[House Report 104-303]
[From the U.S. Government Publishing Office]



104th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 1st Session                                                    104-303
_______________________________________________________________________


 
                   OCEAN SHIPPING REFORM ACT OF 1995

                                _______


November 1, 1995.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

_______________________________________________________________________


 Mr. Shuster, from the Committee on Transportation and Infrastructure, 
                        submitted the following

                              R E P O R T

                        [To accompany H.R. 2149]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Transportation and Infrastructure, to whom 
was referred the bill (H.R. 2149) to reduce regulation, promote 
efficiencies, and encourage competition in the international 
ocean transportation system of the United States, to eliminate 
the Federal Maritime Commission, and for other purposes, having 
considered the same, report favorably thereon without amendment 
and recommend that the bill do pass.

                          Purpose of the Bill

    The purpose of H.R. 2149, the ``Ocean Shipping Reform Act 
of 1995'', is to substantially deregulate the ocean shipping 
industry and eliminate the Federal Maritime Commission (FMC) by 
the end of fiscal year 1997. The Committee believes that this 
bill will foster an international ocean transportation industry 
that is driven much more by the rigors of the marketplace 
rather than by Governmental regulation.
    The Shipping Act of 1984 was enacted to respond to several 
major problems that existed at that time concerning ocean 
shipping practices. The 1984 Act clarified the scope of 
antitrust immunity for ocean common carriers, maintained 
Government tariff filing and enforcement, established the right 
of ``independent action'' on conference filed tariffs, and 
allowed carriers or conferences to enter ``service contracts'' 
with shippers under certain conditions. As directed under 
section 18 of the 1984 Act, the Advisory Commission on 
Conferences on Ocean Shipping conducted a comprehensive study 
of conferences in ocean shipping, including nearly all relevant 
issues in the 1984 Act. The Advisory Commission issued its 
final report in April, 1992. The Advisory Commission members 
were chosen from a wide range of interests affected by ocean 
shipping from the private sector, the Congress, and the 
Administration, and were unable to agree on any recommendations 
for changes to the 1984 Act.
    Although the 1984 Act was labelled ``deregulatory'', it 
maintained an ocean shipping regulatory system that has 
prevented true competition from existing in this important mode 
of transportation.
    In today's rapidly changing and expanding global trading 
economy, this lack of marketplace flexibility is unacceptable. 
U.S. businesses find themselves shackled to a system which does 
not permit normal business interactions and transactions that 
exist in virtually every other sphere of the world's economy. 
Individual carriers and shippers cannot discuss the price and 
terms of shipping goods without being forced to share those 
discussions with competitors. The inhibiting effect of this 
situation on innovation and flexibility cannot be understated. 
Further, the benefits of true marketplace price competition 
cannot be realized.
    The bill amends the Shipping Act of 1984 (46 App. U.S.C. 
1708 et seq.) (1984 Act) to:

   Ensure a mandatory right of independent action on ocean shipping 
  contracts for all carriers operating within shipping conferences on 
                            January 1, 1997

    The 1984 Act established the right of ``independent 
action'' for conference members on any rate or service item 
agreed upon by the conference. The 1984 Act did not extend this 
right to contracts, and allows conferences to prohibit 
conference members from signing individual contracts with 
shippers.
    The Committee believes that this situation has frustrated 
the ability of carriers and their customers to form the close 
commercial ties that produce business efficiencies. Under this 
bill, conferences may not interfere in any way, directly or 
indirectly, with the right of individual conference members to 
sign ocean transportation contracts with the shippers of their 
choice. Also under this bill, the narrow ``service contract'' 
concept has been replaced with the broad definition of ``ocean 
transportation contract'' to include all types of contracts 
between carriers and shippers to provide services.

 Eliminate government tariff enforcement and regulation on January 1, 
 1997 and eliminate government tariff and contract filing requirements 
                            on June 1, 1997

    The 1984 Act requires ocean common carriers to file their 
rates, or tariffs, with the (FMC), and requires the FMC to 
enforce those rates. The 1984 Act also requires the essential 
terms of service contracts to be filed with the FMC, and made 
available to similarly situated shippers.
    No other country has this type of tariff system, nor does 
any other country have Government enforcement of rates. This 
type of regulatory system does not exist for other modes of 
transportation today. Finally, there are many exceptions to the 
existing tariff filing regime. For example, many commodities 
are exempt from the tariff filing requirement in the 1984 Act. 
Also, for cargo shipped through a Canadian or Mexican port, 
there is no public tariff filing or enforcement requirement. 
Today, carriers and shippers can do business successfully in 
foreign-to-foreign trades where government tariff filing does 
not exist.
    It is the Committee's experience that with other 
transportation modes that carriers and shippers do business 
more effectively with less government regulation of 
transportation rates. In fact, American exporters are currently 
at a disadvantage because their transportation costs are 
public, where their foreign competitors costs are not made 
public. Elimination of tariff filing and enforcement will allow 
closer and more satisfactory relationships between shippers and 
carriers, to the benefit of the American consumer.

  Provide authority for shippers and carriers to agree to completely 
      confidential service contracts, beginning on January 1, 1998

    This bill allows carriers and shippers to freely negotiate 
transportation contracts and maintain the confidentiality of 
the terms of those contracts. Confidential business terms are 
allowed in every other transportation sector, as well as 
virtually every other sector of the world economy, with 
benefits accruing to the parties to the contract and to the 
ultimate consumer of goods transported. Confidential contracts 
are currently used in many foreign-to-foreign trades with 
beneficial results.
    The Committee rejects the argument that confidential, 
``secret'' contracts will work to the disadvantage of small 
shippers. Today, small shippers have no advantage over large 
shippers, because the only distinguishing factor allowed under 
the current ocean transportation system is volume. Under the 
ocean shipping regime provided in this bill, small shippers 
will have more flexibility to bargain for attractive shipping 
contract terms, because volume will not be the only important 
factor in the ocean shipping system. Shippers generally will 
have the freedom to bargain for the best prices possible, 
without conference interference.

Retain current system of oversight and filing requirements for carrier 
                conference agreements under the 1984 Act

    This bill does not disturb the exemption from the antitrust 
laws that currently exists under the Shipping Act of 1984. The 
bill also preserves the 1984 Act system of filing of carrier 
agreements and government oversight over those agreements.
    H.R. 2149 provides for an orderly transition to a more 
market based system that will better serve the interests of 
consumers, shippers, and ocean carriers. The bill allows the 
current system of ocean carrier conferences to continue. These 
conferences presently enjoy a broad grant of immunity from the 
antitrust laws of the United States, and that grant of immunity 
is unaffected by this bill. These conferences meet, discuss and 
frequently determine what the price of shipping particular 
goods between specific points will be. While this approach is 
counter to the usual approach the United States has taken 
toward concerted economic activity, it has been the legal and 
policy approach of the United States for nearly 100 years. 
Discarding it overnight would be detrimental to all U.S. 
interests. The bill provides very significant reforms to ocean 
shipping, but preserves much of the existing conference 
structure while the reforms provided by this bill are phased-in 
and take root over the next several years.
    While conferences will continue to discuss and set shipping 
prices, H.R. 2149 removes significant business activity from 
their control, enabling carriers, shippers, and others to enter 
into flexible, innovative, and competitive arrangements to ship 
goods. Carriers and shippers will be able to enter into ``ocean 
transportation contracts'' with each other without hindrance or 
oversight from a conference.
    The expectation is that over time, carrier/shipper business 
relations will be increasingly governed by contracts negotiated 
outside of the conference system. Again, the purpose is to 
permit opportunities for flexibility, innovation, and price 
competition to flourish. For those business people comfortable 
with the features of the existing common carrier system, it 
will continue to exist and be available.
    The exemption from the U.S. antitrust laws for ocean 
carriers has existed since 1916, and is the policy of our 
international trading partners. Unilateral action by the United 
States to revoke antitrust immunity would disrupt international 
trading conditions and unfairly disadvantage U.S. carriers. It 
will also discourage investment in U.S.-flag shipping. Another 
important reason to maintain the current scope of antitrust 
immunity for carriers in trade with the United States is the 
concern that the antitrust laws would not be uniformly 
enforced, and that U.S. carriers would be unfairly targeted for 
antitrust prosecution because of the difficulty of enforcing 
the antitrust laws abroad.
    The Committee supports the current exemption from the 
antitrust laws under the 1984 Act, but is concerned that 
certain concerted behavior on the part of ocean conferences has 
abused the grant of immunity under the 1984 Act. The antitrust 
exemption is intended to allow carriers and conferences to 
cooperate in efficiency enhancing practices. The exemption is 
not intended to endorse anticompetitive practices on the part 
of conferences. The conference that operates in the North 
Atlantic Trade, known as the Trans-Atlantic Conference 
Agreement, has engaged in practices that have been criticized 
as anticompetitive. The Committee believes that the amendments 
made by this bill weaken the concerted rate making authority of 
conferences, and discourage future anticompetitive behavior on 
the part of conferences. The ocean shipping system established 
under this bill preserves the ``status quo'' concerning 
antitrust immunity, and is intended to allow ocean carriers to 
address their common concerns and within the agreement 
oversight structure of the 1984 Act.

 Strengthen laws related to unfair trade practices of foreign carriers 
                        and foreign governments

    H.R. 2149 contains new tools to address the potential of 
unreasonable, predatory, or anticompetitive pricing behavior in 
the new, more competitive system of ocean shipping established 
under this bill.

    Transfer the remaining responsibilities of the Federal Maritime 
Commission to the Secretary of Transportation, between October 1, 1995, 
and October 1, 1997, and eliminate the FMC as an independent agency, by 
                      the end of fiscal year 1997

    The primary responsibility of the FMC is to administer the 
Shipping Act of 1984. This bill repeals the most significant 
regulatory functions of the 1984 Act, including tariff filing 
and enforcement. The Committee believes that the residual 
functions of the Federal Maritime Commission are most 
appropriately consolidated within the Department of 
Transportation.
    The bill will eliminate the Government from the business of 
being the repository and the enforcer of the prices set by the 
carrier conferences. Presently, prices, or tariffs, are filed 
with the FMC and if a carrier or shipper deviates from that 
filed tariff, they are subject to FMC enforcement action. This 
is an outmoded approach toward the regulation of transportation 
that neither fits with nor benefits the contemporary business 
climate and marketplace. Under title III of this bill, the FMC 
will be abolished on October 1, 1997. Its residual functions 
will be inherited by the Secretary of Transportation.
    Consumers of other modes of transportation such as air 
passenger, air cargo, and trucking have been largely free of 
government involvement in pricing for a number of years. The 
result in these modes has been more choices and better prices 
for the consumer. Some might argue that it is also more chaotic 
and less predictable, but it is the Committee's experience that 
the American consumer accepts more pricing uncertainty--when it 
also results in lower consumer prices. By eliminating tariff 
filing with the FMC and eventually the FMC itself, the shipping 
public and the carriers will have removed a major impediment to 
pricing, service competition, and innovation.
    The changes embodied in this bill are required for U.S. 
businesses and U.S. carriers to compete effectively in the 
world economy. Increasingly, if businesses and their employees 
are to succeed and prosper, they must be nimble in order to 
anticipate or respond to global business opportunities. The 
current ocean shipping regime under the 1984 Act stifles the 
innovative spirit of American business people. H.R. 2149 
creates opportunities for American importers and exporters and 
will allow them to compete for a greater share of international 
business.
    Finally, the bill is strongly supported by U.S. ocean 
carriers, the U.S. shipping community, as well as the Clinton 
Administration. It represents a well balanced approach to the 
future of ocean shipping regulation.

                            Committee Action

    On February 2, 1995, the Subcommittee held a hearing and 
received extensive information and input to determine whether 
the current regulatory scheme governing ocean common carriage 
in the foreign commerce of the United States should be reformed 
to provide a greater degree of competition in ocean shipping. 
The Subcommittee received testimony from a wide variety of 
witnesses representing all facets of the ocean shipping 
industry.
    During the first panel of witnesses, the Subcommittee 
received testimony from Edward M. Emmett, President, National 
Industrial Transportation League (NIT League); George Hazzard, 
Manager, International and Water Transportation, Monsanto, for 
the Chemical Manufacturers Association (CMA); Robert W. 
Granatelli, Manager of Transportation in North America for 
Himont, and Chairman, Alliance for Competitive Transportation; 
Jil Morley, President, Agriculture Ocean Transportation 
Coalition (AG/OTC); Roger Wigen, Manager, Transportation Policy 
and Industry Affairs, Minnesota Mining and Manufacturing 
Corporation; and Don Schilling, Vice President, Wesco 
International Inc., for the Coalition of Supporters of the 
Shipping Act.
    In his testimony, Mr. Emmett explained that the NIT League 
is the Nation's oldest and largest shippers' organization, 
whose members are responsible for all kinds of freight in both 
interstate and international commerce. Mr. Emmett's testimony 
highlighted some of the reasons the League supports elimination 
of the current system economic regulation of the ocean liner 
industry under the 1984 Act. Mr. Emmett's first objection to 
U.S. laws governing ocean shipping was that ocean carrier 
antitrust immunity allows carriers to collectively set rates 
and restrict capacity. He stated that the Federal Maritime 
Commission (FMC) has failed to adequately protect U.S. shippers 
under the current ocean shipping regime.
    Mr. Emmett's second objection to the current system was the 
prohibition of shippers and carriers from signing confidential 
contracts. His final objection involves the current tariff 
filing system which requires U.S. shippers' transportation 
costs be published, and available to their competitors overseas 
while U.S. shippers are prevented from seeing the 
transportation costs of their foreign competitors. Mr. Emmett 
also pointed out that carrier conferences are dominated by 
foreign carriers.
    Mr. George W. Hazzard testified that the CMA represents 
more than 90 percent of America's productive capacity for basic 
industrial chemicals, employs 1.1 million Americans, and 
accounts for a trade surplus of $17 billion per year. Mr. 
Hazzard states that the CMA has repeatedly advocated 
significant reform of the Shipping Act of 1984. He further 
explained that collective decision-making on freight rates and 
liner services by conferences promotes anti-competitive 
commercial practices. Mr. Hazzard recommended that Congress 
amend the Shipping Act by ending antitrust immunity for ocean 
carrier conferences, exempt contract carriage from conference 
control and from FMC jurisdiction, prevent conferences from 
interfering with any carrier's independent actions, and 
prohibit cargo and revenue allocation agreements.
    Mr. Robert W. Granatelli noted that Himont is a 
manufacturer of plastic resin and a small shipper with 
international costs of $2 million in 1994. He also represented 
the Alliance for Competitive Transportation. Mr. Granatelli 
stated his objections to the Shipping Act of 1984, specifically 
antitrust immunity, by explaining how the current system 
adversely affects a small shipper.
    Ms. Jil Morley testified that the AG/OTC is a coalition of 
individual companies, cooperatives, shippers' associations and 
national and regional associations involved in farm, food, 
fiber, and forest products, with an interest in efficient, 
cost-effective, reliable ocean transportation that will enable 
these organizations to compete effectively in foreign markets. 
She also stated that transportation costs are a critical factor 
in the huge U.S. agricultural export market. Ms. Morley's 
organization believes that the FMC's implementation and 
oversight of the Shipping Act of 1984 has allowed shipping 
conferences to become unregulated cartels controlling a large 
percentage of the international shipping capacity. Her members 
have experienced rate increases as high as 60 percent in a two 
year period. She concluded by saying that the current system is 
hindering U.S. exports and suggests that the Shipping Act of 
1984 be amended to increase competition in this industry.
    Mr. Roger W. Wigen stated that he represents 3M Corporation 
which sells 60,000 products in over 200 countries with $7 
billion in international sales. Mr. Wigen discussed his belief 
that several conferences have complete control over their trade 
lanes which erodes competition in ocean shipping. He stated 
that ending carrier antitrust immunity and allowing 
confidential and customized contracts and partnerships between 
shippers and ocean carriers would increase productivity by 15 
to 20 percent, reduce his company's international trading 
administrative costs by 20 percent, and reduce ocean 
transportation costs by 15 percent.
    Mr. Don Schilling operates a small export company in 
Seattle. His company, Wesco International, Inc., exported 
75,000 tons of hay last year. He represented the Coalition of 
Supporters of the Shipping Act. Mr. Schilling testified that he 
supports the Shipping Act of 1984 because it creates a level 
playing field for small and medium sized exporters. He 
continued by saying that without the Shipping Act of 1984 and 
the FMC to administer it, he would lose his export business 
because he fears that independent service contracts will lead 
to secret deals and preferential treatment for large shippers.
    During the second panel of witnesses, the Subcommittee 
received testimony from John Clancy, President and CEO of 
SeaLand Service, a subsidiary of CSX Corporation; V.L. 
Bijvoets, CEO, Nedlloyd Lines; William P. Verdon, Vice 
President and General Counsel, Crowley Maritime Corporation; 
and Timothy J. Rhein, President and CEO, American President 
Lines (APL) Land Transportation Services. This panel 
represented U.S. and foreign liner operators.
    Mr. John Clancy who is President and CEO of SeaLand, a U.S. 
carrier, testified that he strongly supports the Shipping Act 
of 1984. He stated his belief that the Act has increased 
service, reliability and frequency, as well as provided the 
shipping public with significant innovations in transportation. 
He stated that he does not believe his industry earns excess 
profits. In fact, he said earnings in his industry have been 
inadequate and are inadequate today. He further stated his 
belief that abolishing the FMC and antitrust immunity would 
promote significant rate instability and definitely discourage 
investment in a business that historically has had a lot of 
risk. He concluded by saying international ocean shipping 
should not be compared to the domestic trucking and rail 
industries because these industries operate under one 
government and one set of laws. He noted that SeaLand operates 
in 80 countries and must deal with governments that own and 
support their carriers.
    Mr. Paul Bijvoets is CEO of Nedlloyd Group, a foreign ocean 
carrier headquartered in the Netherlands. Mr. Bijvoets also 
stated his support for the Shipping Act of 1984. He believes 
the Act has allowed for the innovations and massive investments 
by the world ocean carrier industry. He explained that shipping 
rates have fallen dramatically in real terms over the last 10 
years and that service levels have improved. He also believes 
that the Shipping Act of 1984 has provided a high degree of 
competition within this industry.
    Mr. William P. Verdon represented Crowley Maritime, a U.S.-
flag carrier, which operates in the U.S. trade as well as the 
international trade in South and Central America. Mr. Verdon 
also strongly supported the Shipping Act of 1984. Mr. Verdon 
stated that deregulation will put U.S.-flag carriers at a 
disadvantage with foreign carriers because U.S.-flag carriers 
will be subject to U.S. antitrust laws while foreign carriers 
will continue to meet in conferences with foreign shipping 
companies. Mr. Verdon stated that Crowley Maritime, and other 
U.S.-flag carriers, could be put out of business because it 
will be unable to compete in the international marketplace in a 
deregulated environment.
    Timothy J. Rhein is President and CEO of APL Transport 
Services. He is also the former President of APL, Ltd., an 
international ocean carrier operating both U.S. and foreign 
flag vessels. Mr. Rhein testified that his company strongly 
supports the Shipping Act of 1984. He believes that 
deregulating the international ocean shipping industry could 
very quickly and decisively wipe out APL as a viable business. 
Without a U.S. shipping industry, Mr. Rhein argued that 
American national security will be at risk. He stated the 
Shipping Act of 1984 is a balanced, well-accepted and highly 
respected American law that levels the playing field. Mr. Rhein 
stated that APL's shipping rates have in real terms been 
reduced by 30 percent during the 1980s. Mr. Rhein concludes 
that deregulation would lead to the end of ocean common 
carriage of goods.
    During the third panel of witnesses, the Subcommittee 
received testimony from Paul Unsworth, Vice President, Unsworth 
Transportation International (UTI), Inc., and President, 
American International Freight Association (AIFA); James J. 
O'Brien, Director of Port Everglades, Florida, for the American 
Association of Port Authorities (AAPA); The Honorable Robert 
Quartel, Jr., former member of the U.S. Federal Maritime 
Commission (FMC); Peter Powell, Sr., Chairman, Freight 
Forwarding Committee, National Customs Brokers & Forwards 
Association of America; Laurie Zack-Olson, Executive Director, 
International Association of Non-Vessel-Operating Common 
Carriers (NVOCCs); and The Honorable Helen Bentley, former 
Chairman of the Federal Maritime Commission (FMC).
    Mr. Paul Unsworth is Vice President of UTI, an ocean 
freight forwarder and non-vessel-operating common carrier based 
in New Jersey, and President of AIFA, a trade association of 
transportation intermediaries known in the U.S. as NVOCCs and 
freight forwarders. AIFA is a member of the International 
Federation of Freight Forwarders Associations (FIATA), and Mr. 
Unsworth is also the Vice President of this organization. Mr. 
Unsworth testified on behalf of the combined membership of AIFA 
and FIATA, which includes more than 35,000 freight forwarders. 
AIFA and FIATA serve small to medium sized companies that 
individually do not have the volume of export cargo or the 
resources to enable them to have the expertise needed to 
complete an international shipping transaction.
    Mr. Unsworth reported that it has become increasingly 
difficult to negotiate competitive rates with ocean carriers 
for their customers. He believes the increase in conferencing 
and decrease in the number of independent carriers has left 
most ocean trades without any real competition. His industry 
has appealed to the FMC for relief from the uncompetitive 
rates, but the FMC has failed to assist them. He believes his 
industry is very overregulated. Mr. Unsworth estimated the cost 
to his industry of NVOCC tariff filing is $25 to $30 million 
annually. His industry's proposal to improve ocean shipping 
would be to abolish the legal distinction between NVOCCs and 
freight forwarders and eliminate NVOCC tariff filing. He would 
also allow a single entity, a freight forwarder with a single 
license and a single bond to act as an agent or principal, 
depending on the needs of its customers, prohibit ocean 
carriers from discriminating against freight forwarders, and 
require carriers to negotiate with his industry in good faith.
    Mr. James O'Brien testified representing the United States 
delegation to the AAPA. Mr. O'Brien stated that U.S. public 
ports believe that the Shipping Act of 1984 should remain in 
place as presently constituted and that the regulatory 
authority of the FMC should continue to ensure appropriate 
enforcement of that statute. Mr. O'Brien concluded that without 
the Shipping Act of 1994 and the regulatory process of the FMC, 
instability and competitive pressures could lead to predatory 
pricing and eventually the decline of public investment in new 
port facilities.
    Mr. Robert Quartel served as a Commissioner of the FMC for 
two years. Mr. Quartel testified that Congress should eliminate 
tariff filing, abolish antitrust immunity for conferences, 
allow confidential contracting between lines and their 
customers, and abolish the Federal Maritime Commission by 
transferring its functions to other agencies. Mr. Quartel 
stated that the U.S. is the only country to enforce tariff 
filing, and he believes that American shippers pay an extra two 
to four billion dollars in excess shipping costs because of the 
current regulatory system. Mr. Quartel testified that this 
issue was not related to the national defense of the country.
    Mr. Peter Powell is Chairman of the National Customs 
Brokers & Forwarders Association of America Freight Forwarding 
Committee. Mr. Powell testified that the Shipping Act of 1984 
needs to be reformed, but that antitrust immunity should not be 
eliminated. He stated that this would so destabilize liner 
service as to lead to a massive disruption in the U.S. shipping 
industry. His industry's suggestions for changing the current 
regulatory system included limits on conference market share, 
enforcement of the right of independent action for both general 
and service contract cargo, elimination of the right to have 
both rate fixing and capacity rationalization powers in the 
same conference, and more stringent oversight.
    Ms. Laurie Zack-Olson is the Executive Director of the 
International Association of NVOCCs. NVOCCs are companies that 
take responsibility for the carriage of goods, but do not 
operate the vessels on which the goods are carried. Because 
they accept responsibility for the transportation, NVOCCs are 
principals in relationship to their customers which differs 
from ocean freight forwarders who function as agents of 
shippers in arranging for transportation. NVOCCs consolidate 
small quantities of cargo into larger lots to negotiate volume 
rates with the vessel-operating carriers to allow small 
shippers to easily obtain international transportation at a 
reasonable cost. Ms. Zack-Olson testified that conferences have 
ceased to be of value to the shipping public and that antitrust 
immunity for carriers should be ended.
    Mrs. Helen Bentley is a former Congresswoman and Chairman 
of the FMC. Mrs. Bentley argued that the FMC should not be 
abolished because without this regulatory structure American 
trades will be governed by the laws, rules, and regulations of 
the European Community. Mrs. Bentley stated that deregulating 
the ocean shipping industry and abolishing the FMC would hurt 
U.S.-flag operators as well as seriously harm our small and 
middle sized shippers by putting an end to common carriage. She 
also believes that deregulation will cause the U.S.-flag fleet 
to disappear, making our trade become unstable with fewer 
vessels to call at American ports.
    During the fourth panel, the Subcommittee received 
testimony from William Hathaway, Chairman of the Federal 
Maritime Commission. Chairman Hathaway testified that the FMC 
could cut its appropriation down to zero by accelerating the 
user fee program which was initiated this year by the FMC at 
the request of the Office of Management of Budget. Chairman 
Hathaway argued against repeal of the Shipping Act of 1984, in 
particular, the antitrust exemption. He stated that ending the 
antitrust exemption will drive U.S.-flag carriers out of 
business which would directly harm our national security. 
Chairman Hathaway stated that it would be ridiculous to think 
that we could actually police the world with respect to 
antitrust violations. Chairman Hathaway does think that the 
anti-competitive section, section 6(g), of the Shipping Act of 
1984, could be amended to allow shippers to have a right of 
action to proceed against a carrier and take the case to the 
District Court if they so desire. He also noted that the 
service contract provision of the Act could be amended. He 
further testified that the FMC should remain an independent 
agency for the predictability, the stability, and the 
perception by foreign governments that the maritime laws of the 
U.S. are not being administered by the White House or by an 
executive agency, but rather by an independent agency.
    It should also be noted that during the Spring and Summer 
of 1995 numerous, in depth meetings and discussions were held 
under the Committee's auspices to forge a bill that could enjoy 
wide support among all segments of the ocean shipping industry 
to the greatest extent possible. H.R. 2149 is the product of 
those hearings, meetings and discussions.
    On August 1, 1995, the Subcommittee on Coast Guard and 
Maritime Transportation met to mark up a Discussion Draft of 
the Ocean Shipping Reform Act of 1995. The Discussion Draft 
reflects the seven principles that are supported by the 
bipartisan leadership of the Transportation and Infrastructure 
Committee and the major U.S. ocean carriers and shippers who 
ship goods by water between the United States and foreign 
countries. These principles include ensuring a mandatory right 
of independent action on service contracts for all carriers 
operating within shipping conferences and eliminating 
government tariff enforcement and contract filing requirements. 
It also allows shippers and carriers to agree to completely 
confidential service contracts, retains the current system of 
oversight and filing requirements for carrier conference 
agreements, strengthens laws related to unfair trade practices 
of foreign carriers and foreign governments, and transfers the 
remaining responsibilities of the FMC to the Secretary of 
Transportation. One amendment was adopted by the Subcommittee. 
This amendment was an en bloc amendment offered by Mr. Coble to 
make several technical and conforming changes to the Discussion 
Draft bill to implement the basic agreements under the Ocean 
Shipping Reform Act. The Coble en bloc amendment was agreed to 
by voice vote. The Discussion Draft bill, as amended, was 
ordered reported to the Full Committee by voice vote in the 
presence of a quorum.
    The Discussion Draft bill, as amended, was introduced as 
H.R. 2149 by Mr. Shuster on August 1, 1995, with Mr. Mineta, 
Mr. Coble, Mr. Traficant, and Mr. Oberstar as cosponsors. The 
bill was referred to the Committee on Transportation and 
Infrastructure.
    On August 2, 1995, the Full Committee met to consider H.R. 
2149. No amendments were offered. H.R. 2149 was ordered 
reported to the House of Representatives by a voice vote in the 
presence of a quorum.

                Section-by-Section Analysis of H.R. 2149

Section 1. Short title

    This section states that the Act may be cited as the 
``Ocean Shipping Reform Act of 1995.''

                     TITLE 1--OCEAN SHIPPING REFORM

Section 101. Purposes

    Section 101 of this bill amends section 2 of the Shipping 
Act of 1984 (1984 Act) (46 App. U.S.C. 1701) to add an 
additional purpose to the 1984 Act. This purpose, ``to permit 
carriers and shippers to develop transportation arrangements to 
meet their specific needs'', is added to emphasize that the 
amendments made by this bill are intended to give ocean 
carriers and shippers the flexibility and the freedom to choose 
the most desirable business arrangements for transportation of 
goods in the U.S. foreign commerce, without restrictions 
imposed by ocean shipping conferences.

Sec. 102. Definitions

    Section 102 of this bill amends section 3 of the 1984 Act 
related to definitions.
    Paragraph (1) of this section, effective on January 1, 
1997, amends section 3 of the 1984 Act by striking paragraph 
(9), which contains the definition of ``deferred rebate''. 
Paragraph (2) of this section, effective on June 1, 1997, 
amends section 3 of the 1984 Act by striking paragraphs (4), 
containing the definition of (``bulk cargo''), (10) (``forest 
products''), (13) (``loyalty contract''), (16) (``non vessel 
operating common carrier''), and (21) (``service contract''). 
The definitions stricken under this section are no longer 
necessary or relevant under the amendments to the 1984 Act made 
by this bill.
    Paragraph (2)(B) of this section amends paragraph (7) of 
section 3 of the 1984 Act, containing the definition of 
``conference''. This amendment, effective on the date tariff 
filing is abolished, June 1, 1997, substitutes ``a common 
schedule of transportation rates'' in place of a ``common 
tariff''.
    Paragraph (2)(F) of this section amends paragraph (18) of 
section 3 of the 1984 Act, containing the definition of ``ocean 
freight forwarder''. This amendment consolidates the 
definitions of ``ocean freight forwarder'' and ``non-vessel-
operating common carrier'' into a new definition of ``freight 
forwarder'' for the purposes of the amendments made by this 
bill.
    Paragraph (2)(H) of section 102 of this bill amends 
paragraph (23) of section 3 of the 1984 Act concerning the 
definition of the term ``shipper'' to include ``a shippers' 
association, or an ocean freight forwarder that accepts 
responsibility for payment of the ocean freight''. This 
amendment is intended to place shippers' associations and ocean 
freight forwarders on a equal footing as to eligibility to 
enter ocean transportation contracts with ocean carriers under 
the amendments made by this bill.
    Paragraph (2)(I) of this section contains a technical 
amendment to the definition of ``shippers' association'' to 
substitute ``ocean transportation contracts'' in place of 
``service contracts''.
    Paragraph (2)(J) of section 102 of this bill adds a 
definition of a new term ``ocean transportation contract''. An 
``ocean transportation contract'' is defined as ``a contract in 
writing separate from the bill of lading or receipt between one 
or more common carriers or a conference and one or more 
shippers to provide specified services under specified rates 
and conditions.'' The Committee intends that the definition of 
ocean transportation contract be interpreted broadly, to 
include all types of transportation arrangements that may be 
agreed to between shippers and carriers. Unlike the definition 
of ``service contract'', which was repealed by paragraph (2)(G) 
of this section, and ``ocean transportation contract'' is 
intended to encompass transportation agreements, regardless of 
their costs, duration, service commitments, geographic scope, 
or other term or condition. The definition of ``ocean 
transportation contract'' allows carriers to enter joint 
contracts and conference contracts, including contracts in 
which a group of carriers, either operating as a conference, 
within a conference, or otherwise, join together and enter into 
a contract with a shipper or shippers.

Sec. 103. Agreements within the scope of the act

    Section 103 of this bill amends section 4(a)(5) of the 1984 
Act (46 App. U.S.C. 1703(a)), effective on June 1, 1997, to 
reflect consolidation of non-vessel-operating common carriers 
and freight forwarders under this bill.
    Paragraph 2 of section 103 of this bill amends section 
4(a)(7) of the 1984 Act to eliminate agreements by or among 
ocean common carriers to regulate or prohibit their use of 
service contracts from the scope of the Act, and include within 
the scope of the Act agreements to discuss matters related to 
ocean transportation contracts, and agreements to enter into 
ocean transportation contracts and other agreements related to 
those contracts.
    The amendment is made to clarify that the amendments to the 
1984 Act made by this legislation remove the ability of 
conferences to prohibit the members of the conference from 
negotiating or entering individual ocean transportation 
contracts and from imposing mandatory guidelines or 
requirements on the negotiations or content of ocean 
transportation contracts entered into by individual conference 
members.
    The Committee intends that the amendments made by this bill 
to section 5 and 8 of the Act, adding prohibitions on 
activities by a conference to regulate or prohibit contracting 
by its individual members, are not expressly or impliedly 
overridden by section 4(a) of the 1984 Act. Further, in 
adopting the language in new section 4(a)(7), the Committee 
does not intend to confer any authority upon conferences to 
enter binding agreements or engage in conduct prohibited by 
sections 5(b)(9) and (10) and section 8(b). The new language in 
section 4(a)(7) simply defines activities that are within the 
scope of antitrust immunity provided to ocean carriers under 
the Act and is not intended to override or conflict with the 
new prohibitions and requirement contained in section 5(b)(9) 
and (10) and section 8(b) imposed upon conferences concerning 
contracting by individual conference members. The Committee 
also does not intend that agreements by carriers or conferences 
involving contracts are, under any amendment made by this bill, 
subject in any way to the antitrust laws. Ocean carrier 
agreements or guidelines involving contracts, including 
decisions to enter into or decline to enter into joint 
contracts, will continue to be within the scope of, and subject 
to the requirements of the 1984 Act, and not the antitrust 
laws, to the same extent as under current law.
    Claims that a conference is improperly restricting or 
prohibiting contracting activity are to be addressed under the 
1984 Act and not the antitrust laws.

Sec. 104. Agreements

    Section 104 of this bill amends section 5 of the 1984 Act 
(46 App. U.S.C. 1704), to impose certain requirements on 
conference agreements to ensure that shippers and carriers have 
unrestricted freedom to enter into ocean shipping arrangements. 
Paragraph (1) of section 104 of this bill, effective on January 
1, 1997, amends section 5(b)(4) of the 1984 Act to amend the 
requirement for conference agreements concerning policing of 
conference agreements. Paragraph (1) of this section also adds 
a new paragraph (9) to section 5(b) of the 1984 Act requiring 
each conference agreement to provide that a member of the 
conference may enter into individual and independent 
negotiations and may conclude individual and independent 
service contracts under section 8, as amended by the Ocean 
Shipping Reform Act. Before June 1, 1997, the essential terms 
of those service contracts must continue to be filed with the 
Federal Maritime Commission.
    Paragraph (2) of section 104 of this bill, effective on 
June 1, 1997, further amends section 5 (b) and (e) of the 1984 
Act. Paragraph (2)(A) of section 104 amends subsection (b)(8) 
of the 1984 Act to require each conference agreement to provide 
that any member of the conference may take ``independent 
action'' on any conference rate or service item for 
transportation provided under section 8(a) of the 1984 Act upon 
not more than 3 business days notice to the conference. This 
amendment lowers the notice requirement for ``IAs'' from 10 
calendar days to 3 business days, and will reduce the 
opportunity for conferences to deter or interfere with their 
members' desires to deviate from conference rates.
    Paragraph (2)(B) of section 104 amends new subsection 
(b)(9) to reflect the transition from service contracts to 
ocean transportation contracts, effective on June 1, 1997.
    Paragraph (2)(C) of section 104 adds a new paragraph (10) 
to section 5(b) of the 1984 Act that requires each conference 
agreement to prohibit the conference from: (A) prohibiting or 
restricting the conference members from engaging in 
negotiations for ocean transportation contracts; and (B) 
issuing mandatory rules or requirements affecting ocean 
transportation contracts.
    The prohibitions of section 5(b)(10) are applicable to 
mandatory guidelines enforceable by the conference. They do not 
extend to voluntary guidelines or agreements among conference 
members concerning their use of ocean transportation contracts, 
or to discussion of such guidelines within the conference. Such 
voluntary guidelines are similarly not precluded by sections 
5(b)(10)(A) or 8(b)(4) of the Act. Thus, for example, a 
conference may discuss and agree upon voluntary guidelines 
concerning matters such as contract cycles, currency and 
adjustment factors, bunker surcharges and other rates and 
charges. However, adoption of voluntary guidelines or 
agreements among conference members conference members 
concerning ocean transportation contracts shall not bind or 
impose any obligations or requirements on any individual 
conference member. Thus, a member line could not be prevented, 
penalized or otherwise disciplined by the conference if it 
chooses to deviate from these guidelines and enter a contract 
that differs from these guidelines.
    The Committee notes that sections 5(b)(9) and (10) refer to 
``individual'' or ``independent'' negotiations and contracts. 
These references are not intended to suggest that joint 
contracts are impermissible.
    Paragraph (2)(D) is a technical amendment to section 5(e) 
of the 1984 Act to reflect the elimination of the requirement 
to file tariffs with the Federal Maritime Commission, effective 
on June 1, 1997.
    Other than conforming changes to reflect the transfer of 
functions from the Federal Maritime Commission to the Secretary 
of Transportation, H.R. 2149 does not alter current standards 
and procedures governing the filing, approval, and oversight of 
agreements entered by ocean carriers under section 4 of the 
1984 Act. Current agreement filing and review procedures and 
standards, including existing standards and practice under 
sections 5 and 6 of the Act, will be retained in full. The 
legislative history concerning agreement filing and approval 
that accompanied the 1984 Act remains authoritative in the 
construction of the 1984 Act as amended by the Ocean Shipping 
Reform Act, including in particular the discussion of sections 
6(g) and (h) included in the Joint Explanatory Statement of the 
Committee of Conference for the 1984 Act. (See H. Conf. Rep. 
No. 600, 98th Cong., 2d Sess. 31-37.) The Secretary of 
Transportation, however, will now be responsible for 
administering the standards and requirements contained in 
sections 6(g) and (h).
    Under the 1984 Act, no private person may bring an action 
under section 6(g) to challenge an agreement as being 
substantially anticompetitive since that authority is only 
provided to the administering body of the 1984 Act, now the 
Secretary of Transportation. The Committee notes that this 
limitation on private causes of action requires the Secretary 
of Transportation to review, monitor, and enforce agreements 
entered under section 4 of the Act to ensure that shippers and 
other purchasers of ocean transportation services are 
adequately protected from agreements that engage in conduct 
that falls within the standard of section 6(g). Further, any 
commercial party which deals with agreements entered under 
section 4 of the Act should be provided with a means for 
submitting information to the Secretary in the event that they 
experience problems or harm resulting from substantially 
anticompetitive conduct on the party of an agreement.

Sec. 105. Exemption from the antitrust laws

    Section 105 of this bill amends section 7 of the 1984 Act 
(46 App. U.S.C. 1706), to clarify the exemption from the 
antitrust laws for agreements, modifications, or cancellations 
in effect before the effective date of this Act and for 
tariffs, rates, fares, charges, classifications, rules, or 
regulations implementing the agreements, modifications, or 
cancellations. Section 105 also amends section 7(e) of the 1984 
Act to include ``department'' along with ``agency or court'' as 
potential decision-makers regarding the grant of antitrust 
immunity under this Act, in preparation for the transfer of 
conference oversight responsibilities under this Act to the 
Secretary of Transportation.
    The scope of antitrust immunity conferred by section 7 of 
the 1984 Act, in conjunction with sections 4 and 5 of the 1984 
Act, is retained under this bill.

Sec. 106. Common and contract carriage

    Section 106 of this bill repeals section 502 of the High 
Seas Driftnet Fisheries Enforcement Act (46 App. U.S.C. 1707a) 
related to the Federal Maritime Commission's Automated Tariff 
Filing and Information System, effective on June 1, 1997. Also 
effective on June 1, 1997, section 106 amends section 8 of the 
1984 Act (46 App. U.S.C. 1707) to abolish the requirement to 
file tariffs and essential terms of service contracts with the 
Federal Maritime Commission, and to replace that system with a 
more flexible and responsive regime for ocean transportation.
    This amendment does not preclude carriers, conferences, or 
others from using, publishing, and adhering to private, unfiled 
schedules of transportation rates, charges, classifications, 
rules and practices, after the current statutory requirements 
concerning government tariff filing and enforcement are 
eliminated. For example, removal of the express reference to 
tariffs in the definition of a ``conference'' under the 
amendments contained in this bill is a conforming change and 
does not work any substantive change in statutory or regulatory 
treatment of conferences under the Act or their ability to 
agree on matters currently set forth in tariffs. Thus, as a 
part of its collective ratemaking activity, a conference would 
still be permitted to utilize a common schedule of 
transportation rates which may include rates, charges, rules, 
ocean freight forwarder compensation, and other non-contract 
terms governing the ocean and intermodal transportation rates a 
``tariff.'' However, despite any use of the term ``tariff,'' 
the ``files rate doctrine'' under the 1984 Act is no longer 
applicable.
    Paragraph (2) of section 106 of this bill replaces section 
8 of the 1984 Act related to tariffs with a new section 8 that 
requires common carriers or conferences to make their schedule 
of rates for transportation services available in writing to 
any person upon request. Subsections (a)(2) and (a)(3) of new 
section 8 require disputes between a common carrier or 
conference and a person concerning certain items related to 
transportation services under subsection (a)(1), and claims 
concerning a rate for ocean transportation services which 
involves false billing, false classification, false weighing, 
false report of weight, or false measurement, to be decided in 
an appropriate State or Federal court of competent 
jurisdiction, unless the parties otherwise agree.
    Subsection (b) of new section 8 contains the authority for 
one or more common carriers or a conference to enter into an 
ocean transportation contract with one or more shippers. Under 
this subsection, an ocean common carrier may enter into ocean 
transportation contracts without limitations concerning the 
number of contracts or the amount of cargo or space involved. 
The Committee intends that this authority allow common carriers 
and shippers to enter into whatever ocean transportation 
contracts that meet the needs of their companies, without 
restrictions on the terms or conditions of the contracts, and 
without restrictions or interference by conferences.
    New subsection 8(b)(2) provides that a party to an ocean 
transportation contract shall have no duty in connection with 
services provided under the contract other than the duties 
specified by the terms of the contract. This provision is 
based, in part, on a similar contracting provision applicable 
to railroads, contained in the Staggers Rail Act of 1980. The 
provision is intended to ensure that ocean transportation 
contracts are treated as any other contract entered between two 
business parties regardless of the subject matter of the 
contract. Section 8(b)(2) serves to emphasize that the agreed 
upon terms of an ocean transportation contract shall govern the 
conduct of the parties to the contract and that the terms of 
the contract shall be enforced by the courts under the general 
principals of common law contracts.
    New subsection 8(b)(3)(A) provides that an ocean 
transportation contract or the transportation provided under 
that contract may not be challenged in any court on the grounds 
that the contract violated a provision of this Act. New 
subsection 8(b)(3)(B) provides that the exclusive remedy for an 
alleged breach of an ocean transportation contract is an action 
in an appropriate State or Federal court of competent 
jurisdiction, unless the parties otherwise agree.
    Subsection (b) of section 106 of this bill adds a new 
paragraph (4) to amended section 8(b) of the 1984 Act to allow 
carriers and shippers to agree to make ocean transportation 
contracts on a confidential basis, effective on January 1, 
1998. Under paragraph (4), an ocean common carrier that is a 
member of a conference agreement may not be prohibited or 
restricted by the conference from agreeing that the parties to 
the contract will not disclose any matter related to the ocean 
transportation contract to any person or entity, including any 
member of the agreement, the conference, any other carrier, 
shipper, or conference, or any other third party. The only 
exception to this confidentiality requirement is contained in 
new section 5(b)(10), which allows a conference to require a 
member of a conference to disclose the existence of an 
individual ocean transportation contract, but none of the terms 
or conditions contained in the contract, when the conference 
enters negotiations on an ocean transportation contract with 
the same shipper.

Sec. 107. Prohibited acts

    Section 107 of this bill amends section 10 of the 1984 Act 
(46 App. U.S.C. 1709) to repeal certain paragraphs of section 
10 that are no longer necessary or relevant to the new 
deregulated system of ocean transportation established by this 
bill. Section 107 also amends certain paragraphs in section 10 
of the 1984 Act to tailor them to the requirements of 
amendments made by this bill.
    Paragraph (1) of section 107 of this bill amends subsection 
10(b)(1) of the 1984 Act, effective January 1, 1997, to 
establish a consolidated prohibited act concerning 
discrimination against common carriers providing that, except 
for service contracts, no common carrier, either alone or in 
conjunction with any other person, directly or indirectly, may 
subject a person, place, port, or shipper to unreasonable 
discrimination. Paragraph (1) also repeals the prohibited acts 
contained in the following paragraphs of section 10(b) of the 
1984 Act: (2) (concerning rebates), (3) (concerning privileges 
not in accordance with tariffs or service contracts), (4) 
(concerning the use of false means to obtain transportation at 
less than tariff rates), and (8) (concerning deferred rebates).
    Paragraph (2) of section 107 of this bill amends subsection 
10(b) of the 1984 Act to abolish certain prohibited acts, 
including paragraphs (6) (concerning unfair or unjustly 
discriminatory practices), (9) (concerning loyalty contracts), 
(10) (concerning unjust discrimination between shippers or 
ports), and (11) (concerning undue preference or advantage).
    New subsection 10(b): retains the prohibited act concerning 
retaliation against shippers (formerly paragraph (2)); expands 
the prohibited act against an unreasonable refusal to deal to 
include any class or type of shipper (formerly paragraph (12)); 
retain the prohibited act against a refusal to negotiate with a 
shippers' association (formerly paragraph (13)); makes 
technical amendments to the prohibited act against knowingly 
accepting cargo from an unbonded non-vessel-operating common 
carrier (NVOCC) to reflect the consolidation of NVOCC's and 
freight forwarders under this bill (formerly paragraph (14)); 
and makes similar technical amendments to the prohibited act 
against knowingly entering into a service contract with an 
unbonded NVOCC (formerly paragraph (15)).
    New subsection 10(b)(8) (formerly paragraph (16)) contains 
an additional paragraph that, after December 31, 1997, 
prohibits the disclosure of the terms of ocean transportation 
contracts under paragraph (8) if the contracts have been made 
on a confidential basis. This new paragraph also establishes an 
action for breach of contract as an exclusive remedy for a 
disclosure under this paragraph.
    Paragraph (3) of section 107 of this bill makes several 
additional amendments to section 10 of the 1984 Act, effective 
June 1, 1997. Section 10(c)(5) of the 1984 Act is amended to 
limit ocean freight forwarder compensation under that paragraph 
to persons who perform the functions described in section 
3(14)(A), as amended by this Act. Section 10(c)(6) of the 1984 
Act is amended to reflect the substitution of ocean 
transportation contracts for service contracts in the new 
shipping regime created by this Act.
    Paragraph (4) of section 107 of this bill makes a technical 
amendment to section 10(d)(3 of the 1984 Act to conform to the 
amendments made to the prohibited acts contained in section 107 
of this bill.
    Paragraph (5) of section 107 of this bill prohibits a 
conference from imposing unjust or unreasonable ocean contract 
provisions on a person, place, port, class or type of shipper, 
or ocean freight forwarder.

Sec. 108. Reparations

    This section amends section 11(g) of the 1984 Act (46 App. 
1710(g)) to make counter-complainants eligible for reparations 
under this section, and make other changes in the section to 
conform to amendments made under other sections of this bill.

Sec. 109. Foreign laws and practices

    This section amends section 10002 of the Foreign Shipping 
Practices Act of 1988 (46 App. U.S.C. 1710a) to make technical 
and conforming changes consistent with amendments made under 
other sections of this bill.

Sec. 110. Penalties

    Section 110 of this bill amends section 13 of the 1984 Act 
(46 App. U.S.C. 1712), effective on June 1, 1997, to amend the 
appropriate penalties for certain violations of this Act to 
conform to amendments made under other sections of this bill.

Sec. 111. Reports

    Section 111 of this bill repeals section 15(b) of the 1984 
Act (46 App. U.S.C. 1714) relating to certification by the 
Federal Maritime Commission of policies concerning rebating.

Sec. 112. Regulations

    Section 112 of this bill repeals section 17(b) of the 1984 
Act (46 App. U.S.C. 1716(b)) dealing with interim rules and 
regulations that were authorized to implement the 1984 Act.

Sec. 113. Repeal

    Section 113 repeals section 18 of the 1984 Act (46 App. 
U.S.C. 1717) which required the study on the 1984 Act completed 
in 1992 by the Advisory Commission on Conferences in Ocean 
Shipping.

Sec. 114. Ocean freight forwarders

    Section 114 of this bill amends section 19 of the 1984 Act 
(46 App. U.S.C. 1718) to conform the application of section 19 
with the expanded definition of ocean freight forwarder under 
this bill to include non-vessel-operating common carrier.

Sec. 115. Effects on certain agreements and contracts

    Section 115 of this bill amends section 20(e) of the 1984 
Act (46 App. U.S.C. 1719(e)) to provide the savings provisions 
related to service contracts entered into and lawsuits filed 
before the dates of enactment of the provisions of this bill.

Sec. 116. Repeal

    Section 116 of this bill repeals section 23 of the 1984 Act 
(46 App. U.S.C. 1721), concerning sureties for non-vessel-
operating common carriers. The relevant sections of section 23 
of the 1984 Act are consolidated with the amendments made to 
section 19 of the Act under section 114 of this bill.

Sec. 117. Marine terminator operator schedules

    Section 117 of this bill adds a new section 24 to the 1984 
Act, effective on June 1, 1997, to ensure that marine terminal 
operators continue to be compensated for transferring or 
protecting property from loss, complying with a governmental 
requirement, or storing property beyond the period originally 
agreed upon.
    In many cases, necessary services are performed by terminal 
operators for the benefit of cargo without a contract or other 
agreement with the cargo owner. Because of the need for prompt 
and safe movement of cargo, there is no effective way to 
negotiate for providing terminal services before those services 
are rendered. Also, most government inspections of cargo occur 
at marine terminals, and terminal operators are required to 
comply with governmental requirements concerning cargo 
regardless of prior arrangements with the cargo owner.
    New section 24 requires marine terminal operators to 
publish a schedule of rates, regulations, and practices, 
including limitations of liability, pertaining to receiving, 
delivering, handling, or storing property at its marine 
terminal. The schedule is enforceable as an implied contract, 
without proof of actual knowledge of its provisions, for any 
activity by the marine terminal operator to transfer property, 
protect property, comply with governmental requirements, or 
store property beyond the terms of any prior agreement.

                TITLE II--CONTROLLED CARRIERS AMENDMENTS

Sec. 201. Controlled carriers

    Section 201 of this bill amends section 9 of the 1984 Act 
(46 App. U.S.C. 1708), effective June 1, 1997, to broaden the 
group of ocean carriers to which the controlled carrier 
provisions, including the penalties, could potentially by 
applied. Under current law, the controlled carrier provisions 
apply only to carriers that are control by foreign governments. 
The reported bill would also apply these provisions to ``* * * 
ocean common carriers that are not controlled, but who have 
been determined by the Secretary of Transportation to be 
structurally or financially affiliated with nontransportation 
entities or organizations (government or private) in such a way 
as to affect their pricing or marketplace behavior in an 
unfair, predatory, or anticompetitive way that disadvantages 
United States carriers.''
    The original purpose of the controlled carrier provisions 
is to ensure carriers that have the benefits of government 
ownership or control are subjected to scrutiny and, if 
warranted, penalties for unfair marketplace behavior that 
affects trade with the United States. The most significant 
benefit accruing from government control is the reduced need 
(or even no need) to make a profit in the transportation 
marketplace. Unfortunately, such scrutiny and penalties are 
necessary to ensure that government control or ownership does 
not become a marketplace advantage in setting prices that other 
non-government controlled carriers simply do not have.
    While the best approach from a free and fair market 
perspective would be no government control of ocean carriers, 
not all nations are prepared to adopt that approach. The 
controlled carrier provisions ensure that the harmful effects 
of government control to the marketplace can be addressed and 
dealt with by our government.
    In adopting the changes to the controlled carrier 
provisions, the Committee finds that in today's global economy, 
it is not just carriers that are government-owned, that can 
engage in unfair or anticompetitive pricing to the detriment of 
U.S. carriers. Carriers that are affiliated with other non-
transportation entities can be similarly structured within an 
overall private organization so that the transportation element 
is not looked upon to generate a profit enabling transportation 
therefore to be offered at unfair or anticompetitive prices.
    If this happens, the effect on the marketplace is no 
different than if a government controlled carrier engaged in 
this type of behavior. If we are concerned about how 
organizational relationships between a government and a carrier 
can distort marketplace behavior in ways that do harm to the 
marketplace, then we should have very similar concerns about 
structural or financial affiliations that may generate the same 
type of harmful marketplace behavior, even if they do not 
amount to government control as the term is understood today.
    Section 201 of H.R. 2149 also sets out the process by which 
a complaint could be brought or initiated by the Secretary. It 
is not one that could or should be used lightly. The Secretary 
would have to make a multi-step determination (after 
investigation and public hearings) that: (1) A carrier was 
structurally or financially affiliated with a government or 
private non-transportation entity; (2) that this affiliation 
was affected by their pricing or marketplace behavior in an 
unfair, predatory, or anticompetitive way; and (3) that this 
affiliation harmed United States carriers. This is no small 
hurdle to cross before a determination could be made and 
penalties applied.
    When the Secretary conducts such an investigation and makes 
a determination that penalties are warranted, he or she should 
have found that the prices initiated by such carriers are below 
fully allocated costs plus a reasonable profit. Such pricing 
behavior should cause remedial action by the Secretary when 
U.S. carriers are disadvantaged through substantial lost sales, 
unless such lost sales result from prices which meet, but do 
not undercut, the then-existing prices of a carrier in the 
trade.
    The Committee in no way believes this mechanism should be 
used routinely to regulate the prices charged in ocean shipping 
or engage in fishing expeditions related to pricing. The 
purpose of the provision is to zero in on specific problems in 
a particular market or trade and get the problems resolved. As 
a practical matter, the Committee believes and observes that 
most such problems would likely be resolved through 
consultation and negotiation before the process established by 
this bill were fully completed.
    The Committee would also observe that use of this process 
in a frivolous manner to cause the investigation of pricing 
that is lower than the market at any given time, yet is 
actually competitive pricing, would greatly undermine the value 
and intent of these legislative changes. The Committee expects 
the Secretary to administer these provisions with this in mind.

Sec. 202. Negotiating strategy to reduce Government ownership and 
        control of common carriers

    Section 202 of H.R. 2149 requires the Secretary of 
Transportation to develop and implement a negotiating strategy, 
not later than January 1, 1997, to persuade foreign governments 
to divest themselves of ownership and control of ocean common 
carriers.

       title iii--elimination of the federal maritime commission

Sec. 301. Plan for agency termination

    Title I of this bill deregulates the ocean shipping 
industry and abolishes the major functions of the Federal 
Maritime Commission (FMC). The Committee believes that a 
separate agency is not warranted to carry out the residual 
functions of the FMC, and directs, no later than 30 days after 
the date of enactment of this Act, the Director of the Office 
of Management and Budget, in consultation with the Secretary of 
Transportation, to submit a plan to Congress to eliminate the 
Federal Maritime Commission (FMC) by October 1, 1997. The plan 
must include a timetable for the transfer of FMC functions to 
the Secretary of Transportation as soon as possible in fiscal 
year 1996. The plan must also address personnel matters and 
other matters relevant to the transfer of remaining FMC 
functions. Other matters that should be addressed in the plan 
include technical legislative changes that should be made to 
abolish the FMC and transfer remaining functions to the 
Secretary.
    The Committee understands that the Director of the Office 
of Management and Budget has the inherent authority to 
implement the FMC phase-out plan as directed under this 
subsection (b) of this section. The Committee emphasizes that 
all FMC functions that remain at the end of fiscal year 1997 
must be transferred to the Secretary of Transportation, and not 
to any other department of agency.
    Finally, the Committee emphasizes that the phase-out of the 
FMC must begin as soon as possible in fiscal year 1996. In the 
phase-out plan, the Director should consider FMC functions that 
could be transferred immediately to the Secretary of 
Transportation. Regardless, the Director must take whatever 
steps are necessary to ensure that all FMC functions are 
transferred by the end of fiscal year 1997, and that no 
appropriation will be necessary in fiscal year 1998 for FMC 
operations.

            Committee Oversight Findings and Recommendations

    With respect to the requirements of clause 2(l)(3) of rule 
XI of the Rules of the House of Representatives, and clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
the Subcommittee on Coast Guard and Maritime Transportation of 
the Committee on Transportation in Infrastructure held a 
hearing to determine whether the current regulatory scheme 
governing ocean common carriage in the foreign commerce of the 
United States should be reformed to provide a greater degree of 
competition in ocean shipping under the Shipping Act of 1984, 
on August 1, 1995, and the Committee's oversight findings and 
recommendations are reflected in this report.

                     Inflationary Impact Statement

    Pursuant to clause 2(l)(4) of rule XI of the Rules of the 
House of Representatives, the Committee estimates that the 
enactment of H.R. 2149 will have no significant inflationary 
impact on prices and costs in the operations of the national 
economy.

                        Cost of the Legislation

    Clause 7(a) of rule XIII of the Rules of the House of 
Representatives requires an estimate and a comparison by the 
Committee of the costs which would be incurred in carrying out 
H.R. 2149. However, clause 7(d) provides that this requirement 
does not apply when the Committee has included in its report a 
timely submitted cost estimate of the bill prepared by the 
Director of the Congressional Budget Office under section 403 
of the Congressional budget Act of 1974.

                     Compliance With House Rule XI

    1. With respect to the requirement of clause 2(l)(3)(B) of 
rule XI of the Rules of the House of Representatives and 
section 308(a) of the Congressional Budget Act of 1974, H.R. 
2149 does not contain any new budget authority, new credit 
authority, or an increase or decrease in revenues or tax 
expenditures.
    2. With respect to the requirement of clause 2(l)(3)(D) of 
rule XI of the Rules of the House of Representatives, the 
Committee has received no report of oversight findings and 
recommendations from the Committee on Government Reform and 
Oversight of the subject of H.R. 2149.
    3. With respect to the requirement of clause 2(l)(3)(C) of 
rule XI of the Rules of the House of Representatives and 
section 403 of the Congressional Budget Act of 1974, the 
Committee has received the following cost estimate for H.R. 
2149 from the Director of the Congressional Budget Office.

                                     U.S. Congress,
                               Congressional Budget Office,
                                  Washington, DC, October 26, 1995.
Hon. Bud Shuster,
Chairman, Committee on Transportation and Infrastructure, House of 
        Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
reviewed H.R. 2149, the Ocean Shipping Reform Act of 1995, as 
ordered reported by the House Committee on Transportation and 
Infrastructure on August 2, 1995. Assuming appropriation of the 
necessary amounts, we estimate that implementing this 
legislation would cost the federal government about $6 million 
over the next three years. H.R. 2149 would not affect direct 
spending or receipts; therefore, pay-as-you-go procedures would 
not apply.
    H.R. 2149 would provide for a phased deregulation of the 
ocean shipping industry. The bill would repeal certain filing 
requirements imposed on shipping companies, reduce federal 
oversight of contracting activities, and terminate many of the 
regulatory functions carried out by the Federal Maritime 
Commission (FMC). In addition, the bill would require the 
Office of Management and Budget, in consultation with the 
Department of Transportation (DOT), to develop and implement a 
plan for eliminating the FMC over the next two years. Any FMC 
functions that would still need to be performed once the 
industry is deregulated would be transferred to DOT.
    Assuming appropriation of the necessary amounts, CBO 
estimates that the Administration would spend about $1 million 
in 1996 and a total of about $5 million over the following two 
years to implement H.R. 2149. In 1996, the additional funds 
would be needed for developing the plan for eliminating the FMC 
and other costs associated with transferring FMC functions and 
employees (about 20 positions) to DOT. In 1997 and 1998, most 
of the additional funds would be used for severance payments 
and other employee termination costs.
    The FMC currently receives appropriations of about $19 
million annually. We estimate that once termination of the 
agency has been completed, annual costs to carry on functions 
transferred to DOT would be about one-tenth of the current 
level--reflecting a reduction in the number of employees from 
about 200 to 20 or fewer--or less than $2 million.
    Enacting H.R. 2149 would have no direct impact on the 
budgets of state or local governments.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Deborah 
Reis and Karen McVey.
            Sincerely,
                                              James L. Blum
                                   (For June E. O'Neill, Director).

                           Department Reports

    The Committee received a favorable report on H.R. 2149 from 
the Department of Transportation on August 1, 1995. No other 
reports have been received on H.R. 2149.

                           The Secretary of Transportation,
                                    Washington, DC, August 1, 1995.
Hon. Bud Shuster,
Chairman, Committee on Transportation and infrastructure, House of 
        Representatives, Washington, DC.
    Dear Mr. Chairman: I understand that your Committee is 
considering legislation that would substantially deregulate the 
ocean shipping industry and ultimately eliminate the Federal 
Maritime Commission (FMC). I applaud your efforts and want to 
express the Department's strong support for the objectives of 
improving the efficiency of ocean shipping and streamlining 
economic regulation of the industry.
    Elimination of outmoded economic regulations and the 
agencies that oversee them, including the FMC, is consistent 
with both the Administration's effort to reform government and 
with the President's ten-year budget-balancing plan. The 
Department's proposals submitted earlier this year--to 
eliminate the Interstate Commerce Commission, to deregulate 
domestic offshore water carriage, and to reform laws applicable 
to the U.S.-flag fleet--evidence our commitment to economic 
regulatory reform. Significant reform of ocean shipping 
regulation, along with the Administration's proposed maritime 
security program, will enhance the efficiency of our foreign 
shipping trades and help maintain a viable U.S.-flag merchant 
marine. Under our maritime security program, the United States 
will be able to maintain a U.S.-flag fleet of up to 50 modern, 
efficient liner vessels crewed by skilled U.S. mariners. The 
U.S.-flag fleet provides low-cost and effective sealift 
capacity to resupply our armed forces in time of war or 
national emergency, and benefits the American economy by 
reducing the overall trade deficit.
    If ocean shipping reform legislation is enacted, the 
Department would be prepared to accommodate the surviving FMC 
functions as an integral part of its organizational structure. 
Details relating to the timing of the transfer of particular 
functions and the resources required to perform them would have 
to be worked out. (We would note that the 30-day period 
currently provided in section 301 of the draft bill for 
development of a plan to eliminate the FMC is inadequate. At 
least 60 days would be required for the development and 
coordination of an adequate plan.)
    Again, we commend your efforts to enact comprehensive 
legislation, with bipartisan support, to achieve our mutual 
goals of streamlining and improving regulation of the ocean 
shipping industry. We may have additional comments as the bill 
takes its final form, particularly with respect to regulation 
of the domestic offshore trades, freight forwarders, and marine 
terminal operators, and oversight of controlled carriers. In 
the meantime, please feel free to call me or Steven O. Palmer, 
Assistant Secretary for Governmental Affairs, if you have 
particular questions or concerns.
    The Office of Management and Budget advises that it has no 
objection, from the standpoint of the President's program, to 
submission of these views for the consideration of Congress.
            Sincerely,
                                                     Federico Pena.

         Changes in Existing Law Made by the Bill, As Reported

    In compliance with clause 3 of Rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

                          SHIPPING ACT OF 1984

   AN ACT To improve the international ocean commerce transportation 
                      system of the United States

    Be it enacted by the Senate and House of Representatives of 
the United States of America in Congress assembled, That this 
Act may be cited as the ``Shipping Act of 1984''.

                            TABLE OF CONTENTS

Sec. 2. Declaration of policy.
     * * * * * * *
[Sec. 15. Reports and certificates.]
Sec. 15. Reports.
     * * * * * * *
Sec. 24. Marine terminal operator schedules.

 The changes shown below will take effect on the date of the enactment 
                              of this Act

SEC. 2. DECLARATION OF POLICY.

    The purposes of this Act are--
          (1) to establish a nondiscriminatory regulatory 
        process for the common carriage of goods by water in 
        the foreign commerce of the United States with a a 
        minimum of government intervention and regulatory 
        costs;
          (2) to provide an efficient and economic 
        transportation system in the ocean commerce of the 
        United States that is, insofar as possible, in harmony 
        with, and responsive to, international shipping 
        practices; [and]
          (3) to encourage the development of an economically 
        sound and efficient United States-flag liner fleet 
        capable of meeting national security needs[.] ; and
          (4) to permit carriers and shippers to develop 
        transportation arrangements to meet their specific 
        needs.

      The changes shown below will take effect on January 1, 1997

SEC. 3. DEFINITIONS.

    As used in this Act--
          (1) * * *
          * * * * * * *
          [(9) ``deferred rebate'' means a return by a common 
        carrier of any portion of the 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, or for any other purpose, the payment 
        of which is deferred beyond the completion of the 
        service for which it is paid, and is made only if, 
        during both the period for which computed and the 
        period of deferment, the shipper has complied with the 
        terms of the rebate agreement or arrangement.]
          [10] (9) ``fighting ship'' means a vessel used in a 
        particular trade by an ocean common carrier or group of 
        such carriers for the purpose of excluding, preventing, 
        or reducing competition by driving another ocean common 
        carrier out of that trade.
          [11] (10) ``forest products'' means forest products 
        in an unfinished or semifinished state that require 
        special handling moving in lot sizes too large for a 
        container, including, but not limited to lumber in 
        bundles, rough timber, ties, poles, piling, laminated 
        beams, bundled siding, bundled plywood, bundled core 
        stock or veneers, bundled particle or fiber boards, 
        bundled hardwood, wood pulp in rolls, wood pulp in 
        unitized bales, paper board in rolls, and paper in 
        rolls.
          [12] (11) ``inland division'' means the amount paid 
        by a common carrier to an inland carrier for the inland 
        portion of through transportation offered to the public 
        by the common carrier.
          [13] (12) ``inland portion'' means the charge to the 
        public by a common carrier for the nonocean portion of 
        through transportation.
          [14] (13) ``loyalty contract'' means a contract with 
        an ocean common carrier or conference, other than a 
        service contract or contract based upon time-volume 
        rates, by which a shipper obtains lower rates by 
        committing all or a fixed portion of its cargo to that 
        carrier or conference.
          [15] (14) ``marine terminal operator'' means a person 
        engaged in the United States in the business of 
        furnishing wharfage, dock, warehouse, or other terminal 
        facilities in connection with a common carrier.
          [16] (15) ``maritime labor agreement'' means a 
        collective-bargaining agreement between an employer 
        subject to this Act, or group of such employers, and a 
        labor organization representing employees in the 
        maritime or stevedoring industry, or an agreement 
        preparatory to such a collective-bargaining agreement 
        among members of a multiemployer bargaining group, or 
        an agreement specifically implementing provisions of 
        such a collective-bargaining agreement or providing for 
        the formation, financing, or administration of a 
        multiemployer bargaining group, but the term does not 
        include an assessment agreement.
          [17] (16) ``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.
          [18] (17) ``ocean common carrier'' means a vessel-
        operating common carrier.
          [19] (18) ``ocean freight forwarder'' means a person 
        in the United States that--
                  (A) dispatches shipments from the United 
                States via common carriers and books or 
                otherwise arranges space for those shipments on 
                behalf of shippers; and
                  (B) processes the documentation or performs 
                related activities incident to those shipments.
          [(20)](19) ``person'' includes individuals, 
        corporations, partnerships, and associations existing 
        under or authorized by the laws of the United States or 
        of a foreign country.
          [(21)](20) ``service contract'' means a contract 
        between a shipper and an ocean common carrier or 
        conference in which the shipper makes a commitment to 
        provide a certain minimum quantity of cargo over a 
        fixed time period, and the ocean common carrier or 
        conference commits to a certain rate or rate schedule 
        as well as 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 either 
        party.
          [(22)](21) ``shipment'' means all of the cargo 
        carried under the terms of a single bill of lading.
          [(23)](22) ``shipper'' means an owner or person for 
        whose account the ocean transportation of cargo is 
        provided or the person to whom delivery is to be made.
          [(24)](23) ``shippers' association'' means a group of 
        shippers that consolidates or distributes freight on a 
        nonprofit basis for the members of the group in order 
        to secure carload, truckload, or other volume rates or 
        service contracts.
          [(25)](24) ``through rate'' means the single amount 
        charged by a common carrier in connection with through 
        transportation.
          [(26)](25) ``through transportation'' means 
        continuous transportation between origin and 
        destination for which a through rate is assessed and 
        which is offered or performed by one or more carriers, 
        at least one of which is a common carrier, between a 
        United States point or port and a foreign point or 
        port.
          [(27)](26) ``United States'' includes the several 
        States, the District of Columbia, the Commonwealth of 
        Puerto Rico, the Commonwealth of the Northern Marianas, 
        and all other United States territories and 
        possessions.

        The changes shown below will take effect on June 1, 1997

SEC. 3. DEFINITIONS.

    As used in this Act--
          (1) * * *
          * * * * * * *
          [(4) ``bulk cargo'' means cargo that is loaded and 
        carried in bulk without mark or count.]
          * * * * * * *
          (7) ``conference'' means an association of ocean 
        common carriers permitted, pursuant to an approved or 
        effective agreement, to engage in concerted activity 
        and to utilize [a common tariff;] a common schedule of 
        transportation rates; but the term does not include a 
        joint service, consortium, pooling, sailing, or 
        transshipment arrangement.
          * * * * * * *
          [(10) ``forest products'' means forest products in an 
        unfinished or semifinished state that require special 
        handling moving in lot sizes too large for a container, 
        including, but not limited to lumber in bundles, rough 
        timber, ties, poles, piling, laminated beams, bundled 
        siding, bundled plywood, bundled core stock or veneers, 
        bundled particle or fiber boards, bundled hardwood, 
        wood pulp in rolls, wood pulp in unitized bales, paper 
        board in rolls, and paper in rolls.]
          * * * * * * *
          [(13) ``loyalty contract'' means a contract with an 
        ocean common carrier or conference, other than a 
        service contract or contract based upon time-volume 
        rates, by which a shipper obtains lower rates by 
        committing all or a fixed portion of its cargo to that 
        carrier or conference.]
          * * * * * * *
          [(16) ``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.]
          * * * * * * *
          [(18) ``ocean freight forwarder'' means a person in 
        the United States that--
                  [(A) dispatches shipments from the United 
                States via common carriers and books or 
                otherwise arranges space for those shipments on 
                behalf of shippers; and
                  [(B) processes the documentation or performs 
                related activities incident to those 
                shipments.]
          (18) ``ocean freight forwarder'' means a person 
        that--
                  (A)(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; or
                  (ii) processes the documentation or performs 
                related activities incident to those shipments; 
                or
                  (B) acts as a common carrier that does not 
                operate the vessel by which the ocean 
                transportation is provided, and is a shipper in 
                its relationship with an ocean common carrier.
          (19) ``ocean transportation contract'' means a 
        contract in writing separate from the bill of lading or 
        receipt between 1 or more common carriers or a 
        conference and 1 or more shippers to provide specified 
        services under specified rates and conditions.
          [(20) ``service contract'' means a contract between a 
        shipper and an ocean common carrier or conference in 
        which the shipper makes a commitment to provide a 
        certain minimum quantity of cargo over a fixed time 
        period, and the ocean common carrier, or conference 
        commits to a certain rate or rate schedule as well as 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 either party.]
          * * * * * * *
          (22) ``shipper'' means an owner or person for whose 
        account the ocean transportation of cargo is provided 
        [or], the person to whom delivery is to be made[.] , a 
        shippers' association, or an ocean freight forwarder 
        that accepts responsibility for payment of the ocean 
        freight.
          [(23) ``shippers' association'' means a group of 
        shippers that consolidates or distributes freight on a 
        nonprofit basis for the members of the group in order 
        to secure carload, truckload, or other volume rates or 
        service contracts.]
          (23) ``shippers' association'' means a group of 
        shippers that consolidated or distributes freight, on a 
        nonprofit basis for the members of the group in order 
        to secure carload, truckload, or other volume rates or 
        ocean transportation contracts.
           * * * * * * *

        The changes shown below will take effect on June 1, 1997

SEC. 4. AGREEMENTS WITHIN SCOPE OF ACT.

    (a) Ocean Common Carriers.--This Act applies to agreements 
by or among ocean common carriers to--
         (1) * * *
           * * * * * * *
          (5) engage in exclusive, preferential, or cooperative 
        working arrangements among themselves or with one or 
        more marine terminal operators or [non-vessel-operating 
        common carriers] ocean freight forwarders;
           * * * * * * *
          [(7) regulate or prohibit their use of service 
        contracts.]
          (7) discuss any matter related to ocean 
        transportation contracts, and enter ocean 
        transportation contracts and agreements related to 
        those contracts.
           * * * * * * *

      The changes shown below will take effect on January 1, 1997

SEC. 5. AGREEMENTS.

    (a) * * *
    (b) Conference Agreements.--Each conference agreement 
must--
          (1) * * *
          * * * * * * *
          (4) [at the request of any member, require an 
        independent neutral body to police fully] state the 
        provisions, if any, for the policing of the obligations 
        of the conference and its members;
          * * * * * * *
          (7) establish procedures for promptly and fairly 
        considering shippers' requests and complaints; [and]
          (8) provide that any member of the conference may 
        take independent action on any rate or service item 
        required to be filed in a tariff under section 8(a) of 
        this Act upon not more than 10 calendar days' notice to 
        the conference and that the conference will include the 
        new rate or service item in its tariff for use by that 
        member, effective no later than 10 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[.]; and
          (9) provide that a member of the conference may enter 
        individual and independent negotiations and may 
        conclude individual and independent service contracts 
        under section 8 of this Act.

        The changes shown below will take effect on June 1, 1997

SEC. 5. AGREEMENTS.

    (a) * * *
    (b) Conference Agreements.--Each conference agreement 
must--
          (1) * * *
          * * * * * * *
          [(8) provide that any member of the conference may 
        take independent action on any rate or service item 
        required to be filed in a tariff under section 8(a) of 
        this Act upon not more than 10 calendar days' notice to 
        the conference and that the conference will include the 
        new rate or service item in its tariff for use by that 
        member, effective no later than 10 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; and]
          (8) provide that any member of the conference may 
        take independent action on any rate or service item 
        agreed upon by the conference for transportation 
        provided under section 8(a) of this Act upon not more 
        than 3 business days' notice to the conference, and 
        that the conference will provide the new rate or 
        service item for use by that member, effective no later 
        than 3 business 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 provision for that rate or service item;
          (9) provide that a member of the conference may enter 
        individual and independent negotiations and may 
        conclude individual and independent [service] ocean 
        transportation contracts under section 8 of this Act.
          (10) prohibit the conference from--
                  (A) prohibiting or restricting the members of 
                the conference from engaging in individual 
                negotiations for ocean transportation contracts 
                under section 8(b) with 1 or more shippers; and
                  (B) issuing mandatory rules or requirements 
                affecting ocean transportation contracts that 
                may be entered by 1 or more members of the 
                conference, except that a conference may 
                require that a member of the conference 
                disclose the existence of an existing 
                individual ocean transportation contract, when 
                the conference enters negotiations on the ocean 
                transportation contract with the same shipper.
          * * * * * * *
    (e) Maritime Labor Agreement.--This Act, the Shipping Act, 
1916, and the Intercoastal Shipping Act, 1933, do not apply to 
maritime labor agreements. This subsection does not exempt from 
this Act, the Shipping Act, 1916, or the Intercoastal Shipping 
Act, 1933, any rates, charges, regulations, or practices of a 
common [carrier that are required to be set forth in a tariff,] 
carrier, whether or not those rates, charges, regulations, or 
practices arise out of, or are otherwise related to, a maritime 
labor agreement.
          * * * * * * *

 The changes shown below will take effect on the date of the enactment 
                              of this Act

SEC. 7. EXEMPTION FROM ANTITRUST LAWS.

    (a) In General.--The antitrust laws do not apply to--
          (1) * * *
          * * * * * * *
          [(6) subject to section 20(e)(2) of this Act, any 
        agreement, modification, or cancellation approved by 
        the Commission before the effective date of this Act 
        under section 15 of the Shipping Act, 1916, or 
        permitted under section 14b thereof, and any properly 
        published tariff, rate, fare, or charge, 
        classification, rule, or regulation explanatory thereof 
        implementing that agreement, modification, or 
        cancellation.]
          (6) subject to section 20(e)(2) of this Act, any 
        agreement, modification, or cancellation, in effect 
        before the effective date of this Act and any tariff, 
        rate, fare, charge, classification, rule, or regulation 
        explanatory thereof implementing that agreement, 
        modification, or cancellation.
          * * * * * * *
    (c) Limitations.--(1) Any determination by an [agency] 
agency, department, or court that results in the denial or 
removal of the immunity to the antitrust laws set forth in 
subsection (a) shall not remove or alter the antitrust immunity 
for the period before the determination.
          * * * * * * *

        The changes shown below will take effect on June 1, 1997

[SEC. 8. TARIFFS.

    [(a) In General.--
          [(1) Except with regard to bulk cargo, forest 
        products, recycled metal scrap, waste paper, and paper 
        waste, each common carrier and conference shall file 
        with the Commission, and keep open to public 
        inspection, tariffs showing all its rates, charges, 
        classifications, rules, and practices between all 
        points or ports on its own route and on any through 
        transportation route that has been established. 
        However, common carriers shall not be required to state 
        separately or otherwise reveal in tariff filings the 
        inland divisions of a through rate. Tariffs shall--
                  [(A) state the places between which cargo 
                will be carried;
                  [(B) list each classification of cargo in 
                use;
                  [(C) state the level of ocean freight 
                forwarder compensation, if any, by a carrier or 
                conference;
                  [(D) state separately each terminal or other 
                charge, privilege, or facility under the 
                control of the carrier or conference and any 
                rules or regulations that in any way change, 
                affect, or determine any part or the aggregate 
                of the rates or charges; and
                  [(E) include sample copies of any loyalty 
                contract, bill of lading, contract of 
                affreightment, or other document evidencing the 
                transportation agreement.
          [(2) Copies of tariffs shall be made available to any 
        person, and a reasonable charge may be assessed for 
        them.
    [(b) Time-Volume Rates.--Rates shown in tariffs filed under 
subsection (a) may vary with the volume of cargo offered over a 
specified period of time.
    [(c) Service Contracts.--An ocean common carrier or 
conference may enter into a service contract with a shipper or 
shippers' association subject to the requirements of this Act. 
Except for service contracts dealing with bulk cargo, forest 
products, recycled metal scrap, waste paper, or paper waste, 
each contract entered into under this subsection shall be filed 
confidentially with the Commission, and at the same time, a 
concise statement of its essential terms shall be filed with 
the Commission and made available to the general public in 
tariff format, and those essential terms shall be available to 
all shippers similarly situated. The essential terms shall 
include--
          [(1) the origin and destination port ranges in the 
        case of port-to-port movements, and the origin and 
        destination geographic areas in the case of through 
        intermodal movements;
          [(2) the commodity or commodities involved;
          [(3) the minimum volume;
          [(4) the line-haul rate;
          [(5) the duration;
          [(6) service commitments; and
          [(7) the liquidated damages for nonperformance, if 
        any.
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.
    [(d) Rates.--No new or initial rate or change in an 
existing rate that results in an increased cost to the shipper 
may become effective earlier than 30 days after filing with the 
Commission. The Commission, for good cause, may allow such a 
new or initial rate or change to become effective in less than 
30 days. A change in an existing rate that results in a 
decreased cost to the shipper may become effective upon 
publication and filing with the Commission.
    [(e) Refunds.--The Commission may, upon application of a 
carrier or shipper, permit a common carrier or conference to 
refund a portion of freight charges collected from a shipper or 
to waive the collection of a portion of the charges from a 
shipper if--
          [(1) there is an error in a tariff of a clerical or 
        administrative nature or an error due to inadvertence 
        in failing to file a new tariff and the refund will not 
        result in discrimination among shippers, ports, or 
        carriers;
          [(2) the common carrier or conference has, prior to 
        filing an application for authority to make a refund, 
        filed a new tariff with the Commission that sets forth 
        the rate on which the refund or waiver would be based;
          [(3) the common carrier or conference agrees that if 
        permission is granted by the Commission, an appropriate 
        notice will be published in the tariff, or such other 
        steps taken as the Commission may require they give 
        notice of the rate on which the refund or waiver would 
        be based, and additional refunds or waivers as 
        appropriate shall be made with respect to other 
        shipments in the manner prescribed by the Commission in 
        its order approving the application; and
          [(4) the application for refund or waiver is filed 
        with the Commission within 180 days from the date of 
        shipment.
    [(f) Form.--The Commission may be regulation prescribe the 
form and manner in which the tariffs required by this section 
shall be published and filed. The Commission may reject a 
tariff that is not filed in conformity with this section and 
its regulations. Upon rejection by the Commission, the tariff 
is void and its use is unlawful.]

SEC. 8. COMMON AND CONTRACT CARRIAGE.

    (a) Common Carriage.--
          (1) A common carrier and a conference shall make 
        available a schedule of transportation rates which 
        shall include the rates, terms, and conditions for 
        transportation services not governed by an ocean 
        transportation contract, and shall provide the schedule 
        of transportation rates, in writing, upon the request 
        of any person. A common carrier and a conference may 
        assess a reasonable charge for complying with a request 
        for a rate, term, and condition, except that the charge 
        may not exceed the cost of providing the information 
        requested.
          (2) A dispute between a common carrier or conference 
        and a person as to the applicability of the rates, 
        terms, and conditions for ocean transportation services 
        shall be decided in an appropriate State or Federal 
        court of competent jurisdiction, unless the parties 
        otherwise agree.
          (3) A claim concerning a rate for ocean 
        transportation services which involves false billing, 
        false classification, false weighing, false report of 
        weight, or false measurement shall be decided in an 
        appropriate State or Federal court of competent 
        jurisdiction, unless the parties otherwise agree.
    (b) Contract Carriage.--
          (1) I or more common carriers or a conference may 
        enter into an ocean transportation contract with 1 or 
        more shippers. A common carrier may enter into ocean 
        transportation contracts without limitations concerning 
        the number of ocean transportation contracts or the 
        amount of cargo or space involved. The status of a 
        common carrier as an ocean common carrier is not 
        affected by the number or terms of ocean transportation 
        contracts entered.
          (2) A party to an ocean transportation contract 
        entered under this section shall have no duty in 
        connection with services provided under the contract 
        other than the duties specified by the terms of the 
        contract.
          (3)(A) An ocean transportation contract or the 
        transportation provided under that contract may not be 
        challenged in any court on the grounds that the 
        contract violates a provision of this Act.
          (B) The exclusive remedy for an alleged breach of an 
        ocean transportation contract is an action in an 
        appropriate State or Federal court of competent 
        jurisdiction, unless the parties otherwise agree.

       The change shown below will take effect on January 1, 1998

          (4) A contract entered under this section may be made 
        on a confidential basis, upon agreement of the parties. 
        An ocean common carrier that is a member of a 
        conference agreement may not be prohibited or 
        restricted from agreeing with 1 or more shippers that 
        the parties to the contract will not disclose the 
        rates, services, terms, or conditions of that contract 
        to any other member of the agreement, conference, or to 
        any other third party.

        The changes shown below will take effect on June 1, 1997

SEC. 9. CONTROLLED CARRIERS.

    (a) Controlled Carrier Rates.--No controlled carrier 
subject to this section may maintain rates or charges [in its 
tariffs or service contracts filed with the Commission] that 
are below a level that is just and reasonable, nor may any such 
carrier establish or maintain unjust or unreasonable 
classifications, rules, or regulations [in those tariffs or 
service contracts]. An unjust or unreasonable classification, 
rule, or regulation means one that results or is likely to 
result in the carriage or handling of cargo at rates or charges 
that are below a just and reasonable level. The Commission may, 
at any time after notice and hearing, disapprove any rates, 
charges, classifications, rules, or regulations that the 
controlled carrier has failed to demonstrate to be just and 
reasonable. In a proceeding under this subsection, the burden 
of proof is on the controlled carrier to demonstrate that its 
rates, charges, classifications, rules, or regulations are just 
and reasonable. Rates, charges, classifications, rules, or 
regulations [filed by a controlled carrier] that have been 
rejected, suspended, or disapproved by the Commission are void 
and their use is unlawful.
    (b) Rate Standards.--For the purpose of this section, in 
determining whether rates, charges, classifications, rules, or 
regulations by a controlled carrier are just and reasonable, 
the Commission may take into account appropriate factors 
including, but not limited to whether--
          (1) the rates or charges which have been [filed] 
        published 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, which are hereby defined as the 
        costs of another carrier, other than a controlled 
        carrier, operating similar vessels and equipment in the 
        same or a similar trade;
          (2) the rates, charges, classifications, rules, or 
        regulations are the same as or similar to those [filed] 
        published or assessed by other carriers in the same 
        trade;
          * * * * * * *
    (c) Effective Date of Rates.--[Notwithstanding section 8(d) 
of this Act, and except for service contracts the rates, 
charges, classifications, rules, or regulations of controlled 
carriers may not, without special permission of the Commission, 
become effective sooner than the 30th day after the date of 
filing with the Commission.] Each controlled carrier shall, 
upon the request of the Commission, file, within 20 days of 
request (with respect to its existing or proposed rates, 
charges, classifications, rules, or regulations), a statement 
of justification that sufficiently details the controlled 
carrier's need and purpose for such rates, charges, 
classifications, rules, or regulations upon which the 
Commission may reasonably base its determination of the 
lawfulness thereof.
    [(d) Disapproval of Rates.--Whenever the Commission is of 
the opinion that the rates, charges, classifications, rules, or 
regulations filed by a controlled carrier may be unjust and 
unreasonable, the Commission may issue an order to the 
controlled carrier to show cause why those rates, charges, 
classifications, rules, or regulations should not be 
disapproved. Pending a determination as to their lawfulness in 
such a proceeding, the Commission may suspend the rates, 
charges, classifications, rules, or regulations at any time 
before their effective date. In the case of rates, charges, 
classifications, rules, or regulations that have already become 
effective, the Commission may, upon the issuance of an order to 
show cause, suspend those rates, charges, classifications, 
rules, or regulations on not less than 60 days' notice to the 
controlled carrier. No period of suspension under this 
subsection may be greater than 180 days. Whenever the 
Commission has suspended any rates, charges, classifications, 
rules, or regulations under this subsection, the affected 
carrier may file new rates, charges, classifications, rules, or 
regulations to take effect immediately during the suspension 
period in lieu of the suspended rates, charges, 
classifications, rules, or regulations--except that the 
Commission may reject the new rates, charges, classifications, 
rules, or regulations if it is of the opinion that they are 
unjust and unreasonable.]
    (d) Within 120 days of the receipt of information requested 
by the Secretary under this section, the Secretary shall 
determine whether the rates, charges, classifications, rules, 
or regulations of a controlled carrier may be unjust and 
unreasonable. If so, the Secretary shall issue an order to the 
controlled carrier to show cause why those rates, charges, 
classifications, rules, or regulations should not be approved. 
Pending a determination, the Secretary may suspend the rates, 
charges, classifications, rules, or regulations at any time. No 
period of suspension may be greater than 180 days. Whenever the 
Secretary has suspended any rates, charges, classifications, 
rules, or regulations under this subsection, the affected 
carrier may publish and, after notification to the Secretary, 
assess new rates, charges, classifications, rules, or 
regulations--except that the Secretary may reject the new 
rates, charges, classifications, rules, or regulations if the 
Secretary determines that they are unreasonable.
          * * * * * * *
    (f) Exceptions.--[This] Subject to subsection (g), this 
section does not apply to--
          (1) a controlled carrier of a state whose vessels are 
        entitled to a treaty of the United States to receive 
        national or most-favored-nation treatment;
          * * * * * * *
    (g) The rate standards, information submissions, remedies, 
reviews, and penalties in this section shall also apply to 
ocean common carriers that are not controlled, but who have 
been determined by the Secretary to be structurally or 
financially affiliated with nontransportation entities or 
organizations (government or private) in such a way as to 
affect their pricing or marketplace behavior in an unfair, 
predatory, or anticompetitive way that disadvantages United 
States carriers. The Secretary may make such determinations 
upon request of any person or upon the Secretary's own motion, 
after conducting an investigation and a public hearing.
    (h) The Secretary shall issue regulations by June 1, 1997, 
that prescribe periodic price and other information to be 
submitted by controlled carriers and carriers subject to 
determinations made under subsection (g) that would be needed 
to determine whether prices charged by these carriers are 
unfair, predatory, or anticompetitive.

      The changes shown below will take effect on January 1, 1997

SEC. 10. PROHIBITED ACTS.

    (a) * * *
    (b) Common Carriers.--No common carrier, either alone or in 
conjunction with any other person, directly or indirectly, 
may--
          [(1) charge, demand, collect, or receive greater, 
        less, or different compensation for the transportation 
        of property or for any service in connection therewith 
        than the rates and charges that are shown in its 
        tariffs or service contracts;]
          (1) except for service contracts, subject a person, 
        place, port, or shipper to unreasonable 
        discrimination;'
          [(2) rebate, refund, or remit in any manner, or by 
        any device, any portion of its rates except in 
        accordance with its tariffs or service contracts;
          [(3) extend or deny to any person any privilege, 
        concession, equipment, or facility except in accordance 
        with its tariffs or service contracts;
          [(4) allow any person to obtain transportation for 
        property at less than the rates or charges established 
        by the carrier in its tariff or service contract by 
        means of false billing, false classification, false 
        weighing, false measurement, or by any other unjust or 
        unfair device or means;]
          * * * * * * *
          [(8) offer or pay any deferred rebates;]
          * * * * * * *

        The changes shown below will take effect on June 1, 1997

SEC. 10. PROHIBITED ACTS.

    (a) * * *
    [(b) Common Carriers.--No common carrier, either alone or 
in conjunction with any other person, directly or indirectly, 
may--
          [(1) except for service contracts, subject a person, 
        place, port, or shipper to unreasonable discrimination;
          * * * * * * *
          [(5) retaliate against any shipper by refusing, or 
        threatening to refuse, cargo space accommodations when 
        available, or resort to other unfair or unjustly 
        discriminatory methods because the shipper has 
        patronized another carrier, or has filed a complaint, 
        or for any other reason;
          [(6) except for service contracts, engage in any 
        unfair or unjustly discriminatory practice in the 
        matter of--
                  [(A) rates;
                  [(B) cargo classifications;
                  [(C) cargo space accommodations or other 
                facilities, due regard being had for the proper 
                loading of the vessel and the available 
                tonnage;
                  [(D) the loading and landing of freight; or
                  [(E) the adjustment and settlement of claims;
          [(7) employ any fighting ship;
          * * * * * * *
          [(9) use a loyalty contract, except in conformity 
        with the antitrust laws;
          [(10) demand, charge, or collect any rate or charge 
        that is unjustly discriminatory between shippers or 
        ports;
          [(11) except for service contracts, make or give any 
        undue or unreasonable preference or advantage to any 
        particular person, locality, or description of traffic 
        in any respect whatsoever;
          [(12) subject any particular person, locality, or 
        description of traffic to an unreasonable refusal to 
        deal or any undue or unreasonable prejudice or 
        disadvantage in any respect whatsoever;
          [(13) refuse to negotiate with a shippers' 
        association;
          [(14) knowingly and willfully accept cargo from or 
        transport cargo for the account of a non-vessel-
        operating common carrier that does not have a tariff 
        and a bond, insurance, or other surety as required by 
        sections 8 and 23 of this Act;
          [(15) knowingly and willfully enter into a service 
        contract with a non-vessel-operating common carrier or 
        in which a non-vessel-operating common carrier is 
        listed as an affiliate that does not have a tariff and 
        a bond, insurance, or other surety as required by 
        sections 8 and 23 of this Act; or
          [(16) knowingly disclose, offer, solicit, or receive 
        any information concerning the nature, kind, quantity, 
        destination, consignee, or routing of any property 
        tendered or delivered to a common carrier without the 
        consent of the shipper or consignee if that 
        information--
                  [(A) may be used to the detriment or 
                prejudice of the shipper or consignee;
                  [(B) may improperly disclose its business 
                transaction to a competitor; or
                  [(C) may be used to the detriment or 
                prejudice of any common carrier.
Nothing in paragraph (16) shall be construed to prevent 
providing such information, in response to legal process, to 
the United States, or to an independent neutral body operating 
within the scope of its authority to fulfill the policing 
obligations of the parties to an agreement effective under this 
Act. Not shall it be prohibited for any ocean common carrier 
that is a party to a conference agreement approved under this 
Act, or any receiver, trustee, lessee, agent, or employee of 
that carrier, or any other person authorized by that carrier to 
receive information, to give information to the conference or 
any person, firm, corporation, or agency designated by the 
conference, or to prevent the conference or its designee from 
soliciting or receiving information for the purpose of 
determining whether a shipper or consignee has breached an 
agreement with the conference or its member lines or for the 
purpose of determining whether a member of the conference has 
breached the conference agreement, or for the purpose of 
compiling statistics of cargo movement, but the use of such 
information for any other purpose prohibited by this Act or any 
other Act is prohibited.]
    (b) Common Carriers.--No common carrier, either alone or in 
conjunction with any other person, directly or indirectly, 
may--
          (1) except for ocean transportation contracts, 
        subject a person, place, port, or shipper to 
        unreasonable discrimination;
          (2) retaliate against any shipper by refusing, or 
        threatening to refuse, cargo space accommodations when 
        available, or resort to other unfair or unjustly 
        discriminatory methods because the shipper has 
        patronized another carrier or has filed a complaint, or 
        for any other reason;
          (3) employ any fighting ship;
          (4) subject any particular person, locality, class, 
        or type of shipper or description of traffic to an 
        unreasonable refusal to deal;
          (5) refuse to negotiate with a shippers' association;
          (6) knowingly and willfully accept cargo from or 
        transport cargo for the account of an ocean freight 
        forwarder that does not have a bond, insurance, or 
        other surety as required by section 19;
          (7) knowingly and willfully enter into an ocean 
        transportation contract with an ocean freight forwarder 
        or in which an ocean freight forwarder is listed as an 
        affiliate that does not have a bond, insurance, or 
        other surety as required by section 19; or
          (8)(A) knowingly disclose, offer, solicit, or receive 
        any information concerning the nature, kind, quantity, 
        destination, consignee, or routing of any property 
        tendered or delivered to a common carrier without the 
        consent of the shipper or consignee if that 
        information--
                  (i) may be used to the detriment or prejudice 
                of the shipper or consignee;
                  (ii) may improperly disclose its business 
                transaction to a competitor; or
                  (iii) may be used to the detriment or 
                prejudice of any common carrier;
        except that nothing in paragraph (8) shall be construed 
        to prevent providing the information, in response to 
        legal process, to the United States, or to an 
        independent neutral body operating within the scope of 
        its authority to fulfill the policing obligation of the 
        parties to an agreement effective under this Act. Nor 
        shall it be prohibited for any ocean common carrier 
        that is a party to a conference agreement approved 
        under this Act, or any receiver, trustee, lessee, 
        agent, or employee of that carrier, or any other person 
        authorized by that carrier to receive information, to 
        give information to the conference or any person, firm, 
        corporation, or agency designated by the conference or 
        to prevent the conference or its designee from 
        soliciting or receiving information for the purpose of 
        determining whether a shipper or consignee has breached 
        an agreement with a conference or for the purpose of 
        determining whether a member of the conference has 
        breached the conference agreement or for the purpose of 
        compiling statistics of cargo movement, but the use of 
        that information for any other purpose prohibited by 
        this Act or any other Act is prohibited; and
          (B) after December 31, 1997, the rates, services, 
        terms, and conditions of an ocean transportation 
        contract may not be disclosed under this paragraph if 
        the contract has been made on a confidential basis 
        under section 8(b) of this Act.
The exclusive remedy for a disclosure under this paragraph 
shall be an action for breach of contract as provided in 
section 8(b)(3) of this Act.
    (c) Concerted Action.--No conference or group of two or 
more common carriers may--
          (1) * * *
          * * * * * * *
          (5) deny in the export foreign commerce of the United 
        States compensation to an ocean freight forwarder as 
        defined in section 3(14)(A) of this Act or limit that 
        compensation to less than a reasonable amount; or
          (6) allocate shippers among specific carriers that 
        are parties to the agreement or prohibit a carrier that 
        is a party to the agreement from soliciting cargo from 
        a particular shipper, except as otherwise required by 
        the law of the Untied States or the importing or 
        exporting country, or as agreed to by a shipper in [a 
        service] an ocean transportation contract.
    (d) Common Carriers, ocean Freight Forwarders, and Marine 
Terminal Operators.--
          (1) * * *
          * * * * * * *
          (3) The prohibitions in subsection [(b) (11), (12), 
        and (16)] (b) (1), (4), and (8) of this section apply 
        to marine terminal operators.
          * * * * * * *
    (f) Conference Action.--No conference may subject a person, 
place, port, class or type of shipper, or ocean freight 
forwarder, to unjust or unreasonable ocean contract provisions.

        The changes shown below will take effect on June 1, 1997

     SEC. 11. COMPLAINTS, INVESTIGATIONS, REPORTS, AND REPARATIONS

    (a) * * *
          * * * * * * *
    (g) Reparations.--For any complaint filed within 3 years 
after the cause of action accrued, the Commission shall, upon 
petition of the complainant and after notice and hearing, 
direct payment of reparations to the complainant or counter-
complainant for actual injury (which, for purposes of this 
subsection, also includes the loss of interest at commercial 
rates compounded from the date of injury) caused by a violation 
of this Act plus reasonable attorney's fees. Upon a showing 
that the injury was caused by activity that is prohibited by 
section [10(b)(5) or (7)] 10(b) (2) or (3) or section 10(c) (1) 
or (3) of this Act, or that violates section 10(a) (2) or (3), 
the Commission may direct the payment of additional amounts; 
but the total recovery of a complainant may not exceed twice 
the amount of the actual injury. [In the case of injury caused 
by an activity that is prohibited by section 10(b)(6) (A) or 
(B) of this Act the amount of the injury shall be the 
difference between the rate paid by the injured shipper and the 
most favorable rate paid by another shipper.]
           * * * * * * *

        The changes shown below will take effect on June 1, 1997

SEC. 13. PENALTIES.

    (a) * * *
    (b) Additional Penalties.--
          [(1) For a violation of section 10(b) (1), (2), (3), 
        (4), or (8) of this Act, the Commission may suspend any 
        or all tariffs of the common carrier, or that common 
        carrier's right to use any or all tariffs of 
        conferences of which it is a member, for a period not 
        to exceed 12 months.
          [(2) For failure to supply information ordered to be 
        produced or compelled by subpena under section 12 of 
        this Act, the Commission may, after notice and an 
        opportunity for hearing, suspend any or all tariffs of 
        a common carrier, or that common carrier's right to use 
        any or all tariffs of conferences of which it is a 
        member.
          [(3) A common carrier that accepts or handles cargo 
        for carriage under a tariff that has been suspended or 
        after its right to utilize that tariff has been 
        suspended is subject to a civil penalty of not more 
        than $50,000 for each shipment.]
          (1) If the Secretary 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 1711 of this Act, 
        the Secretary 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 Secretary, 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 App. U.S.C. 91).
          [(4)] (2) If, in defense of its failure to comply 
        with a subpena or discovery order, a common carrier 
        alleges that documents or information located in a 
        foreign country cannot be produced because of the laws 
        of that country, the Commission shall immediately 
        notify the Secretary of State of the failure to comply 
        and of the allegation relating to foreign laws. Upon 
        receiving the notification, the Secretary of State 
        shall promptly consult with the government of the 
        nation within which the documents or information are 
        alleged to be located for the purpose of assisting the 
        Commission in obtaining the documents or information 
        sought.
          [(5)] (3) If, after notice and hearing, the 
        Commission finds that the action of a common carrier, 
        acting alone or in concert with any person, or a 
        foreign government has unduly impaired access of a 
        vessel documented under the laws of the United States 
        to ocean trade between foreign ports, the Commission 
        shall take action that it [finds appropriate, including 
        the imposition of any of the penalties authorized under 
        paragraphs (1), (2), and (3) of this subsection finds 
        appropriate including the imposition of the penalties 
        authorized under paragraph (2).
          [(6)] (4) Before an order under this subsection 
        becomes effective, it shall be immediately submitted to 
        the President who may, within 10 days after receiving 
        it, disapprove the order if the President finds that 
        disapproval is required for reasons of the national 
        defense or the foreign policy of the United States.
          * * * * * * *
    (f) Limitations.--
          (1) No penalty may be imposed on any person for 
        conspiracy to violate section [10 (a)(1), (b)(1), or 
        (b)(4)] 10(a)(1) of this Act, or to defraud the 
        Commission by concealment of such a violation.
          * * * * * * *

      The changes shown below will take effect on January 1, 1997

SEC. 15. REPORTS [AND CERTIFICATES].

    [(a) Reports.--]The Commission may require any common 
carrier, or any officer, receiver, trustee, lessee, agent, or 
employee thereof, to file with it any periodical or special 
report or any account, record, rate, or charge, or memorandum 
of any facts and transactions appertaining to the business of 
that common carrier. The report, account, record, rate, charge, 
or memorandum shall be made under oath whenever the Commission 
so requires, and shall be furnished in the form and within the 
time prescribed by the Commission. Conference minutes required 
to be filed with the Commission under this section shall not be 
released to third parties or published by the Commission.
    [(b) Certification.--The Commission shall require the chief 
executive officer of each common carrier and, to the extent it 
deems feasible, may require any shipper, shippers' association, 
marine terminal operator, ocean freight forwarder, or broker to 
file a periodic written certification made under oath with the 
Commission attesting to--
          [(1) a policy prohibiting the payment, solicitation, 
        or receipt of any rebate that is unlawful under the 
        provisions of this Act;
          [(2) the fact that this policy has been promulgated 
        recently to each owner, officer, employee, and agent 
        thereof;
          [(3) the details of the efforts made within the 
        company or otherwise to prevent or correct illegal 
        rebating; and
          [(4) a policy of full cooperation with the Commission 
        in its efforts to end those illegal practices.
Whoever fails to file a certificate required by the Commission 
under this subsection is liable to the United States for a 
civil penalty of not more than $5,000 for each day the 
violation continues.]
          * * * * * * *

 The changes shown below will take effect on the date of the enactment 
                              of this Act

SEC. 17. REGULATIONS.

    [(a)] The Commission may prescribe rules and regulations as 
necessary to carry out this Act.
    [(b) The Commission may prescribe interim rules and 
regulations necessary to carry out this Act. For this purpose, 
the Commission is excepted from compliance with the notice and 
comment requirements of section 553 of title 5, United States 
Code. All rules and regulations prescribed under the authority 
of this subsection that are not earlier superseded by final 
rules shall expire no later than 270 days after the date of 
enactment of this Act.

 The changes shown below will take effect on the date of the enactment 
                              of this Act

SEC. 18. AGENCY REPORTS AND ADVISORY COMMISSION.

    [(a) Collection of Data.--For a period of 5 years following 
the enactment of this Act, the Commission shall collect and 
analyze information concerning the impact of this Act upon the 
international ocean shipping industry, including data on:
          [1) increases or decreases in the level of tariffs;
          [(2) changes in the frequency or type of common 
        carrier services available to specific ports or 
        geographic regions;
          [(3) the number and strength of independent carriers 
        in various trades; and
          [(4) the length of time, frequency, and cost of major 
        types of regulatory proceedings before the Commission.
    [(b) Consultation With Other Departments and Agencies.--The 
Commission shall consult with the Department of Transportation, 
the Department of Justice, and the Federal Trade Commission 
annually concerning data collection. The Department of 
Transportation, the Department of Justice, and the Federal 
Trade Commission shall at all times have access to the data 
collected under this section to enable them to provide comments 
concerning data collection.
    [(c) Agency Reports.--
          [(1) Within 6 months after expiration of the 5-year 
        period specified in subsection (a), the Commission 
        shall report the information, with an analysis of the 
        impact of this Act, to Congress, to the Advisory 
        Commission on Conferences in Ocean Shipping established 
        in subsection (d), and to the Department of 
        Transportation, the Department of Justice, and the 
        Federal Trade Commission.
          (2) Within 60 days after the Commission submits its 
        report, the Department of Transportation, the 
        Department of Justice, and the Federal Trade Commission 
        shall furnish an analysis of the impact of this Act to 
        Congress and to the Advisory Commission on Conferences 
        in Ocean Shipping.
          [(3) The reports required by this subsection shall 
        specifically address the following topics:
                  [(A) the advisability of adopting a system of 
                tariffs based on volume and mass of shipment;
                  [(B) the need for antitrust immunity for 
                ports and marine terminals; and
                  [(C) the continuing need for the statutory 
                requirement that tariffs be filed with and 
                enforced by the Commission.
    [(d) Establishment and Composition of Advisory 
Commission.--
          [(1) Effective 5\1/2\ years after the date of 
        enactment of this Act, there is established the 
        Advisory Commission on Conferences in Ocean Shipping 
        (hereinafter referred to as the ``Advisory 
        Commission'').
          [(2) The Advisory Commission shall be composed of 17 
        members as follows:
                  [(A) a cabinet level official appointed by 
                the President;
                  [(B) 4 members from the United States Senate 
                appointed by the President pro tempore of the 
                Senate, 2 from the membership of the Committee 
                on Commerce, Science, and Transportation and 2 
                from the membership of the Committee on the 
                Judiciary;
                  [(C) 4 members from the United States House 
                of Representatives appointed by the Speaker of 
                House, 2 from the membership of the Committee 
                on Merchant Marine and Fisheries, and 2 from 
                the membership of the Committee on the 
                Judiciary; and
                  [(D) 8 members from the private sector 
                appointed by the President.
          [(3) The President shall designate the chairman of 
        the Advisory Commission.
          [(4) The term of office for members shall be for the 
        term of the Advisory Commission.
          [(5) A vacancy in the Advisory Commission shall not 
        affect its powers, and shall be filled in the same 
        manner in which the original appointment was made.
          [(6) Nine members of the Advisory Commission shall 
        constitute a quorum, but the Advisory Commission may 
        permit as few as 2 members to hold hearings.
    (e) Compensation of Members of the Advisory Commission.--
          [(1) Officials of the United States Government and 
        Members of Congress who are members of the Advisory 
        Commission shall serve without compensation in addition 
        to that received for their services as officials and 
        Members, but they shall be reimbursed for reasonable 
        travel, subsistence, and other necessary expenses 
        incurred by them in the performance of the duties 
        vested in the Advisory Commission.
          [(2) Members of the Advisory Commission appointed 
        from the private sector shall each receive compensation 
        not exceeding the maximum per diem rate of pay for 
        grade 18 of the General Schedule under section 5332 of 
        title 5, United States Code, when engaged in the 
        performance of the duties vested in the Advisory 
        Commission, plus reimbursement for reasonable travel, 
        subsistence, and other necessary expenses incurred by 
        them in the performance of those duties, 
        notwithstanding the limitations in sections 5701 
        through 5733 of title 5, United States Code.
          [(3) Members of the Advisory Commission appointed 
        from the private sector are not subject to section 208 
        of title 18, United States Code. Before commencing 
        service, these members shall file with the Advisory 
        Commission a statement disclosing their financial 
        interests and business and former relationships 
        involving or relating to ocean transportation. These 
        statements shall be available for public inspection at 
        the Advisory Commission's offices.
    (f) Advisory Commission Functions.--The Advisory Commission 
shall conduct a comprehensive study of, and make 
recommendations concerning, conferences in ocean shipping. The 
study shall specifically address whether the Nation would be 
best served by prohibiting conferences, or by closed or open 
conferences.
    [(g) Powers of the Advisory Commission.--
          [(1) The Advisory Commission may, for the purpose of 
        carrying out its functions, hold such hearings and sit 
        and act at such times and places, administer such 
        oaths, and require, by subpena or otherwise, the 
        attendance and testimony of such witnesses, and the 
        production of such books, records, correspondence, 
        memorandums, papers, and documents as the Advisory 
        Commission may deem advisable. Subpoenas may be issued 
        to any person within the jurisdiction of the United 
        States courts, under the signature of the chairman, or 
        any duly designated member, and may be served by any 
        person designated by the chairman, or that member. In 
        case of contumacy by, or refusal to obey a subpoena to, 
        any person, the Advisory Commission may advise the 
        Attorney General who shall invoke the aid of any court 
        of the United States within the jurisdiction of which 
        the Advisory Commission's proceedings are carried on, 
        or where that person resides or carries on business, in 
        requiring the attendance and testimony of witnesses and 
        the production of books, papers, and documents; and the 
        court may issue an order requiring that person to 
        appear before the Advisory Commission, there to produce 
        records, if so ordered, or to give testimony. A failure 
        to obey such an order of the court may be punished by 
        the court as a contempt thereof. All process in any 
        such case may be served in the judicial district 
        whereof the person is an inhabitant or may be found.
          [(2) Each department, agency, and instrumentality of 
        the executive branch of the Government, including 
        independent agencies, shall furnish to the Advisory 
        Commission, upon request made by the chairman, such 
        information as the Advisory Commission deems necessary 
        to carry out its functions.
          [(3) Upon request of the chairman, the Department of 
        Justice, the Department of Transportation, the Federal 
        Maritime Commission, and the Federal Trade Commission 
        shall detail staff personnel as necessary to assist the 
        Advisory Commission.
          [(4) The chairman may rent office space for the 
        Advisory Commission, may utilize the services and 
        facilities of other Federal agencies with or without 
        reimbursement, may accept voluntary services 
        notwithstanding section 1342 of title 31, United States 
        Code, may accept, hold, and administer gifts from other 
        Federal agencies, and may enter into contracts with any 
        public or private person or entity for reports, 
        research, or surveys in furtherance of the work of the 
        Advisory Commission.
    [(h) Final Report.--The Advisory Commission shall, within 1 
year after all of its members have been duly appointed, submit 
to the President and to the Congress a final report containing 
a statement of the findings and conclusions of the Advisory 
Commission resulting from the study undertaken under subsection 
(f), including recommendations for such administrative, 
judicial, and legislative action as it deems advisable. Each 
recommendation made by the Advisory Commission to the President 
and to the Congress must have the majority vote of the Advisory 
Commission present and voting.
    [(i) Expiration of the Commission.--The Advisory Commission 
shall cease to exist 30 days after the submission of its final 
report.
    [(j) Authorization of Appropriation.--There is authorized 
to be appropriated $500,000 to carry out the activities of the 
Advisory Commission.]

        The changes shown below will take effect on June 1, 1997

SEC. 19. OCEAN FREIGHT FORWARDERS.

    (a) License.--No person in the United States may act as an 
ocean freight forwarder unless that person holds a license 
issued by the Commission. The Commission shall issue a 
forwarder's license to any person that--
          (1) the Commission determines to be qualified by 
        experience and character to render forwarding services; 
        and
          (2) furnishes [a bond] 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.
A bond, insurance, or other surety obtained pursuant to this 
section shall be available to pay any judgment for damages 
against an ocean freight forwarder arising from its 
transportation-related activities under this Act or order for 
reparation issued pursuant to section 11 or 14 of this Act. An 
ocean freight forwarder 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.
    (b) Suspension or Revocation.--The Commission shall, after 
notice and hearing, suspend or revoke a license if it finds 
that the ocean freight forwarder is not qualified to render 
forwarding services or that it willfully failed to comply with 
a provision of this Act or with a lawful order, rule, or 
regulation of the Commission. The Commission may also revoke a 
forwarder's license for failure to maintain [a bond] a bond, 
proof of insurance, or other surety in accordance with 
subsection (a)(2).
          * * * * * * *
    (d) Compensation of Forwarders By Carriers.--
          (1) * * *
          * * * * * * *
          [(3) No compensation may be paid to an ocean freight 
        forwarder except in accordance with the tariff 
        requirements of this Act.]
          [(4)] (3) No ocean freight forwarder may receive 
        compensation from a common carrier with respect to a 
        shipment in which the forwarder has a direct or 
        indirect beneficial interest nor shall a common carrier 
        knowingly pay compensation on that shipment.

SEC. 20. REPEALS AND CONFORMING AMENDMENTS.

          * * * * * * *
    [(e) Savings Provisions.--
          [(1) Each service contract entered into by a shipper 
        and an ocean common carrier or conference before the 
        date of enactment of this Act may remain in full force 
        and effect and need not comply with the requirements of 
        section 8(c) of this Act until 15 months after the date 
        of enactment of this Act.
          [(2) This Act and the amendments made by it shall not 
        affect any suit--
                  [(A) filed before the date of enactment of 
                this Act; or
                  [(B) with respect to claims arising out of 
                conduct engaged in before the date of enactment 
                of this Act, filed within 1 year after the date 
                of enactment of this Act.]
    (e) Savings Provisions.--
          (1) Each service contract entered into by a shipper 
        and an ocean common carrier or conference before the 
        date of the enactment of the Ocean Shipping Reform Act 
        of 1995 may remain in full force and effect according 
        to its terms.
          (2) This Act and the amendments made by this Act 
        shall not affect any suit--
                  (A) filed before the date of the enactment of 
                the Ocean Shipping Reform Act of 1995;
                  (B) with respect to claims arising out of 
                conduct engaged in before the date of the 
                enactment of the Ocean Shipping Reform Act of 
                1995, filed within 1 year after the date of the 
                enactment of the Ocean Shipping Reform Act of 
                1995;
                  (C) with respect to claims arising out of 
                conduct engaged in after the date of the 
                enactment of the Ocean Shipping Reform Act of 
                1995 but before January 1, 1997, pertaining to 
                a violation of section 10(b) (1), (2), (3), 
                (4), or (8), as in effect before January 1, 
                1997, filed by June 1, 1997;
                  (D) with respect to claims pertaining to the 
                failure of a common carrier or conference to 
                file its tariffs or service contracts in 
                accordance with this Act in the period 
                beginning January 1, 1997, and ending June 1, 
                1997, filed by December 31, 1997; or
                  (E) with respect to claims arising out of 
                conduct engaged in on or after the date of the 
                enactment of the Ocean Shipping Reform Act of 
                1995 but before June 1, 1997, filed by December 
                31, 1997.
          * * * * * * *

        The changes shown below will take effect on June 1, 1997

[SEC. 23. SURETY FOR NON-VESSEL-OPERATING COMMON CARRIERS.

    [(a) Surety.--Each non-vessel-operating common carrier 
shall furnish to the Commission a bond, proof of insurance, or 
such other surety, as the Commission may require, in a form and 
an amount determined by the Commission to be satisfactory to 
insure the financial responsibility of that carrier. Any bond 
submitted pursuant to this section shall be issued by a surety 
to this section shall be issued by a surety company found 
acceptable by the Secretary of the Treasury.
    [(b) Claims Against Surety.--A bond, insurance, or other 
surety obtained pursuant to this section shall be available to 
pay any judgment for damages against a non-vessel-operating 
common carrier arising from its transportation-related 
activities under this Act or order for reparations issued 
pursuant to section 11 of this Act or any penalty assessed 
against a non-vessel-operating carrier pursuant to section 13 
of this Act.
    [(c) Resident Agent.--A non-vessel-operating common carrier 
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.
    [(d) Tariffs.--The Commission may suspend or cancel any or 
all tariffs of a non-vessel-operating common carrier for 
failure to maintain the bond, insurance, or other surety 
required by subsection (a) of this section or to designate an 
agent as required by subsection (c) of this section or for a 
violation of section 10(a)(1) of this Act.]

        The change shown below will take effect on June 1, 1997

SEC. 24. MARINE TERMINAL OPERATOR SCHEDULES.

    A marine terminal operator shall make available to the 
public a schedule of rates, regulations, and practices, 
including limitations of liability, pertaining to receiving, 
delivering, handling, or storing property at its marine 
terminal. The schedule shall be enforceable as an implied 
contract, without proof of actual knowledge of its provisions, 
for any activity by the marine terminal operator that is taken 
to--
          (1) efficiently transfer property between 
        transportation modes;
          (2) protect property from damage or loss;
          (3) comply with any governmental requirement; or
          (4) store property in excess of the terms of any 
        other contract or agreement, if any, entered into by 
        the marine terminal operator.
                              ----------                              

      SECTION 10002 OF THE FOREIGN SHIPPING PRACTICES ACT OF 1988

                 TITLE X--OCEAN AND AIR TRANSPORTATION

                 Subtitle A--Foreign Shipping Practices

SEC. 10001. SHORT TITLE.

  This subtitle may be cited as the ``Foreign Shipping 
Practices Act of 1988''.

        The change shown below will take effect on June 1, 1997

SEC. 10002. FOREIGN LAWS AND PRACTICES.

  (a) Definitions.--For purposes of this section--
          (1) ``common carrier'', ``marine terminal operator'', 
        [``non-vessel-operating common carrier'',] ``ocean 
        common carrier'', ``ocean freight forwarder'', 
        ``person'', ``shipper'', ``shippers' association'', and 
        ``United States'' have the meanings given each such 
        term, respectively, in section 3 of the Shipping Act of 
        1984 (46 App. U.S.C. 1702);
          * * * * * * *
          (4) ``maritime-related services'' means intermodal 
        operations, terminal operations, cargo solicitation, 
        forwarding and agency services, [non-vessel-operating 
        common carrier operations,] and all other activities 
        and services integral to total transportation systems 
        of ocean common carriers and their foreign domiciled 
        affiliates on their own and others' behalf;
          * * * * * * *
  (e) Action Against Foreign Carriers.--(1) Whenever, after 
notice and opportunity for comment or hearing, the Commission 
determines that the conditions specified in subsection (b) of 
this section exist, the Commission shall take such action as it 
considers necessary and appropriate against any foreign carrier 
that is a contributing cause to, or whose government is a 
contributing cause to, such conditions, in order to offset such 
conditions. Such action may include--
          (A) limitations on sailings to and from United States 
        ports or on the amount or type of cargo carried;
          [(B) suspension, in whole or in part, of any or all 
        tariffs filed with the Commission, including the right 
        of an ocean common carrier to use any or all tariffs of 
        conferences in United States trades of which it is a 
        member for such period as the Commission specifies;
          [(C) suspension, in whole or in part, of the right of 
        an ocean common carrier to operate under any agreement 
        filed with the Commission, including agreements 
        authorizing preferential treatment at terminals, 
        preferential terminal leases, space chartering, or 
        pooling of cargo or revenues with other ocean common 
        carriers; and
          [(D) a fee, not to exceed $1,000,000 per voyage.]
                  (B) suspension, in whole or in part, of the 
                right of an ocean common carrier to operate 
                under any agreement filed with the Secretary, 
                including agreements authorizing preferential 
                treatment at terminals, preferential terminal 
                leases, space chartering, or pooling of cargo 
                or revenues with other ocean common carriers; 
                and
                  (C) a fee, not to exceed $1,000,000 per 
                voyage.
          * * * * * * *
  (h) The actions against foreign carriers authorized in 
subsections (e) and (f) of this section may be used in the 
administration and enforcement of [section 13(b)(5) of the 
Shipping Act of 1984 (46 App. U.S.C. 1712(b)(5))] section 
13(b)(2) of the Shipping Act of 1984 (46 App. U.S.C. 
1712(b)(2)) or section 19(1)(b) of the Merchant Marine Act, 
1920 (46 App. U.S.C. 876).
          * * * * * * *

                                
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