Good morning. At this time I will be handing over the gavel to acting chairman Michael Khouri. Before I do that, I want to make a brief statement here. I had the pleasure to serve as chairman for almost 4 years and I would like to thank the staff, the senior executives, for their time in working and making progress and making us a better commission. So my sincere appreciation, and I want to make sure for the record -- when progress is made, it is not necessarily because of who is up here. It really speaks to the great staff that we have at the commission. With that, I will support the acting chair in that endeavor of continuing to meet our mission and objectives. I'm very confident we are at a point where together we will continue to make progress. With that, like the -- with that, Mike, you will now have the pleasure of banking on this thing. -- banging on this thing. Congratulations. Chairman Khouri: Thank you so much. I would first like to make an announcement, a major, major change in communication protocols in the office of the chairman. No more will we have quizzical and obscure sports analogies or references -- [LAUGHTER] Chairman Khouri: About baseball in general or the Los Angeles dodgers. Commissioner Cordero: Mr. Chairman, does that apply to basketball? Chairman Khouri: Now you will enjoy clear and insightful and eliminating metaphors -- eliminating metaphors on basketball -- illuminating metaphors and basketball, complete with references to the river racing. Commissioner Dye: University of North Carolina. Chairman Khouri: Who we play in a couple of weeks. Sure communication will improve. Sincerely, I want to thank you for your four years as chairman and as Commissioner Cordero said, with this gavel he turns over the commission to me in fine shape. It is a great team of associates . That is from top to bottom. I think the study of the steady climb in partnership for Public service survey gives strong, strong testimony to your successful leadership. We have had a most helpful and gracious transition and I personally thank you for that. We have always enjoy that collegial working relationship and I'm confident that that report will continue -- rapport will continue if my colleagues have anything to say. Commissioner Dye: Thank you, Mr. Chairman. I strongly support President Trump's decision to appoint you as chair of the Federal Maritime commission. I wish you all the best and look forward to working together on important matters at the commission. Thank you. Doyle Commissioner Doyle: Mr. Chairman, I also support President Trump's appointment of chairman Khouri. As a brother of the sea, it is good to have you as chairman, a merchant Marine Maritime officer yourself. I look forward to working with you, and it is a pleasure. Thank you. Commissioner Maffei: Mr. Chairman, I want to take the opportunity to thank Mario for all his hard work and dedication being chairman. Not until recently the brother of the sea, Mario is one of the first people I met here and he was so welcoming and so wonderful about teaching the commission. His hard work has improved tremendously on a whole bunch of measures as chairman Khouri mentioned. On a personal note, he works so hard, and his family is in Los Angeles and yet you would never know that. You see him down the hall the time. I really cannot re -- really, really appreciate that. I want to congratulate Michael Khouri on his appointment as acting chairman. His diligence is tremendous and I will say his patients in educating a novice has been just admirable. We have had so many important talks already. The wonderful thing about the federal Maritime commission -- I'm not saying this is different from other parts of government, but we will let others decide that we really work as a team. I know chairman Khouri has expressed his desire to continue to do that. Any sort of abrupt transition, as many places in government would be -- I am so pleased about the transition and I know chairman Khouri will do an excellent job and make us continue to be successful. Chairman Khouri: Thank you. I will gavel us in and we have a special presentation, if I can slip out of here. Now for a very special presentation. Almost big enough for me to read. The very nature of the work done by the federal Maritime commission is international in scope and requires regular consultation with counterparts in foreign government. Over the years we at the commission have been most fortunate to have a colleague in the department of state's office of transportation policy who has been a full and faithful partner in all of our efforts to address agency concerned and to assure a competitive marketplace for ocean transportation services. Stephen Miller has spent more than three decades in dedicated service to the people of the government of the United States. Almost all of his career has been devoted to ocean shipping matters. His work has touched most of the world's continents and covered every issue related to Maritime transportation imaginable. Steve has been a tireless representative of the United States and bilateral, multilateral, and international forums, always working to advance the influence of our nation in his quiet but effective style. Steve has worked effectively over the years on the commission of issues related to international trade, promote competition. He has been an integral participant in several of the commission's post important and high-profile issues over the years. He has worked with the commission on behalf of state during negotiation'ss on Japanese shipping carriers in 1997 in our efforts to address allegedly restrictive practices that existed in the country. Additionally he was a member of the U.S. team that successfully negotiated the first U.S.-China bilateral maritime agreement that was signed in 2003. Those of us, including who have had the pleasure of working with Steve, no one even kill, polite -- know what an even keeled, polite, and thorough professional he is. Always willing to share information to solve the problem , Steve has constantly demonstrated the highest professional qualities in his work while maintaining the very best qualities of a diplomat. As Steve brings his career in public service to a close this spring, we want them to know how much we have appreciated his assistance through the years. To that end and on behalf of my fellow commissioners, I am pleased to present Steve Miller our certificate of recognition for his dedicated efforts in providing counsel, cooperation, and support to the Federal Maritime commission. We wish our friend good fortune, Fairwinds. First I believe my college want to have their comments -- my college want to have their comments. Commissioner Dye. Commissioner Dye: Thank you, Mr. Chairman. Steve, all the best. I agree with everything the chairman said. We feel that deeply and we know the wins our favorite. [LAUGHTER] Commissioner Dye: We know that. So thank you, thank you. Enjoy everything. Commissioner Cordero: Yes, Steve, I believe the chairman cover the whole base there and I echo every word he said. Also having personally worked with you on issues, I will vouch for the representative and from my point of view appreciate so much the expertise that you went the extra 10 yards on many issues and I will for member -- forever remember your advice and expertise and how you have the commitment to working across the board with federal agencies, including the Federal Maritime commission I thank you so much for the effort you made. Commissioner Doyle: Steve, you are great guy. I've been on trips with you overseas and your expertise from your professionalism, was welcome. And I think the U.S. government itself is going to miss you. You are great public servant. I appreciate everything you have done for the federal Maritime commission of the government over the years. Thank you very much. Commissioner Maffei: Steve come we didn't get a chance to work together to much but you were very, very helpful. Your reputation is just tremendous. I appreciate your government service. As you know, I'm a former member of Congress, and both in your case and the case of several retiring staff members at the Federal Maritime commission, I did inquire with my former colleagues as to whether it might be possible to pass legislation that would require you to stay in your position. Unfortunately, it is apparently unconstitutional. [LAUGHTER] Commissioner Maffei: Something about the 13th amendment, blah blahblahblah blah. What to do know that we tried hard to prevent this but since it is going to happen, you have all my best wishes and everybody on the commission. Chairman Khouri: Madam Secretary, would you please read the certificate of appreciation into the commission's official meeting record?
We the commission do hereby salute Mr. Stephen Miller, United States Department of State, for his outstanding work in facilitating successful and collaborative international maritime cooperation between the United States and other maritime nations, and for his commendable support for the federal Maritime commission's commissionable fostering a fair, efficient, and reliable ocean transportation system, under the seal of the Federal Maritime commission, February 15.
Thank you very much. [APPLAUSE] well, Mr. Chairman, first of all, let me add my congratulations, and other chairmen, ladies and gentlemen, I have to say, there has been a lot of talk of teens here. The teams here at the federal Maritime commission have shown so strongly that it really does help us and spreads among us throughout the U.S. government and Maritime officials. The FMC was one of the first agencies I had the privilege to work with back when dinosaurs roamed the earth. And actually have start care -- had dark hair. One of the first people I worked with in the commission was a young lady by the name of Florence. A few years after that I bumped into her and her husband and there was a vague and arms, and I mentioned she has children of her own who are well past the stage of being base in arms. And my work with her and with her many successors -- Rebecca Fadiman, Mary -- is she here? There you are. Tyler and Lauren and the commissioners with whom I've had the privilege of working. It has been a fruitful and close relationship and I do think we all closely and steadily followed this goal of an open and efficient Maritime market. Equally important are the more personal memories. I have worked long and hard with many people here. I remember chasing samurais in Tokyo with some of the staff here. I remember 2 characters -- the guilty parties can tell you the stories later. I remember cackling about -- these numbers are equally important to the public function. But I do want to return to that because now that everybody's boss is here, I have to say that the staff I've had the privilege to work with -- Rebecca and Florence and Tyler Lauren and Mary, they have all in themselves with the highest ideals of public service, it has been a privilege to work with you. I must say there are probably many people out there who are more deserving of this kind of recognition, but there are few who are more grateful for it. [APPLAUSE] Thank you. [APPLAUSE] Chairman Khouri: OK, Madam Secretary, please proceed with item one.
Thank you. Good morning, Mr. Chairman and commissioners. The first item is a briefing by Commissioner Doyle concerning competition law and the transport sector conference. Commissioner Doyle: Thank you, Mr. Chairman. So I went to quite a country. Every morning -- I was there for about four days and everyone who we -- everyone we went to the Hague. Met with various agencies in The Hague. Amsterdam. Also visited Rotterdam. Those three provinces comprised what is known is Holland -- Holland and South Holland. I got to tell you, it was quite a country with a lot of history. The folks that brought me from the State Department work remarkable. I mean, they were very, very good at their jobs. I also want to thank Laura angle for helping me put together the meetings that I had. They were very productive. She worked 2 weeks straight getting everything set up. It was at a time that I was changing councils. And David was coming on board and Patrick was leaving. I really want to thank Lauren for helping me out with the prep. The Rotterdam -- I've never seen a port like that. I had been there back in the 1990's and you don't realize what it is like in a port when you are on a ship because you are not here that long. You see the terminal and you move on. This places 31 miles long. Comes in an area of 31 miles. I get to CFE terminal -- see at the terminal, the newest terminal in Rotterdam, 19,200 vessel. And watching that port and how that ship operated and how the port system itself operates is amazing. What came to my mind the most is the shipping aspect of how Europe operates. With a lot arriving between Amsterdam, the Hague, and Rotterdam, not a lot of trucks on the road because they use the rivers on the waterways. The Netherlands itself as a country is below sea level. Everywhere you look there are dikes, windmills, because it looks good and it is historic and to use the windmills to run the pumps to come the water back -- pump the water back into the sea. Something we don't see in the United States with the shipping aspect -- the only thing I could equate to his New Orleans. You know when you are walking down the street in New Orleans, the French quarter, and you look up and you see a cruise ship going by on the Mississippi River. It is a weird thing to look up and see a ship going by. That is because New Orleans is officia -- New Orleans is a fishbowl. In the Netherlands, you are driving down the highway, 60 miles an hour, and there is an overpass. In that overpass, a ship. They unload these massive container ships and then they put them on these barges, so propelled, and then they go off from the North Sea and spread out all the way into Europe. Most of them are heading towards Germany. The river system extends from the North Sea although into the Black Sea. In two -- and to see how things maneuver, you are literally -- they are taking the containers off the ship, grounding it, putting them on these riverboats that are carrying 20 or 30 containers. All day and night. We have a nice Riverway system in the United States, but it is something to see. They really have it down pat. Amsterdam, Amsterdam was good. Amsterdam was not the container port. Amsterdam has the aggregate, the oil and petroleum products. After that -- Amsterdam, they dam it up. The history they are proud of between the Dutch West Indies -- we had some time and they make sure to bring me to the headquarters of the Dutch West India Company and let me know that new Amsterdam is New York. They have a nice bronze statue of the first provisional governor of New York. That was something. I also got to see the original headquarters -- I had a meeting and I didn't realize this when I was walking in, but it was right on the docks in Rotterdam. Holland-America line. Goes back to the 1800s. After my meeting, I have some time to -- before going on the tour, to see the terminal. And it is now a hotel called the hotel New York. I was looking around. I want to walk around this building. Really cool to see. And I asked the man -- can I walk around, take a look around? Help yourself. What I saw on the wall, it was the old when you see in movies or books where they wrap the hose up and it is a water system. I walked into the room with the State Department guy, and it is six or sevenrows of chairs stacked up on these wheels. About seven feet high. I look on the wall and there is a mural. It was the old Holland-America trade route over to the Netherlands. It was where you had people coming in and it was the times and the dates we went from port to port. Took up the entire wall. I took a couple of pictures of that. It has been up there for a while. You know, turn that into some kind of runway. It was clear to see but it was something. Getting to the actual conference -- it was a good conference. The attorneys for a lot of the major carriers -- I think just about all of them. A lot of them were attorneys and work in the business. I talked to chairman Khouri ahead of time and one of the first things when I was there was I let them know that Mario cordero was leaving the seat of chairman, and explaining that Mario would still remain as a commissioner, because that was the commission -- how does that work, what happens. I explained how the commission works, and Mario remains and commissioner Khouri is the acting chairman of the Federal Maritime commission. And a lot of what commissioner Maffei said his with the Federal Maritime commission, most if not all -- the percentages unanimous. That is how we work as a commission. To go from -- I touched on a few points in the economic analysis. We look at pricing we look at service -- price and we look at service. Extent that it increases or decreases. We have an excellent staff that looked at that and analyzes it and brings it to the commission. The attorneys representing the companies, the folks on the other side are really anxious on what will happen in April. How is this new set of alliances when they go into operation, how is that going to work out? It is a work in progress. We will see. The other is the Japanese carriers. What is going to happen with the Japanese carriers? Some people weren't quite clear on how that is going to work out, meaning that the countries are still going to remain, the containment factor will form one company standalone. Forming the container side, the order and aggregate and everything else. A lot of questions on what would happen. And what I could gather is that there are discussions. We will see where it leads to. But safeguards. This is really -- I will say that I made it perfectly clear that these are my points of view. I'm not speaking for any of the commissioners. I do believe one point and alliances formed, there is a responsibility of alliance partners to make sure the alliance is successful, and if somebody does go bankrupt or something goes wrong, they don't abandon. They find ways to make sure the supply chain and the transportation chain still moves forward. Not to my surprise, but I was happy to hear, that is six Eckley what some of these companies are doing -- that is exactly what some of these committees are doing. They are making sure they do have safeguards as they move forward in the future so something happens in the alliance, the other alliance members can make sure transportation sharing still moves. Finally, my favorite subject is, in my view, contracting and suppliers. It is my view that as the commission, we granted an amazing amount of antitrust immunity to these folks. And I explained that I don't have a problem with that. That is our job. We look at the economic analysis may give you limited antitrust immunity to form alliances. We have a fully functioning domestic maritime service. Barges. The have -- we have domestic service providers on land. And from that standpoint, we need antitrust immunity carriers and they should not use that immunity to drive down the rates of the individual domestic United States service providers who have no counterbalancing pathology and receive it from anywhere in the United States to negotiate against the carriers. Service folks domestic land-based, truckers. They don't have the power or the authority to form their own alliance and negotiate against the carrier. Now, having said that, there was a discussion at lunch. I sat down with three or four different high-level carrier councils. And they understood. They understood that. They understood the fact that, OK, we have a domestic -- the way this is explained is kind of unfair. I thanked them, because we discussed this provisions in two hours. Inevitable situation -- in every single situation we saw the ocean carriers pull back their language. They are not looking to come back to the commission and provide those amendments -- not yet, at least. So it was a good meeting. Again, these are my feelings and I made them perfectly clear. Mr. Chairman, those are my remarks. Thank you very much. Chairman Khouri: Thank you. Any comments or questions? Commissioner Dye: Thank you for the briefing. Commissioner Cordero: Thank you, Commissioner, for your efforts going to other parts of the world and working with stakeholders and parties on these issues with regard to sharing the best practices. Thank you again. Commissioner Maffei: Thank you, Mr. Chairman. I want to associate myself with the comments of Commissioner Doyle in terms of the responsibility of alliance members to keep the supply chain moving. I acknowledge that the shipping act currently gives us the authority to require that and I hope the alliance members would do that on their own but it is something Capitol Hill should look at because it is so important that should we have of accuracy or some other crisis that prevents supply-chain from moving that we have to wait to efficiently get it moving without increasing the cost to everybody involved. And I really appreciate all of Commissioner Doyle's report. It was very interesting. Chairman Khouri: Yes, and thank you for your report. I have 2 comments. One, as you referenced earlier the short sea shipping is an issue that I have observed here in the United States and in Europe and also in Asia. It has been a long time coming. There are a number of reasons why it has not taken off here, but when I talk with folks in other agencies, they continue to try. They started and failed and start again. Hopefully Edison's comment about the 100 lightbulbs that didn't work should be a failure -- oh no, I've learned what not to do now. Hopefully short sea shipping welcome to the United States in a profitable way. I want to make a comment because this cap posted -- I'm not sure this week or last week -- my vote on the statement that as the shipping developed in 1984 and then in 1998 with amendments , there were a number of places that, while 2 or more vessels operating companies would have to file a grievance with the commission because of one section of the shipping act, the other sections were saying he would look at the agreement. However, you did not get antitrust immunity. I think that was the situation that did --
Supports the extension of time to make nickel collection from 40 hours to 30 day -- technical correction from 48 hours to 30 days for service contracts and in a sacred believe recognizes that the time limit has a burden on carriers and has no objection to the proposed extension for service contracts. The WSE recognizes the 48-hour time limit is a burden on the carriers and has no objection to the proposed extension. Also related to section 530.10 is the proposal to extend the service contract correction request require 45 days to 180 days but is not, however, support using this to address service contracts. There were 4 commenters who support the proposal. We also support extension of Time to file from 48 days to 180 days covering those service contracts as well as an essay. Quadrupling the amount of time, 45 days to 180 days might seem overly generous to some, but the commercial reality supports the proposal and has no objection to the adoption. The proposal provides the same relief. While the shipping Council supports the extension of time to follow from 45 to 180 days. They propose that the commission consider extending the service contract correction process to include unfiled service contract amendments can have adverse consequences for the shipper and is a significant matter. This should be a process available to ensure that the shipper is not penalized for carrier's error. The proposed rule does not suggest eliminating carrier affidavits is required for service contract corrections. Why over -- however, he did propose to reduce the filing fee providing the carrier affidavit is maintained. The reduced fee of $95 is now in place. There was only one comment. They advised that the league would also note that it seems unduly burdensome to require the filing of an affidavit to support contract corrections and to avoid the correction procedure is other options may be available to address the contract our. The eighth issue we wanted to mention is even when there was no proposal to modify 530.12, the publication of the terms has likely outlived its commercial value. It is not the -- it is not -- it's as the likely revelatory burden is identical. It encourages eliminating publication. Nine, the commission did not propose to amend the exceptions. However, we did receive a few comments. They believe the proposal merits further examination and public dialogue. On the other hand, we received a comment on the confidential export trading company and they believe the lack of contracts would create business struggles as the service contracts include special requirements. They are reflective of comments with the underlying customers. Without the contract terms in place, this would be what they call negative and they have to pay much higher tariff penalties with possibly other terms they agreed to. The exceptions were expanded to include agricultural products. The carriers would opt -- would gouge them on price. They advise ag sales timeline under the current service contract carriers must publish I was -- at least 30 days in advance. They don't know how to manage and conduct business. Cap, we also wanted to point out that the proposed rule does not address the proposal filed at this time as the commission voted to address this issue regarding the petition t-215 30 there were 2 comments. Broadening the NRA exemption. Do not wait until issuance of rule in 16-05 to eliminate publication and filing and to allow both the amended and include noneconomic terms. UPS commented that they object to the elimination of an - nsa. This will be further addressed in a future rulemaking. 11, section 531.65, certification of shipper status. In regards to the certification of shipper status, the NSA regulations do not include a requirement that the shipper certify status, which is a requirement for shippers under the current service contract regulation. The proposed rule on making this requirement consistent and uniform. There were no comments. 531.9, publication of NSA -- the proposed rule does not address the proposal to eliminate NSA filings because it plans to address future rulemaking. There was only one comment, that they continue to believe that the NSA essential terms publication and filing required requirements do not serve a legitimate purpose. Beckham -- that concludes my report and I would be happy to answer questions. Chairman Khouri: Thank you for the report. Questions or comments? Commissioner Dye: Thank you, Mr. Chairman. Thank you, Gary. I appreciate it. It will come as a surprise to no one here that I believe in the spirit of president trump's Executive Order on regulations and would move forward immediately on the regular Tory portions -- regulatory portions of this rule. At this time to move forward as soon as possible. In that spirit I would delete the serve-time requirement, any other provisions that would establish deregulatory requirements, and move forward immediately, especially to provide the 30-day relief or service contracts and NSA filing . Also I would be interested in including the proposal to eliminate publication of essential terms. So many of the ocean transportation intermediaries, as the president remarked, we should also move forward with the broom making concerning the approval of the petition and eliminate the publication and filing of NSAs. I would be in favor of allowing the NRA to be amended. I look forward to working with you, Mr. Chairman, on these matters to remove all unnecessary compliance costs from the supply-chain system. Thank you. Commissioner Cordero: Thank you, Gary, for your presentation outlining not only the issues that the commentary. At this time I don't have any further questions. Chairman Khouri: Thank you. Commissioner Doyle. Commissioner Doyle: Couple of things. Actually, just one thing. Thank you very much. Great presentation. This entire rule -- what I hear from the shippers and carriers, one issue. It is the 30-day rule. They want to be able to -- meaning the shipper and the carrier -- they want to be able to negotiate terms and conditions, on or service contracts, and not to have to wait to file before becoming a blended. That is the number 1 -- becoming implemented. That is the number one rule. Both sides want to be able to sit down, negotiate, and immediately implement what was agreed to. Up to this point right now, it has been you can't implement until you file. So I know you went through a lot of issues, but if I was voting right now on that rule, the entire industry wants to I'm in favor of going to that 30 day rule. Because otherwise, we are stopping commerce. Thank you. Chairman Khouri: Thank you, Commissioner.
I just want to thank Gary again for his thorough job. This is so important that we get outside input on these things. I appreciate the fact that the respondent represented the broad swath of the industries. It is very helpful to us. I was listening to Commissioner dye's comments wishing I could disagree with everything -- I can certainly agree with the spirit of the comment. We do what we can in the spirit of making it easier to navigate our own governmental systems. Particularly if we are going to lessen them anyway what we should follow the spirit of President Trump's position to reduce these regulations as much as we can. Thank you, Mr. Chairman. Chairman Khouri: Thank you. I think I will start with something and said before -- I have said before over the seven years I've served on the commission. In a previous career come over 23 years with a carrier, one third roughly of our business was regulated by the interstate commerce commission. The other two thirds were bolt commodities -- bulk commodities. Throughout that period, what we are talking about in the 30 day filing requirements and a lot of these other requirements is for us lawyers in the room, the issue is contract formation. At what point have you formed an enforceable contract. The second issue is -- which I wrote down because I was proud I could remember the Latin term -- the burden on proving the contract is the one who offered the contract. In this 23 years of all the disputes we had with customers from a to Z, not once -- I want to emphasize -- not once was the issue over contract formation. What was the rate, what was the term or what was the tone age -- tonnage? I cannot emphasize strongly enough how much I associate with Commissioner dye's comments. When I came here seven years ago , my first vote was on the NRA issues. Seven years later, we are still wrestling with some of these issues. I hope you can understand my frustration with moving some of these issues forward. I would like the commitment from the staff that we are going to move forward all of these issues . Either it be by notation as soon as possible, we don't need to bring another issue up to the next commission meeting or the next commission meeting. I would be most pleased -- we are not voting on this -- but nodding their head that if we could have it before the next commission meeting in March where we can demonstrate a response to our stakeholders. With that comment, does anyone want to have rebuttal? Is there a response that any of the staff would like to offer to that directive?
Yes, sir. I plan to finish my review of the draft final rule today. The next office will be the general counsel who will receive that Bill and I expect we will be able to present that for circulation to the commission by the end of next week. Chairman Khouri: Sounds good. Thank you. Any other business for our meeting today?
Know, serve. -- no, Sir. Chairman Khouri: Thank you very much. We stand adjourned.