Federal Maritime Commissioner Richard Lidinsky spoke with The Journal of Commerce this week on the issues facing the agency in 2013, including a renewed push for an agriculture export index. The following is an edited transcript of the interview.
JOC: Following the release of the divided FMC report on Canadian cargo diversions, what is the next step for commission?
LIDINSKY: There has been no feedback from Congress yet, which is not unusual because they are getting themselves organized. It’s possible there could be a hearing or two on Canadian (issues) and put in with other topics. (We haven’t) heard anything from the Canadian side. The big question in the background is about the (Harbor Maintenance Tax). Again, if there is some move aftoot to alter the HMT scheme, we will be party to those hearings.
JOC: Do you expect Congress to take on HMT reform this year?
LIDINSKY: We might be at the point after all these years that with the Canadian factor and other factors, there might finally be enough momentum to come to grips with HMT. I see HMT as a much more approachable issue than trying to reform the Jones Act. The Jones Act is a solid rock of our maritime policy. The history is HMT is mixed and has a lot of critics, but they have never come together to bring about a change. This might be the year, but all the stars have to align. There has to be a bill, (and) there has to be industry support.
JOC: How should Congress and the industry approach HMT reform?
LIDINSKY: I think you have to maintain the monetary levels of HMT is bringing in. I think you’ve got to have a balanced alliance in the sense that there have certain ports that have set themselves up as defenders of HMT and other ports attack it. Within the port community, you need to see some cohesion and formulate a legislative strategy that fits into the bigger fiscal cliff issues.
JOC: What is the status of proposal to create a container rate index for agriculture exports?
LIDINSKY: On the shelf at the moment. We had a number of issues that we had to clean up procedurally. It’s not dead, and it will be revived soon. The first issue is: Does the commission have the authority to issue such an index? Internally, there is division on this point. I believe we do have the authority to do it in a proactive sense of helping exporters to enhance their shipments and come to grips with service contracts. Others feel the other way. The first step is to take before the commission (in the spring) a draft rule, perhaps in pilot project form. Frankly, even those in the commission supportive of the index don’t have a final vision or game plan of how this is to be produced. The second (hurdle) is how to do it. Do you pick the five or six commodities picked before? It has also been suggested that the commission mine the data and hand it over to a commercial enterprise to analyze it or publish it.
JOC: The World Shipping Council says it would violate Ocean Shipping Reform Act’s confidentiality provisions. What are your thoughts on this?
LIDINSKY: There is absolutely no conflict. The WSC doesn’t determine what this commission does. What I’ve found over the years is that their view is always opposite of what we want to do. We have heard that a few WSC members don’t share the anti-FMC tone taken by the umbrella group. My view (on creating an agriculture export index) is that we have this procedure in place judicially and if the commission goes too far, we will be told that by (the courts). I am of the school that you exercise the authority you have and don’t be cautious in it, and then be told (you can't).
JOC: How else is FMC aiming to help exporters so their shipments aren’t treated as just backhaul cargo?
LIDINSKY: Capacity is the new buzzword to shipper-carrier relations, and I would say that any kind of an alteration of an agreement or services capacity will always be one of the first things we look at. The (Transpacific Stabilization Agreement) is going to try to change their structure and incorporate (Westbound Stabilization Agreement) into one big tent. Feb. 3 is the effective date of this agreement. The carriers have to be closely questioned on capacity matters, and that is our responsibility on behalf of American importers and exporters.
Second, it is our responsibility to press both sides to have very good service contracts because a lot of the problems that arise in the course of capacity shortage and container shortage all reflect back to service contracts between the parties. If the shipper is remiss in putting in certain provisions to prevent blockage of their movement, higher rates or too many (general rate increases), that goes right back to that document. We urge both parties to sharpen their pencils and for shippers not to just be worried about rates but be worried about service conditions. We can’t sit in the room with them (when contracts are created), but we can offer consumer affairs and dispute resolution services.
JOC: You unsuccessfully pushed Congress to create an informal dispute resolution process within the commission years ago. Do you see foresee a way Congress could reconsider your push this year?
LIDINSKY: We have a new (House Transportation and Infrastructure Committee) and I have heard rumors of a draft bill that is circulating on the Senate side. There is rumor of a Senate bill that would eliminate the antitrust immunity, eliminate the service contract filing, would give us (dispute resolution authority), give us the authority over leasing companies ... and perhaps (bring) structural changes to the commission’s procedures. But at this point time we have (no bill) to sponsor.
JOC: You mentioned an interest in the FMC regulating the container leasing industry. How would the commission take this on?
LIDINSKY: In the absence of a complaint, it’s pretty hard to investigate people you don’t have jurisdiction over. When I talk about protecting people who are part of our maritime family, believe it or not, I am talking about carriers as well. Carriers were subjected to some leasing company abuses in the container shortage days. We had evidence of boxes being withheld from carriers and large shippers by leasing companies, and they were just waiting for the rate situation to be corrected. (The container leasing companies) have taken in the last year or so a very low profile as the container capacity pendulum seems to have a swung a little bit. There is now adequate capacity although (container) production is down in China. Boxes are coming from other places. A suggestion has been made that we license them, but I’m not sure licensing is the right answer.
As they continue to be a key party in this intermodal transaction, someone should be keeping an eye on them. Their response is, “Customs (and Border Protection) is keeping an eye on us or port authorities are keeping an eye on us.” But I’m talking about us keeping an eye on you as part of entire intermodal transaction. How would you regulate (the industry)? The commission isn’t going to set leasing rates for these people. We have one member of staff who tracks leasing companies. There are disagreements on who owns how many containers, so I think just to get a clear picture and enhance their role, it would be good if we could regulate them. But that is up for Congress to decide.
JOC: Your term expired June 30. How long do you expect to stay on? With William Doyle filling the remaining vacant seat on the commission, is there advantage in have a full line-up?
LIDINSKY: The FMC is one of the few agencies where you continue to serve until you are replaced. I’ve heard nothing about a replacement. (A full commission) allows us for the first time in many years to have five full-time hard-working commissioners, and each has their own areas of interest, so I think it will allow us to put items on the agenda to be voted on.
JOC: Rep. Darrel Issa, R-Calif., last year said the FMC “may be an agency in crisis," after two commission economists said they were mistreated for objecting to banning owner-operators from providing drayage at the Port of Los Angeles? The investigation launched by the House Oversight and Government Reform Commission is looking into accusations that FMC violated employees’ privacy and misused taxpayer dollars. Have you heard anything from Issa’s office?
LIDINSKY: No. All the reports have been filed with Mr. Issa, and we are on standby on hearing back from them. Assuming we don’t hear back from him, we assume that they have what they need to make a determination. I am confident that after all the stories come out and all the audits are run that we will be vindicated what we have done. (Lidinsky wasn't able to discuss particulars of the issue because the agency is still under investigation).
JOC: Among Cabinet departments and independent agencies, the FMC had the sharpest drop in the Best Places to Work in the Federal Government ranking. Do you feel the study — created by the Partnership for Public Service with help from Deloitte consulting firm — is accurate?
LIDINSKY: What you have to understand in analyzing this fall or shift is that in an agency of 118 people I believe there were less than 100 people that participated in the actual survey itself. The shift of four or five people can mean an earthquake shift in the ranking of the agency. A lot of the questions in the survey are vague. What we are going to do is receive a full briefing from this organization. We are going meet with these people very soon and have them explain all the ramifications of the survey. It is recommended that we start these focus groups to drill down to determine whether there is anger against the agency overall or is it that “I wasn’t promoted," or “I don’t like my parking space.” Every federal agency has dissatisfaction. There hasn’t been a pay increase in three years, and people aren’t retiring so there is no movement up the ranks. The fact that we fell from point X to point Y is certainly a cause of concern. I’m not happy about it, and certainly no one here is happy about it. But let’s get to the root of it.
JOC: Has the Issa investigation and survey affected the commission’s ability to take on its mission?
LIDINSKY: No. It’s not an issue. As you govern and regulate, you stick to your core mission. As questions are properly raised by the Hill within their jurisdiction, you deal with it. Again, if you look at our meeting agenda from when this started in late spring, we’ve had pretty full agenda.
JOC: Any final thoughts on your and the FMC’s performance?
LIDINSKY: I am most proud that we’ve got the commission moving again. Some will disagree with some of the policies and issues, but no one can disagree that the commission is a player in maritime activity taking place. We don’t shy away form any controversial topics. I think the right amount of controversy is good because it brings into the focus the change need. Sometimes change isn’t need, but debate is needed. The commission under my leadership is not a rubber stamp. When you look at our agenda, you couldn’t get a feel whether there were Democratic or Republican issues.
We’ve focused on importer and exporter issues, and looked through their eyes into shipping as opposed as taking agreements and treating them as an ATM or rubber stamp. I think that’s what Congress wants us to do. It wants us to put Americans first and create level playing field for everybody do their business.