By Land and By Sea
By Land and By Sea
S4.E10 - Captain's Log Edition (Truckers have entered the chat on the FMC Rule Petitions... & an ILA & USMX Update)
Topic of the Week (12/13/24):
A mash up of current stories in global ocean shipping! It's the Captain's Log Holiday Series! 🎅
⚓ 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 - INTERNATIONAL LONGSHOREMENS ASSOCIATION and UNITED STATES MARITIME ALLIANCE LIMITED Updates
4 - No New Updates to FMC Chairman News
5 - FMC Issues RFAI for Premier Alliance
https://www.fmc.gov/articles/fmc-issues-request-for-additional-information-regarding-premier-alliance-agreement/
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âť—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 or podcast. If you need an attorney, contact an attorney.âť—
Oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh. I've got soul coming through, flying free. Skies are blue, all the waves it makes a room. I've got soul coming through, won't stop in the piece and on top of the world, can't walk to the beat when you see me coming, Make some room. Everywhere I go, I'm in the spotlight. This is a good life I'm living bold. This is what it looks like On the tiptoe Out of the world. We're continuing to sail through the holidays, so let's keep moving on our quick roundup of stories with the Captain's Log Holiday Series. 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 Began, founder of the 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, for educational purposes only. It should not be construed to be 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 usually we go through our top three stories of the week, but during the Captain's Log holiday series every story is a top story, so let's get into it. All right, story number one we've been checking in with the rulemakings. I like to kind of start here, so that way we know where we're going, we know what we're talking about. So what happened during 2024? Well, we had a few rulemakings that became final. We had the billing practices of attention and demurrage. That became a final effective rule on May 28, 2024. Notable developments that were happening around that rule. The commission issued a correction to the final rule preamble text. So, like all the discussion part clarifying the application for a carrier truck relationship, that kind of led us into the World Shipping Council filing a petition against the detention to merge billing requirements, final rule. So really kind of that's the issue, right, the direct contractual relationship and how it relates to the motor carriers. There's other things going on, but I bring that up as kind of one of the precipice for the discussion on. That is at least one of the main issues. Is this direct contractual relationship at how it relates to motor carriers as of now it's not a direct contractual relationship as the final rule says and so the motor carriers cannot be directly billed. They can pay it but they can't be part of that direct billing of the detention or demurrage invoice. We talked about that when we talked about the detention demurrage rule itself. So go back and listen to that episode if you'd like to know more about the billing practice, the detention merge final rule. But I mentioned all that because we're going to talk about the petition in a minute here.
Speaker 1:The other rule that we were watching this year was defining unreasonable refusal to deal or negotiate with respect to vessel space accommodations provided by an ocean common carrier. This final rule became effective September 23rd 2024. So just a few months ago you might not have noticed it, paid attention to it, it came out, it was finalized right before the port strikes. What kind of got. Maybe overshadowed. Go take a look at this. I urge everybody to go take a look at this. This is defining different things in the industry, certainly as they relate to unreasonable refusal to deal or negotiate, unreasonable defining unreasonable. Anytime reasonable or unreasonable is being defined by a federal agency, go check it out, see if it applies to you, see if you have problems with it, see if you like it. Just go check it out.
Speaker 1:Things that I'm anticipating for 2025, charge complaints. We've heard from the FMC that they intend to finalize and formalize their charge complaints process. That was something created under OSRA 2022. So the Ocean Shipping Reform Act of 2022, congress said look, charge complaints, you need to be reviewing them to the FMC. And the FMC said, okay, cool, we'll make a process. It was effective immediately.
Speaker 1:So June 16, 2022 was when charge complaints became a thing, but they didn't really have. Congress didn't say here's how you're going to do it. They kind of now need to make a rulemaking. So here we are. It's going to be two, two and a half, three years by the time they get to doing this years later, but they will be going through a formal rulemaking process because it's something that they were directed by Congress to do this charge complaints process. Now they need to formalize it into a conversation with the public, right? That's what rulemakings really are. They are going to ask for comments at some point. That's your opportunity to have a conversation with the agency and tell them do you like charge complaints process? Do you not like charge complaints process? What do you think about it? I think I also anticipate from some of the messaging that I've been hearing from some of the meetings, the FMC meetings. You can go check those out on the YouTube page. Fmc has a YouTube page where they post all of their recorded meetings, but you can go. What they said at one of those was potentially the statute of limitations, and does that three-year statute of limitations apply to charge complaints process? That was something that the general counsel was bringing up and I anticipate that that'll be probably one of the issues coming up in a formal rulemakings process. So those are the rules that we're looking at.
Speaker 1:We'll see what a new Trump administration second term brings. If we're going to see term one had a one rulemaking forward means two rulemakings off. I don't know if that's going to go forward. We'll find out more as we get closer to the January 20th date of the change of power, but that's what happened during Trump. One was, for every rulemaking an agency brought forward, they had to repeal two rulemakings, and so we'll see if that happens this time around. All right.
Speaker 1:Story number two like I said, we're going to check in on those petitions. If that happens this time around, all right. Story number two like I said, we're going to check in on those petitions. So we have a little bit of kind of interesting thing happening with this petition on the billing practices of detention to merge. So this started April 18th. It was filed. It's mostly kind of circled around, standing and lacking of authority whether the FMC has authority to go into these different areas, right, and if the World Shipping Council is standing to bring these issues and bring this petition. But like I said, if we get into the subject matter of kind of what's happening here, at least one of the major issues is this contractual relationship, the direct contractual relationship requirement under this D&D rulemaking for motor carriers and the inability to directly bill motor carriers for detention to merge.
Speaker 1:So the World Shipping Council I've said this a few times brought up five main issues in their opening brief. I'll run through those quickly. So it was whether the final rule is contrary to the Ocean Ship Reform Act because the commission exceeded Congress's limited grant of authority to initiate a rulemaking. Two, whether the rule exceeds the FMC statutory authority because the commission lacks authorization to ban a billing practice, absent of finding that the practice is unjust and unreasonable. That's that nod to carrier to motor carrier billing the direct contractual, they're saying, lacks authorization to ban a billing practice. That's kind of what the FMC is doing is banning billing to the motor carriers.
Speaker 1:The third argument was whether the rule is arbitrary and capricious. Fourth, whether the rule is arbitrary and capricious because it fails to meaningfully respond to crucial comments submitted during the rulemaking process. And five, whether the FMC violated the National Environmental Policy Act, nepa, by failing to issue an environmental impact statement. Those are the arguments In the opening brief of the World Shipping Council. We got a response brief from the FMC about a week, week and a half ago, maybe two weeks ago. Basically kind of saying the council has failed to provide evidence to support its claim of representational standing. So there's that standing issue. As an association the council must provide sufficient evidence of its members standing. But it's also failed to do that. These are the FMC's arguments.
Speaker 1:The final rule permissibly defines which parties may be billed for demerge and detention. Saying the commission had ample authority to issue the regulation under ASRA. Saying the council failed to show the commission lacks authority. The council failed to show the commission lacks authority under two different areas. The billed parties rule easily survives the deferential review. Application of arbitrary and capricious. So those are the FMC's arguments on kind of responses right to the World Shipping Councils.
Speaker 1:But here's where it got interesting this week. The truckers have entered the chat. So on December 9th, american Trucking Association, the ATA Agriculture Transportation Coalition, so AGTC, association of Bi-State Motor Carriers, the California Trucking Association, the Harbor Trucking Association and New Jersey Motor Trucking Association filed a joint amicus curiae brief. So this is a non-party friend of the court offering so basically it's non-parties to the matter offering information, expertise, general insight to the court on the matter. And so since this issue is kind of hinging on this motor carrier question and the inability to be directed, it makes sense that they may want to weigh in.
Speaker 1:So what did they say? And I'm just going to be kind of paraphrasing, I'm bringing in a little bit of their justification for this amicus brief. So what they say is Amici, each have a strong interest in the rule at issue in this case because their memberships include and this is the joint filing of this amicus brief from the trucking associations and AGTC and they're kind of justifying why this brief should be allowed at all like their interest in talking about this case. It says because their memberships include either motor carriers who move shipping containers in and out of the nation's maritime ports or shippers who move commodities through these ports. Thus, each of these AMISI represent members who have a direct interest in ensuring the billing practices for demerge and detention are just and reasonable, and each of the AMISI participated in the underlying rulemaking through comment submissions on the proposed rule. Moreover, as industry groups with practical knowledge of how detention to merge charges affect both shippers and motor carriers, amici's perspective will assist the court in understanding the practical impacts of the rule under review on key components of the supply chain. So I mean they're saying look, this is all about us, you're talking about us, let's just, can we say something here? And so it's interesting.
Speaker 1:They brought up three arguments in their outline and go into it. I mean this brief is 30, 32 pages long but essentially what it distills down to is they said this joint brief says Congress did not require the FMC to focus on the interpretive rules incentive principle to the exclusion of all other considerations, meaning they didn't only have to focus on incentive principle and not anything else. So they're saying that's kind of one of the arguments that they're trying to dispel from the World Shipping Council, it seems here the second thing they said the joint amicus brief, the final rule aligns with the incentive principle. And they also said the final rule advances Congress's broader goals as embodied in OSRA, the Ocean Shipping Reform Act. So they're kind of a general overview statement of the argument.
Speaker 1:This joint brief says World Shipping Council's arguments that the final rule on demurrage and detention billing requirements is contrary to statute and arbitrary and capricious all rest on their contention that the Ocean Shipping Reform Act required the FMC to develop a rule focused exclusively on the incentive principle articulated in the FMC's earlier interpretive rule on detention to merge under the Shipping Act. That was that May 18, 2020 thing that came out interpretive rule that came out from the FMC and that's where the incentive principle came from. They continue and that the final rule fails to serve that principle. Both of these contentions are incorrect, as the FMC explains in its brief. World Shipping Council is wrong in its assertion that the final rule is fatally misaligned with the incentive principle and they are wrong to suggest that Osra compelled the FMC to exclude all other considerations.
Speaker 1:Amici submit this brief to further explain why the final rule adheres closely to the incentive principle as articulated in the interpretive rule, while simultaneously so they're saying look, it's not, it's not contrary to the incentive principle here. But they're saying while simultaneously furthering the additional principles articulated in the interpretive rule and mandated by Congress in ASRA more effectively than world shipping councils are trinitive would? Um. So they're saying look they're, they're furthering principles of the interpretive rule by doing what Congress told them to do. This is the triggers and the AGTC saying this. So I mean a pretty interesting, perhaps compelling, brief to be included. Like I said, it's over 30 pages. So if you want to see more about what the Trucking Association and AGTC have to say about these arguments, go take a look. It's over 30 pages. It's on PACER. That's where you can find all of this. But yeah, it's pretty interesting.
Speaker 1:The other petition that we've been following is this unreasonable refusal to negotiate with respect to vessel space accommodations no movement there. We've been on the arguments. It feels very legal procedural Lack of standing. Can the council bring the suit on behalf of their members? So I'll continue to watch that as well. But really interesting, right that the truckers are entering into this conversation. I thought that that was fascinating and perhaps not surprising, right? I mean, if it deals with the truckers and the motor carriers, why not All right.
Speaker 1:Story number three the ILA and the US Maritime Alliance. So more strong language. We've been watching and last week when we checked in, we had kind of been talking about the strong language. A few weeks before that, the ILA had walked away from the table. Well, yesterday we got a little glimpse of what may come next and a surprise move, I might say so. President-elect Donald Trump posted on Truth Social I think is where it was, and I'm just going to read what he said. So just finished a meeting with the International Longshoremen's Association. This is from President Trump. President-elect Trump and it's President, harold Daggett, and Executive VP Dennis Daggett.
Speaker 1:There's been a lot of discussion having to do with automation on United States stocks. I've studied automation. This is still reading off of the post. I've studied automation and know just about everything there is to know about it. The amount of money saved is nowhere near the distress, hurt and harm it causes for American workers, in this case our longshoremen.
Speaker 1:Foreign companies have made a fortune in the US by giving them access to our markets. They shouldn't be looking for every last penny, knowing how many families are hurt. They've got record profits and I'd rather see these foreign companies spend it on the great men and women on our docks than machinery which is expensive and which will constantly have to be replaced. In the end, there's no gain for them and I hope that they will understand how important an issue this is for me. For the great privilege of accessing our markets, these foreign companies should hire our incredible American workers instead of laying them off and sending those profits back to foreign countries. It's time to put America first and sending those profits back to foreign countries. It's time to put America first. So interesting, right, interesting. That's the surprise that he's coming out. I'm in full support of the ILA here.
Speaker 1:So, of course, the United States Maritime Alliance posted a statement as well. I'm going to read that so you get the full what they said. So the US Maritime Alliance said we appreciate and value President-elect Trump's statement on the importance of American ports. It's clear President-elect Trump, us Maritime Alliance and the ILA all share the goal of protecting and adding good-paying American jobs at our ports. But this contract goes beyond our ports. It is about supporting American consumers and giving American businesses access to the global marketplace, from farmers to manufacturers, to small business and innovative startups. Boost port efficiency, increase port capacity and strengthen our supply chains. Ila members' compensation increases with more goods they move. The greater capacity our ports have in goods that are moved means more money in their pockets. We look forward to working with the President-elect and the incoming administration on how our members are working to support the strength and resilience of the US supply chain and making crucial investments that support ILA members and millions of workers and businesses across the entire domestic supply chain, improving efficiency and creating even more high-paying jobs for ILA members. So that's what the Maritime Alliance said.
Speaker 1:Okay, so this is interesting, right. So, like, what does all this mean for January 15th? Well, right now, I mean the intensity increased, right, it just got a little bit more high stakes. So the potential for a strike, I'd say, feels back on the table, not that it wasn't off the table, but just the intensity, right. But I'm really encouraged. This is the good part. I'm really encouraged that this conversation is happening now, december 13th or December 12th really, and not January 12th, right, not three days before, and I think that's what we saw the last time. So we're seeing conversations happening with the administration early or the incoming administration early.
Speaker 1:I think the surprise is that Trump is coming out in full support of the ILA and doubling down on the American jobs versus foreign interest rhetoric in full support of the ILA and doubling down on the American jobs versus foreign interests rhetoric. But I said this last week and I think that that's to me. It feels like a grossly oversimplification of the issues and I don't want to say you know, ocean carriers, foreign ocean carriers are certainly part of the US Maritime Alliance, but they're not the only part, right, like, not all ports have foreign terminals and, look, the ocean carriers probably have strong voice at US Maritime Alliance, like, we know that. But there's also domestically based ports, associations included in the membership and domestic companies included in the membership. Side is oversimplifying and potentially complicating, increasing the complication of an already complicated relationship. Look, I don't know, further stonewalling outright technology advances doesn't feel right either. I think what the ILA does on the docks is incredibly important, obviously right and also incredibly dangerous. But look, it also feels like technology can be included to help, aid and assist the ability to be safe on the yard and it's the messaging coming out saying absolutely no technology advances. I mean that doesn't feel right, especially in this day and age. I don't know, we'll see where it goes. I wouldn't even be surprised if maybe in the next week or two we get a deal done right, because maybe that's why that's being put out there in the public right now. Remember, this has been negotiated in the press as much as, maybe even sometimes more than, an actual formal negotiation. So I'll keep watching this one. So I'll keep watching this one. But maybe that means that we're in for an agreement over the next few weeks, maybe before Christmas. Maybe that'll be the Christmas present that the supply chain gets this year. We'll see. I'll keep watching it. All right.
Speaker 1:Story number four FMC Commissioner News. Last week we talked about a letter written by the Federal Maritime Commission, commissioner Lou Sola, to President-elect Donald Trump recommending Commissioner Rebecca Dye to be designated as chairman, and this week, well, we have no new updates. We have nothing to report here. Still watching to see if there are other names being floated, because, no matter what, we're going to need a new commissioner to fill that third Republican spot, to fill that third Republican spot, and the big question is does the chairmanship then go to Commissioner Dye or does it go to a newly appointed commissioner? And I think with a president-elect Trump, it could go either way, but certainly Commissioner Dye has the support, it feels, of many of the industry.
Speaker 1:I think that she is very well respected. She's been at the commission since 2002. She's seen the ups and downs. She's seen the movement of the Ocean Carrier Global Ocean Alliances. She's seen a lot and understands it. It's a tricky industry, right as we all know, but I think that she provides a lot of really interesting know-how but also is interested in making sure that the FMC doesn't overstep and becomes more really leans into its role of being a facilitator and not necessarily a regular well, they're still going to be a regulator but she likes the industry to lead the conversation. So we'll see, we'll see where that goes. I'll keep watching it, the conversation. So we'll see, we'll see where that goes. I'll keep watching it. All right.
Speaker 1:Story number five the FMC issued a request for additional information regarding Premier Alliance agreement and I'm just going to read the note and jot in little pieces of information that I have. So this is the press release that the FMC released on December 6, so about a week ago. A global operational alliance of three container shipping companies will not go into effect next week because more information is needed by the FMC to determine the potential competitive impacts of the agreement. Hmm, hyundai Merchant Marine, one Ocean Network Express and the Yang Ming Joint Services Agreement. Yang Ming filed the premier alliance at the commission on October 28, 2024. This agreement authorizes the three entities to share vessels, charter, exchange vessel space, discuss and agree on the size and characteristics of vessels operated under the agreement and engage in other related activities on a global scale.
Speaker 1:Agreements become effective 45 days after filing, unless the Commission issues a request for additional information, as it's doing here. That's true, right. So 45 days it just becomes effective, unless the FMC files an injunction in federal court to stop it or unless they ask for more information, and so they're getting an extra 45 days to review it. So, continuing on with the announcement, the commission uses the RFAI request for additional information process to obtain documents and verifiable information necessary to achieve clarity on matters that were not addressed by the filing parties or where insufficient information was provided in the originally filed agreement.
Speaker 1:The commission has determined that the Premier Alliance agreement has submitted lack sufficient detail to allow for a complete analysis of potential competitive impacts and whether the agreement fully complies with all statutory requirements. They're just continuing to look into this. This is interesting, though, because remember, the premier alliance is basically an already existing alliance, just minus one member, right? So this is the new HMM ONE and Yang Ming without. Was it, mariska, either way. So this is kind of just a continuation, but with the same members minus one. So information sought as part of the RFI-AI is commercially sensitive and not publicly published. Reconsideration of the agreement will not commence until the commission has received a fully compliant response to the inquiry, so that 45 days doesn't start right away. It starts once they feel like they've gotten all compliant responses to the inquiry, once they feel like they've gotten all compliant responses to the inquiry. So that's where we're looking at it.
Speaker 1:Said the Premier Alliance would have gone into effect Thursday, december 12th, yesterday. That would have been the 45 days. But that's not an. We've seen this happen with the Gemini cooperation. We've seen this happen with most alliance agreements filed. They want the 45 days. They get the 45 days. Initially, the commission usually has additional questions as just part of their process. So that's what they're doing, that's what they're looking through.
Speaker 1:I'm going to continue to watch it. No new updates on it. We talked about that last week. I'll continue to watch that. But look, this month of December is pretty happening. So I'll keep watching it. And that's it for this week. Like I said, we wanted to do something quick during this Captain's Log holiday series. We'll see you all next week for probably the last before we break for the holidays of the Captain's Log holiday series.
Speaker 1:So, as always, the guidance is general, for educational purposes only. It should not be construed to be legal advice directly related to your matter. You need an attorney, contact an attorney. But if you have specifically good questions, feel free to reach out to me at my legal company, skoll Strategies. Otherwise, for the non-legal questions, the e-learning and 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 Bicy. If you prefer to see the video, they live on my YouTube page by Landon Bicy, presented by the Maritime Professor. While you're at it, check out the website themaritimeprofessorcom. So until next week. This is Lauren Began, the Maritime Professor, and you've just listened to by Landon Bicy. See you next time, thank you.