Topic of the Week (7/12/24):
What a few weeks it’s been for the judicial system and ocean shipping – the overturning of Chevron (impacting federal agencies) and the vacating and remanding of TCW v. Evergreen (a discussion of the incentive principle and FMC’s May 18, 2020 Interpretive Rule) – there’s a lot going on, let’s break it down.
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 Strategiesᵀᴹ)
Let's dive in...
1 -Federal Maritime Commission announced they added Hyundai Merchant Marine (HMM) to its controlled carrier list
https://www.fmc.gov/articles/fmc-designates-korea-based-container-company-a-controlled-carrier/
2 – TCW v. Evergreen – vacated and remanded, a discussion.
3 – The U.S. Supreme Court overturns Chevron deference – what does that mean for the FMC?
-------------------------------
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#ByLandAndBySea
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
I got soul coming through, flying free.
Skies are blue, all the waves.
(00:21):
It makes a room.
I got soul coming through.
Won't stop in the deep end Ontop of the world.
Catwalk to the beat when yousee me coming.
Make some room.
Everywhere I go, I'm in thespotlight.
This is a good life I'm livingbold.
(00:43):
This is what it looks like Onthe tip of the world.
Oh boy, do we have to talk?
There has been a lot of stuffcoming out of a few different
(01:05):
courts that is going to impactglobal ocean shipping world.
You know what?
It's time to sit up and payattention.
Honestly, I'm still digestingit all Evergreen case being
(01:26):
vacated, so canceled andremanded back, so sent back to
the Federal Maritime Commission.
And we're also talking about alittle thing you probably heard
in the news Chevron wasoverturned, which will have some
impact on the Federal MaritimeCommission.
Let's get into it.
Hi, welcome to, by Land and bySea, an attorney breaking down
(01:48):
the weakened supply chainpresented by the Maritime
Professor me.
I'm Lauren Began, founder ofthe Maritime Professor and
Squall Strategies.
I'm your favorite maritimeattorney.
Join me every week as we walkthrough both ocean transport and
surface transport topics, thewild world of supply chain.
As always, the guidance here isgeneral, for educational
purposes only.
(02:09):
It should not be construed tobe legal advice and there is no
attorney-client privilegecreated by this video or this
podcast.
If you need an attorney,contact an attorney.
Again, this is general and foreducational purposes.
I just want to hit that todaybecause we're covering legal
cases.
So today we're only doing ourtop three stories of the week
(02:31):
and stories number two and three.
Well, they're doozies, so let'sget into it.
All right, story number onewe're going to be hitting those
two major cases that are goingto have impacts on the us ocean,
on the global ocean shippingworld in the us.
(02:51):
But first let's start with alittle appetizer, shall we?
Let's start with something alittle bit lighter.
Uh, I wanted to highlightsomething that came out, and
again, last week was the fourthof of July holiday, so we took
the week off, so we're kind ofcatching up for the month of
July anyways.
But on July 1st the FMCannounced that they would be
(03:15):
designating a new controlledcarrier to its controlled
carrier list.
So on July 1st 2024, the FMCannounced and I'm going to be
pulling most of this off oftheir announcement that they
classified Hyundai MerchantMarine HMM as a controlled
carrier of the government of theRepublic of Korea and added it
to the agency's controlledcarrier list.
(03:36):
Did you know that they holdthis?
So I've talked a little bitabout the controlled carrier
list but I'm going to rely onactually what they said in the
announcement.
This is a very kind of completeannouncement where they talk
about what is a controlledcarrier.
So it says from the FMCannouncement here controlled
carriers are ocean commoncarriers operating in the US
foreign trades that are or whoseoperating assets are directly
(04:01):
or indirectly owned orcontrolled by a foreign
government.
So that's that name rightControlled carriers that either
is directly or whose operatingassets are directly or
indirectly owned or controlledby a foreign government.
Controlled carriers are subjectto enhanced regulatory
oversight by the commissionunless a treaty exists between
(04:21):
the United States and thecontrolled carriers host nation.
A treaty of friendshiphip,commerce and Navigation and
there's a link in theannouncement signed in 1957
between the US and the Republicof Korea entitles HMM to this
exception at 46 USC 407061.
This is again from theannouncement and in 407061, it
(04:44):
says this chapter does not applyto any controlled carrier of a
foreign country whose vesselsare entitled by a treaty of the
US to receive national or mostfavored nation treatment or
trade served only by controlledcarriers.
So I mean some interestingthings, right?
So I just because there's somestatutory references, I wanted
to let you know what all thatthose numbers mean.
(05:06):
So that's 46 USC 407061.
Continuing on with theannouncement, which exempts it
from the requirements of Title46 407.
However, hmm remains subject tothe provisions of 46 USC 40502F
.
What is that?
It talks about?
Breach of contract, breach ofservice contracts and the court
or forum of 46 USC 40502F.
What is that?
It talks about?
Breach of contract, breach ofservice contracts and the court
(05:28):
or forum of the remedies.
And then it also it continuesto say and 46 USC 46106B7, which
is it talks about the FMC'sannual report, and that they
must include an IDing ofotherwise concerning practices
of a controlled carrier.
And there's some other USTR,united States Trade
(05:49):
Representative authoritiesthrough the Trade Laws Trade Act
that remain intact.
So they're saying look, hmmremains subject to the
provisions there for the annualreport and also the breach of
service contract.
So, continuing on with theannouncement, the controlled
carrier list is not acomprehensive list of all
foreign owned, foreigncontrolled or government linked
(06:09):
companies and assets.
It is a list of companiesmeeting statutory requirements
found at 46 USC Chapter 407.
Commission regulations relatedto controlled carriers are found
and they reference theregulation, the reg 46 CFR 565.
So who's on the list?
Well, hyundai Merchant Marineright, we just talked about them
.
There's actually five totalcompanies on the list.
(06:32):
So it's Costco Shipping isnumber one, and they're not
necessarily ranked, they're justwhen they're added to the list
and when they're taken off.
So first one is Costco Shipping.
Second one is Orient OverseasContainer Lines Limited.
So OOCL Limited, oocl EuropeLimited is number three.
Number four is HEDA, it's HongKong International Shipping
(06:54):
Limited, and number five, as wejust announced, was HMM Hyundai
Merchant Marine.
So four of the five are fromthe People's Republic of China
and the fifth one there isRepublic of Korea.
So that's the relativelynon-controversial story of the
day.
I guess, unless you ask theRepublic of Korea or the
People's Republic of China right, they might find that
(07:17):
announcement a little morecontroversial.
But these next two stories and Iwant to couch this
appropriately because these nexttwo stories are big, right, I
mean, these are big stories andI've been chewing on them,
thinking about them, gosh.
So look, the Evergreen Vacateand Remand and Chevron Deference
(07:39):
.
They are both so much stillbeing digested in the industry,
or just I mean generally right.
I mean they've only been out afew weeks, days, weeks, I kid
you not.
I've been thinking about bothof them probably at least daily,
if not every few hours, sincethey both came out.
(08:01):
Since they both came out, I'mnot entirely sure where I'm
landing on how I feel about them, but we couldn't wait any
longer.
Right, we had to talk aboutthem, we had to start diving
into them.
So that's what today is is theattempt to kind of bring them
into the conversation, bringthem into the collective
(08:22):
awareness.
If you haven't paid attentionto them, pay attention to them,
go read them.
The TCW case is only 11 pages.
The Evergreen case is only 11pages.
The Chevron overturn case, theRaimundo, it's a hundred and
(08:42):
something pages.
But yeah, I couldn't wait anylonger.
But please, I want to, like Isaid with the qualifier here,
forgive me if I get somethingwrong here, or mischaracterized,
or miscategorized, becauseclarity really isn't going to
come for a while on either ofthose and what the significance
of both of these cases is.
(09:03):
Certainly, chevron, deferencehas a national impact.
The Evergreen case, while it'svery important to us in the
ocean shipping world is maybenot likely to find its way to
nightly news, but still it's avery impactful thing.
So I want to be fair in thepresentation of both of these
(09:25):
cases, but they are both verysignificant, very impactful, and
so they're ripe for discussionand interpretation.
And so look since, to make surethat the way I'm presenting
them is fair, and it's stillbeing determined how best to
(09:51):
present them, but I'm divinginto it anyways.
So, all this to say, look, Iwant to hear from you on this.
It's not a shameless plug foryou to engage in my platforms.
I'm trying to absorb everyconversation and every webinar
and every blog post I can, justto really kind of make sense of
it all and see what all of thismeans for the next steps and
where we go from here on boththe incentive principle of the
(10:13):
Evergreen case, but then alsothe deference and the
overturning of the Chevrondeference and what that means
for federal agencies.
So that's the caveat, right,that's the entry.
With all of that said, again,I'm trying to be as fair as I
can and as accurate as I can andas kind of neutral right as I
(10:34):
can for both of these.
So, with all of that said, Imove into the next two stories
with the best of intentions, andI hope that you'll meet me
there for that.
So, story number two TCW versusEvergreen.
Stories with the best ofintentions and I hope that
you'll meet me there for that.
So, story number two TCW versusEvergreen.
It has been vacated and remandedat the DC Court of Appeals,
federal Court of Appeals for theDC Circuit.
(10:55):
This is a big deal, so let'swalk through the case a bit here
.
Right, I'm going to mostly bepulling the text from the actual
opinion because, well, that'sthe document, right, that's
causing the shakeup.
Plus, if I'm pulling from theactual opinion, that's a horse's
mouth.
Right, I'll do a little bit ofinterpretation, but I want you
(11:17):
to hear what the court said here, because they did a pretty good
job of explaining things andwalking through it and walking
through their rationale and it'sthe did they get it right?
Did they not get it right?
That's the piece of thequalifier that I really was
doing just a minute ago to makesure that everybody is still
(11:38):
digesting this.
So let's get into it right.
So, as the DC Court of Appealssaid in the background, and like
I said, I think they did apretty good job of kind of
laying things out.
Um, this case arises from thefederal maritime commission's
application of its incentiveprinciple this is text from the
opinion to hold evergreens latefees did not provide an economic
(11:58):
.
Um, I'm going to, I'm going torestate that because I I missed
a word and the whole thing went.
You know, this case arises fromthe FMC's application of its
incentive principle to holdevergreens late fees did not
provide an economic incentive toprompt return of a container.
So I often talk about howagency is the subject matter
(12:19):
experts right?
The agencies, the federalagencies, particularly the FMC,
right?
They're the subject matterexperts.
I get a little weary of thecourt making some of these
decisions in this very nuancedworld very nuanced world that
even the agencies and theexperts within right.
There's discussion anddiscrepancy all throughout, and
(12:40):
so I just get a little bitcautious when courts who really
probably aren't maritime orglobal ocean shipping or even
supply chain experts try to diveinto this world.
But that's what the world oflitigating attorneys that's.
Their job is to provide theinformation so that the court
can make that determination.
(13:01):
But, like I said, I think thatthe court did a pretty nice job
of setting the stage for thecase and the background
discussion.
So I tend to err on the side ofreading it off and I'm going to
do that again here with thatdiscussion.
So from the background, from theopinion, the shipping industry,
undergirding the shippingindustry, is a system for
(13:21):
borrowing and returningequipment, particularly shipping
containers and the chassis onwhich they are moved.
Yes, they got that right.
The efficiency of the system,which the FMC terms its freight
fluidity, depends upon promptreturn to port of borrowed
equipment for its next voyage.
Essentially so, continuing on,any breakdown in the operation
(13:43):
of the cycle can have costlyripple effects.
When a carrier borrows acontainer and does not promptly
return it this is the courtsaying this in the opinion the
lender has one fewer containerto use or to lease out.
I mean, they're, for the mostpart, getting it right.
Right.
If the number of unreturnedcontainers builds up over time,
(14:04):
then there will be a shortage insupply of containers available
to pick up shipments.
Simple enough.
In the commission's own words,congestion begets further
congestion, which in turn, mayresult in higher costs for
everyone in the supply chain,and the court got that from the
congestion report of 2015.
We've often referenced that, soit's the Federal Maritime
(14:25):
Commission's report rules, ratesand practices relating to
detention, demurrage and freetime for containerized imports
and exports moving throughselected United States ports.
That was pulled from page 21,.
But this is the 2015 reportthat we often talk about,
because that 2015 report thatwas six, five years prior to
(14:47):
COVID really, looking back on itfeels like it hinted at some
ways in some of the supply chainproblems, and it's probably not
that surprising, right, becausewe were starting to have
congestion problems happening inthe 2010s, that 2015 time
period, and so they were on fulldisplay right during COVID
(15:08):
congestion years.
But there's a lot of relevancystill still now, nine years
later, to that 2015 report.
So I encourage you to go readit Every time we talk about it.
I encourage you to go read it,definitely go read it.
But the court read it and theyincorporated it into their
opinion.
So, continuing on with theopinion, detention under
detention charges under theShipping Act.
(15:29):
In order to encourage thetimely return of equipment,
ocean carriers imposed detentioncharges, defined by the
commission as any charges,including per diem, assessed by
ocean common carriers related tothe use of shipping containers,
not including freight charges,and they referenced the CFR, the
regulatory, the reg.
The practice in the shippingindustry is that the party
(15:50):
responsible for retrieving aloaded container from a port and
delivering its cargo to theaddressee is allotted a certain
number of days to return theempty container and any related
equipment before detentioncharges begin to accrue.
The amount of this so-calledfree time is either set forth in
the ocean carrier's tariff ofpublished terms and conditions
(16:11):
for transportation orestablished by contract right, a
service contract.
We know that Per diem detentioncharges provide an incentive
for the timely return ofequipment and compensate the
ocean carrier for theopportunity cost of its late
return.
That's interesting.
(16:34):
I'm only pausing here and thisis a real.
Like I said, I'm stilldigesting all of this right.
So per diem detention chargethis is what the court said per
diem detention charges providean incentive for the timely
return of equipment andcompensate the ocean carrier for
the opportunity cost of itslate carrier, for the
opportunity cost of its latereturn.
That opportunity cost of itslate return, I think, is
something that the FMC addressedin the D&D rulemaking and some
(16:54):
of their discussion and preamble, not in the final rule but
previously.
I paused because I think that Idon't know, maybe they'll
address it in the remand, butthat is the court going a little
bit the other way on.
Just this little teeny tinything or maybe not teeny tiny
(17:17):
thing, I don't know, I'm justthere's going to be more there I
can imagine Compensate theocean carrier for the
opportunity cost, right, theopportunity cost of its late
return.
I guess why I'm pausing.
The FMC has kind of said look,lost opportunity or lost
business revenue is notnecessarily something that falls
under.
I think in the example the FMCgave was demurrage.
(17:38):
But now the court is sayingthis opportunity cost of its
late return for detention.
I don't know, I'm like chewingon this in real time.
So let's keep going.
But all right.
So, continuing on from theopinion here, the Shipping Act
leaves to the commissiondetermination whether a
detention charge is just andreasonable.
(17:58):
Okay, so then the court goesthrough the history that led to
the interpretive rule.
And that interpretive rule whatwas it?
May 18th 2020.
In that interpretive rule camethe incentive principle, which
is ultimately what this wholedecision hinges on.
So the aspect this is what thecourt said the aspect of the
(18:21):
interpretive rule at issue hereis the incentive principle,
which provides thereasonableness of detention
charges will be judged by theextent to which they are serving
their intended primary purposesas financial incentives to
promote freight fluidity.
The interpretive rule alsospecifies that, absent
extenuating circumstances,practices and regulations that
(18:41):
provide for imposition ofdetention when it does not serve
its incentivizing purposes,such as when empty containers
cannot be returned, are likelyto be found unreasonable.
At the same time, however, theFMC acknowledged that the rule,
being interpretative, did notcreate any new requirements,
(19:03):
mandates or dictates.
On the contrary, itspecifically rejected some
commenters' requests for abright line rule.
So what the court is saying?
Look, the FMC said this doesnot mandate, this does not
require.
This interpretive rule was nota new requirement, mandate or
dictation by the FMC.
It was not a bright line ruleor dictation by the FMC.
(19:27):
It was not a bright line rule.
See, this is all stillhappening like real time in my
head.
These are all the differentthings that I've been thinking
about.
Now.
I'm thinking about how Azrapointed to the interpretive rule
and so, as we're going to talkabout Chevron, deference and
this return to statutoryauthority and and the intentions
(19:49):
of statutory authority, I'm I'mgoing to, after we're done here
, I'm going to go back and lookat the statutory authority that
was given by Congress to the FMCand on this interpretive rule,
okay, I mean this is sorry, thisfeels a little chaotic, but
(20:10):
this is still me digesting allof this in real time.
So we've talked about theEvergreen facts before, but
essentially at issue here wasthe objection over a $510 charge
over Memorial Day holidayweekend right, it was May 23rd
through the 25th 2020.
The objection was because thePort of Savannah was closed.
Evergreen refused to waive thecharges and TCW paid the invoice
(20:32):
and then filed in small claimsat the FMC.
It was informal proceedings iswhat it is.
They called it small claims.
I mean, yeah, that'sessentially what it is.
There's the small claims whichis under a certain monetary
threshold.
I mean it's only $510 here, buta big issue.
(20:53):
So then, yeah, continuing on,that's kind of what the court
said.
So the settlement officer thecourt says small claims officer
ruled in favor of TCW, the FMCsettlement officer, and then the
commission then had 30 days todetermine if they wanted to
review the case.
That's the sua sponte review.
We've kind of talked about thatevery once in a while, but
after the settlement officer orthe administrative law judge,
(21:15):
the ALJ, makes their decision,the FMC then has 30 days, has an
opportunity to decide.
Do the five commissioners wantto weigh in on this.
Do they want to pull the caseand weigh in on it?
They did, and what the courtsaid is that the FMC referenced
that they were quoteparticularly interested in
arguments regarding applicationof the interpretive rule on
(21:36):
demurrage and detention.
I mean, right, that's the wholething.
Even though this was a smallclaims case, an informal docket,
the magnitude, as we've nowseen, was properly identified at
that time.
So, continuing on with theopinion, the FMC underscored
that during the rulemaking thecommission was clear that no
amount of detention canincentivize the return of a
(21:57):
container when the terminalcannot accept the container.
The FMC also rejected theargument that failing to impose
detention charges during the May23rd, 25th port closure quote
would have disincentivized thereturn of the container before
the closure, noting that thesearguments were previously raised
and similarly dismissed duringthe rulemaking process and that
the disincentivizing argumentsneglects the commercial
(22:20):
incentives to returning emptycontainers.
So the court continues herewithout explaining what those
commercial incentives might be.
The FMC then dismissedEvergreen's argument that TCW
could have returned thecontainers prior to May 23rd,
through 25th.
So the court then continues andbrings in FMC Commissioner Carl
(22:40):
Bensel's dissent.
So, dissenting, CommissionerBensel reasoned that the
incentive principle and theinterpretive rule did not
displace the reasonablenessstandard in the Shipping Act.
So the Shipping Act isstatutory authority right.
The Shipping Act was created byCongress giving FMC their
authorities.
So he said, even though the FMC, through this interpretive rule
(23:03):
, had this incentive principle,it does not displace the
reasonableness standard in theShipping Act.
So, continuing on from theopinion, in his view the
commission was at risk ofoverstating the manufactured and
the court provides bracketincentive principle, they say.
Commissioner Brunsell said atrisk of overstating the
manufactured principle at theperil of usurping reasonableness
(23:27):
.
So the court continues, hethought the commission was
overly concerned with themethodology of assessing
detention charges, rather thanasking whether the charges
reasonably achieved theobjective of providing fluidity
of movement of cargo.
Continuing on, the court saidin any event, commissioner
Bensel would have heldEvergreen's detention charges
(23:47):
were consistent with theContinuing on, the court said
that were beyond or outside thecontrol of TCW, justifying the
denial of detention penalties.
(24:09):
In essence, tcw knew when theport was closed and failed to
timely re-deliver Evergreen'sequipment before the stipulated
time.
And that was both court andreference to the dissent.
So, continuing on in the courtopinion, our review under the
arbitrary and capriciousstandard is deferential, but we
nonetheless require thecommission to articulate a
(24:31):
satisfactory explanation for itsaction, including a rational
connection between the factsfound and the choices made.
So an agency action isarbitrary and capricious if the
agency has and they listentirely failed to consider an
important aspect of the problem,offered an explanation for its
decision that runs counter tothe evidence before the agency
(24:54):
or is so implausible that itcould not be ascribed to a
difference in view or theproduct of agency expertise.
So what did the courtultimately rule?
That the commission hadfollowed the incentive principle
as a bright line rule, whichwas in direct opposition to what
the court said, that the FMCclaimed that they did not create
.
Right.
(25:17):
So let me pull in the textagain.
In effect, the commissiontreated the incentive principle
as just the sort of bright linerule it had denied creating when
adopting the rule.
Yet, as the commission itselfnoted when it published the rule
, and as Commissioner Benselexplained in his dissent, an
interpretive rule does notcreate any legal obligations.
Terms such as incentiveprinciple do not replace
reasonableness, which isunderpinning of the Shipping Act
(25:38):
.
Continuing on, in the opinion,the illogic of the FMC's
position is illustrated by thevery reason it offered in its
support to the need to considerthe broader context of freight
fluidity throughout the supplychain, such as potential log
jams if there is a rush to getequipment in before a weekend
closure.
The court continues if thecommission is right that there
(25:59):
is no incentivizing effect fromcharging detention fees on a
weekend when a port is closed,then why would there be a log
jam to avoid the detentioncharge?
Right, they're saying, ifthere's no incentivization
because they know they got toget it out, otherwise they're
going to get charged three daysthen why are they talking about
(26:20):
congestion happening rightbefore those three days?
Happening right before thosethree days?
Because people are the, the,the.
What the court is trying to sayis that naturally, if there's a
log jam on that day before thethree-day weekend, that's
probably because they don't wantto get charged those three days
.
That's what they're saying.
There's kind of this disconnect.
(26:42):
The court says this logicalinconsistency alone renders the
commission's order arbitrary andcapricious.
And they go on to reference andcite a case here where the
quote in the case is certainly,if the result reached is
illogical on its own terms, theagency's order is arbitrary and
(27:02):
capricious.
Order is arbitrary andcapricious.
So the commission, or the court, again continues on saying
under the APA, so theAdministrative Procedures Act.
The commission cannot rest upona bare assertion that a
detention charge assessed for aday when a port is closed has no
incentivizing effect.
It must at a minimum provide alogical explanation for its view
.
That's the crux of this wholeproblem.
(27:25):
The court is saying look, yousaid that it wasn't
incentivizing, but you didn'tsay why.
And actually the way youreferenced it you kind of said
it was incentivizing.
So, like I said, the court saidit must at a minimum provide a
logical explanation for its view.
It continues on and saysperhaps it can do so on remand,
(27:45):
but so far it has done the veryopposite.
Ouch, it's so fascinating,right.
I mean, I'm still digesting howI feel about it.
There's some nuggets here andthere that I think we're going
to see reappear.
I think we're going to bedissecting this for a while.
(28:08):
But what I'm really interestedin is what the FMC has to say,
and they're going to get theiropportunity when they remand or
revisit this right, theincentivization principle, the
interpretive rule.
They're getting kind of anotheropportunity to what they meant
to say.
But as of right now, thedecision is vacated and it's
(28:32):
sent back to the FMC to tryagain, and so that's what it is.
The FMC is going to get anotheropportunity to address this
case, but yeah, for now the FMCis doubling down on the
incentive principle and itsenforcement activity.
Remember, when they sent outthat there was a press release
(28:52):
that said look, evergreen is adecided case through the FMC and
we're going to be watching thisand making sure that we're
enforcing enforcement activityfor those not following the
Evergreen case.
Right, remember, they said thatit was last spring, I believe
it was.
I mean, I don't know.
(29:16):
I mean, that feels moot.
Maybe the FMC is going to haveto address that.
There's a lot of gray area hereand right.
Business loves, businessthrives on certainty, and this,
this throws a lot of uncertaintyinto the mix.
We'll get there, we'll getthere, and it's very fresh off
the off the presses.
(29:36):
So take a look, read thisdecision.
I'm so interested to see howeverybody is is taking this in.
So I hope I did that casejustice.
I hope I did the explanationjustice there, all right.
Story number three Chevrondeference.
Let's just go, let's just go,let's just get into it.
Chevron deference.
(29:57):
Chevron deference has beenoverturned.
So what is this?
What am I talking about?
Chevron was a case right, and itwas a pinnacle staple in legal
training.
Every lawyer that tookadministrative law or any
relation to anything that had todo with the federal agencies
and government kind of was awareof Chevron deference.
(30:20):
So Chevron was Chevron, usaversus Natural Resources Defense
Council, and it was a case from1984.
That case created a two-parttest.
This is where the Chevrondeference comes in.
It created a two-part test onwhen an agency should be given
that deference.
Yes, like deferred to.
Yes, like when the agencyshould just be like believed and
(30:44):
whatever is being challenged.
Well, the agency, you're theexperts.
We're just going to, you know,we're going to go with what you
said Deferred right, deferencelike deferred to.
So the test was it was atwo-part test, right, so one a
court must determine whetherCongress expressed intent in the
statute and, if so, whether ornot that statute was ambiguous.
(31:05):
So like Congress creates astatute right, so whether or not
that statute was ambiguous, solike Congress creates a statute
right and then the agencycreates a regulation that
interprets that statute or noteven interprets it, implements.
It's the way that that statutethen kind of turns into.
Here's how we're going to do it.
Here's how we're going to beimplementing that statute.
Congress creates that statute,right, that's the law.
(31:25):
And then the the agency, theFMC in this case.
But the agency will then takethat authority given to it by
statute and, if needed, um,either explain it or kind of
turn it into.
Here's how we're going to do it.
So if the statute intent wasn'tclear, then the agency must
carry out.
(31:45):
So if it was clear, the agencymust carry out the clear intent,
right, like that.
That's simple.
If it was clear and it saidagency, you should do this, and
like it was clear, there was nointerpretation, then that's,
that's fine and that's where yougo.
But if it was ambiguous, right?
So if Congress gave that statuteto the agency and it was a
little bit ambiguous, whatChevron deference did is it said
(32:06):
look, the court must defer tothe agency's interpretation of
the statute if it relied on apermissible construction.
So like there were a fewdifferent ways of what
permissible construction.
And this is not a law class,this is purely for educational
purposes.
We are just kind of chatting,but I want to keep it light.
So that's the background onChevron deference, right?
(32:28):
So like, if it's clear, that'swhat you go with, that's what
the court goes with.
If it was a little bit unclear,if it was ambiguous, then as
long as it was kind of likepermissible construction, as
long as it was I mean reasonableI guess I want to oversimplify
it then the court must defer tothe agency's interpretation,
must?
They were given the deferencefor the agency's interpretation.
(32:51):
So that's the background.
That's all old law.
Now, right?
So Chevron deference has beenoverturned by Loper Bright
Enterprises versus Raimondo.
Yes, raimondo, like Departmentof Commerce Secretary Gina
Raimondo, yes, like formergovernor of Rhode Island,
raimondo.
I'm up in New England, so Imean Gina Raimondo is from the
(33:13):
Rhode Island area, and so it'sjust so wild that this case,
chevron, which everybody knows,is now the Loper right, the
Loper case, or I mean it's Loperv Raimondo, all right.
So just a reference there foranybody who is listening in the
New England area.
So what did they say?
So what did the Supreme Courtsay when they overturned Chevron
(33:36):
deference?
Right, so well, the automaticdeference, that was the Chevron
ruling, so that automatic.
If it's ambiguous, it goes tothe agencies.
It's now clawed back a bit.
It goes to the agencies.
It's now clawed back a bit,basically.
And the court must exercisethis is from the opinion
(33:59):
independent judgment, but theycan quote, seek aid from the
interpretations of the federalagency.
So, and they say the federal,they don't say federal agency
necessarily, they say thoseresponsible for implementing
particular statutes.
So I mean that's the agency.
So now the court independentjudgment, but they can still
seek aid on thoseinterpretations.
So it's not an automatic, youjust have to go with what the
(34:21):
agency says.
So there's still a deferenceprinciple, though I want to kind
of immediately there was somuch doom and gloom out there
and once I started diving intoit I moved away from kind of the
doom and gloom conversations toa little bit more intrigue and
(34:42):
interested and just wanting toknow more right.
So there's still a deferenceprinciple out there.
It's not ironclad or.
I mean even Chevron wasn't ironknow more, right.
So there's still a deferenceprinciple out there.
It's not ironclad.
I mean even Chevron wasn'tironclad, right, it wasn't as
direct as Chevron.
But there's the Skidmoredeference and I'm not going to
go too far into it all becauseit gets pretty legally,
technically complex pretty quick.
(35:03):
But just know that there'sstill something out there called
the Skidmore deference.
It's not as direct and not askind of bright line, I guess, as
Chevron, but there is still aform of deference and, like I
said, there is a lot of doom andgloom here being kind of
portrayed with this overturningof Chevron deference, but there
(35:25):
are still a few things that Iwant us to consider.
Overturning of Chevrondeference, but there are still a
few things that I want us toconsider.
And I'm, like I said, not goingtoo far into all the specifics
here, because this really ismore legal than it is global
ocean shipping, and this is apodcast about things that I know
well and that's global oceanshipping.
But it's important for anybodywho deals with any federal
agencies to at least have someawareness and maybe some kind of
(35:47):
baseline understanding.
And so I also want to mentionthe court said that this doesn't
affect past cases that reliedon that Chevron doctrine, so
it's not overturning anythingpreviously.
By this I mean except forChevron, but anything that
relied on the Chevron doctrineat the time when it was still
(36:07):
good law.
They're saying we're nottouching that.
So to me, here's what I see theSupreme Court intended on
rebalancing, checks and balancesright, and that's what one of
the concurrences focused on itwas.
Justice Thomas said that it,quote, curbs the judicial power
afforded to courts.
That's what he was sayingChevron deference or Chevron did
courts.
(36:28):
That's what he was sayingChevron deference or Chevron did
.
So to say it another way, hewas saying in this opinion,
where they were overturningChevron, he said, look, chevron
forced the judicial to just rollover to the executive.
So judicial being the court,right, and the executive being
these federal agencies.
And he said, instead of makingtheir own, well, he didn't say
this, but essentially saidthey're rolling over to the
(36:50):
executive, the agencies, insteadof being able to make their own
informed decision, right.
He said, curbs the judicialpower afforded to courts.
So, and as the checks andbalances provided, right, that's
the separation of the judicial,which is the courts, the
legislative, which is Congress,and the executive, which is the
president, the legislative,which is Congress, and the
executive, which is thepresident.
So he was kind of saying, look,I'm okay with overturning this
(37:12):
because we're returning thepower of the judicial.
I mean, I'm only pausing becausethere's a whole.
You could talk about that fordays and days and days.
And I'm still like, yeah, I'mstill digesting all this.
I think the entire legal worldis so, does agency expertise
still count for something?
(37:32):
I want to kind of distill someof these things down and I
pulled a news, an article fromFederal News Network.
But I thought that they did areally good job of kind of
explaining some of these thingsand they had a former OIRA
administrator.
So OIRA is the Office ofInformation and Regulatory
Affairs.
It's a branch of the Office ofManagement and Budget, omb,
(37:53):
which is part of the executiveoffices of the president.
They often work in the OIRA,often works in the regulation
and regulatory side of things.
So in this Federal News Networkarticle it said in legal
challenges to agency rulemaking,former OIRA administrator Susan
(38:13):
Dudley, a distinguishedprofessor of practice at GW in
the Public Policy AdministrationSchool of Public Policy and
Public Administration, saidcourts will still defer to the
agency's expertise, includingtechnical, scientific and
economic analyses.
And now when I'm reading thiskind of federal news network,
this isn't ocean shippingspecific, this is just generally
(38:35):
.
So she continues on.
That will not change.
She said when agencies justifytheir regulation it starts with
here's our statutory authority.
It has to start there.
But the bulk of that regulatoryimpact analysis, the preamble
of their regulation, is allthese other factors, the
alternatives they considered andwhy this is the best
alternative, given theirexpertise.
(38:58):
And so, actually having justspent the last few days in DC
myself.
I was in town this weekend Jeez, oh Pete, was it hot.
But I heard, aside from that, Idid hear a lot of general
discussions on kind of statutoryauthority.
Of course, right, I mean, thisis a major thing and it happened
in DC and the Supreme Court'sthere.
So, you know, maybe I was justlistening more for it or maybe
(39:24):
my feeling was that maybe it wasthat, you know, when we were
talking to people who worked inagencies, maybe they were making
a greater intention to ensurethat statutory authority was a
focal point.
I mean, maybe I was justlistening more for it, but it
felt like conversations weremore intentionally rooted in
(39:45):
some of that statutory authority.
One of the critiques of Chevrondeference as of recently was
that agencies may have beentaking bolder moves in their
interpretation of statutoryauthority.
And the argument is that I'veheard is that because they knew
they had the deference, theyknew that if it came down to
(40:07):
well, this was an interpretationof an ambiguous statutory
authority piece from Congress.
Perhaps they were being morebold because they knew they had
the difference.
So now the thought is does thismean that agencies might not be
so bold on new regulations thatmight have shaky statutory
authority and so, going back tothis Federal News Network, a
(40:29):
chilling effect on newregulations.
So it says when it comes toproposing new regulations,
dudley, that former OIRAadministrator, said agencies may
be a little less ambitious andthat they may think twice before
finding some novel authority inan older statute.
She continues what will changeis there will be a greater focus
on that first step.
(40:49):
What does the law say?
What are we authorized to do?
She said we may see agenciesengaging the Department of
Justice and the White Housecounsel the cross-cutting legal
parts of the government on thosequestions before they go down a
path.
There may be earlier engagementon that and I think that that's
.
I think that we will, I thinkshe's, I think she's right in
(41:12):
that, in that prediction, Ithink we will get there.
I don't know if that's going tohappen right away.
My feeling is that right awaypeople are going to be okay.
Let's go back to basics.
What is the specific statutoryauthority and let's directly
point to it.
And so that's the next piecehere is that what this article
said is that agencies may takean extra level of precaution
(41:35):
when drafting rules, at least inthe immediate and certainly
probably beyond that.
So what does the Chevrondeference overturn mean for the
FMC and what about some of thepending cases?
And we will probably dive intoall of this more because this is
still part of that Chevrondeference overturn as a general
concept across the whole legalspectrum and then now kind of
(41:57):
focusing it more on the FMC.
So for the FMC, I anticipatethat the FMC and really all
agencies, but certainly the FMC,will be careful to stay within
their clearly defined statutoryauthority.
I think they try to do that.
And I say try because there'sstill some critiques on them
moving outside of that statutoryauthority sometimes.
But the Shipping Act and theOcean Shipping Reform Act of
(42:20):
1998, and again the OceanShipping Reform Act, asra of 22,
give the FMC some pretty clearauthority.
So their actual operations andenforcements might not change
too much, right, because theywere kind of delegated this
specific thing to do.
Watch the monopolistic andanti-competitive impacts, and
I'm oversimplifying and kind ofjust paraphrasing, but that's
(42:43):
what they're charged to do,right, and so that's kind of the
meat and potatoes of what theyare doing.
So I don't think I don't see alot of things changing there,
but some of the more novelquestions and certainly the
things that they were maybebeing challenged on mission
creep and expansion ofcongressionally delegated
authority through the statutes.
Those just became a lot moreinteresting.
(43:05):
So the first thing that comes tomind here for how it applies to
the FMC would be maybe the grayarea of through bills of lading
We've talked about that beforethe FMC's authority over those
per diem charges on the railyard right, like the not the
ocean side necessarily, butthat's through bill of lading,
because STB says it's not us butthe FMC says, well, I'm through
(43:26):
bill of ladings on on, uh,through ocean shipments.
I mean the FMC says it is us,but then remember, don't forget,
there was that industrystakeholders letter that asked
Congress for clarity.
I think that letter of 77stakeholders just got more
interesting as well.
The other thing that I think Isee this may be affecting well,
(43:50):
maybe not maybe, maybeeverything's a maybe right now
when I see this also havingcreating more interesting
conversations is with the WorldShipping Council's petition at
the US Court of Appeals for theDC Circuit.
Right, we've talked about thatbefore.
This is after the FMC issuedtheir final rule correction on
the detention to marriagebilling requirements.
It seemed to me at the timethat perhaps, maybe that, paired
(44:15):
with that Chevron deferencefrom yestermonth, that maybe
that deference, paired with themkind of making a correction to
it, felt like solve the questionof ambiguity.
That was kind of at the heart,or at least piece of the heart
of that petition.
(44:36):
Maybe it felt like maybe thepetition, the questions had been
solved.
And I guess my thought was,maybe it might make it difficult
for the World ShippingCouncil's argument in the
petition to find its way againstthat final rule.
But now, now, after the Chevrondeference overturn, now that
(44:56):
the FMC doesn't have that kindof automatic deference and still
it wasn't a complete blanketdeference but you still have to
make the arguments but there wasa, there was a confidence in
the deference right as a generalstatement across the board, not
necessarily speaking for FMC,but like across the board.
Now I think that that petitionjust became a lot more
(45:19):
interesting because because Imean, it's a petition about the
statutory authority for thatfinal rule and so I think that
it's something that the courtwill have to address because
they won't be able to kind ofand this is oversimplifying it
(45:40):
but they won't be able to kickit out and just say well, you
know, we're going to have to gowith the agency here.
They're going to have to saywell, the agency said this and
independent review, we find whoknows where they're going to go
with it.
So I don't know.
I'm kind of just talking here,I guess, but I'm really
(46:02):
interested to see how otherpeople think that this is going
to affect the FMC specifically.
The other thing that I want tokind of throw into that petition
conversation and this is whereI really really I've always
wanted to be fair on thisbecause I really want to see how
this all plays out and I'vebeen watching, right, that
petition but the other thingthat I think we can't discredit
(46:28):
is that this D&D billingrequirements final rule is
already effective.
Right, it went into effect atthe end of May.
I think that that's going tohave some weight because that
was kind of a major change forthe industry.
Right, we had the 13 invoicerequirements coming out of OSRA
22, the Ocean Reform Act of 2022.
That was from Congress, so thatis not an issue.
But the 20 invoice requirementexpansion from the FMC and maybe
(46:56):
it wasn't a full expansion butjust like a dissecting of some
of the 13.
But then also, I mean therewere some other pieces direct
contractual relationship.
I mean all those things.
I mean those things went intoeffect the end of May and now I
still hesitant here.
Right, I would suspect that acourt wouldn't want to overturn
(47:19):
that because it made an impactin the industry.
But I mean, that's part of kindof the craziness of the Chevron
overturn is that they couldpotentially tie the FMC's other
parts right, not just the 13invoice requirements but the
other parts to that argument ofthe general argument on Chevron
(47:43):
deference where they saidbasically agencies were going
too far from initial statutoryauthority and so without that
automatic deference that Chevronprovided.
I'm not saying it's right orwrong, I'm not saying anybody's
right or wrong here, I'm justsaying I think there's going to
be a really interestingdiscussion on the topic now from
(48:04):
the court.
Did the FMC in the court'sindependent review have the
authority through OSRA, throughthe Shipping Act, right to kind
of go into those other pieces?
This petition just got a lotmore interesting and it's just
so.
I mean I'm nerding out here,right, so I'm going to continue
(48:24):
to watch all of this.
I hope I did it justice today.
I hope that this was a goodconversation.
I hope that I fairly presentedthese two really impactful,
significant, significant casesand the controlled carrier news.
But as always, I can't say itenough the guidance here is
general and for educationalpurposes only.
(48:45):
It should not be construed tobe legal advice directly related
to your matter.
If you need an attorney,contact an attorney.
But if you do have specificlegal questions, feel free to
reach out to me at my legalcompanies called Strategies.
Otherwise, for the non-legalquestions, the e-learning and
general industry information andinsights, come find me at the
Maritime Professor.
If you like these videos, letme know, comment, like and share
(49:05):
.
If you want to listen to theseepisodes on demand, or if you
missed any previous episodes,check out the podcast by Land
and by Sea.
You can get it on pretty muchall podcast platforms.
If you prefer to see the video,they live on my YouTube page by
Land and by Sea, presented bythe Maritime Professor.
While you're at it, check outthe website
themaritimeprofessorcom.
So until next week.
This is Lauren Began, theMaritime.
I got soul coming through, flying free.
Skies are blue, all the waves.
(00:21):
It makes a room.
I got soul coming through.
Won't stop in the deep end Ontop of the world.
Catwalk to the beat when yousee me coming.
Make some room.
Everywhere I go, I'm in thespotlight.
This is a good life I'm livingbold.
(00:43):
This is what it looks like Onthe tip of the world.
Oh boy, do we have to talk?
There has been a lot of stuffcoming out of a few different
(01:05):
courts that is going to impactglobal ocean shipping world.
You know what?
It's time to sit up and payattention.
Honestly, I'm still digestingit all Evergreen case being
(01:26):
vacated, so canceled andremanded back, so sent back to
the Federal Maritime Commission.
And we're also talking about alittle thing you probably heard
in the news Chevron wasoverturned, which will have some
impact on the Federal MaritimeCommission.
Let's get into it.
Hi, welcome to, by Land and bySea, an attorney breaking down
(01:48):
the weakened supply chainpresented by the Maritime
Professor me.
I'm Lauren Began, founder ofthe Maritime Professor and
Squall Strategies.
I'm your favorite maritimeattorney.
Join me every week as we walkthrough both ocean transport and
surface transport topics, thewild world of supply chain.
As always, the guidance here isgeneral, for educational
purposes only.
(02:09):
It should not be construed tobe legal advice and there is no
attorney-client privilegecreated by this video or this
podcast.
If you need an attorney,contact an attorney.
Again, this is general and foreducational purposes.
I just want to hit that todaybecause we're covering legal
cases.
So today we're only doing ourtop three stories of the week
(02:31):
and stories number two and three.
Well, they're doozies, so let'sget into it.
All right, story number onewe're going to be hitting those
two major cases that are goingto have impacts on the us ocean,
on the global ocean shippingworld in the us.
(02:51):
But first let's start with alittle appetizer, shall we?
Let's start with something alittle bit lighter.
Uh, I wanted to highlightsomething that came out, and
again, last week was the fourthof of July holiday, so we took
the week off, so we're kind ofcatching up for the month of
July anyways.
But on July 1st the FMCannounced that they would be
(03:15):
designating a new controlledcarrier to its controlled
carrier list.
So on July 1st 2024, the FMCannounced and I'm going to be
pulling most of this off oftheir announcement that they
classified Hyundai MerchantMarine HMM as a controlled
carrier of the government of theRepublic of Korea and added it
to the agency's controlledcarrier list.
(03:36):
Did you know that they holdthis?
So I've talked a little bitabout the controlled carrier
list but I'm going to rely onactually what they said in the
announcement.
This is a very kind of completeannouncement where they talk
about what is a controlledcarrier.
So it says from the FMCannouncement here controlled
carriers are ocean commoncarriers operating in the US
foreign trades that are or whoseoperating assets are directly
(04:01):
or indirectly owned orcontrolled by a foreign
government.
So that's that name rightControlled carriers that either
is directly or whose operatingassets are directly or
indirectly owned or controlledby a foreign government.
Controlled carriers are subjectto enhanced regulatory
oversight by the commissionunless a treaty exists between
(04:21):
the United States and thecontrolled carriers host nation.
A treaty of friendshiphip,commerce and Navigation and
there's a link in theannouncement signed in 1957
between the US and the Republicof Korea entitles HMM to this
exception at 46 USC 407061.
This is again from theannouncement and in 407061, it
(04:44):
says this chapter does not applyto any controlled carrier of a
foreign country whose vesselsare entitled by a treaty of the
US to receive national or mostfavored nation treatment or
trade served only by controlledcarriers.
So I mean some interestingthings, right?
So I just because there's somestatutory references, I wanted
to let you know what all thatthose numbers mean.
(05:06):
So that's 46 USC 407061.
Continuing on with theannouncement, which exempts it
from the requirements of Title46 407.
However, hmm remains subject tothe provisions of 46 USC 40502F
.
What is that?
It talks about?
Breach of contract, breach ofservice contracts and the court
or forum of 46 USC 40502F.
What is that?
It talks about?
Breach of contract, breach ofservice contracts and the court
(05:28):
or forum of the remedies.
And then it also it continuesto say and 46 USC 46106B7, which
is it talks about the FMC'sannual report, and that they
must include an IDing ofotherwise concerning practices
of a controlled carrier.
And there's some other USTR,united States Trade
(05:49):
Representative authoritiesthrough the Trade Laws Trade Act
that remain intact.
So they're saying look, hmmremains subject to the
provisions there for the annualreport and also the breach of
service contract.
So, continuing on with theannouncement, the controlled
carrier list is not acomprehensive list of all
foreign owned, foreigncontrolled or government linked
(06:09):
companies and assets.
It is a list of companiesmeeting statutory requirements
found at 46 USC Chapter 407.
Commission regulations relatedto controlled carriers are found
and they reference theregulation, the reg 46 CFR 565.
So who's on the list?
Well, hyundai Merchant Marineright, we just talked about them
.
There's actually five totalcompanies on the list.
(06:32):
So it's Costco Shipping isnumber one, and they're not
necessarily ranked, they're justwhen they're added to the list
and when they're taken off.
So first one is Costco Shipping.
Second one is Orient OverseasContainer Lines Limited.
So OOCL Limited, oocl EuropeLimited is number three.
Number four is HEDA, it's HongKong International Shipping
(06:54):
Limited, and number five, as wejust announced, was HMM Hyundai
Merchant Marine.
So four of the five are fromthe People's Republic of China
and the fifth one there isRepublic of Korea.
So that's the relativelynon-controversial story of the
day.
I guess, unless you ask theRepublic of Korea or the
People's Republic of China right, they might find that
(07:17):
announcement a little morecontroversial.
But these next two stories and Iwant to couch this
appropriately because these nexttwo stories are big, right, I
mean, these are big stories andI've been chewing on them,
thinking about them, gosh.
So look, the Evergreen Vacateand Remand and Chevron Deference
(07:39):
.
They are both so much stillbeing digested in the industry,
or just I mean generally right.
I mean they've only been out afew weeks, days, weeks, I kid
you not.
I've been thinking about bothof them probably at least daily,
if not every few hours, sincethey both came out.
(08:01):
Since they both came out, I'mnot entirely sure where I'm
landing on how I feel about them, but we couldn't wait any
longer.
Right, we had to talk aboutthem, we had to start diving
into them.
So that's what today is is theattempt to kind of bring them
into the conversation, bringthem into the collective
(08:22):
awareness.
If you haven't paid attentionto them, pay attention to them,
go read them.
The TCW case is only 11 pages.
The Evergreen case is only 11pages.
The Chevron overturn case, theRaimundo, it's a hundred and
(08:42):
something pages.
But yeah, I couldn't wait anylonger.
But please, I want to, like Isaid with the qualifier here,
forgive me if I get somethingwrong here, or mischaracterized,
or miscategorized, becauseclarity really isn't going to
come for a while on either ofthose and what the significance
of both of these cases is.
(09:03):
Certainly, chevron, deferencehas a national impact.
The Evergreen case, while it'svery important to us in the
ocean shipping world is maybenot likely to find its way to
nightly news, but still it's avery impactful thing.
So I want to be fair in thepresentation of both of these
(09:25):
cases, but they are both verysignificant, very impactful, and
so they're ripe for discussionand interpretation.
And so look since, to make surethat the way I'm presenting
them is fair, and it's stillbeing determined how best to
(09:51):
present them, but I'm divinginto it anyways.
So, all this to say, look, Iwant to hear from you on this.
It's not a shameless plug foryou to engage in my platforms.
I'm trying to absorb everyconversation and every webinar
and every blog post I can, justto really kind of make sense of
it all and see what all of thismeans for the next steps and
where we go from here on boththe incentive principle of the
(10:13):
Evergreen case, but then alsothe deference and the
overturning of the Chevrondeference and what that means
for federal agencies.
So that's the caveat, right,that's the entry.
With all of that said, again,I'm trying to be as fair as I
can and as accurate as I can andas kind of neutral right as I
(10:34):
can for both of these.
So, with all of that said, Imove into the next two stories
with the best of intentions, andI hope that you'll meet me
there for that.
So, story number two TCW versusEvergreen.
Stories with the best ofintentions and I hope that
you'll meet me there for that.
So, story number two TCW versusEvergreen.
It has been vacated and remandedat the DC Court of Appeals,
federal Court of Appeals for theDC Circuit.
(10:55):
This is a big deal, so let'swalk through the case a bit here
.
Right, I'm going to mostly bepulling the text from the actual
opinion because, well, that'sthe document, right, that's
causing the shakeup.
Plus, if I'm pulling from theactual opinion, that's a horse's
mouth.
Right, I'll do a little bit ofinterpretation, but I want you
(11:17):
to hear what the court said here, because they did a pretty good
job of explaining things andwalking through it and walking
through their rationale and it'sthe did they get it right?
Did they not get it right?
That's the piece of thequalifier that I really was
doing just a minute ago to makesure that everybody is still
(11:38):
digesting this.
So let's get into it right.
So, as the DC Court of Appealssaid in the background, and like
I said, I think they did apretty good job of kind of
laying things out.
Um, this case arises from thefederal maritime commission's
application of its incentiveprinciple this is text from the
opinion to hold evergreens latefees did not provide an economic
(11:58):
.
Um, I'm going to, I'm going torestate that because I I missed
a word and the whole thing went.
You know, this case arises fromthe FMC's application of its
incentive principle to holdevergreens late fees did not
provide an economic incentive toprompt return of a container.
So I often talk about howagency is the subject matter
(12:19):
experts right?
The agencies, the federalagencies, particularly the FMC,
right?
They're the subject matterexperts.
I get a little weary of thecourt making some of these
decisions in this very nuancedworld very nuanced world that
even the agencies and theexperts within right.
There's discussion anddiscrepancy all throughout, and
(12:40):
so I just get a little bitcautious when courts who really
probably aren't maritime orglobal ocean shipping or even
supply chain experts try to diveinto this world.
But that's what the world oflitigating attorneys that's.
Their job is to provide theinformation so that the court
can make that determination.
(13:01):
But, like I said, I think thatthe court did a pretty nice job
of setting the stage for thecase and the background
discussion.
So I tend to err on the side ofreading it off and I'm going to
do that again here with thatdiscussion.
So from the background, from theopinion, the shipping industry,
undergirding the shippingindustry, is a system for
(13:21):
borrowing and returningequipment, particularly shipping
containers and the chassis onwhich they are moved.
Yes, they got that right.
The efficiency of the system,which the FMC terms its freight
fluidity, depends upon promptreturn to port of borrowed
equipment for its next voyage.
Essentially so, continuing on,any breakdown in the operation
(13:43):
of the cycle can have costlyripple effects.
When a carrier borrows acontainer and does not promptly
return it this is the courtsaying this in the opinion the
lender has one fewer containerto use or to lease out.
I mean, they're, for the mostpart, getting it right.
Right.
If the number of unreturnedcontainers builds up over time,
(14:04):
then there will be a shortage insupply of containers available
to pick up shipments.
Simple enough.
In the commission's own words,congestion begets further
congestion, which in turn, mayresult in higher costs for
everyone in the supply chain,and the court got that from the
congestion report of 2015.
We've often referenced that, soit's the Federal Maritime
(14:25):
Commission's report rules, ratesand practices relating to
detention, demurrage and freetime for containerized imports
and exports moving throughselected United States ports.
That was pulled from page 21,.
But this is the 2015 reportthat we often talk about,
because that 2015 report thatwas six, five years prior to
(14:47):
COVID really, looking back on itfeels like it hinted at some
ways in some of the supply chainproblems, and it's probably not
that surprising, right, becausewe were starting to have
congestion problems happening inthe 2010s, that 2015 time
period, and so they were on fulldisplay right during COVID
(15:08):
congestion years.
But there's a lot of relevancystill still now, nine years
later, to that 2015 report.
So I encourage you to go readit Every time we talk about it.
I encourage you to go read it,definitely go read it.
But the court read it and theyincorporated it into their
opinion.
So, continuing on with theopinion, detention under
detention charges under theShipping Act.
(15:29):
In order to encourage thetimely return of equipment,
ocean carriers imposed detentioncharges, defined by the
commission as any charges,including per diem, assessed by
ocean common carriers related tothe use of shipping containers,
not including freight charges,and they referenced the CFR, the
regulatory, the reg.
The practice in the shippingindustry is that the party
(15:50):
responsible for retrieving aloaded container from a port and
delivering its cargo to theaddressee is allotted a certain
number of days to return theempty container and any related
equipment before detentioncharges begin to accrue.
The amount of this so-calledfree time is either set forth in
the ocean carrier's tariff ofpublished terms and conditions
(16:11):
for transportation orestablished by contract right, a
service contract.
We know that Per diem detentioncharges provide an incentive
for the timely return ofequipment and compensate the
ocean carrier for theopportunity cost of its late
return.
That's interesting.
(16:34):
I'm only pausing here and thisis a real.
Like I said, I'm stilldigesting all of this right.
So per diem detention chargethis is what the court said per
diem detention charges providean incentive for the timely
return of equipment andcompensate the ocean carrier for
the opportunity cost of itslate carrier, for the
opportunity cost of its latereturn.
That opportunity cost of itslate return, I think, is
something that the FMC addressedin the D&D rulemaking and some
(16:54):
of their discussion and preamble, not in the final rule but
previously.
I paused because I think that Idon't know, maybe they'll
address it in the remand, butthat is the court going a little
bit the other way on.
Just this little teeny tinything or maybe not teeny tiny
(17:17):
thing, I don't know, I'm justthere's going to be more there I
can imagine Compensate theocean carrier for the
opportunity cost, right, theopportunity cost of its late
return.
I guess why I'm pausing.
The FMC has kind of said look,lost opportunity or lost
business revenue is notnecessarily something that falls
under.
I think in the example the FMCgave was demurrage.
(17:38):
But now the court is sayingthis opportunity cost of its
late return for detention.
I don't know, I'm like chewingon this in real time.
So let's keep going.
But all right.
So, continuing on from theopinion here, the Shipping Act
leaves to the commissiondetermination whether a
detention charge is just andreasonable.
(17:58):
Okay, so then the court goesthrough the history that led to
the interpretive rule.
And that interpretive rule whatwas it?
May 18th 2020.
In that interpretive rule camethe incentive principle, which
is ultimately what this wholedecision hinges on.
So the aspect this is what thecourt said the aspect of the
(18:21):
interpretive rule at issue hereis the incentive principle,
which provides thereasonableness of detention
charges will be judged by theextent to which they are serving
their intended primary purposesas financial incentives to
promote freight fluidity.
The interpretive rule alsospecifies that, absent
extenuating circumstances,practices and regulations that
(18:41):
provide for imposition ofdetention when it does not serve
its incentivizing purposes,such as when empty containers
cannot be returned, are likelyto be found unreasonable.
At the same time, however, theFMC acknowledged that the rule,
being interpretative, did notcreate any new requirements,
(19:03):
mandates or dictates.
On the contrary, itspecifically rejected some
commenters' requests for abright line rule.
So what the court is saying?
Look, the FMC said this doesnot mandate, this does not
require.
This interpretive rule was nota new requirement, mandate or
dictation by the FMC.
It was not a bright line ruleor dictation by the FMC.
(19:27):
It was not a bright line rule.
See, this is all stillhappening like real time in my
head.
These are all the differentthings that I've been thinking
about.
Now.
I'm thinking about how Azrapointed to the interpretive rule
and so, as we're going to talkabout Chevron, deference and
this return to statutoryauthority and and the intentions
(19:49):
of statutory authority, I'm I'mgoing to, after we're done here
, I'm going to go back and lookat the statutory authority that
was given by Congress to the FMCand on this interpretive rule,
okay, I mean this is sorry, thisfeels a little chaotic, but
(20:10):
this is still me digesting allof this in real time.
So we've talked about theEvergreen facts before, but
essentially at issue here wasthe objection over a $510 charge
over Memorial Day holidayweekend right, it was May 23rd
through the 25th 2020.
The objection was because thePort of Savannah was closed.
Evergreen refused to waive thecharges and TCW paid the invoice
(20:32):
and then filed in small claimsat the FMC.
It was informal proceedings iswhat it is.
They called it small claims.
I mean, yeah, that'sessentially what it is.
There's the small claims whichis under a certain monetary
threshold.
I mean it's only $510 here, buta big issue.
(20:53):
So then, yeah, continuing on,that's kind of what the court
said.
So the settlement officer thecourt says small claims officer
ruled in favor of TCW, the FMCsettlement officer, and then the
commission then had 30 days todetermine if they wanted to
review the case.
That's the sua sponte review.
We've kind of talked about thatevery once in a while, but
after the settlement officer orthe administrative law judge,
(21:15):
the ALJ, makes their decision,the FMC then has 30 days, has an
opportunity to decide.
Do the five commissioners wantto weigh in on this.
Do they want to pull the caseand weigh in on it?
They did, and what the courtsaid is that the FMC referenced
that they were quoteparticularly interested in
arguments regarding applicationof the interpretive rule on
(21:36):
demurrage and detention.
I mean, right, that's the wholething.
Even though this was a smallclaims case, an informal docket,
the magnitude, as we've nowseen, was properly identified at
that time.
So, continuing on with theopinion, the FMC underscored
that during the rulemaking thecommission was clear that no
amount of detention canincentivize the return of a
(21:57):
container when the terminalcannot accept the container.
The FMC also rejected theargument that failing to impose
detention charges during the May23rd, 25th port closure quote
would have disincentivized thereturn of the container before
the closure, noting that thesearguments were previously raised
and similarly dismissed duringthe rulemaking process and that
the disincentivizing argumentsneglects the commercial
(22:20):
incentives to returning emptycontainers.
So the court continues herewithout explaining what those
commercial incentives might be.
The FMC then dismissedEvergreen's argument that TCW
could have returned thecontainers prior to May 23rd,
through 25th.
So the court then continues andbrings in FMC Commissioner Carl
(22:40):
Bensel's dissent.
So, dissenting, CommissionerBensel reasoned that the
incentive principle and theinterpretive rule did not
displace the reasonablenessstandard in the Shipping Act.
So the Shipping Act isstatutory authority right.
The Shipping Act was created byCongress giving FMC their
authorities.
So he said, even though the FMC, through this interpretive rule
(23:03):
, had this incentive principle,it does not displace the
reasonableness standard in theShipping Act.
So, continuing on from theopinion, in his view the
commission was at risk ofoverstating the manufactured and
the court provides bracketincentive principle, they say.
Commissioner Brunsell said atrisk of overstating the
manufactured principle at theperil of usurping reasonableness
(23:27):
.
So the court continues, hethought the commission was
overly concerned with themethodology of assessing
detention charges, rather thanasking whether the charges
reasonably achieved theobjective of providing fluidity
of movement of cargo.
Continuing on, the court saidin any event, commissioner
Bensel would have heldEvergreen's detention charges
(23:47):
were consistent with theContinuing on, the court said
that were beyond or outside thecontrol of TCW, justifying the
denial of detention penalties.
(24:09):
In essence, tcw knew when theport was closed and failed to
timely re-deliver Evergreen'sequipment before the stipulated
time.
And that was both court andreference to the dissent.
So, continuing on in the courtopinion, our review under the
arbitrary and capriciousstandard is deferential, but we
nonetheless require thecommission to articulate a
(24:31):
satisfactory explanation for itsaction, including a rational
connection between the factsfound and the choices made.
So an agency action isarbitrary and capricious if the
agency has and they listentirely failed to consider an
important aspect of the problem,offered an explanation for its
decision that runs counter tothe evidence before the agency
(24:54):
or is so implausible that itcould not be ascribed to a
difference in view or theproduct of agency expertise.
So what did the courtultimately rule?
That the commission hadfollowed the incentive principle
as a bright line rule, whichwas in direct opposition to what
the court said, that the FMCclaimed that they did not create
.
Right.
(25:17):
So let me pull in the textagain.
In effect, the commissiontreated the incentive principle
as just the sort of bright linerule it had denied creating when
adopting the rule.
Yet, as the commission itselfnoted when it published the rule
, and as Commissioner Benselexplained in his dissent, an
interpretive rule does notcreate any legal obligations.
Terms such as incentiveprinciple do not replace
reasonableness, which isunderpinning of the Shipping Act
(25:38):
.
Continuing on, in the opinion,the illogic of the FMC's
position is illustrated by thevery reason it offered in its
support to the need to considerthe broader context of freight
fluidity throughout the supplychain, such as potential log
jams if there is a rush to getequipment in before a weekend
closure.
The court continues if thecommission is right that there
(25:59):
is no incentivizing effect fromcharging detention fees on a
weekend when a port is closed,then why would there be a log
jam to avoid the detentioncharge?
Right, they're saying, ifthere's no incentivization
because they know they got toget it out, otherwise they're
going to get charged three daysthen why are they talking about
(26:20):
congestion happening rightbefore those three days?
Happening right before thosethree days?
Because people are the, the,the.
What the court is trying to sayis that naturally, if there's a
log jam on that day before thethree-day weekend, that's
probably because they don't wantto get charged those three days
.
That's what they're saying.
There's kind of this disconnect.
(26:42):
The court says this logicalinconsistency alone renders the
commission's order arbitrary andcapricious.
And they go on to reference andcite a case here where the
quote in the case is certainly,if the result reached is
illogical on its own terms, theagency's order is arbitrary and
(27:02):
capricious.
Order is arbitrary andcapricious.
So the commission, or the court, again continues on saying
under the APA, so theAdministrative Procedures Act.
The commission cannot rest upona bare assertion that a
detention charge assessed for aday when a port is closed has no
incentivizing effect.
It must at a minimum provide alogical explanation for its view
.
That's the crux of this wholeproblem.
(27:25):
The court is saying look, yousaid that it wasn't
incentivizing, but you didn'tsay why.
And actually the way youreferenced it you kind of said
it was incentivizing.
So, like I said, the court saidit must at a minimum provide a
logical explanation for its view.
It continues on and saysperhaps it can do so on remand,
(27:45):
but so far it has done the veryopposite.
Ouch, it's so fascinating,right.
I mean, I'm still digesting howI feel about it.
There's some nuggets here andthere that I think we're going
to see reappear.
I think we're going to bedissecting this for a while.
(28:08):
But what I'm really interestedin is what the FMC has to say,
and they're going to get theiropportunity when they remand or
revisit this right, theincentivization principle, the
interpretive rule.
They're getting kind of anotheropportunity to what they meant
to say.
But as of right now, thedecision is vacated and it's
(28:32):
sent back to the FMC to tryagain, and so that's what it is.
The FMC is going to get anotheropportunity to address this
case, but yeah, for now the FMCis doubling down on the
incentive principle and itsenforcement activity.
Remember, when they sent outthat there was a press release
(28:52):
that said look, evergreen is adecided case through the FMC and
we're going to be watching thisand making sure that we're
enforcing enforcement activityfor those not following the
Evergreen case.
Right, remember, they said thatit was last spring, I believe
it was.
I mean, I don't know.
(29:16):
I mean, that feels moot.
Maybe the FMC is going to haveto address that.
There's a lot of gray area hereand right.
Business loves, businessthrives on certainty, and this,
this throws a lot of uncertaintyinto the mix.
We'll get there, we'll getthere, and it's very fresh off
the off the presses.
(29:36):
So take a look, read thisdecision.
I'm so interested to see howeverybody is is taking this in.
So I hope I did that casejustice.
I hope I did the explanationjustice there, all right.
Story number three Chevrondeference.
Let's just go, let's just go,let's just get into it.
Chevron deference.
(29:57):
Chevron deference has beenoverturned.
So what is this?
What am I talking about?
Chevron was a case right, and itwas a pinnacle staple in legal
training.
Every lawyer that tookadministrative law or any
relation to anything that had todo with the federal agencies
and government kind of was awareof Chevron deference.
(30:20):
So Chevron was Chevron, usaversus Natural Resources Defense
Council, and it was a case from1984.
That case created a two-parttest.
This is where the Chevrondeference comes in.
It created a two-part test onwhen an agency should be given
that deference.
Yes, like deferred to.
Yes, like when the agencyshould just be like believed and
(30:44):
whatever is being challenged.
Well, the agency, you're theexperts.
We're just going to, you know,we're going to go with what you
said Deferred right, deferencelike deferred to.
So the test was it was atwo-part test, right, so one a
court must determine whetherCongress expressed intent in the
statute and, if so, whether ornot that statute was ambiguous.
(31:05):
So like Congress creates astatute right, so whether or not
that statute was ambiguous, solike Congress creates a statute
right and then the agencycreates a regulation that
interprets that statute or noteven interprets it, implements.
It's the way that that statutethen kind of turns into.
Here's how we're going to do it.
Here's how we're going to beimplementing that statute.
Congress creates that statute,right, that's the law.
(31:25):
And then the the agency, theFMC in this case.
But the agency will then takethat authority given to it by
statute and, if needed, um,either explain it or kind of
turn it into.
Here's how we're going to do it.
So if the statute intent wasn'tclear, then the agency must
carry out.
(31:45):
So if it was clear, the agencymust carry out the clear intent,
right, like that.
That's simple.
If it was clear and it saidagency, you should do this, and
like it was clear, there was nointerpretation, then that's,
that's fine and that's where yougo.
But if it was ambiguous, right?
So if Congress gave that statuteto the agency and it was a
little bit ambiguous, whatChevron deference did is it said
(32:06):
look, the court must defer tothe agency's interpretation of
the statute if it relied on apermissible construction.
So like there were a fewdifferent ways of what
permissible construction.
And this is not a law class,this is purely for educational
purposes.
We are just kind of chatting,but I want to keep it light.
So that's the background onChevron deference, right?
(32:28):
So like, if it's clear, that'swhat you go with, that's what
the court goes with.
If it was a little bit unclear,if it was ambiguous, then as
long as it was kind of likepermissible construction, as
long as it was I mean reasonableI guess I want to oversimplify
it then the court must defer tothe agency's interpretation,
must?
They were given the deferencefor the agency's interpretation.
(32:51):
So that's the background.
That's all old law.
Now, right?
So Chevron deference has beenoverturned by Loper Bright
Enterprises versus Raimondo.
Yes, raimondo, like Departmentof Commerce Secretary Gina
Raimondo, yes, like formergovernor of Rhode Island,
raimondo.
I'm up in New England, so Imean Gina Raimondo is from the
(33:13):
Rhode Island area, and so it'sjust so wild that this case,
chevron, which everybody knows,is now the Loper right, the
Loper case, or I mean it's Loperv Raimondo, all right.
So just a reference there foranybody who is listening in the
New England area.
So what did they say?
So what did the Supreme Courtsay when they overturned Chevron
(33:36):
deference?
Right, so well, the automaticdeference, that was the Chevron
ruling, so that automatic.
If it's ambiguous, it goes tothe agencies.
It's now clawed back a bit.
It goes to the agencies.
It's now clawed back a bit,basically.
And the court must exercisethis is from the opinion
(33:59):
independent judgment, but theycan quote, seek aid from the
interpretations of the federalagency.
So, and they say the federal,they don't say federal agency
necessarily, they say thoseresponsible for implementing
particular statutes.
So I mean that's the agency.
So now the court independentjudgment, but they can still
seek aid on thoseinterpretations.
So it's not an automatic, youjust have to go with what the
(34:21):
agency says.
So there's still a deferenceprinciple, though I want to kind
of immediately there was somuch doom and gloom out there
and once I started diving intoit I moved away from kind of the
doom and gloom conversations toa little bit more intrigue and
(34:42):
interested and just wanting toknow more right.
So there's still a deferenceprinciple out there.
It's not ironclad or.
I mean even Chevron wasn't ironknow more, right.
So there's still a deferenceprinciple out there.
It's not ironclad.
I mean even Chevron wasn'tironclad, right, it wasn't as
direct as Chevron.
But there's the Skidmoredeference and I'm not going to
go too far into it all becauseit gets pretty legally,
technically complex pretty quick.
(35:03):
But just know that there'sstill something out there called
the Skidmore deference.
It's not as direct and not askind of bright line, I guess, as
Chevron, but there is still aform of deference and, like I
said, there is a lot of doom andgloom here being kind of
portrayed with this overturningof Chevron deference, but there
(35:25):
are still a few things that Iwant us to consider.
Overturning of Chevrondeference, but there are still a
few things that I want us toconsider.
And I'm, like I said, not goingtoo far into all the specifics
here, because this really ismore legal than it is global
ocean shipping, and this is apodcast about things that I know
well and that's global oceanshipping.
But it's important for anybodywho deals with any federal
agencies to at least have someawareness and maybe some kind of
(35:47):
baseline understanding.
And so I also want to mentionthe court said that this doesn't
affect past cases that reliedon that Chevron doctrine, so
it's not overturning anythingpreviously.
By this I mean except forChevron, but anything that
relied on the Chevron doctrineat the time when it was still
(36:07):
good law.
They're saying we're nottouching that.
So to me, here's what I see theSupreme Court intended on
rebalancing, checks and balancesright, and that's what one of
the concurrences focused on itwas.
Justice Thomas said that it,quote, curbs the judicial power
afforded to courts.
That's what he was sayingChevron deference or Chevron did
courts.
(36:28):
That's what he was sayingChevron deference or Chevron did
.
So to say it another way, hewas saying in this opinion,
where they were overturningChevron, he said, look, chevron
forced the judicial to just rollover to the executive.
So judicial being the court,right, and the executive being
these federal agencies.
And he said, instead of makingtheir own, well, he didn't say
this, but essentially saidthey're rolling over to the
(36:50):
executive, the agencies, insteadof being able to make their own
informed decision, right.
He said, curbs the judicialpower afforded to courts.
So, and as the checks andbalances provided, right, that's
the separation of the judicial,which is the courts, the
legislative, which is Congress,and the executive, which is the
president, the legislative,which is Congress, and the
executive, which is thepresident.
So he was kind of saying, look,I'm okay with overturning this
(37:12):
because we're returning thepower of the judicial.
I mean, I'm only pausing becausethere's a whole.
You could talk about that fordays and days and days.
And I'm still like, yeah, I'mstill digesting all this.
I think the entire legal worldis so, does agency expertise
still count for something?
(37:32):
I want to kind of distill someof these things down and I
pulled a news, an article fromFederal News Network.
But I thought that they did areally good job of kind of
explaining some of these thingsand they had a former OIRA
administrator.
So OIRA is the Office ofInformation and Regulatory
Affairs.
It's a branch of the Office ofManagement and Budget, omb,
(37:53):
which is part of the executiveoffices of the president.
They often work in the OIRA,often works in the regulation
and regulatory side of things.
So in this Federal News Networkarticle it said in legal
challenges to agency rulemaking,former OIRA administrator Susan
(38:13):
Dudley, a distinguishedprofessor of practice at GW in
the Public Policy AdministrationSchool of Public Policy and
Public Administration, saidcourts will still defer to the
agency's expertise, includingtechnical, scientific and
economic analyses.
And now when I'm reading thiskind of federal news network,
this isn't ocean shippingspecific, this is just generally
(38:35):
.
So she continues on.
That will not change.
She said when agencies justifytheir regulation it starts with
here's our statutory authority.
It has to start there.
But the bulk of that regulatoryimpact analysis, the preamble
of their regulation, is allthese other factors, the
alternatives they considered andwhy this is the best
alternative, given theirexpertise.
(38:58):
And so, actually having justspent the last few days in DC
myself.
I was in town this weekend Jeez, oh Pete, was it hot.
But I heard, aside from that, Idid hear a lot of general
discussions on kind of statutoryauthority.
Of course, right, I mean, thisis a major thing and it happened
in DC and the Supreme Court'sthere.
So, you know, maybe I was justlistening more for it or maybe
(39:24):
my feeling was that maybe it wasthat, you know, when we were
talking to people who worked inagencies, maybe they were making
a greater intention to ensurethat statutory authority was a
focal point.
I mean, maybe I was justlistening more for it, but it
felt like conversations weremore intentionally rooted in
(39:45):
some of that statutory authority.
One of the critiques of Chevrondeference as of recently was
that agencies may have beentaking bolder moves in their
interpretation of statutoryauthority.
And the argument is that I'veheard is that because they knew
they had the deference, theyknew that if it came down to
(40:07):
well, this was an interpretationof an ambiguous statutory
authority piece from Congress.
Perhaps they were being morebold because they knew they had
the difference.
So now the thought is does thismean that agencies might not be
so bold on new regulations thatmight have shaky statutory
authority and so, going back tothis Federal News Network, a
(40:29):
chilling effect on newregulations.
So it says when it comes toproposing new regulations,
dudley, that former OIRAadministrator, said agencies may
be a little less ambitious andthat they may think twice before
finding some novel authority inan older statute.
She continues what will changeis there will be a greater focus
on that first step.
(40:49):
What does the law say?
What are we authorized to do?
She said we may see agenciesengaging the Department of
Justice and the White Housecounsel the cross-cutting legal
parts of the government on thosequestions before they go down a
path.
There may be earlier engagementon that and I think that that's
.
I think that we will, I thinkshe's, I think she's right in
(41:12):
that, in that prediction, Ithink we will get there.
I don't know if that's going tohappen right away.
My feeling is that right awaypeople are going to be okay.
Let's go back to basics.
What is the specific statutoryauthority and let's directly
point to it.
And so that's the next piecehere is that what this article
said is that agencies may takean extra level of precaution
(41:35):
when drafting rules, at least inthe immediate and certainly
probably beyond that.
So what does the Chevrondeference overturn mean for the
FMC and what about some of thepending cases?
And we will probably dive intoall of this more because this is
still part of that Chevrondeference overturn as a general
concept across the whole legalspectrum and then now kind of
(41:57):
focusing it more on the FMC.
So for the FMC, I anticipatethat the FMC and really all
agencies, but certainly the FMC,will be careful to stay within
their clearly defined statutoryauthority.
I think they try to do that.
And I say try because there'sstill some critiques on them
moving outside of that statutoryauthority sometimes.
But the Shipping Act and theOcean Shipping Reform Act of
(42:20):
1998, and again the OceanShipping Reform Act, asra of 22,
give the FMC some pretty clearauthority.
So their actual operations andenforcements might not change
too much, right, because theywere kind of delegated this
specific thing to do.
Watch the monopolistic andanti-competitive impacts, and
I'm oversimplifying and kind ofjust paraphrasing, but that's
(42:43):
what they're charged to do,right, and so that's kind of the
meat and potatoes of what theyare doing.
So I don't think I don't see alot of things changing there,
but some of the more novelquestions and certainly the
things that they were maybebeing challenged on mission
creep and expansion ofcongressionally delegated
authority through the statutes.
Those just became a lot moreinteresting.
(43:05):
So the first thing that comes tomind here for how it applies to
the FMC would be maybe the grayarea of through bills of lading
We've talked about that beforethe FMC's authority over those
per diem charges on the railyard right, like the not the
ocean side necessarily, butthat's through bill of lading,
because STB says it's not us butthe FMC says, well, I'm through
(43:26):
bill of ladings on on, uh,through ocean shipments.
I mean the FMC says it is us,but then remember, don't forget,
there was that industrystakeholders letter that asked
Congress for clarity.
I think that letter of 77stakeholders just got more
interesting as well.
The other thing that I think Isee this may be affecting well,
(43:50):
maybe not maybe, maybeeverything's a maybe right now
when I see this also havingcreating more interesting
conversations is with the WorldShipping Council's petition at
the US Court of Appeals for theDC Circuit.
Right, we've talked about thatbefore.
This is after the FMC issuedtheir final rule correction on
the detention to marriagebilling requirements.
It seemed to me at the timethat perhaps, maybe that, paired
(44:15):
with that Chevron deferencefrom yestermonth, that maybe
that deference, paired with themkind of making a correction to
it, felt like solve the questionof ambiguity.
That was kind of at the heart,or at least piece of the heart
of that petition.
(44:36):
Maybe it felt like maybe thepetition, the questions had been
solved.
And I guess my thought was,maybe it might make it difficult
for the World ShippingCouncil's argument in the
petition to find its way againstthat final rule.
But now, now, after the Chevrondeference overturn, now that
(44:56):
the FMC doesn't have that kindof automatic deference and still
it wasn't a complete blanketdeference but you still have to
make the arguments but there wasa, there was a confidence in
the deference right as a generalstatement across the board, not
necessarily speaking for FMC,but like across the board.
Now I think that that petitionjust became a lot more
(45:19):
interesting because because Imean, it's a petition about the
statutory authority for thatfinal rule and so I think that
it's something that the courtwill have to address because
they won't be able to kind ofand this is oversimplifying it
(45:40):
but they won't be able to kickit out and just say well, you
know, we're going to have to gowith the agency here.
They're going to have to saywell, the agency said this and
independent review, we find whoknows where they're going to go
with it.
So I don't know.
I'm kind of just talking here,I guess, but I'm really
(46:02):
interested to see how otherpeople think that this is going
to affect the FMC specifically.
The other thing that I want tokind of throw into that petition
conversation and this is whereI really really I've always
wanted to be fair on thisbecause I really want to see how
this all plays out and I'vebeen watching, right, that
petition but the other thingthat I think we can't discredit
(46:28):
is that this D&D billingrequirements final rule is
already effective.
Right, it went into effect atthe end of May.
I think that that's going tohave some weight because that
was kind of a major change forthe industry.
Right, we had the 13 invoicerequirements coming out of OSRA
22, the Ocean Reform Act of 2022.
That was from Congress, so thatis not an issue.
But the 20 invoice requirementexpansion from the FMC and maybe
(46:56):
it wasn't a full expansion butjust like a dissecting of some
of the 13.
But then also, I mean therewere some other pieces direct
contractual relationship.
I mean all those things.
I mean those things went intoeffect the end of May and now I
still hesitant here.
Right, I would suspect that acourt wouldn't want to overturn
(47:19):
that because it made an impactin the industry.
But I mean, that's part of kindof the craziness of the Chevron
overturn is that they couldpotentially tie the FMC's other
parts right, not just the 13invoice requirements but the
other parts to that argument ofthe general argument on Chevron
(47:43):
deference where they saidbasically agencies were going
too far from initial statutoryauthority and so without that
automatic deference that Chevronprovided.
I'm not saying it's right orwrong, I'm not saying anybody's
right or wrong here, I'm justsaying I think there's going to
be a really interestingdiscussion on the topic now from
(48:04):
the court.
Did the FMC in the court'sindependent review have the
authority through OSRA, throughthe Shipping Act, right to kind
of go into those other pieces?
This petition just got a lotmore interesting and it's just
so.
I mean I'm nerding out here,right, so I'm going to continue
(48:24):
to watch all of this.
I hope I did it justice today.
I hope that this was a goodconversation.
I hope that I fairly presentedthese two really impactful,
significant, significant casesand the controlled carrier news.
But as always, I can't say itenough the guidance here is
general and for educationalpurposes only.
(48:45):
It should not be construed tobe legal advice directly related
to your matter.
If you need an attorney,contact an attorney.
But if you do have specificlegal questions, feel free to
reach out to me at my legalcompanies called Strategies.
Otherwise, for the non-legalquestions, the e-learning and
general industry information andinsights, come find me at the
Maritime Professor.
If you like these videos, letme know, comment, like and share
(49:05):
.
If you want to listen to theseepisodes on demand, or if you
missed any previous episodes,check out the podcast by Land
and by Sea.
You can get it on pretty muchall podcast platforms.
If you prefer to see the video,they live on my YouTube page by
Land and by Sea, presented bythe Maritime Professor.
While you're at it, check outthe website
themaritimeprofessorcom.
So until next week.
This is Lauren Began, theMaritime.
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