[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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