[Congressional Record Volume 144, Number 44 (Tuesday, April 21, 1998)]
[Senate]
[Pages S3306-S3321]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
OCEAN SHIPPING REFORM ACT OF 1997
The PRESIDING OFFICER. Under the previous order, the hour of 9:40
a.m. having arrived, the Senate will now resume consideration of S.
414, which the clerk will report.
The assistant legislative clerk read as follows:
A bill (S. 414) to amend the Shipping Act of 1984 to
encourage competition in international shipping and growth of
United States imports and exports, and for other purposes.
The Senate resumed consideration of the bill.
Pending:
Hutchison amendment No. 1689, in the nature of a
substitute.
Gorton amendment No. 2287 (to amendment No. 1689) to
provide rules for the application of the act to
intermediaries.
Amendment No. 2287
The PRESIDING OFFICER. There will now be 20 minutes of debate prior
to the vote on or in relation to the Gorton amendment No. 2287.
Mr. GORTON addressed the Chair.
The PRESIDING OFFICER. The Senator from Washington.
Privilege of the Floor
Mr. GORTON. Mr. President, I ask unanimous consent to allow a
Commerce Committee staffer, Jim Sartucci, the privilege of the floor
during the remainder of the debate on this bill.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. GORTON. I also ask unanimous consent that my own assistant,
Jeanne Bumpus, be granted the privilege of the floor.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. GORTON. Mr. President, the 1984 Shipping Act significantly
brought openness and competition into the field of ocean shipping, a
field dominated for decades by cartels, by fixed prices, by underhanded
competition, and by, very frequently, the victimization of those who
ship their goods by sea.
This 1998 set of amendments to the Shipping Act further opens up the
process to competition and allows the business of ocean shipping to
operate far more like most of the rest of the free market in the United
States, with one exception. If you are a large shipper of goods by sea,
sophisticated, a major customer, you deal directly with the ocean
carrier, and those relationships with the ocean carrier are made much
more flexible, much more subject to competition, by this bill.
If, on the other hand, you are a modest shipper, a small or medium-
sized shipper, perhaps someone new to the business of exporting your
goods from the United States of America, you don't, as a general
practice, deal directly with the ocean carrier, you deal with a
middleman, a consolidator, a freight forwarder. That small businessman
in the various ports of the United States gathers together shipments to
the same place from a number of different shippers and makes the
arrangements with the ocean carrier.
As this bill was debated and reported from the Committee on Commerce,
it treated both of these groups in an identical fashion. Each got the
benefits of the bill; each got the benefits of competition.
Somewhere, however, between the Commerce Committee and the floor, the
big boys got together behind closed doors, and a combination of the
ocean carriers and the longshoremen's unions, working with a handful of
Senators, determined that the small business people would not get these
advantages, that they would continue to have to operate, under most
circumstances, under the requirements of the 1984 act.
Under the 1984 act, they were treated identically. If this bill
passes without my amendment, they will no longer be treated
identically. The small shipper will be discriminated against. The small
businessman who is a freight forwarder will be discriminated against.
The big guys will get away with something.
It is curious, Mr. President, that neither the small shippers nor the
freight forwarders were included in the negotiations that led to the
revised bill, the substantive bill that is before us, as against the
bill that came out of the Commerce Committee. The big boys got
together, shafted the small business people on both sides, and now
present this bill to you with the statement, ``Take it or leave it;
it's tough, but we've made a deal with the longshoremen's unions
because they think that they may not get some of the business from
these small businessmen, and you're just simply going to have to take
it that way.''
I don't think that is the way the laws ought to be made. I don't
think that is the way we ought to deal as Senators. We make wonderful
speeches at home, all of us, about the sanctity of small business, but
here we are asked to discriminate against small business and in favor
of big business.
If we adopt my amendment, we will simply put this bill back into the
same condition in which it found itself when it was reported by the
Commerce Committee--everyone treated equally, everyone the beneficiary
of a freer market than we have at the present time--and we will have
done our duty to all of our constituents and not just to those who are
able to afford expensive lobbyists in Washington, DC.
The bill, in its present form, is unfair to small businesses. It
discriminates against small businesses. The bill as reported from the
Commerce Committee did not do so. We should restore provisions that the
Commerce Committee saw fit to include in the bill.
Mr. BREAUX addressed the Chair.
The PRESIDING OFFICER. The Senator from Louisiana.
Mr. BREAUX. Thank you, Mr. President.
I would imagine that all Members of the Senate who are vitally
interested in this legislation must be here this morning to follow
these very complicated, very detailed arguments. This, indeed, is
incredibly complicated. It just always continues to amaze me how
complicated some of these international shipping agreements can become.
It is part of the reason why it took 4 years to put together this
legislation. This is not something that just came to the floor
overnight but is the result of 4 years of painful negotiating and
compromise among people who ship packages and cargo, people who carry
packages and cargo internationally.
Mr. President, 96 percent of our cargoes carried internationally are
on shipping vessels. It also has involved, to a large extent, the
people who put together packages for people to ship in order to make it
more efficient than it has been in the past.
Like all other compromises that normally are reached, everybody
doesn't get everything they want. I think this legislation is an
example of what a true compromise is. This legislation clearly is
incredibly important because it further deregulates the shipping
industry and makes it more competitive than it has been in the past.
But in reaching that compromise among all of the Senators who are
involved, including Senator Gorton and Senator Kay Bailey Hutchison,
who has done such a terrific job as the chairman of our subcommittee,
Senator Lott's involvement, Senator Inouye's involvement--everybody on
the committee has been deeply involved on this very complicated issue,
like I said, for 4 years.
[[Page S3307]]
Unfortunately, the amendment of the Senator from Washington is a
killer amendment in the sense that if this amendment were to be
adopted, the 4 years of hard work would go for naught. This bill would
not be able to pass because the carefully crafted compromise would fall
apart. As in most compromises, if you lose one part, you will lose the
whole deal.
So it is very, very important for all of us who want to see a
shipping act adopted and signed into law to recognize that it is
necessary this morning to defeat the amendment of the Senator from
Washington. I know it is well intended. I do not in any way question
his motives in offering it, but I think that on the facts, there is a
strong difference of opinion.
The non-vessel-operating common carriers, the so-called NVOCCs, are
not actually in the business of carrying cargo at all. These
organizations were formed in 1984 and recognized in 1984 in order to
help very small shippers who would not ordinarily have enough cargo to
fill an entire container, who would hire these NVOCCs to consolidate
the cargo and put them in the container. But it is very, very clear
that they are not a carrier, they don't own ships, they don't have the
expense of having an entire shipping company at their disposal in
building ships and operating ships and everything else.
Yet under the Gorton amendment, they would want to be treated just
like a shipper would be treated and yet not have any of the expenses of
a common carrier. That is wrong. That is why it was not done. It is
wrong to say they are going to get special treatment and be treated
just like an international shipping company with all of their expenses
because in fact they are not so. Yet the Gorton amendment would
basically accord these intermediary companies, who actually do not
perform any transportation function itself, the same contractual rights
that an ocean carrier enjoys, without any of the expense, without any
of the liability, without any of the responsibility. That is simply not
right, and it is not correct.
I submit that this is a hindrance to small business because the small
NVOCCs could not do this. They do not have enough cargo to be able to
provide these types of special deals. So the small NVOCCs would not be
helped at all. What it would help basically is a large number of
foreign NVOCCs, particularly from the European theater, who would be
able to assimilate large enough amounts of cargo in order to
participate under the Gorton amendment.
This would not help small intermediaries at all. They simply do not
have the capacity to benefit from it. Small NVOCCs, by virtue of the
modest cargoes that they handle, as I have said, would not be able to
take advantage of the Gorton amendment. Only the big, huge
megacompanies out of Europe and foreign companies who are our
competition would be able to participate. America's small businesses, I
think, do not deserve this type of treatment.
So I just conclude by saying, No. 1, it not fair to the small
companies in America. It helps the larger ones basically in Europe; and
that is not our responsibility. In addition to that, it is a killer
amendment. The 4 years of hard work led by so many on this committee--
including Senator Gorton, who has been, I think, very helpful in
putting this package together; we differ on this one amendment--but the
whole thing would go down the drain, and we would not have the moderate
reform of the Shipping Act that I think is so important. I hope at the
appropriate time those who are managing the legislation, Senator
Hutchison and others, will make a motion to table the Gorton amendment.
I intend to support that motion to table and hope that in fact it is
tabled and we can go along and proceed to final passage in an expedited
fashion.
Mr. President, we have been laboring long and hard over the past four
years to reformulate, and further deregulate the ocean shipping
industry. S. 414, the Ocean Shipping Reform Act, reflects an effort to
compromise the sometimes dissimilar interests of the international
ocean shipping industry, from the ocean carriers and shippers and
shipping intermediaries to the interests of U.S. ports and port-related
labor interests such as longshoremen and truckers. The effort to
provide further deregulation has been difficult due to some of the
unique characteristics of international liner shipping. Currently,
every nation affords ocean liner shipping companies an exemption from
the relevant antitrust or competition policies that regulate
competition for domestic companies. Given the need to provide some
regulatory oversight to protect against abuse of the grant of antitrust
immunity, it has been difficult to balance the desire for further
deregulation. However, I feel that we have reached a workable agreement
which almost all parties can support.
It is safe to say that our ocean shipping industry affects all of us
in the United States as currently 96% of our international trade is
carried on board ships, but very few of us fully understand the ocean
shipping industry. International ocean shipping is an over half a
trillion dollar annual industry that is inextricably linked to our
fortunes in international trade. It is a unique industry, in that
international maritime trade is regulated by more than just the
policies of the United States, in fact, it is regulated by every nation
capable of accepting vessels that are navigated on the seven seas. It
is a complex industry to understand because of the multinational nature
of the trade, and its regulation is different from any of our domestic
transportation industries such as trucking, rail, or aviation.
The ocean shipping industry provides the most open and pure form of
trade in international transportation. For instance, trucks and
railroads are only allowed to operate on a domestic basis, and foreign
trucks and railroads are required to stop at border locations, with
cargo for points further inland transported by U.S. firms.
International aviation is subject to restrictions imposed as a result
of bilateral trade agreements, that is, foreign airlines can only come
into the United States if bilateral trade agreements provide access
into the United States. However, international maritime trade is not
restricted at all, and treaties of friendship, commerce, and navigation
guarantee the right of vessels from anywhere in the world to deliver
cargo to any point in the United States that is capable of
accommodating the navigation of foreign vessels.
The Federal Maritime Commission (``FMC'') is charged with regulating
the international ocean shipping liner industry. The ocean shipping
liner industry consists of those vessels that provide regularly
scheduled services to U.S. ports from points abroad, in large part, the
trade consists of containerized cargo that is capable of being moved on
an international basis. The Federal Maritime Commission does not
regulate the practices of ocean shipping vessels that are not on
regularly scheduled services, such as vessels chartered to carry oil or
chemicals, or bulk grain or coal carriers. One might ask why regulate
the ocean liner industry, and not bulk shipping industry? The answer is
that the ocean liner industry enjoys a worldwide exemption from the
application of U.S. antitrust laws and foreign competition policies.
Also, the ocean liner industry is required to provide a system of
``common carriage,'' that is, our law requires carriers to provide
service to any importer or exporter on a fair, and non-discriminatory
basis.
The international ocean shipping liner industry is not a healthy
industry, in general, it is riddled with trade distorting practices,
chronic over-capacity, and fiercely competitive carriers. In fact,
rates have plunged in the trans-pacific trade to the degree that
importers and exporters are expressing concerns about the overall
health of the shipping industry. The primary cause of liner shipping
overcapacity is the presence of international policies designed to
promote national-flag carriers and also to ensure strong shipbuilding
capacity in the interest of national security. These policies include
subsidies to purchase ships and to operate ships, tax advantages to
lower costs, cargo reservation schemes, and national control of
shipyards and shipping companies. This results in an industry which is
not completely driven by economic objectives. For instance, one of the
largest shipping companies in the world, China Overseas Shipping
Company (``COSCO'') is operated by the government of China, much in the
way the U.S. government controls the Navy, however, the government of
[[Page S3308]]
China is not constrained by considerations that plague private sector
companies.
Historically, ocean shipping liner companies attempted to combat
``rate wars'' that had developed because of the situation of over-
capacity by establishing shipping conferences to coordinate the
practices and pricing policies of liner shipping companies. The first
shipping conference was established in 1875, but it was not until 1916
that the U.S. government reviewed the conference system. The Alexander
Committee (named after the then-Chairman of the House Committee on
Merchant Marine and Fisheries) recommended continuing the conference
system in order to avoid ruinous ``rate wars'' and trade instability,
but also determined that conference practices should be regulated to
ensure that their practices did not adversely impact shippers. All
other maritime nations allow shipping conferences to exist immune from
the application of antitrust or competition laws, and presently no
nation is considering changes to their shipping regulatory policies.
In the past, U.S. efforts to apply antitrust principles to the ocean
shipping liner industry were met with great difficulty, since foreign
governments objected to the application of U.S. antitrust laws to the
business interests of their shipping companies, and to the exclusion of
their own laws on competition policy. Many nations have enacted
blocking statutes to expressly prevent the application of U.S.
antitrust laws to the practices of their shipping companies. As a
result of these blocking statutes, U.S. antitrust laws would only be
able to reach U.S. companies and would destroy their ability to compete
with foreign companies. With the difficulties in applying our antitrust
laws, U.S. ocean shipping policy has endeavored to regulate ocean
shipping practices to ensure both that the grant of antitrust immunity
is not abused and that our regulatory structure does not contradict the
regulatory practices of foreign nations.
The current regulatory statute that governs the practices of the
ocean liner shipping industry, is the Shipping Act of 1984. The
Shipping Act of 1984 was enacted in response to changing trends in the
ocean shipping industry. The advent of intermodalism and
containerization of cargo drastically changed the face of ocean
shipping, and nearly all liner operations are now containerized. Prior
to the Shipping Act of 1984, uncertainty existed as to whether
intermodal agreements were within the scope of antitrust immunity
granted to carriers. In addition, carrier agreements were subject to
lengthy regulatory scrutiny under a public interest-type of standard.
Dissatisfaction with the regulatory structure led to hearings and
legislative review in the late 1970s and early 1980s. In the wake of
passage of legislation deregulating the trucking and railroad industry,
deregulation of the ocean shipping industry was accomplished with the
enactment of the Shipping Act of 1984.
The Shipping Act of 1984 continues antitrust immunity for agreements
unless the FMC seeks an injunction against any agreement it finds ``is
likely, by a reduction of competition, to produce an unreasonable
reduction in transportation service or an unreasonable increase in
transportation cost.'' The Act also clarifies that agreements can be
filed covering intermodal movements, thus allowing ocean carriers to
more fully coordinate ocean shipping services with shore-side services
and surface transportation. One can easily measure the success of this
provision, in examining the number of railroad double stack services, a
rail service that was actually pioneered by U.S.-flag shipping
companies, that have promulgated since the enactment of the Shipping
Act of 1984.
The Shipping Act of 1984 attempts to harmonize the twin objectives of
facilitating an efficient ocean transportation system while controlling
the potential abuses and disadvantages inherent in the conference
system. The Act maintains the requirement that all carriers publish
tariffs and provide rates and services to all shippers without unjust
discrimination, thus continuing the obligations of common carriage. In
order to provide shippers with a means of limiting conference power,
the Shipping Act of 1984 made three major changes: (1) it allowed
shippers to utilize service contracts, but required the essential terms
of the contract to be filed and allowed similarly situated shippers the
right to enter similar contracts; (2) it allowed shippers the right to
set up shippers associations, in order to allow collective cargo
interests to negotiate service contracts; and (3) it mandated that all
conference carriers had the right to act independently of the
conference in pricing or service options upon ten days' notice to the
conference.
Amendments to the Merchant Marine Act, 1920, and the passage of the
Foreign Shipping Practices Act of 1988, strengthened the FMC's
oversight of foreign shipping practices and the practices of foreign
governments that adversely impact conditions facing U.S. carriers and
shippers in foreign trade. The FMC effectively utilized its trade
authorities last year to challenge restrictive port practices in Japan,
and after a tense showdown, convinced the Japanese to alter their
practices that restrict the opportunity of carriers to operate their
own marine terminals. The changes that will be required to be
implemented under this agreement will save consumers of imports and
exporters trading to Japan, millions of dollars, and the FMC deserves
praise for hanging tough in what was undeniably a tense situation.
Ten years later, after the enactment of the Shipping Act of 1984, we
started anew on the process of providing a deregulated shipping
environment to allow our shippers to become more competitive in
international trade, and to provide more contractual flexibility to our
ocean shipping companies. After four years of stops and starts, I think
that we have reached a point where nearly all sectors of the maritime
transportation community can get behind a common proposal for change.
It has not been easy to balance the different interest involved in this
legislation because of the competing differences of each of their
needs, but I think that we have had each of the different sectors
willing to give up a little of what they hoped to get in order to move
the bill forward, and I would congratulate the private sector
representatives for their willingness to compromise to move the process
forward.
The Ocean Shipping Reform Act moves forward to provide further
deregulation to the ocean shipping industry, while at the same time,
balancing the need for a degree of oversight given the continued
provision of immunity from antitrust laws. The bill will not alter the
structure of the FMC. The FMC is a small independent agency with an
annual appropriation of $15 million which oversees over one half a
trillion dollars of trade. It is important to note, that the agency's
status of independence allows it to effectively fulfill its trade
opening related functions without interference from other sorts of
considerations. We had considered the possibility of merging the
functions of the Federal Maritime Commission and the Surface
Transportation Board, but ultimately concluded that the combination of
the two agencies did not save the taxpayer anything because the
agencies would have no real overlap of responsibility.
One of the major problems in moving forward with legislative change
in this area was the need to provide additional service contract
flexibility and confidentiality, while balancing the need to continue
oversight of contract practices to ensure against anti-competitive
practices immunized from our antitrust laws. I think the contracting
proposal embodied in S. 414 adequately balances these competing
considerations. The bill transfers the requirements of providing
service and price information to the private sector, and will allow the
private sector to perform functions that had heretofore been provided
by the government. The bill broadens the authority of the FMC to
provide statutory exemptions, and reforms the licensing and bonding
requirements for ocean shipping intermediaries.
I have been contacted by Senators Lautenberg and Moynihan about their
concerns for the freight forwarding community, and their desire to set
mandatory or reasonable compensation for forwarding services provided
under a shipping contract. While we were unable to provide a legal
requirement for forwarder compensation, I would urge the FMC to
continue to be vigilent to ensure that forwarders and forwarding
[[Page S3309]]
expertise is not jeopardized in this new and more deregulated
environment. The forwarding community provides valuable expertise to
the shipping community and I will continue to monitor the impacts of
this legislation to ensure that it does not adversely impact
forwarders. Additionally, we were able to provide less stringent report
guidance about what sort of activity should be monitored by the FMC to
ensure against unjust discrimination against shipping intermediaries at
the request of Senator Harkin, and I would like to thank him for his
imput on this legislation.
Importantly, the bill does not change the structure of the Federal
Maritime Commission. The FMC is a small agency with a annual budget of
about 14 million dollars. When you subtract penalties and fines
collected over the past seven years, the annual cost of agency
operations is less than $7 million. All told, the agency is a bargain
to the U.S. taxpayer as it oversees the shipping practices of over $500
billion in maritime trade. Added benefit to the U.S. public accrues
when the FMC is able to break down trade barriers that cost importers
and exporters millions in additional costs, such as what recently
occurred when the FMC challenged restrictive Japanese port practices.
The FMC is an independent regulatory agency that is not accountable
to the direction of the administration. Independency allows the FMC to
maintain a more aggressive and objective posture when it comes to the
consideration of eliminating foreign trade barriers. When we first
assessed the issue of agency structure we considered appending the
functions of the FMC to a new enlarged Surface Transportation Board
(``STB''). However, the functions performed by the STB are quite
different than the FMC functions that would remain after implementation
of the deregulatory changes provided in S. 414 and the Congressional
Budget Office did not estimate any savings through a merger approach.
Additionally, the initial proposal to merge the functions of the FMC
and the STB would have run afoul of the Appointments Clause of the
Constitution. Ultimately, we decided to pursue solely the needed
regulatory changes, and not needlessly alter the structure of the
agency for no real purpose.
S. 414 also provides some additional protection to longshoremen who
work at U.S. ports. The concerns expressed by U.S. ports and port-
related labor interests revolved around reductions in the transparency
afforded to shipping contracts, and the potential abuse that could
occur as a result of carrier antitrust immune contract actions. In
order to address the concerns of longshoremen who have contracts for
longshore and stevedoring services, S. 414 sets up a mechanism to allow
the longshoremen to request information relevant to the enforcement of
collective bargaining agreements.
I would also like to thank Senators Hutchison, Lott and Gorton for
their efforts on this bill. Additionally, the following staffers spent
many hours meeting with the affected members of the shipping public and
listening to their concerns about our proposal and I would like to
personally thank Jim Sartucci, Carl Bentzel, Clyde Hart, and Jim Drewry
of the Commerce Committee staff, Carl Biersack of Senator Lott's staff,
Jeanne Bumpus of Senator Gorton's staff, Amy Henderson of Senator
Hutchison's staff as well as my own staffers, Mark Ashby and Paul
Deveau. It is my hope that our progress on ocean shipping will spill
over to our efforts to implement the OECD Shipbuilding Trade Agreement,
so we can move forward with another positive piece of legislation for
the maritime industries.
I yield the floor.
Mr. GORTON addressed the Chair.
The PRESIDING OFFICER. The Senator from Washington.
Mr. GORTON. Mr. President, my friend from Louisiana makes a curious
set of arguments. The single word he used most in his remarks was
``compromise,'' that this provision is now the result of a compromise
of 4 years' work. No; this provision is not the result of 4 years of
work. This provision is the result of a discussion that took place
after this bill was reported from the Commerce Committee, after all of
the open public hearings and all the open discussion. And what kind of
compromise was it? Well, it was a compromise between the big unions,
the big carriers and maybe some of the big shippers. It isn't a
compromise that involved its victims.
No representative of small shippers was in the room where this
``compromise'' was made. None of the small businessmen who were
middlemen were in the room when this ``compromise'' was made. A curious
compromise, I must say, when the victims were excluded from it, after
having been a part of everything that went on for the 4 years of work
on this bill up through and including its report from the Commerce
Committee. No, this was not a compromise; this was a backroom deal, the
worst kind of backroom deal.
The Senator from Louisiana says, ``Carefully, carefully crafted.''
``Killer amendment.'' Strange. I don't see any dissent on the Commerce
Committee, Republicans or Democrats, with the bill in its original
form. How can it be a killer amendment?
Does the Senator from Louisiana mean that, if we pass this amendment,
every Member of his party will then filibuster the bill? Simply because
we have not done the will of the longshoremen's unions, they will give
up competition and open shipping, lock, stock and barrel across the
board? Well, if that is what he means--if that is what they mean, let
them say so. It isn't going to kill the bill over here; and I do not
think it will kill the bill over there.
What do outsiders say about it? Today's Journal of Commerce, the
newspaper that deals with business, endorses this bill. It says:
Today, the Senate is expected to approve a bill that boosts
competition and makes it easier for shipping lines and their
customers to operate.
In one respect, however, this bill actually limits
competition by denying freight consolidators--middlemen--full
opportunity under the new law.
* * * * *
Lately, however, middlemen have become an important export
conduit and even a threat to the status quo. Not
surprisingly, it was the major shipping lines and labor
unions that teamed up to deny to consolidators private
contracting privileges.
In other words, they have given themselves the ability to do business
in a way they now want to deny to others in the same business. The only
difference is the people who made this ``compromise'' are big and the
ones who are victimized are small.
This amendment is consistent with the philosophy of the bill. It was
included in the bill in every stage to this point. It is backed by
everyone who deals with this issue objectively. It will not kill the
bill, unless there are 41 Members here who will simply vote to kill the
bill on behalf of one small set of labor unions who want a monopoly.
And I do not think that will happen.
We should do the right thing and pass the amendment.
Mr. President, I ask unanimous consent to have the article in the
Journal of Commerce, which is dated April 21, 1998; a statement in
support by the Transportation Intermediaries Association, dated April
20, 1998; and a letter from the New York/New Jersey Foreign Freight
Forwarders and Brokers Association, Inc., dated April 20, 1998, printed
in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
[From the Journal of Commerce, April 21, 1998]
Ship Deregulation Promise
After three years of tortured debate, a congressional bid
to curb regulation of the ocean shipping business is at a
critical stage. Today, the Senate is expected to approve a
bill that boosts competition and makes it easier for shipping
lines and their customers to operate.
In one respect, however, this bill actually limits
competition by denying freight consolidators--middlemen--full
opportunity under the new law. Even with this blight, the
bill deserves support. But senators should be aware of its
tainted nature and the culprits who shaped it, and revisit it
later to fix its shortcomings.
The shipping bill scheduled for debate today lets ocean
carriers and their customers, for the first time, negotiate
direct, confidential contracts--without influence from the
cartels that define this business. Thus, parties in the
maritime industry would enjoy the same contracting privileges
as other buyers and sellers of transportation.
With one important exception.
The bill does not let ocean freight consolidators--
companies that pool small export shipments, then buy space
aboard
[[Page S3310]]
ships--sign private contracts with their customers.
Confidential contracting is important to carriers and
shippers because it allows them to negotiate deals free from
competitors' prying eyes. If consolidators--or non-vessel-
operating common carriers--do not have the same right, they
could have trouble keeping customers and striking good deals.
At the time of the 1984 Shipping Act, freight consolidators
were not a major industry force. Lately, however, middlemen
have become an important export conduit and even a threat to
the status quo. Not surprisingly, it was the major shipping
lines and labor unions that teamed up to deny to
consolidators private contracting privileges.
The unions are predictably doing whatever they can to hurt
non-union companies. Ocean carriers take a more subtle tack,
arguing that companies that don't have ships shouldn't have
the same privileges as those that do.
Ultimately the carriers' arguments are just as self-serving
as the unions'. Low-overhead middlemen are an important part
of many industries, brokering deals, arbitraging markets and
holding down prices. This sometimes exerts price pressure on
higher cost operators; in this case, shipping lines. The
carriers hope to deny consolidators private contracting
rights to curb a competitive threat. That is wrong.
To correct this problem, Sen. Slade Gorton, R-Wash., will
offer an amendment today that extends private contracting to
freight consolidators. It doesn't stand much of a chance,
however. Why? Because supporters say the shipping bill is a
delicate compromise that could blow apart if the careful
balance between carriers, shippers, ports and labor is
disturbed. Part of that balance is to hammer consolidators.
Distasteful as that is, the bill is still worth passing.
The basic contracting freedoms it offers are simply too
important to be delayed yet again. Fortunately, some
consolidators may have a way around the bill's restrictions.
Shippers' associations--groups of shippers who pool their
business to get better rates--have full contracting rights
under the bill, so consolidators working with them may be
able to sidestep the bill's restrictions.
Even so, the House should shine as much light as possible
on this issue when it considers the bill, perhaps later this
year. The ``delicate compromise'' argument likely will
prevail there as well, but the issue still needs debating.
If the bill becomes law, lawmakers should look for a chance
next year to fix the consolidator provision, a strategy the
bill's chief sponsor, Sen. Kay Baley Hutchison, R-Texas,
hinted at earlier this month. If deregulation is to yield
real benefits, everyone must have the same right to compete,
not just those who wield the biggest sticks.
____
Support Gorton Amendment to S. 414, the Ocean Shipping Reform Act of
1998
The Transportation Intermediaries Association (TIA) urges
you to support Senator Slade Gorton's amendment to the Ocean
Shipping Reform Act of 1998. Passage of the Gorton amendment
April 21 is essential to permit the benefits of deregulation
to flow to small business as well as large business.
The Ocean Shipping Reform Act of 1998 requires NVOCCs
(transportation intermediaries) to publish tariffs and does
not permit them to deviate from those tariffs in confidential
contracts. The bill does, however, permit the ocean carriers
to deviate from tariffs by entering into confidential
contracts. The Gorton amendment will permit both carriers and
transportation intermediaries to offer confidential contracts
to shippers.
This issue is important, because while large shippers can
enter into direct negotiations with ocean carriers, small
shippers usually deal with transportation intermediaries to
arrange for their transportation. S. 414 as it is currently
written will permit large shippers to know what their small
competitors pay for ocean freight, while the small competitor
will not know what the large shipper is paying. The benefits
of deregulation in S. 414, therefore, will flow only to big
business! Senator Gorton's amendment will permit all shippers
to benefit from ocean carrier deregulation through the right
to confidential contracting for ocean freight transportation.
Transportation intermediaries have the ability to enter
into confidential contracts with their shipper customers and
with motor carriers, railroads, and airlines. Forwarders
based in other countries can enter into confidential
contracts for ocean carriage anywhere in the world except to
or from the U.S. It is baffling why the Senate would treat
U.S. ocean carriage differently than other modes of
transportation and ocean carriage everywhere else in the
world. It will be American small businesses that suffer
because of this distinction.
TIA is the leading organization of North American
transportation intermediaries. TIA is the only organization
representing transportation intermediaries of all
disciplines. The members of TIA include: international
forwarders, NVOCCs, property brokers, domestic freight
forwarders, air forwarders, intermodal marketing companies,
perishable commodity brokers, and logistics management
companies. TIA also provides management services for the
American International Freight Association (AIFA), a leading
organization of NVOCCs. AIFA is the U.S. representative of
FIATA, an international organization of more than 30,000
freight forwarders.
For further information, contact TIA's Government Affairs
Manager Ed Mortimer at (703) 329-1895. Show your support for
small business. Vote ``YES'' for the Gorton amendment.
____
New York/New Jersey Foreign Freight Forwarders and
Brokers, Association, Inc.,
April 20, 1998.
Hon. Bob Graham,
U.S. Senator, Senate Office Building, Washington, DC.
Re: S. 414: The ``Gorton Amendment''--Votes YES for Small
Business and US Exports
Dear Senator Graham: On Tuesday morning S. 414 will come
before the Senate and Senator Slade Gorton will offer an
amendment on behalf of small exporters and shippers. Members
of the New York/New Jersey Foreign Freight Forwarders &
Brokers Association, Inc. encourage you to vote YES on the
Gorton Amendment and help make the Ocean Shipping Reform Act
true ``reform'' for small business and US exports.
S. 414 is about international trade. The Gorton Amendment
is about whether the small guy is going to benefit from this
legislation or suffer as a result of special interests.
Voting YES on the Gorton Amendment will help to protect in
the global commerce of the 21st Century the 70% of U.S.
exports that small shippers produce. The Gorton Amendment
helps ensure that the small shipper and business will be able
to compete by enabling the freight consolidator (NVOCC), who
works on behalf of smaller shippers, to sign confidential
contracts with the shipper-client. Without the Gorton
Amendment, large multi-national companies, that don't use
NVOCCs, would be able to sign confidential contracts with the
steamship companies--but since the NVOCCs would not be able
to sign contracts with their shipper-clients, small business'
transportation costs will NOT be confidential--unlike their
larger competitors. This is not reform.
The ironic twist to this debate is that the Senate Commerce
Committee initially recommended that NVOCCs be able to sign
contacts with shippers--but longshore labor and some carriers
used the legislative process to advance their dislike for
consolidators--and small shippers. As it stands now, S. 414
would please labor, large shippers and carriers, and place
the small shipper at a severe disadvantage and impede the
entry of small business in the global marketplace. The
question is simple: Do you support small business? The Gorton
Amendment helps to right the wrong done to small shippers. We
urge you to support small business and vote YES of on the
Gorton Amendment.
Very truly yours,
Louis Policastro,
Vice President, Export Committee.
Mr. BREAUX. Mr. President, I would just, as we move toward a vote on
this measure, make one other comment, and that is that it is very clear
that there is a great deal of support for the current bill that is on
the floor. And there is pretty much across-the-board opposition to the
amendment that Senator Gorton is offering. And it is across the board
in the sense that it is opposed by all segments of the industry.
I want to have printed in the Record, and ask unanimous consent to do
so, a letter addressed to myself in opposition to the Gorton amendment.
There being no objection, the letter was ordered to be printed in the
Record, as follows:
Supporters of S. 414.
Arlington, VA, March 11, 1998.
Re Opposition to Senator Gorton Amendment.
Hon. John B. Breaux,
U.S. Senate, Hart Senate Office Building, Washington, DC.
Dear Senator Breaux: We wish to convey to you our full
support for the managers' floor amendment for S. 414, The
Ocean Shipping Reform Act of 1998, without additional
amendments. It represents a carefully crafted compromise
serving a broad cross section of the maritime industry
including importers/exporters, ports, carriers, and labor.
We understand that Senator Slade Gorton plans to offer an
amendment to S. 414 managers floor amendment that would alter
current law and allow non-vessel operating common carriers
(NVOCCs) to offer confidential service contracts directly to
the proprietary owners of the cargo. Some interests have
argued that the retention of current law would disadvantage
smaller volume shippers who might utilize NVOCC's in order to
obtain competitive rates with larger volume shippers.
However, the perceived benefits that smaller shippers might
receive from the ability of NVOCCs to enter into service
contracts with their customers is largely misunderstood.
Under current law, NVOCCs are allowed to enter into service
contracts with carriers and this can generate a significant
cost savings that is passed onto shippers. This would not
change under the latest version of S. 414. NVOCC's would
however benefit from the provisions allowing confidentiality
of certain terms in their contracts with carriers. Smaller
volume shippers would also
[[Page S3311]]
have the option to consolidate their cargoes by joining
shippers associations who may then negotiate lower rates as
larger volume shippers.
Therefore, we urge you to oppose the Gorton amendment. This
amendment is unnecessary and would kill legislation which has
been carefully constructed by the bill's sponsors to make
U.S. ocean shipping law compatible with the rest of the
transportation industry and which will benefit the U.S.
economy.
Sincerely,
American Association of Port Authorities; APL, Limited;
Council of European and Japanese Shipowners'
Associations; Crowley Maritime Corporation; Internal
Longshoremen's Association; International
Longshoremen's & Warehousemen's Union; The Chamber of
Shipping of America; The National Industrial
Transportation League; Sea-Land Service, Inc.;
Transportation Trades Department, AFL-CIO.
Mr. BREAUX. The letter basically says that:
We understand that Senator Slade Gorton plans to offer an
amendment . . . that would alter current law and allow non-
vessel operating common carriers (NVOCCs) to offer
confidential service contracts directly to the proprietary
owners of the cargo. Some interests have argued that the
retention of current law would disadvantage smaller volume
shippers who might utilize [the non-vessel operating common
carriers] in order to obtain competitive rates with larger
volume shippers.
They point out:
However, the perceived benefits that smaller shippers might
receive from the ability of NVOCCs to enter into service
contracts with their customers is largely misunderstood.
Under current law, NVOCCs are allowed to enter into service
contracts with carriers and this can generate a significant
cost savings that is passed onto shippers. This would not
change under the latest version of S. 414. NVOCCs would
however benefit from the provisions allowing confidentiality
of certain terms in their contracts with carriers. Smaller
volume shippers would also have the option to consolidate
their cargoes by joining shippers associations who may then
negotiate lower rates as larger volume shippers.
The point is pretty clear that this group opposes the amendment of
the Senator from Washington. I would like to list for the Record the
ones who have signed this letter because it indeed is significant, and
that is across-the-board opposition.
It is signed by the American Association of Port Authorities; by
American President Lines, Limited; by the Council of European and
Japanese Shipowners' Associations; by the Crowley Maritime Corporation,
a major shipping company; the International Longshoremen's Association;
by The Chamber of Shipping of America; by The National Industrial
Transportation League; by Sea-Land Service, one of the largest carriers
in the world; by the Transportation Trades Department of the AFL-CIO.
So whether you are talking about the workers who handle the cargo, or
by the port authorities who have the cargo shipped through their ports,
or by the ship carriers who are actually carrying the cargo, it is
pretty unanimous agreement that this is not the right thing to do.
Let us support the compromise. Everything in that compromise is a
positive step forward. It may not be as much as some would want, but it
is far better than the current law. It allows some more decontrol,
allows some more deregulation, more competition. And that is good. But
it is simply unfair to say to people who have no responsibility for
owning ships or the expense of running ships that they are going to
allow them to have the same advantages as a shipping company does. It
simply would break the balance in this industry, which I think is very
important to preserve.
I think the bill is a good bill. It took 4 years to get us to this
point. These compromises were not entered into behind the scenes, but
were debated on a regular basis among all the active participants. This
is a good bill. It should be passed. The Gorton amendment should be
tabled.
The PRESIDING OFFICER. All time has expired. Under the previous
order, the question is on the Gorton amendment.
Mrs. HUTCHISON addressed the Chair.
The PRESIDING OFFICER. The Senator from Texas.
Mrs. HUTCHISON. I move to table the amendment and I ask for the yeas
and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.
The PRESIDING OFFICER. The question is on agreeing to the motion to
lay on the table the amendment of the Senator from Washington.
The clerk will call the roll.
The assistant legislative clerk called the roll.
Mr. NICKLES. I announce that the Senator from Utah (Mr. Bennett) is
necessarily absent.
Mr. FORD. I announce that the Senator from Hawaii (Mr. Inouye) and
the Senator from New York (Mr. Moynihan) are necessarily absent.
I further announce that, if present and voting, the Senator from New
York (Mr. Moynihan) would vote ``aye.''
The result was announced--yeas 72, nays 25, as follows:
[Rollcall Vote No. 85 Leg.]
YEAS--72
Abraham
Akaka
Ashcroft
Baucus
Biden
Bingaman
Bond
Boxer
Breaux
Bryan
Bumpers
Campbell
Chafee
Cleland
Cochran
Collins
Conrad
Coverdell
Craig
D'Amato
Daschle
DeWine
Dodd
Dorgan
Durbin
Faircloth
Feingold
Feinstein
Ford
Frist
Glenn
Graham
Gregg
Hagel
Harkin
Hatch
Hollings
Hutchison
Inhofe
Johnson
Kempthorne
Kennedy
Kerrey
Kerry
Kohl
Landrieu
Lautenberg
Leahy
Levin
Lieberman
Lott
Lugar
Mack
Mikulski
Moseley-Braun
Murray
Reed
Reid
Robb
Rockefeller
Roth
Santorum
Sarbanes
Shelby
Snowe
Specter
Thompson
Thurmond
Torricelli
Warner
Wellstone
Wyden
NAYS--25
Allard
Brownback
Burns
Byrd
Coats
Domenici
Enzi
Gorton
Gramm
Grams
Grassley
Helms
Hutchinson
Jeffords
Kyl
McCain
McConnell
Murkowski
Nickles
Roberts
Sessions
Smith (NH)
Smith (OR)
Stevens
Thomas
NOT VOTING--3
Bennett
Inouye
Moynihan
The motion to lay on the table the amendment (No. 2287) was agreed
to.
Mrs. HUTCHISON. Mr. President, I move to reconsider the vote.
Mr. COVERDELL. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
CHANGE OF VOTE
Mr. ASHCROFT. On rollcall vote 85, I voted no. It was my intention to
vote yea. Therefore, I ask unanimous consent I be permitted to have a
change of my vote reflected in the Record. It in no way changes the
outcome of the vote. I did not note it was a motion to table rather
than the substance of the amendment.
The PRESIDING OFFICER. Without objection, it is so ordered.
(The foregoing tally has been changed to reflect the above order.)
Mr. HOLLINGS. Mr. President, I rise in support of the Hutchison,
Lott, and Breaux amendment to S. 414. This amendment reflects a fair
and reasoned compromise among the various interests affected by the
bill. While I am no great fan of deregulation, I do believe that it is
necessary to balance the interests affected by the bill in order not to
adversely impact or destroy any particular sector. I am particularly
pleased that the amendment preserves the Federal Maritime Commission
(FMC) as an independent agency to oversee our waterborne foreign
commerce.
As introduced and reported out of Committee, S. 414 would have merged
the FMC and Surface Transportation Board (STB) into a new entity to be
known as the Intermodal Transportation Board (ITB), placed within the
Department of Transportation (DOT). The Hutchison, Lott, and Breaux
amendment alleviates several problems with this approach.
In the first place, there are no overlaps in jurisdiction or
functions between the FMC and the STB that in any way hamper effective
regulation. There are simply no significant synergies between the FMC's
mandate to protect U.S. international ocean commerce and the STB's
responsibilities with respect to domestic railroad mergers, rate
regulation, and the like. Moreover, given the two vastly different
constituencies and the two entirely different systems of regulation,
there would have been a continuing
[[Page S3312]]
struggle to determine priorities and to allocate scarce resources
within a merged agency. Lastly, even though there might be some
marginal savings in administrative expenses from such a merger, these
would be offset by the more substantial costs of combining and
relocating the two agencies. I understand that when the FMC was
required by the General Services Administration to relocate in 1992,
the moving costs to the government were $1 million.
The Congressional Budget Office (CBO) has determined that if the two
agencies were merged, the ``ongoing costs to carry out the new board's
responsibilities would be about the same as those incurred by the FMC
and the STB under current law.'' Clearly then, the combining of these
two agencies could not be justified by any cost savings that would
accrue to the government.
I would also note that during the ocean shipping reform process, the
vast majority of the commenters have supported an independent, free-
standing agency to oversee our waterborne foreign commerce. Those
sentiments were initially expressed by the South Carolina State Ports
Authority and have subsequently been endorsed by many others. This
includes the three U.S. shipping companies who otherwise supported the
bill but stated that ``the Federal Maritime Commission has done a
superb job,'' and ``[o]ur strong preference would be to preserve the
agency's structure as an independent agency.'' Others who joined in
support of an independent FMC include: the International Longshoremen's
and Warehousemen's Union; the Transportation Trades Department, AFL-
CIO; the National Customs Brokers & Forwarders Association of America,
Inc.; the NY/NJ Foreign Freight Forwarders and Brokers Association; the
Council of European and Japanese National Shipowners' Association; and
the American Association of Port Authorities, as well as many
individual port authorities. Further, it is my understanding that the
coalition supporting this amendment supports, in toto, the retention of
the FMC in its present form. A change in the agency's structure could
serve to fracture that fragile coalition of support for the amendment.
Another reason I support the amendment is that merging the FMC into
the STB would have sent the wrong message to our trading partners--
i.e., that the new agency would be constrained from taking direct and
immediate action against unfair foreign shipping practices. The FMC has
been able to effectively combat unfair trading practices of foreign
governments largely because of its status as an independent agency. The
agency has an international reputation for aggressively and swiftly
addressing restrictive shipping practices without the threat of
diplomatic interference or retaliation in other sectors. In fact, I
would hope that some of our other trade agencies could learn a thing or
two from the FMC. Both the Department of State and DOT regularly cite
the FMC's independence to persuade foreign governments that maritime
issues must be addressed directly and expeditiously. In fact, Admiral
Herberger, former Administrator of the Maritime Administration (MarAd),
testified before the House Appropriations Subcommittee that the FMC's
independent status has been critical to MarAd's success in negotiations
with foreign governments. Also, in his August 5, 1997, letter to the
Japanese Ministry of Transport, Secretary of Transportation Rodney
Slater cited the FMC's authority to impose sanctions while urging Japan
to reform its port practices.
The agency's recent actions against Japanese port restrictions are a
perfect example of its successful accomplishments. The agency took
decisive action to address Japanese intransigence on easing
restrictions which impede the operations of U.S. carriers. As an
independent agency, the FMC did not have to overcome the hurdles or
various pressures imposed by other Executive branch departments within
the Administration that have competing interests. And this body, by a
100 to zero vote, in S. Res. 140, endorsed the action taken by the FMC
to respond to the unfair practices of Japan.
Supporting this amendment and the FMC ensures that the agency's
effectiveness will not be impeded, and sends the right message to our
trading partners: that the U.S. Congress endorses an aggressive stance
against foreign-imposed restrictions on open competition in shipping.
I would further note that by retaining the FMC as an independent
agency, the amendment alleviates the concern of some that merging the
FMC and STB into a new entity could violate the Appointments Clause of
the Constitution, U.S. Const. Art. II, Sec. 2, cl. 2, to the extent
that STB members would be accruing new responsibilities unrelated to
those for which they were appointed and confirmed, and could
accordingly subject the new agency to challenges that it is not legally
constituted.
The amendment offered by Senators Hutchison, Lott, and Breaux
corrects a major and potentially disastrous flaw in S. 414. I support
this amendment enthusiastically.
(At the request of Mr. Daschle the following statement was ordered to
be printed in the Record.)
Mr. INOUYE. Mr. President, I would like to join my colleagues
in support of the Hutchison amendment to S. 414, the Ocean Shipping
Reform Act of 1998. I believe that this amendment further improves upon
the bill as reported out of the Commerce Committee and takes into
account and alleviates many of the concerns raised by interested
parties who may be affected by the bill. As is true with all
compromises, you cannot please everybody. Nonetheless, I believe this
amendment represents a workable solution to the regulation of our
waterborne foreign commerce and should serve us well for many years to
come. I would like to commend my Chairwoman, Senator Hutchison, for her
effort in moving this bill forward, and also thank Senators Breaux,
Lott, and Gorton for their invaluable imput into the process.
I am pleased to note that the bill preserves antitrust immunity for
the conference system which has been an integral part of our ocean
transportation regime since 1916. While it may be best for everyone if
the antitrust laws were applicable on a global basis, it is unrealistic
to believe that we could achieve a global recognition of the value and
utility of the Sherman Act. However, the Shipping Acts of 1916 and 1984
balanced the inability to apply our antitirust laws to foreign
corporations, with a realistic approach allowing us to operate in
comity with international shipping regulatory practices, and the need
to protect our citizens from potential abuses brought on by a lack of
antitrust law enforcement.
This bill, however, makes several changes to the conference system to
make it more ``user-friendly'' for its shipper customers. For example,
the bill requires shipping conferences to allow their members to offer
rates that are different than those of the conference--so-called
``independent action.'' As a result, individual conference carriers can
offer their own service contracts unimpeded by conference action. I am
further pleased that the notice requirement for all independent action
has been reduced from 10 business days to five calendar days. This will
ensure that independently negotiated rates or service contracts will
quickly become effective. I also support the prohibition against
conferences requiring their members to disclose service contract
negotiations.
The bill as reported out of committee treated all service contracts
equally. Subsequently, there were several attempts to develop a
bifurcated treatment for service contracts, with one set of rules
governing carrier agreement service contracts and another dealing with
individual carrier contracts. I am pleased that the current amendment
returns to a version more closely resembling that which was reported
out of committee and, more importantly, treating all service contracts
the same. While there was some merit to the bifurcated treatment
approach, it may have been very difficult to have implemented in
practice.
The amendment will require that all service contracts be filed
confidentially with the Commission, that they contain certain essential
terms, and that a limited number of those terms be published and made
available to the general public. I believe that this compromise
represents the best approach to service contracting. It allows carriers
and shippers a certain degree of confidentiality with respect to the
bargains they have struck, while at the same time informing the general
public of the types of arrangements being
[[Page S3313]]
made for certain commodities, for certain minimum volumes, in specific
trade lanes. I also believe that the continued filing of the actual
contracts with the Federal Maritime Commission ("FMC") will enable it
to monitor them and take appropriate action if necessary. It will also
help the U.S. port community in monitoring trade developments and
reacting accordingly.
Like many of you, I am particularly pleased to see that the amendment
maintains the FMC as an independent agency overseeing the ocean
transportation industry. The Commission has time and again proven its
worth in administering Congress' system of regulation and combating
unfair foreign shipping practices, most recently in Japan. And the
Senate unanimously backed the FMC in its action to address the unfair
practices of Japan in passing S. Res. 140. The Commission has developed
considerable expertise in implementing the Shipping Act of 1984. It
will now be able to bring this expertise to bear on the new era of
ocean shipping reform engendered by this bill.
Another aspect of this bill that is particularly commendable is the
new provision dealing with the disclosure of certain terms of service
contracts to labor organizations. A labor organization which is party
to a collective bargaining agreement that includes an ocean common
carrier now has a mechanism for obtaining information concerning
movements of cargo within port areas and the assignment of certain work
within those areas. It is my understanding that this type of
information is especially relevant to labor organizations and this bill
should ensure that they will have easy access to it. This information
will enable them to make sure that the terms of their collective
bargaining agreement are complied with.
This amendment, in my opinion, achieves a balance in S. 414 which
provides the best possible compromise among the broad array of
interests in shipping. It has not been easy to balance the many
disseparate interests involved, but I think that we have reached an
approach which accomodates many of these interests. It fosters one of
the bill's primary goals of stimulating U.S. exports through a more
efficient and market-reliant ocean transportation system. It provides
for a more effective system of industry oversight, regulating where we
need to and not regulating where we do not. And it keeps the FMC as an
independent agency, unfettered by political or other influences as it
performs its critical international trade functions. I support this
amendment, and urge my colleagues to do the same.
The PRESIDING OFFICER (Mr. Roberts). The clerk will read S. 414 for
the third time.
The legislative clerk read as follows:
A bill (S. 414) to amend the Shipping Act of 1984 to
encourage competition and international shipping and growth
of United States imports and exports.
The PRESIDING OFFICER. Under the previous order, the bill is passed.
The bill (S. 414), as amended, was passed, as follows:
S. 414
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Ocean Shipping Reform Act of
1998''.
SEC. 2. EFFECTIVE DATE.
Except as otherwise expressly provided in this Act, this
Act and the amendments made by this Act take effect May 1,
1999.
TITLE I--AMENDMENTS TO THE SHIPPING ACT OF 1984
SEC. 101. PURPOSE.
Section 2 of the Shipping Act of 1984 (46 U.S.C. App. 1701)
is amended by--
(1) striking ``and'' after the semicolon in paragraph (2);
(2) striking ``needs.'' in paragraph (3) and inserting
``needs; and'';
(3) adding at the end thereof the following:
``(4) to promote the growth and development of United
States exports through competitive and efficient ocean
transportation and by placing a greater reliance on the
marketplace.''.
SEC. 102. DEFINITIONS.
Section 3 of the Shipping Act of 1984 (46 U.S.C. App. 1702)
is amended by--
(1) striking ``the government under whose registry the
vessels of the carrier operate;'' in paragraph (8) and
inserting ``a government;'';
(2) striking paragraph (9) and inserting the following:
``(9) `deferred rebate' means a return by a common carrier
of any portion of freight money to a shipper as a
consideration for that shipper giving all, or any portion, of
its shipments to that or any other common carrier over a
fixed period of time, the payment of which is deferred beyond
the completion of service for which it is paid, and is made
only if the shipper has agreed to make a further shipment or
shipments with that or any other common carrier.'';
(3) striking paragraph (10) and redesignating paragraphs
(11) through (27) as paragraphs (10) through (26);
(4) striking ``in an unfinished or semifinished state that
require special handling moving in lot sizes too large for a
container,'' in paragraph (10), as redesignated;
(5) striking ``paper board in rolls, and paper in rolls.''
in paragraph (10) as redesignated and inserting ``paper and
paper board in rolls or in pallet or skid-sized sheets.'';
(6) striking ``conference, other than a service contract or
contract based upon time-volume rates,'' in paragraph (13) as
redesignated and inserting ``agreement'';
(7) striking ``conference.'' in paragraph (13) as
redesignated and inserting ``agreement and the contract
provides for a deferred rebate arrangement.'';
(8) by striking ``carrier.'' in paragraph (14) as
redesignated and inserting ``carrier, or in connection with a
common carrier and a water carrier subject to subchapter II
of chapter 135 of title 49, United States Code.'';
(9) striking paragraph (16) as redesignated and
redesignating paragraphs (17) through (26) as redesignated as
paragraphs (16) through (25), respectively;
(10) striking paragraph (17), as redesignated, and
inserting the following:
``(17) `ocean transportation intermediary' means an ocean
freight forwarder or a non-vessel-operating common carrier.
For purposes of this paragraph, the term--
``(A) `ocean freight forwarder' means a person that--
``(i) in the United States, dispatches shipments from the
United States via a common carrier and books or otherwise
arranges space for those shipments on behalf of shippers; and
``(ii) processes the documentation or performs related
activities incident to those shipments; and
``(B) `non-vessel-operating common carrier' means a common
carrier that does not operate the vessels by which the ocean
transportation is provided, and is a shipper in its
relationship with an ocean common carrier.'';
(11) striking paragraph (19), as redesignated and inserting
the following:
``(19) `service contract' means a written contract, other
than a bill of lading or a receipt, between one or more
shippers and an individual ocean common carrier or an
agreement between or among ocean common carriers in which the
shipper or shippers makes a commitment to provide a certain
volume or portion of cargo over a fixed time period, and the
ocean common carrier or the agreement commits to a certain
rate or rate schedule and a defined service level, such as
assured space, transit time, port rotation, or similar
service features. The contract may also specify provisions in
the event of nonperformance on the part of any party.''; and
(12) striking paragraph (21), as redesignated, and
inserting the following:
``(21) `shipper' means--
``(A) a cargo owner;
``(B) the person for whose account the ocean transportation
is provided;
``(C) the person to whom delivery is to be made;
``(D) a shippers' association; or
``(E) an ocean transportation intermediary, as defined in
paragraph (17)(B) of this section, that accepts
responsibility for payment of all charges applicable under
the tariff or service contract.''.
SEC. 103. AGREEMENTS WITHIN THE SCOPE OF THE ACT.
(a) Ocean Common Carriers.--Section 4(a) of the Shipping
Act of 1984 (46 U.S.C. App. 1703(a)) is amended by--
(1) striking ``operators or non-vessel-operating common
carriers;'' in paragraph (5) and inserting ``operators;'';
(2) striking ``and'' in paragraph (6) and inserting ``or'';
and
(3) striking paragraph (7) and inserting the following:
``(7) discuss and agree on any matter related to service
contracts.''.
(b) Marine Terminal Operators.--Section 4(b) of that Act
(46 U.S.C. App. 1703(b)) is amended by--
(1) striking ``(to the extent the agreements involve ocean
transportation in the foreign commerce of the United
States)'';
(2) striking ``and'' in paragraph (1) and inserting ``or'';
and
(3) striking ``arrangements.'' in paragraph (2) and
inserting ``arrangements, to the extent that such agreements
involve ocean transportation in the foreign commerce of the
United States.''.
SEC. 104. AGREEMENTS.
(a) In General.--Section 5 of the Shipping Act of 1984 (46
U.S.C. App. 1704) is amended by--
(1) striking subsection (b)(8) and inserting the following:
``(8) provide that any member of the conference may take
independent action on any rate or service item upon not more
than 5 calendar days' notice to the conference and that,
except for exempt commodities not published in the conference
tariff, the conference will include the new rate or service
[[Page S3314]]
item in its tariff for use by that member, effective no later
than 5 calendar days after receipt of the notice, and by any
other member that notifies the conference that it elects to
adopt the independent rate or service item on or after its
effective date, in lieu of the existing conference tariff
provision for that rate or service item;
(2) redesignating subsections (c) through (e) as
subsections (d) through (f); and
(3) inserting after subsection (b) the following:
``(c) Ocean Common Carrier Agreements.--An ocean common
carrier agreement may not--
``(1) prohibit or restrict a member or members of the
agreement from engaging in negotiations for service contracts
with 1 or more shippers;
``(2) require a member or members of the agreement to
disclose a negotiation on a service contract, or the terms
and conditions of a service contract, other than those terms
or conditions required to be published under section 8(c)(3)
of this Act; or
``(3) adopt mandatory rules or requirements affecting the
right of an agreement member or agreement members to
negotiate and enter into service contracts.
An agreement may provide authority to adopt voluntary
guidelines relating to the terms and procedures of an
agreement member's or agreement members' service contracts if
the guidelines explicitly state the right of members of the
agreement not to follow the guidelines. These guidelines
shall be confidentially submitted to the Commission.''.
(b) Application.--
(1) Subsection (e) of section 5 of that Act, as
redesignated, is amended by striking ``this Act, the Shipping
Act, 1916, and the Intercoastal Shipping Act, 1933, do'' and
inserting ``this Act does''; and
(2) Subsection (f) of section 5 of that Act, as
redesignated, is amended by--
(A) striking ``and the Shipping Act, 1916, do'' and
inserting ``does'';
(B) striking ``or the Shipping Act, 1916,''; and
(C) inserting ``or are essential terms of a service
contract'' after ``tariff''.
SEC. 105. EXEMPTION FROM ANTITRUST LAWS.
Section 7 of the Shipping Act of 1984 (46 U.S.C. App. 1706)
is amended by--
(1) inserting ``or publication'' in paragraph (2) of
subsection (a) after ``filing'';
(2) striking ``or'' at the end of subsection (b)(2);
(3) striking ``States.'' at the end of subsection (b)(3)
and inserting ``States; or''; and
(4) adding at the end of subsection (b) the following:
``(4) to any loyalty contract.''.
SEC. 106. TARIFFS.
(a) In General.--Section 8(a) of the Shipping Act of 1984
(46 U.S.C. App. 1707(a)) is amended by--
(1) inserting ``new assembled motor vehicles,'' after
``scrap,'' in paragraph (1);
(2) striking ``file with the Commission, and'' in paragraph
(1);
(3) striking ``inspection,'' in paragraph (1) and inserting
``inspection in an automated tariff system,'';
(4) striking ``tariff filings'' in paragraph (1) and
inserting ``tariffs'';
(5) striking ``freight forwarder'' in paragraph (1)(C) and
inserting ``transportation intermediary, as defined in
section 3(17)(A),'';
(6) striking ``and'' at the end of paragraph (1)(D);
(7) striking ``loyalty contract,'' in paragraph (1)(E);
(8) striking ``agreement.'' in paragraph (1)(E) and
inserting ``agreement; and'';
(9) adding at the end of paragraph (1) the following:
``(F) include copies of any loyalty contract, omitting the
shipper's name.''; and
(10) striking paragraph (2) and inserting the following:
``(2) Tariffs shall be made available electronically to any
person, without time, quantity, or other limitation, through
appropriate access from remote locations, and a reasonable
charge may be assessed for such access. No charge may be
assessed a Federal agency for such access.''.
(b) Service Contracts.--Subsection (c) of that section is
amended to read as follows:
``(c) Service Contracts.--
``(1) In general.--An individual ocean common carrier or an
agreement between or among ocean common carriers may enter
into a service contract with one or more shippers subject to
the requirements of this Act. The exclusive remedy for a
breach of a contract entered into under this subsection shall
be an action in an appropriate court, unless the parties
otherwise agree. In no case may the contract dispute
resolution forum be controlled by or in any way affiliated
with a controlled carrier as defined in section 3(8) of this
Act, or by the government which owns or controls the carrier.
``(2) Filing requirements.--Except for service contracts
dealing with bulk cargo, forest products, recycled metal
scrap, new assembled motor vehicles, waste paper, or paper
waste, each contract entered into under this subsection by an
individual ocean common carrier or an agreement shall be
filed confidentially with the Commission. Each service
contract shall include the following essential terms--
``(A) the origin and destination port ranges;
``(B) the origin and destination geographic areas in the
case of through intermodal movements;
``(C) the commodity or commodities involved;
``(D) the minimum volume or portion;
``(E) the line-haul rate;
``(F) the duration;
``(G) service commitments; and
``(H) the liquidated damages for nonperformance, if any.
``(3) Publication of certain terms.--When a service
contract is filed confidentially with the Commission, a
concise statement of the essential terms described in
paragraphs 2 (A), (C), (D), and (F) shall be published and
made available to the general public in tariff format.
``(4) Disclosure of certain terms.--
``(A) An ocean common carrier, which is a party to or is
subject to the provisions of a collective bargaining
agreement with a labor organization, shall, in response to a
written request by such labor organization, state whether it
is responsible for the following work at dock areas and
within port areas in the United States with respect to cargo
transportation under a service contract described in
paragraph (1) of this subsection--
``(i) the movement of the shipper's cargo on a dock area or
within the port area or to or from railroad cars on a dock
area or within the port area;
``(ii) the assignment of intraport carriage of the
shipper's cargo between areas on a dock or within the port
area;
``(iii) the assignment of the carriage of the shipper's
cargo between a container yard on a dock area or within the
port area and a rail yard adjacent to such container yard;
and
``(iv) the assignment of container freight station work and
container maintenance and repair work performed at a dock
area or within the port area.
``(B) The common carrier shall provide the information
described in subparagraph (A) of this paragraph to the
requesting labor organization within a reasonable period of
time.
``(C) This paragraph requires the disclosure of information
by an ocean common carrier only if there exists an applicable
and otherwise lawful collective bargaining agreement which
pertains to that carrier. No disclosure made by an ocean
common carrier shall be deemed to be an admission or
agreement that any work is covered by a collective bargaining
agreement. Any dispute regarding whether any work is covered
by a collective bargaining agreement and the responsibility
of the ocean common carrier under such agreement shall be
resolved solely in accordance with the dispute resolution
procedures contained in the collective bargaining agreement
and the National Labor Relations Act, and without reference
to this paragraph.
``(D) Nothing in this paragraph shall have any effect on
the lawfulness or unlawfulness under this Act, the National
Labor Relations Act, the Taft-Hartley Act, the Federal Trade
Commission Act, the antitrust laws, or any other Federal or
State law, or any revisions or amendments thereto, of any
collective bargaining agreement or element thereof, including
any element that constitutes an essential term of a service
contract under this subsection.
``(E) For purposes of this paragraph the terms `dock area'
and `within the port area' shall have the same meaning and
scope as in the applicable collective bargaining agreement
between the requesting labor organization and the carrier.''.
(c) Rates.--Subsection (d) of that section is amended by--
(1) striking the subsection caption and inserting ``(d)
Tariff Rates.--'';
(2) striking ``30 days after filing with the Commission.''
in the first sentence and inserting ``30 calendar days after
publication.'';
(3) inserting ``calendar'' after ``30'' in the next
sentence; and
(4) striking ``publication and filing with the
Commission.'' in the last sentence and inserting
``publication.''.
(d) Refunds.--Subsection (e) of that section is amended
by--
(1) striking ``tariff of a clerical or administrative
nature or an error due to inadvertence'' in paragraph (1) and
inserting a comma; and
(2) striking ``file a new tariff,'' in paragraph (1) and
inserting ``publish a new tariff, or an error in quoting a
tariff,'';
(3) striking ``refund, filed a new tariff with the
Commission'' in paragraph (2) and inserting ``refund for an
error in a tariff or a failure to publish a tariff, published
a new tariff'';
(4) inserting ``and'' at the end of paragraph (2); and
(5) striking paragraph (3) and redesignating paragraph (4)
as paragraph (3).
(e) Marine Terminal Operator Schedules.--Subsection (f) of
that section is amended to read as follows:
``(f) Marine Terminal Operator Schedules.--A marine
terminal operator may make available to the public, subject
to section 10(d) of this Act, a schedule of rates,
regulations, and practices pertaining to receiving,
delivering, handling, or storing property at its marine
terminal. Any such schedule made available to the public
shall be enforceable by an appropriate court as an implied
contract without proof of actual knowledge of its
provisions.''.
(f) Automated Tariff System Requirements; Form.--Section 8
of that Act is amended by adding at the end the following:
``(g) Regulations.--The Commission shall by regulation
prescribe the requirements for the accessibility and accuracy
of automated tariff systems established under this section.
The Commission may, after periodic review,
[[Page S3315]]
prohibit the use of any automated tariff system that fails to
meet the requirements established under this section. The
Commission may not require a common carrier to provide a
remote terminal for access under subsection (a)(2). The
Commission shall by regulation prescribe the form and manner
in which marine terminal operator schedules authorized by
this section shall be published.''.
SEC. 107. AUTOMATED TARIFF FILING AND INFORMATION SYSTEM.
Section 502 of the High Seas Driftnet Fisheries Enforcement
Act (46 U.S.C. App. 1707a) is repealed.
SEC. 108. CONTROLLED CARRIERS.
Section 9 of the Shipping Act of 1984 (46 U.S.C. App. 1708)
is amended by--
(1) striking ``service contracts filed with the
Commission'' in the first sentence of subsection (a) and
inserting ``service contracts, or charge or assess rates,'';
(2) striking ``or maintain'' in the first sentence of
subsection (a) and inserting ``maintain, or enforce'';
(3) striking ``disapprove'' in the third sentence of
subsection (a) and inserting ``prohibit the publication or
use of''; and
(4) striking ``filed by a controlled carrier that have been
rejected, suspended, or disapproved by the Commission'' in
the last sentence of subsection (a) and inserting ``that have
been suspended or prohibited by the Commission'';
(5) striking ``may take into account appropriate factors
including, but not limited to, whether--'' in subsection (b)
and inserting ``shall take into account whether the rates or
charges which have been published or assessed or which would
result from the pertinent classifications, rules, or
regulations are below a level which is fully compensatory to
the controlled carrier based upon that carrier's actual costs
or upon its constructive costs. For purposes of the preceding
sentence, the term `constructive costs' means the costs of
another carrier, other than a controlled carrier, operating
similar vessels and equipment in the same or a similar trade.
The Commission may also take into account other appropriate
factors, including but not limited to, whether--'';
(6) striking paragraph (1) of subsection (b) and
redesignating paragraphs (2), (3), and (4) as paragraphs (1),
(2), and (3), respectively;
(7) striking ``filed'' in paragraph (1) as redesignated and
inserting ``published or assessed'';
(8) striking ``filing with the Commission.'' in subsection
(c) and inserting ``publication.'';
(9) striking ``Disapproval of Rates.--'' in subsection (d)
and inserting ``Prohibition of Rates.--Within 120 days after
the receipt of information requested by the Commission under
this section, the Commission shall determine whether the
rates, charges, classifications, rules, or regulations of a
controlled carrier may be unjust and unreasonable.'';
(10) striking ``filed'' in subsection (d) and inserting
``published or assessed'';
(11) striking ``may issue'' in subsection (d) and inserting
``shall issue'';
(12) striking ``disapproved.'' in subsection (d) and
inserting ``prohibited.'';
(13) striking ``60'' in subsection (d) and inserting
``30'';
(14) inserting ``controlled'' after ``affected'' in
subsection (d);
(15) striking ``file'' in subsection (d) and inserting
``publish'';
(16) striking ``disapproval'' in subsection (e) and
inserting ``prohibition'';
(17) inserting ``or'' after the semicolon in subsection
(f)(1);
(18) striking paragraphs (2), (3), and (4) of subsection
(f); and
(19) redesignating paragraph (5) of subsection (f) as
paragraph (2).
SEC. 109. PROHIBITED ACTS.
(a) Section 10(b) of the Shipping Act of 1984 (46 U.S.C.
App. 1709(b)) is amended by--
(1) striking paragraphs (1) through (3);
(2) redesignating paragraph (4) as paragraph (1);
(3) inserting after paragraph (1), as redesignated, the
following:
``(2) provide service in the liner trade that--
``(A) is not in accordance with the rates, charges,
classifications, rules, and practices contained in a tariff
published or a service contract entered into under section 8
of this Act unless excepted or exempted under section 8(a)(1)
or 16 of this Act; or
``(B) is under a tariff or service contract which has been
suspended or prohibited by the Commission under section 9 of
this Act or the Foreign Shipping Practices Act of 1988 (46
U.S.C. App. 1710a);'';
(4) redesignating paragraphs (5) and (6) as paragraphs (3)
and (4), respectively;
(5) striking ``except for service contracts,'' in paragraph
(4), as redesignated, and inserting ``for service pursuant to
a tariff,'';
(6) striking ``rates;'' in paragraph (4)(A), as
redesignated, and inserting ``rates or charges;'';
(7) inserting after paragraph (4), as redesignated, the
following:
``(5) for service pursuant to a service contract, engage in
any unfair or unjustly discriminatory practice in the matter
of rates or charges with respect to any port;'';
(8) redesignating paragraphs (7) and (8) as paragraphs (6)
and (7), respectively;
(9) striking paragraph (6) as redesignated and inserting
the following:
``(6) use a vessel or vessels in a particular trade for the
purpose of excluding, preventing, or reducing competition by
driving another ocean common carrier out of that trade;'';
(10) striking paragraphs (9) through (13) and inserting the
following:
``(8) for service pursuant to a tariff, give any undue or
unreasonable preference or advantage or impose any undue or
unreasonable prejudice or disadvantage;
``(9) for service pursuant to a service contract, give any
undue or unreasonable preference or advantage or impose any
undue or unreasonable prejudice or disadvantage with respect
to any port;
``(10) unreasonably refuse to deal or negotiate;'';
(11) redesignating paragraphs (14), (15), and (16) as
paragraphs (11), (12), and (13), respectively;
(12) striking ``a non-vessel-operating common carrier'' in
paragraphs (11) and (12) as redesignated and inserting ``an
ocean transportation intermediary'';
(13) striking ``sections 8 and 23'' in paragraphs (11) and
(12) as redesignated and inserting ``sections 8 and 19'';
(14) striking ``or in which an ocean transportation
intermediary is listed as an affiliate'' in paragraph (12),
as redesignated;
(15) striking ``Act;'' in paragraph (12), as redesignated,
and inserting ``Act, or with an affiliate of such ocean
transportation intermediary;''
(16) striking ``paragraph (16)'' in the matter appearing
after paragraph (13), as redesignated, and inserting
``paragraph (13)''; and
(17) inserting ``the Commission,'' after ``United States,''
in such matter.
(b) Section 10(c) of the Shipping Act of 1984 (46 U.S.C.
App. 1709(c)) is amended by--
(1) striking ``non-ocean carriers'' in paragraph (4) and
inserting ``non-ocean carriers, unless such negotiations and
any resulting agreements are not in violation of the
antitrust laws and are consistent with the purposes of this
Act'';
(2) striking ``freight forwarder'' in paragraph (5) and
inserting ``transportation intermediary, as defined by
section 3(17)(A) of this Act,'';
(3) striking ``or'' at the end of paragraph (5);
(4) striking ``contract.'' in paragraph (6) and inserting
``contract;''; and
(5) adding at the end the following:
``(7) for service pursuant to a service contract, engage in
any unjustly discriminatory practice in the matter of rates
or charges with respect to any locality, port, or persons due
to those persons' status as shippers' associations or ocean
transportation intermediaries; or
``(8) for service pursuant to a service contract, give any
undue or unreasonable preference or advantage or impose any
undue or unreasonable prejudice or disadvantage with respect
to any locality, port, or persons due to those persons'
status as shippers' associations or ocean transportation
intermediaries;''.
(c) Section 10(d) of the Shipping Act of 1984 (46 U.S.C.
App. 1709(d)) is amended by--
(1) striking ``freight forwarders,'' and inserting
``transportation intermediaries,'';
(2) striking ``freight forwarder,'' in paragraph (1) and
inserting ``transportation intermediary,'';
(3) striking ``subsection (b)(11), (12), and (16)'' and
inserting ``subsections (b)(10) and (13)''; and
(4) adding at the end thereof the following:
``(4) No marine terminal operator may give any undue or
unreasonable preference or advantage or impose any undue or
unreasonable prejudice or disadvantage with respect to any
person.
``(5) The prohibition in subsection (b)(13) of this section
applies to ocean transportation intermediaries, as defined by
section 3(17)(A) of this Act.''.
SEC. 110. COMPLAINTS, INVESTIGATIONS, REPORTS, AND
REPARATIONS.
Section 11(g) of the Shipping Act of 1984 (46 U.S.C. App.
1710(g)) is amended by--
(1) striking ``section 10(b)(5) or (7)'' and inserting
``section 10(b)(3) or (6)''; and
(2) striking ``section 10(b)(6)(A) or (B)'' and inserting
``section 10(b)(4)(A) or (B).''.
SEC. 111. FOREIGN SHIPPING PRACTICES ACT OF 1988.
Section 10002 of the Foreign Shipping Practices Act of 1988
(46 U.S.C. App. 1710a) is amended by--
(1) striking `` `non-vessel-operating common carrier','' in
subsection (a)(1) and inserting `` `ocean transportation
intermediary','';
(2) striking ``forwarding and'' in subsection (a)(4);
(3) striking ``non-vessel-operating common carrier'' in
subsection (a)(4) and inserting ``ocean transportation
intermediary services and'';
(4) striking ``freight forwarder,'' in subsections (c)(1)
and (d)(1) and inserting ``transportation intermediary,'';
(5) striking ``filed with the Commission,'' in subsection
(e)(1)(B) and inserting ``and service contracts,'';
(6) inserting ``and service contracts'' after ``tariffs''
the second place it appears in subsection (e)(1)(B); and
(7) striking ``(b)(5)'' each place it appears in subsection
(h) and inserting ``(b)(6)''.
SEC. 112. PENALTIES.
(a) Section 13(a) of the Shipping Act of 1984 (46 U.S.C.
App. 1712(a)) is amended by adding at the end thereof the
following: ``The amount of any penalty imposed upon a common
carrier under this subsection shall constitute a lien upon
the vessels operated by that common carrier and any such
vessel
[[Page S3316]]
may be libeled therefore in the district court of the United
States for the district in which it may be found.''.
(b) Section 13(b) of the Shipping Act of 1984 (46 U.S.C.
App. 1712(b)) is amended by--
(1) striking ``section 10(b)(1), (2), (3), (4), or (8)'' in
paragraph (1) and inserting ``section 10(b)(1), (2), or
(7)'';
(2) by redesignating paragraphs (4), (5), and (6) as
paragraphs (5), (6), and (7), respectively;
(3) inserting before paragraph (5), as redesignated, the
following:
``(4) If the Commission finds, after notice and an
opportunity for a hearing, that a common carrier has failed
to supply information ordered to be produced or compelled by
subpoena under section 12 of this Act, the Commission may
request that the Secretary of the Treasury refuse or revoke
any clearance required for a vessel operated by that common
carrier. Upon request by the Commission, the Secretary of the
Treasury shall, with respect to the vessel concerned, refuse
or revoke any clearance required by section 4197 of the
Revised Statutes of the United States (46 U.S.C. App. 91).'';
and
(4) striking ``paragraphs (1), (2), and (3)'' in paragraph
(6), as redesignated, and inserting ``paragraphs (1), (2),
(3), and (4)''.
(c) Section 13(f)(1) of the Shipping Act of 1984 (46 U.S.C.
App. 1712(f)(1)) is amended by--
(1) striking ``or (b)(4)'' and inserting ``or (b)(2)'';
(2) striking ``(b)(1), (4)'' and inserting ``(b)(1), (2)'';
and
(3) adding at the end thereof the following ``Neither the
Commission nor any court shall order any person to pay the
difference between the amount billed and agreed upon in
writing with a common carrier or its agent and the amount set
fourth in any tariff or service contract by that common
carrier for the transportation service provided.''.
SEC. 113. REPORTS AND CERTIFICATES.
Section 15 of the Shipping Act of 1984 (46 U.S.C. App.
1714) is amended by--
(1) striking ``and certificates'' in the section heading;
(2) striking ``(a) Reports.--'' in the subsection heading
for subsection (a); and
(3) striking subsection (b).
SEC. 114. EXEMPTIONS.
Section 16 of the Shipping Act of 1984 (46 U.S.C. App.
1715) is amended by striking ``substantially impair effective
regulation by the Commission, be unjustly discriminatory,
result in a substantial reduction in competition, or be
detrimental to commerce.'' and inserting ``result in
substantial reduction in competition or be detrimental to
commerce.''.
SEC. 115. AGENCY REPORTS AND ADVISORY COMMISSION.
Section 18 of the Shipping Act of 1984 (46 U.S.C. App.
1717) is repealed.
SEC. 116. OCEAN FREIGHT FORWARDERS.
Section 19 of the Shipping Act of 1984 (46 U.S.C. App.
1718) is amended by--
(1) striking ``freight forwarders'' in the section caption
and inserting ``transportation intermediaries'';
(2) striking subsection (a) and inserting the following:
``(a) License.--No person in the United States may act as
an ocean transportation intermediary unless that person holds
a license issued by the Commission. The Commission shall
issue an intermediary's license to any person that the
Commission determines to be qualified by experience and
character to act as an ocean transportation intermediary.'';
(3) redesignating subsections (b), (c), and (d) as
subsections (c), (d), and (e), respectively;
(4) inserting after subsection (a) the following:
``(b) Financial Responsibility.--
``(1) No person may act as an ocean transportation
intermediary unless that person furnishes a bond, proof of
insurance, or other surety in a form and amount determined by
the Commission to insure financial responsibility that is
issued by a surety company found acceptable by the Secretary
of the Treasury.
``(2) A bond, insurance, or other surety obtained pursuant
to this section--
``(A) shall be available to pay any order for reparation
issued pursuant to section 11 or 14 of this Act, or any
penalty assessed pursuant to section 13 of this Act;
``(B) may be available to pay any claim against an ocean
transportation intermediary arising from its transportation-
related activities described in section 3(17) of this Act
with the consent of the insured ocean transportation
intermediary and subject to review by the surety company, or
when the claim is deemed valid by the surety company after
the ocean transportation intermediary has failed to respond
to adequate notice to address the validity of the claim; and
``(C) shall be available to pay any judgment for damages
against an ocean transportation intermediary arising from its
transportation-related activities under section 3(17) of this
Act, provided the claimant has first attempted to resolve the
claim pursuant to subparagraph (B) of this paragraph and the
claim has not been resolved within a reasonable period of
time.
``(3) The Commission shall prescribe regulations for the
purpose of protecting the interests of claimants, ocean
transportation intermediaries, and surety companies with
respect to the process of pursuing claims against ocean
transportation intermediary bonds, insurance, or sureties
through court judgments. The regulations shall provide that a
judgment for monetary damages may not be enforced except to
the extent that the damages claimed arise from the
transportation-related activities of the insured ocean
transportation intermediary, as defined by the Commission.
``(4) An ocean transportation intermediary not domiciled in
the United States shall designate a resident agent in the
United States for receipt of service of judicial and
administrative process, including subpoenas.'';
(5) striking, each place such term appears--
(A) ``freight forwarder'' and inserting ``transportation
intermediary'';
(B) ``a forwarder's'' and inserting ``an intermediary's'';
(C) ``forwarder'' and inserting ``intermediary''; and
(D) ``forwarding'' and inserting ``intermediary'';
(6) striking ``a bond in accordance with subsection
(a)(2).'' in subsection (c), as redesignated, and inserting
``a bond, proof of insurance, or other surety in accordance
with subsection (b)(1).'';
(7) striking ``Forwarders.--'' in the caption of
subsection (e), as redesignated, and inserting
``Intermediaries.--'';
(8) striking ``intermediary'' the first place it appears in
subsection (e)(1), as redesignated and as amended by
paragraph (5)(A), and inserting ``intermediary, as defined in
section 3(17)(A) of this Act,'';
(9) striking ``license'' in paragraph (1) of subsection
(e), as redesignated, and inserting ``license, if required by
subsection (a),'';
(10) striking paragraph (3) of subsection (e), as
redesignated, and redesignating paragraph (4) as paragraph
(3); and
(11) adding at the end of subsection (e), as redesignated,
the following:
``(4) No conference or group of 2 or more ocean common
carriers in the foreign commerce of the United States that is
authorized to agree upon the level of compensation paid to an
ocean transportation intermediary, as defined in section
3(17)(A) of this Act, may--
``(A) deny to any member of the conference or group the
right, upon notice of not more than 5 calendar days, to take
independent action on any level of compensation paid to an
ocean transportation intermediary, as so defined; or
``(B) agree to limit the payment of compensation to an
ocean transportation intermediary, as so defined, to less
than 1.25 percent of the aggregate of all rates and charges
which are applicable under a tariff and which are assessed
against the cargo on which the intermediary services are
provided.''.
SEC. 117. CONTRACTS, AGREEMENTS, AND LICENSES UNDER PRIOR
SHIPPING LEGISLATION.
Section 20 of the Shipping Act of 1984 (46 U.S.C. App.
1719) is amended by--
(1) striking subsection (d) and inserting the following:
``(d) Effects on Certain Agreements and Contracts.--All
agreements, contracts, modifications, licenses, and
exemptions previously issued, approved, or effective under
the Shipping Act, 1916, or the Shipping Act of 1984, shall
continue in force and effect as if issued or effective under
this Act, as amended by the Ocean Shipping Reform Act of
1998, and all new agreements, contracts, and modifications to
existing, pending, or new contracts or agreements shall be
considered under this Act, as amended by the Ocean Shipping
Reform Act of 1998.'';
(2) inserting the following at the end of subsection (e):
``(3) The Ocean Shipping Reform Act of 1998 shall not
affect any suit--
``(A) filed before the effective date of that Act; or
``(B) with respect to claims arising out of conduct engaged
in before the effective date of that Act filed within 1 year
after the effective date of that Act.
``(4) Regulations issued by the Federal Maritime Commission
shall remain in force and effect where not inconsistent with
this Act, as amended by the Ocean Shipping Reform Act of
1998.''.
SEC. 118. SURETY FOR NON-VESSEL-OPERATING COMMON CARRIERS.
Section 23 of the Shipping Act of 1984 (46 U.S.C. App.
1721) is repealed.
TITLE II--AUTHORIZATION OF APPROPRIATIONS FOR THE FEDERAL MARITIME
COMMISSION
SEC. 201. AUTHORIZATION OF APPROPRIATIONS FOR FISCAL YEAR
1998.
There are authorized to be appropriated to the Federal
Maritime Commission, $15,000,000 for fiscal year 1998.
SEC. 202. FEDERAL MARITIME COMMISSION ORGANIZATION.
Section 102(d) of Reorganization Plan No. 7 of 1961 (75
Stat. 840) is amended to read as follows:
``(d) A vacancy or vacancies in the membership of
Commission shall not impair the power of the Commission to
execute its functions. The affirmative vote of a majority of
the members serving on the Commission is required to dispose
of any matter before the Commission.''.
SEC. 203. REGULATIONS.
Not later than March 1, 1999, the Federal Maritime
Commission shall prescribe final regulations to implement the
changes made by this Act.
[[Page S3317]]
TITLE III--AMENDMENTS TO OTHER SHIPPING AND MARITIME LAWS
SEC. 301. AMENDMENTS TO SECTION 19 OF THE MERCHANT MARINE
ACT, 1920.
(a) In General.--Section 19 of the Merchant Marine Act,
1920 (46 U.S.C. App. 876) is amended by--
(1) striking ``forwarding and'' in subsection (1)(b);
(2) striking ``non-vessel-operating common carrier
operations,'' in subsection (1)(b) and inserting ``ocean
transportation intermediary services and operations,'';
(3) striking ``methods or practices'' and inserting
``methods, pricing practices, or other practices'' in
subsection (1)(b);
(4) striking ``tariffs of a common carrier'' in subsection
7(d) and inserting ``tariffs and service contracts of a
common carrier'';
(5) striking ``use the tariffs of conferences'' in
subsections (7)(d) and (9)(b) and inserting ``use tariffs of
conferences and service contracts of agreements'';
(6) striking ``tariffs filed with the Commission'' in
subsection (9)(b) and inserting ``tariffs and service
contracts'';
(7) striking ``freight forwarder,'' each place it appears
and inserting ``transportation intermediary,''; and
(8) striking ``tariff'' each place it appears in subsection
(11) and inserting ``tariff or service contract''.
(b) Stylistic Conformity.--Section 19 of the Merchant
Marine Act, 1920 (46 U.S.C. App. 876), as amended by
subsection (a), is further amended by--
(1) redesignating subdivisions (1) through (12) as
subsections (a) through (l), respectively;
(2) redesignating subdivisions (a), (b), and (c) of
subsection (a), as redesignated, as paragraphs (1), (2), and
(3);
(3) redesignating subdivisions (a) through (d) of
subsection (f), as redesignated, as paragraphs (1) through
(4), respectively;
(4) redesignating subdivisions (a) through (e) of
subsection (g), as redesignated, as paragraphs (1) through
(5), respectively;
(5) redesignating clauses (i) and (ii) of subsection
(g)(4), as redesignated, as subparagraphs (A) and (B),
respectively;
(6) redesignating subdivisions (a) through (e) of
subsection (i), as redesignated, as paragraphs (1) through
(5), respectively;
(7) redesignating subdivisions (a) and (b) of subsection
(j), as redesignated, as paragraphs (1) and (2),
respectively;
(8) striking ``subdivision (c) of paragraph (1)'' in
subsection (c), as redesignated, and inserting ``subsection
(a)(3)'';
(9) striking ``paragraph (2)'' in subsection (c), as
redesignated, and inserting ``subsection (b)'';
(10) striking ``paragraph (1)(b)'' each place it appears
and inserting ``subsection (a)(2)'';
(11) striking ``subdivision (b),'' in subsection (g)(4), as
redesignated, and inserting ``paragraph (2),'';
(12) striking ``paragraph (9)(d)'' in subsection (j)(1), as
redesignated, and inserting ``subsection (i)(4)''; and
(13) striking ``paragraph (7)(d) or (9)(b)'' in subsection
(k), as redesignated, and inserting ``subsection (g)(4) or
(i)(2)''.
SEC. 302. TECHNICAL CORRECTIONS.
(a) Public Law 89-777.--Sections 2 and 3 of the Act of
November 6, 1966 (46 U.S.C. App. 817d and 817e) are amended
by striking ``they in their discretion'' each place it
appears and inserting ``it in its discretion''.
(b) Tariff Act of 1930.--Section 641(i) of the Tariff Act
of 1930 (19 U.S.C. 1641) is repealed.
TITLE IV--MERCHANT MARINER BENEFITS.
SEC. 401. MERCHANT MARINER BENEFITS.
(a) Benefits.--Part G of subtitle II, title 46, United
States Code, is amended by adding at the end the following
new chapter:
``CHAPTER 112--MERCHANT MARINER BENEFITS
``Sec.
``11201. Qualified service.
``11202. Documentation of qualified service.
``11203. Eligibility for certain veterans' benefits.
``11204. Processing fees.
``Sec. 11201. Qualified service
``For purposes of this chapter, a person engaged in
qualified service if, between August 16, 1945, and December
31, 1946, the person--
``(1) was a member of the United States merchant marine
(including the Army Transport Service and the Naval
Transportation Service) serving as a crewmember of a vessel
that was--
``(A) operated by the War Shipping Administration or the
Office of Defense Transportation (or an agent of the
Administration or Office);
``(B) operated in waters other than inland waters, the
Great Lakes, other lakes, bays, and harbors of the United
States;
``(C) under contract or charter to, or property of, the
Government of the United States; and
``(D) serving the Armed Forces; and
``(2) while so serving, was licensed or otherwise
documented for service as a crewmember of such a vessel by an
officer or employee of the United States authorized to
license or document the person for such service.
``Sec. 11202. Documentation of qualified service
``(a) Record of Service.--The Secretary, or in the case of
personnel of the Army Transport Service or the Naval
Transport Service, the Secretary of Defense, shall, upon
application--
``(1) issue a certificate of honorable discharge to a
person who, as determined by the respective Secretary,
engaged in qualified service of a nature and duration that
warrants issuance of the certificate; and
``(2) correct, or request the appropriate official of the
Federal Government to correct, the service records of the
person to the extent necessary to reflect the qualified
service and the issuance of the certificate of honorable
discharge.
``(b) Timing of Documentation.--The respective Secretary
shall take action on an application under subsection (a) not
later than one year after the respective Secretary receives
the application.
``(c) Standards Relating to Service.--In making a
determination under subsection (a)(1), the respective
Secretary shall apply the same standards relating to the
nature and duration of service that apply to the issuance of
honorable discharges under section 401(a)(1)(B) of the GI
Bill Improvement Act of 1977 (38 U.S.C. 106 note).
``(d) Correction of Records.--An official of the Federal
Government who is requested to correct service records under
subsection (a)(2) shall do so.
``Sec. 11203. Eligibility for certain veterans' benefits
``(a) Eligibility.--
``(1) In general.--The qualified service of an individual
referred to in paragraph (2) is deemed to be active duty in
the Armed Forces during a period of war for purposes of
eligibility for benefits under chapters 23 and 24 of title
38.
``(2) Covered individuals.--Paragraph (1) applies to an
individual who--
``(A) receives an honorable discharge certificate under
section 11202 of this title; and
``(B) is not eligible under any other provision of law for
benefits under laws administered by the Secretary of Veterans
Affairs.
``(b) Reimbursement for Benefits Provided.--The Secretary
shall reimburse the Secretary of Veterans Affairs for the
value of benefits that the Secretary of Veterans Affairs
provides for an individual by reason of eligibility under
this section.
``(c) Prospective Applicability.--An individual is not
entitled to receive, and may not receive, benefits under this
chapter for any period before the date of enactment of this
chapter.
``Sec. 11204. Processing fees
``(a) Collection of Fees.--The Secretary, or in the case of
personnel of the Army Transport Service or the Naval
Transport Service, the Secretary of Defense, shall collect a
fee of $30 from each applicant for processing an application
submitted under section 11202(a) of this title.
``(b) Treatment of Fees Collected.--Amounts received by the
respective Secretary under this section shall be deposited in
the general fund of the Treasury as offsetting receipts of
the department in which the Coast Guard is operating and
ascribed to Coast Guard activities, or in the case of fees
collected for processing discharges from the Army Transport
Service or the Naval Transport Service, deposited in the
general fund of the Treasury as offsetting receipts of the
Department of Defense, and shall be available subject to
appropriation for the administrative costs for processing
such applications.''.
(b) Clerical Amendment.--The table of chapters at the
beginning of subtitle II of title 46, United States Code, is
amended by inserting after the item relating to chapter 111
the following:
``112. Merchant mariner benefits.............11201''.
TITLE V--CERTAIN LOAN GUARANTEES AND COMMITMENTS
SEC. 501. CERTAIN LOAN GUARANTEES AND COMMITMENTS.
(a) The Secretary of Transportation may not issue a
guarantee or commitment to guarantee a loan for the
construction, reconstruction, or reconditioning of a liner
vessel under the authority of title XI of the Merchant Marine
Act, 1936 (46 U.S.C. App. 1271 et seq.) after the date of
enactment of this Act unless the Chairman of the Federal
Maritime Commission certifies that the operator of such
vessel--
(1) has not been found by the Commission to have violated
section 19 of the Merchant Marine Act, 1920 (46 U.S.C. App.
876), or the Foreign Shipping Practices Act of 1988 (46
U.S.C. App. 1701a), within the previous 5 years; and
(2) has not been found by the Commission to have committed
a violation of the Shipping Act of 1984 (46 U.S.C. App. 1701
et seq.), which involves unjust or unfair discriminatory
treatment or undue or unreasonable prejudice or disadvantage
with respect to a United States shipper, ocean transportation
intermediary, ocean common carrier, or port within the
previous 5 years.
(b) The Secretary of Commerce may not issue a guarantee or
a commitment to guarantee a loan for the construction,
reconstruction, or reconditioning of a fishing vessel under
the authority of title XI of the Merchant Marine Act, 1936
(46 U.S.C. App. 1271 et seq.) if the fishing vessel operator
has been--
(1) held liable or liable in rem for a civil penalty
pursuant to section 308 of the Magnuson-Stevens Fishery
Conservation and Management Act (16 U.S.C. 1858) and not paid
the penalty;
[[Page S3318]]
(2) found guilty of an offense pursuant to section 309 of
the Magnuson-Stevens Fishery Conservation and Management Act
(16 U.S.C. 1859) and not paid the assessed fine or served the
assessed sentence;
(3) held liable for a civil or criminal penalty pursuant to
section 105 of the Marine Mammal Protection Act of 1972 (16
U.S.C. 1375) and not paid the assessed fine or served the
assessed sentence; or
(4) held liable for a civil penalty by the Coast Guard
pursuant to title 33 or 46, United States Code, and not paid
the assessed fine.
Mr. LOTT. Mr. President, today is a great day for America's maritime
community; for those who sailed the high seas during the final days of
World War II; for those who sail the seas today in the international
container industry; and for those who will go to sea in the future.
Mr. President, I hope my colleagues will permit me to take a long
view of the maritime issues being addressed by the Senate during the
105th Congress.
I am a product of the maritime industry. I grew up in a maritime
community where my father built ships. The maritime world was the
source of my first job as a lawyer. I still live in Pascagoula,
Mississippi where the proud maritime tradition continues with Navy
contracts to build DDG-51 Destroyers.
As I grew up on Mississippi's coast, an important lesson was learned.
Our nation was founded as a maritime nation and remains one today. We
are a nation that must continue to invest in this vital industry.
As you know, this is the International Year of the Ocean and tomorrow
is Earth Day. As we celebrate the 28th Earth Day, we recognize the
importance of the world's 4 oceans and 54 seas. Oceans cover more than
75% of our globe. Oceans provide us all with vast sources of food,
medicine, and minerals. They provide a means for recreation,
transportation, and commerce. Teaming with life and resources, oceans
are where America's merchant maritime industry must be present. Oceans
are where our government must make a conscious decision to maintain
America's presence.
Many of our colleagues understand the importance of a strong, healthy
maritime industry. This including ports, vessel owners, vessel
operators, shipbuilders and the workers to run the ports, sail the high
seas or build the latest ship. In a world of increasing international
trade by sea, a strong maritime industry is essential to our national
security and our economic strength. This is a simple but true equation.
To provide a context for today's action, I want to reflect on our
work in the 104th Congress changed our maritime public policy. In the
last Congress, the Maritime Security Act of 1996 was enacted into
public law. It received overwhelming and bipartisan support. It was the
first maritime policy change in over a decade. It was a profound change
and has successfully reformed how our maritime industry supports our
nation's defense.
This program now effectively ensures that efficient commercial ocean
transportation services are available to the Department of Defense for
national security purposes. The use of modern U.S.-flag commercial
vessels saves DOD hundreds of millions of dollars that would otherwise
be required to procure additional sealift capacity. As we enter the
appropriation cycle, I hope my colleagues will support full funding of
the Maritime Security Program.
Today, the Senate completed action on S. 414, the Ocean Shipping
Reform Act of 1998.
This bill will increase competition in the ocean liner shipping
industry and help U.S. exporters compete in the world's market. S. 414
was a bipartisan compromise. It was supported by all segments of the
industry. Even U.S. businesses that use ocean liner services supported
this legislative approach. The bill is a true compromise where the many
diverse and competing interests benefited equally.
My good friend, Senator Slade Gorton, wanted to get a little bit more
for one of these segments, but in so doing jeopardized the Senate's
ability to pass this important legislation during this Congress by
taking the delicate compromise out of balance. This is why the
amendment was defeated.
Just for the record, non-vessel-operating common carriers are not
real common carriers. However, they can successfully compete with
vessel operators. Also small shippers will continue to have equal
access to the transportation systems.
Mr. President, S. 414, the Ocean Shipping Reform Act of 1998 is a
major step forward in the 105th Congress' maritime reform agenda.
This year's maritime bill focuses on one part of the commercial
segment while last year's bill dealt with the defense segment.
As with the maritime bill in the last Congress, competition is its
hallmark. It will permit competition for the ocean liner shipping
industry. This means that U.S. exporters will also enhance their
competitiveness in the world's market. The majority of international
trade is carried on ships and that is why S. 414 is so important. The
United States will now have an ocean liner shipping system that enables
America to compete with other countries on a level playing field.
S. 414 is that level playing field.
This effort started back in the 104th Congress. It has taken the
Senate a long time to develop a workable solution because the shipping
industry includes so many different competing segments. Balancing their
interests has been difficult and everyone made compromises.
S. 414 is solidly backed by U.S. shippers; U.S. and foreign ocean
carriers; U.S. ports; and U.S. labor. Achieving such strong support
from such a diverse group demonstrates that the entire maritime
industry wants and needs this meaningful reform.
I call upon the House of Representatives to complete the legislative
process and promptly adopt S. 414 this year. The nation's consumers,
businesses, and maritime industry deserve to reap the benefits of a
reformed ocean liner shipping system.
This bill is fair. This bill is needed.
S. 414 also contains a provision concerning World War II merchant
mariner burial benefits, which was introduced separately as S. 61.
Mr. President, today the Senate also celebrates the passage of S. 61
another very important piece of maritime legislation which recognizes
the sacrifices made by a group of merchant mariners.
This provision clarifies, once and for all, that those American
merchant mariners who served our country in World War II between August
16, 1945 and December 31, 1946 are in fact eligible for veteran's
funeral and burial benefits. Just like all other World War II merchant
mariners.
This legislation, originally introduced last year as the Merchant
Marine Fairness Act, has 71 cosponsors. I want to thank each cosponsor
for their bipartisan support for mariners who ask to be recognized upon
their deaths for service to our nation.
Mr. President, the overwhelming majority of World War II merchant
mariners have already been awarded veteran status. However, through
this 16-month extension, the Senate recognizes in a limited, yet
meaningful, fashion those who stood, in harm's way, through the war's
final day when on December 31, 1946 President Truman officially
declared an end to hostilities.
Although Japan officially surrendered in August of 1945, the job was
not complete for our nation's merchant mariners. In fact, more
dangerous work awaited them, and their allies.
Harbors in Japan, Germany, Italy, France, and other parts of the
world's maritime trade lanes were still filled with mines. This created
many hazards as merchant mariners transported Allied troops home, or
transported them to occupational duties. Axis stragglers also needed to
be transported. When the men of the U.S. merchant marine were called to
serve, they were ready and willing. Their duties were vital to
consolidating the battlefield victory that our combat forces had just
won.
Let me be clear. The services performed by these merchant mariners
were extremely dangerous. Twenty-two U.S.-government-owned vessels--
carrying military cargoes--were damaged or sunk by mines after V-J Day.
At least four U.S. merchant mariners were killed and 28 injured aboard
these vessels. Those American merchant mariners who served during this
time did so with pride, professionalism and a dedication to their
country. They deserve this simple, proper recognition.
I hope the House of Representatives will act swiftly on this
legislation, too.
[[Page S3319]]
Bills similar to S. 61 have passed in the House of Representatives
three times in recent years. Already, H.R. 1126, the companion bill to
S. 61, has more than 150 cosponsors.
Mr. President, our nation values the sacrifices of our veterans and
so should Congress. The service's of these merchant mariners to America
deserves recognition for a job well done.
The passage of the Merchant Mariner's Fairness Act confers the title
of veteran to a small group of elderly, surviving mariners--an
acknowledgment they richly deserve.
Mr. President, I remember one of these extraordinary mariners telling
me why it was so important to receive this official recognition and why
this delay has been so frustrating.
What that merchant mariner said, quite simply, was that he wants to
tell his grandchildren that he too is a World War II veteran.
Mr. President, this particular merchant mariner and many other
merchant mariners deserve our nation's profound gratitude for their
WWII service.
Mr. President, there is yet another important maritime bill that the
Senate must enact this year. S. 1216.
This legislation will ratify and implement the OECD Shipbuilding
Agreement. It will eliminate foreign shipbuilding subsidies and provide
a level playing field for our shipbuilding industry.
S. 1216 was approved by both the Finance Committee and the Commerce,
Science, and Transportation Committee. It is ready to move to the
Senate floor. The amendments added through separate committee actions
address head on and completely the concerns identified by segments of
the maritime community.
I am disappointed that a few maritime associations continue to oppose
this bill despite its many changes. I am disturbed by their unfortunate
misrepresentations.
Let me set the record straight on this bill. S. 1216 and the OECD
Agreement do not threaten the Jones Act or the construction of Jones
Act vessels. Period.
S. 1216 clearly excludes America's defense requirements and maritime
features while ensuring that no country may illegally subsidize its
commercial shipbuilding industry.
S. 1216 first equaled, then exceeded, the amendment offered by
Representative Bateman in the 104th Congress to extend the current
Title XI program's terms and conditions. The Senate bill provides an
additional year. However, these associations moved the goalposts by
demanding even more exemptions.
S. 1216 implements OECD. It does not speak to every individual
argument that came up during its negotiations. That is water under the
bridge. Rather, the bill recognizes that the United States cannot out-
subsidize other countries' shipbuilding industries and should not try.
It forces these other countries to give up their subsidies.
On a different legislative tract, but a related issue, the Senate
showed that it will take steps to address shipyard subsidies. Through
the International Monetary Fund bill, the Senate ensured that South
Korean shipyards are not entitled to a bail out from American
taxpayers.
S. 1216 is about ratifying this international agreement this year;
however, it is clear these associations' aim is to scuttle OECD. I
believe they want to shift funds from shipyards where only commercial
vessels are built to those yards where naval vessel construction occurs
because the level of military construction is decreasing. This is folly
because America needs both types of shipyards for a healthy maritime
community.
The U.S. must preserve its commercial shipbuilding base and that
means ratifying the OECD agreement. That means adopting the
implementing language in S. 1216 this year.
One last point--the Jones Act and other related cabotage related
legislation. There is no secret that I am an ardent supporter of the
Jones Act. I acknowledge that there are some members of Congress who do
not see the wisdom of protecting our domestic water-borne maritime
trade--just like every other coastal nation. I take it as my challenge
to spread the wisdom and value of the Jones Act to my colleagues. I
also realize that the current system is not meeting the needs of every
domestic shipper and that is why I encourage the Jones Act maritime
industry and the Administration to work closely with these shippers to
solve their transportation needs. Still, I remain a firm believer that
these needs can be served by U.S.-built, U.S.-owned, U.S.-flagged, and
U.S.-crewed ships.
In summary, Mr. President, the Senate has made much progress in our
maritime public policy agenda this year, and I hope there will be more
before the 105th Congress adjourns. Maritime issues are bipartisan and
important to our economy and our national security.
Mr. President, thank you. I want to also thank all mariners who go to
sea to face the elements and work. I also want to thank all who work on
shore, at the dock and in the shipyard, to enable our nation's maritime
transportation system to go to sea safely and profitably. It is a
fitting tribute to pass the Ocean Shipping Act of 1998 during the
International Year of the Ocean.
Mrs. HUTCHISON. Mr. President, I want to congratulate the Senate on
its adoption of S. 414, the Ocean Shipping Reform Act of 1998. We have
worked long and hard to achieve the consensus necessary to move this
bill forward. The revisions that S. 414 would make to the Shipping Act
of 1984 will help U.S. shippers, ports, and containership operators
succeed in an increasingly competitive world of international trade.
I want to thank all Senators who worked on this bill for their key
contributions, especially Senator Lott, our distinguished Majority
Leader; Senator McCain, Chairman of the Commerce Committee; and
Senators Gorton and Breaux who ensured that all affected groups'
concerns were thoroughly considered and addressed. I ask the leadership
of the House to quickly adopt S. 414 without amendment so that the
participants in the ocean liner shipping industry can turn their
efforts toward reaping the benefits of these changes.
Mr. President, for the record, I now want to explain some of the key
provisions of S. 414.
The most significant benefit of S. 414 is that it will provide
shippers and common carriers with greater choice and flexibility in
entering into contractual relationships for ocean transportation and
intermodal services. It accomplishes this through seven specific
changes to the Shipping Act of 1984. It allows multiple shippers to be
parties to the same service contract. It allows service contracts to
specify either a percentage or quantity of the shipper's cargo subject
to the service contract. It prohibits multiple-ocean common carrier
cartels from restricting cartel members from contracting with shippers
of their choice independent of the cartel. It allows service contract
origin and destination geographic areas, rates, service commitments,
and liquidated damages to remain confidential. It eliminates the
requirement that similarly situated shippers be given the same service
contract rates and service conditions. It eliminates the current
restrictions on individual common carriers engaging in discriminatory,
preferential, or advantageous treatment of shippers and ocean
transportation intermediaries in service contracts (while retaining
those restrictions for groups of common carriers and strengthening
prohibitions against refusals to deal or negotiate by individual common
carriers). It allows groups of ocean common carriers to jointly
negotiate inland transportation rates, subject to the antitrust laws
and consistent with the purposes of the 1984 Act.
The Commerce Committee report on S. 414 dated July 31, 1997, includes
in pages 12 through 17 a new legislative history for section 6(g) of
the 1984 Act. Although a substitute amendment to the Commerce Committee
reported version of S. 414 has been adopted by the Senate, the
legislative history for section 6(g) and other sections of the 1984 Act
affected by S. 414 contained in the Committee report remains intact, to
the extent that the Committee reported provisions of S. 414 are not
substantively amended by the substitute amendment, or the Committee
report legislative history is not superseded by the below comments.
It is anticipated that members of ocean common carrier agreements
will enter into individual service contracts with shippers and that,
consistent with section 8(c) of the 1984 Act, as amended
[[Page S3320]]
by S. 414, some of the terms and conditions of those service contracts
will not, by agreement of the contracting parties, be publicly
available.
Section 5(c) of the 1984 Act, as amended by S. 414, states that an
agreement of ocean common carriers may not require its members to
disclose any service contract negotiations they may have with shippers
or the terms and conditions of any service contracts which they may
enter into for the transportation of cargo. It is important to note
that, while section 5(b) of the 1984 Act applies only to conference
agreements, new section 5(c) would apply to all agreements among ocean
common carriers, including conference agreements.
Any agreement requirement that members disclose confidential contract
information would violate section 5(c) and subject agreement members to
penalties under the 1984 Act, as amended by S. 414. In the event a
member divulged confidential contract information, that member would
likely be in breach of its contract with the shipper and could be held
liable by the shipper under the contract. However, in the absence of
any agreement requirement that disclosure be made, neither that carrier
nor any other agreement member would be subject to penalties under the
1984 Act, as amended by S. 414. Section 8(c)(1) of the 1984 Act, as
amended by S. 414, provides that the exclusive remedy for a breach of a
service contract shall be an action in an appropriate court, unless the
parties otherwise agree.
Section 8(c)(2) of the 1984 Act, as amended by S. 414, would continue
to require that all service contracts be filed with the Federal
Maritime Commission. The purpose of this requirement is to assist the
FMC in the enforcement of applicable provisions of United States
shipping laws. However, other Federal agencies have expressed concerns
over how they are to ensure ocean carrier compliance with United States
cargo preference law requirements concerning shipping rates in an era
of service contract rate confidentiality. The FMC is encouraged to work
with affected Federal agencies to address this concern.
S. 414 would add a new section 8(c)(4) to the 1984 Act that would
allow a labor union with a collective bargaining agreement with an
ocean common carrier to request information from the carrier with
respect to cargo transported under a service contract entered into by
that carrier to assist the union in enforcing its collective bargaining
agreement and would require the carrier to provide that information.
Section 8(c)(4) envisions the release of information not necessarily
contained in the service contract. While the cargo transportation in
question has to be made pursuant to a service contract, the carrier's
response to an information request authorized by section 8(c)(4) may
require the use of documents other than the service contract.
The purpose of section 8(c)(4) is to provide the requesting labor
union with information concerning certain land transportation
services and other services for which an ocean common carrier subject
to a collective bargaining agreement with that labor union may be
responsible pursuant to a service contract. The specific language of
section 8(c)(4)(A) describing the work covered by that disclosure
requirement is intended to ensure that the ocean common carrier is not
able to avoid compliance with the disclosure requirement by narrowly
interpreting the statutory language of the work covered by the
disclosure requirement. Section 8(c)(4), however, has no other purpose
but to require disclosure of specified information and is not intended
to serve any other purpose.
The Senate understands that disputes have arisen, or may arise,
concerning the assignment of certain off-dock and inter-dock
transportation services at U.S. ports. We want to make it perfectly
clear that nothing in this provision is intended to resolve or
influence the outcome of any such dispute in any manner. The
descriptions of work contained in section 8(c)(4)(A) should not be
misinterpreted by a court or agency to imply a Congressional
endorsement of any position in any such dispute. These issues are to be
considered and determined by the appropriate agencies and courts taking
into consideration existing provisions of the National Labor Relations
Act, the Taft-Hartley Act, the Federal Trade Commission Act, other
provisions of the Shipping Act of 1984, as amended by S. 414, and other
federal and state laws. Nothing in these disclosure provisions should
affect or influence the outcome of the decisions of those courts or
agencies, one way or the other.
The substitute amendment to S. 414 contains several significant
changes with respect to the anti-discrimination provisions contained in
sections 10(b) and 10(c) of the Commerce Committee reported version of
S. 414 affecting shippers' associations and ocean transportation
intermediaries that need to be clarified. These revisions by the
substitute amendment remove limitations placed on these sections in the
Committee reported bill with respect to shippers' associations and
ocean transportation intermediaries and thus supersede the Committee's
Report of July 31, 1997 at pages 28 and 29.
S. 414 is intended to promote a more competitive ocean transportation
marketplace. In such a marketplace, it is anticipated that small to
medium-sized shippers will increasingly rely upon non-profit shippers'
associations and other forms of transportation intermediaries in order
to obtain access to competitive economies of scale enjoyed by the
largest shippers. Recognizing the important role that the small shipper
plays in the competitiveness of the United States in the global
economy, S. 414 contains several strong provisions to ensure that
shippers who seek to combine their cargo with other shippers to obtain
volume discounts in a shippers' association are not subjected to
unreasonable discrimination due to their status as a shippers'
association when entering into such service contracts.
As amended by S. 414, new section 10(b)(10) of the 1984 Act would
make it unlawful for a common carrier to ``unreasonably refuse to deal
or negotiate.'' Previously, the prohibition against refusals to
negotiate was limited to shippers' associations. The new section
10(b)(10) continues to provide a shippers' association or ocean
transportation intermediary with protection against an unreasonable
refusal to deal by one or more common carriers, and continues to
provide the other protections included in section 10(b)(12) of the
current law.
New sections 10(c)(7) and 10(c)(8) of the 1984 Act, as amended by S.
414, would protect individual shippers' associations and ocean
transportation intermediaries against the type of conduct specified in
those paragraphs which is due to such person's status as a shippers'
association or ocean transportation intermediary. The FMC should direct
its enforcement efforts with respect to unreasonable discrimination due
to a person's status as a shippers' association or ocean transportation
intermediary for other than objective, relevant economic transportation
factors on those groups of ocean common carriers that have the greatest
potential to economically harm a shippers' association or an ocean
transportation intermediary. S. 414 does not require identical
treatment of shippers' associations and affords ocean common carriers
greater flexibility than the current 1984 Act to differentiate their
service contract terms and conditions.
Section 10(c)(4) of the 1984 Act currently prohibits concerted action
by ocean common carriers in negotiation of U.S. inland transportation
rates and services with truck, rail, air, or other non-ocean carriers.
Since the enactment of the 1984 Act, U.S. ocean common carriers have
made very substantial investments in inland intermodal networks in
reliance on the protections of section 10(c)(4).
S. 414 would amend section 10(c)(4) to remove the current per se
prohibition on joint negotiation of inland transportation agreements.
S. 414 would allow joint negotiations and agreements with respect to
the inland portion of these ocean common carriers' intermodal
movements, but retain protections to ensure that U.S. inland intermodal
carriers are not harmed.
First, any such joint negotiations and agreements permitted under
this section must be in conformity with the antitrust laws. There is no
intention under this provision to permit or authorize any joint
activity with respect to the negotiation of purchasing of U.S. inland
services provided by non-ocean carriers that would not be permitted
under the principles that apply
[[Page S3321]]
to joint purchasing activities under the antitrust laws.
Second, the joint negotiations and agreements permitted under this
section must be consistent with the purposes of the Act, as amended by
S. 414 and as determined by the Federal Maritime Commission. For
example, the ability of joint purchasing arrangements to contribute to
efficiencies in the U.S. transportation system in the ocean commerce of
the United States that are then passed on to shippers is a factor that
may be considered in determining whether an arrangement is consistent
with the purposes of the 1984 Act. Another purpose of the 1984 Act is
the development of an economically sound and efficient U.S.-flag liner
fleet capable of meeting national security needs. As stated above,
U.S.-flag liner operators have made very substantial investments in
affiliated inland intermodal providers, and harm to these providers
resulting from the use of market power by conferences or other groups
of ocean common carriers would be inconsistent with the 1984 Act's
purpose of maintaining a sound U.S.-flag liner fleet.
Mr. McCAIN. Mr. President, I am pleased that the Senate has adopted
S. 414, the Ocean Shipping Reform Act of 1998. S. 414 was approved by
the Committee on Commerce, Science, and Transportation on May 1, 1997.
Over the past several months, the bill has been adjusted to address the
concerns of several members.
S. 414 would instill greater competition within the U.S.
international ocean liner shipping market by ensuring that every liner
vessel operator has the right to enter into a service contract with any
shipper without interference from other vessel operators. This will
allow U.S. importers and exporters to contract with vessel operators of
their choice, not as directed by ocean shipping cartels.
Also, S. 414 would allow vessel operators and shippers who negotiate
service contracts to keep the rates and terms of service of those
contracts private. The bill would also remove the requirement that
vessel operators provide the same contract rate and terms to other
similar shippers. This change, combined with the one I just described,
will increase the responsiveness of ocean liner system to market
forces.
The bill would also privatize the function of publishing ocean
transportation tariffs, which should reduce the expense of this system.
The bill would provide the Federal Maritime Commission adequate means
to review and enforce tariff and service contract regulations.
The bill also includes a provision I added during the Commerce
Committee markup. This provision would require the Secretary of
Transportation to obtain certification from the Federal Maritime
Commission that a liner vessel operator has not violated certain U.S.
shipping laws within the past 5 years prior to the Secretary granting
the operator a shipbuilding loan guarantee under title XI of the
Merchant Marine Act, 1936.
I realize that S. 414 is not perfect. In my view, a lot more could be
done to improve competition in this business. However, in this case the
bill makes significant progress, and should not be held up in the hope
that greater progress can be made in the future. I hope the other body
will take action on S. 414 so that the bill may be enacted this year.
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