercogliano and I often talk about how we love Commissioner Dye. We think that she is just such a great commissioner for the FMC.

Speaker 1:

But we also have Chairman Sola, or Commissioner, excuse me, is that future planning Commissioner Sola? So Commissioner Lou Sola has only been in the commission role since January 2019. So he was nominated for a term spanning November 15th 2018 to June 30th 2023. So their terms all end June 30th of a certain year. So, recall, I said they can only hold I don't know if I said this. So, under the COBOL Act the Term Limiting Act previously mentioned that's what I said earlier, that I mentioned this COBOL Act they, as I recall, they can only hold over for one year past the expiration of their term before they're forced to leave. So that happened to Chairman Buffet when he was a commissioner. He was awaiting his reconfirmation hearing, but he didn't get it in time and so he had to leave and then come back. So, here with Commissioner Sola, if you'll recall the dates here, he was sworn in January 2019, but he was nominated for the term of Novemberover expired.

Speaker 1:

Right, but, but. But. But this might not apply when you're on a partial term, and I think that that might be the exception here, because otherwise, if you had somebody who came in on a on a limited term, went through the confirmation or the yeah confirmation, a nomination confirmation hearing, and then, all of a sudden, they only had one month left and then it was only, you see how it could be problematic. So perhaps that's why he's able to stay longer and so maybe because he didn't get a chance to start his term until 2019,. Again, this is all for Commissioner Lusola, but the term started November 18th but he didn't actually start until 2019. Perhaps he's able to stay on longer, so like five years plus one year holdovers. Then perhaps that puts us at January 2nd 2025, or perhaps we get Commissioner Sola June 30th 2025, because of this partial thing.

Speaker 1:

All that to say, look, all that to say. We have Commissioner Dye, who wasn't going anywhere and likely a top choice for the next FMC chairman, and we have Commissioner Sola, who may need an expedited reconfirmation hearing to stick around, which could probably happen pretty quickly if needed, I imagine. But we have these two Republicans, and a third commissioner on the Republican side is going to be up for grabs. I'm so interested Whenever they get new commissioners. I'm so interested in who they bring in.

Speaker 1:

I think that it's really interesting the group that they have now, because they have Chairman Dan Maffei, who's a former congressman. They have Commissioner Rebecca Dye, who has the institutional knowledge. She's the longest serving commissioner. We have Commissioner Carl Benzel, who does the MTDI, and he's really pushing information and conversation on the data side of things, which is such an important thing for that conversation to have started. We have Max Beckett, commissioner Max Beckett, who is the labor guy. I mean right not to over-casual that, but I mean it's such a great conversation, that is an important one, that we really haven't had a labor guy at the FMC in quite a long time. And then we have Lusola, who really enjoys the cruise side of things, and so cruising is part of the FMC jurisdiction, and so having him with his attention to cruising has been great.

Speaker 1:

So the five commissioners that we have right now are such an interesting mix that I would hope that if they do have a new commissioner come in, one, they understand what the commission is for and, two, that the president and his team really choose somebody who will compliment the commissioners that are there, because they have been doing a lot. They have been very active We've talked about that Perhaps a little too active for some people's taste, but they have been doing things. So we'll see. We'll see where this is going to be a new thing happening. So what happens on the Department of Transportation side? There's new stuff happening over there. So the Secretary of Transportation role is a cabinet level position. So that's similar to like Secretary of State, secretary of Defense, secretary of Commerce, that's Secretary of Transportation, is in the mix and it's a cabinet level position and those advise the president directly. And it's a cabinet level position and those advise the president directly. So why didn't I mention cabinet level position?

Speaker 1:

On the FMC side, well, they are an independent regulatory commission, so they're similar to the FEC or the SEC. They are not subject to direct control by the president. So when the president sends directives to his cabinet level agencies, you'll note that when they mention the FMC, they say the FMC is suggested to or the FMC is advised to, because the FMC can say all right, thanks, we'll take it under advisement, but we don't have to do anything, and they've done that before. So it is an independent regulatory agency and so they don't have to take direction from the president's office. Congress can direct the FMC to do something, and we saw that in Osra, the Oceanship Reform Act of 22, and they do right. But it takes much more to have all of Congress agree on something and tell the FMC to do something. It's a much harder task, which is why this independent regulatory agency is such an important thing.

Speaker 1:

So, getting back to DOT, though, right, that was just a compare and contrast, getting back to DOT and cabinet level agency. So Secretary of Department of Transportation. So SECDOT will leave as of January 19th, if not sooner, because inauguration day of the new president is every four years on January 20th. Unless January 20th falls on a Sunday, then it will be January 21st. This year it's going to be January 20th, which is a Monday, so usually we'll see letters of resignation dated for January 19th. As part of that process we will also see the maritime administrator, who has been a really active role. I mean we don't talk about MARAD as much, but she's a political appointee. That position will also change. Admiral Ann Phillips will be departing on January 19th or sooner as well.

Speaker 1:

So it's going to be all new leadership. All new leadership, but not necessarily particularly from the FMC side, not all new faces. Right and I think that that's the importance of career level positions at both the FMC and MARAD, is that they don't necessarily lose all the work that they've done, because they can have some high level federal employees that stick around, that are there for the long term, that tend to stay insulated from the politics because they're not tied to a political party that moves in and out. So, all that to say, we're going to get a new chairman at the FMC, we're going to get one new commissioner, which means we're going to lose one of the commissioners that we currently have. From the Democrat side, we're going to be gaining a Republican. We will be losing Secretary of Transportation, pete Buttigieg, and we will be losing the maritime administrator, ann Phillips. So new changes. This happens every four to eight years. This happens every time we have a new political party, or a lame duck where we have somebody new coming in. So I'm going to keep watching. I think that this is interesting. It's always really interesting to see. I feel like it brings fresh life to some of these agencies sometimes, and we'll see what the priorities are.

Speaker 1:

So, as always, the guidance here is general and for educational purposes only. It should not be considered to be legal advice directly related to your matter. If you need an attorney, contact an attorney, but if you do have legal questions, feel free to reach out to me at my legal company, skoll Strategies. Otherwise, from the non-legal questions, the e-learning and general industry information and insights, come find me at the Maritime Professor.

Speaker 1:

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 the website themaritimeprofessorcom. I promise e-courses are coming soon. I think I'm going to do a compare and contrast FMC Marad and I think I want. I really feel like people need to understand what that rule is doing. So until next week actually until two weeks from now we will not have a show next week, two weeks from now. This is Lauren Vegan, the Maritime Professor, and you've just listened by Landed by Sea. See you next time you.