Ocean Shipping Reform Act of 2021
Floor Speech
BREAK IN TRANSCRIPT
Mr. GARAMENDI. Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 4996) to amend title 46, United States Code, with respect to prohibited acts by ocean common carriers or marine terminal operators, and for other purposes, as amended.
The Clerk read the title of the bill.
The text of the bill is as follows: H.R. 4996
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE.
This Act may be cited as the ``Ocean Shipping Reform Act of 2021''. SEC. 2. PURPOSES.
Section 40101 of title 46, United States Code, is amended by striking paragraphs (2) through (4) and inserting the following:
``(2) ensure an efficient and competitive transportation system for the common carriage of goods by water in the foreign commerce of the United States that is, as far as possible, in harmony with fair and equitable international shipping practices;
``(3) encourage the development of a competitive and efficient liner fleet of vessels of the United States capable of meeting national security and commerce needs of the United States;
``(4) support the growth and development of United States exports through a competitive and efficient system for the common carriage of goods by water in the foreign commerce of the United States and by placing a greater reliance on the marketplace; and
``(5) promote reciprocal trade in the common carriage of goods by water in the foreign commerce of the United States.''. SEC. 3. SERVICE CONTRACTS.
Section 40502 of title 46, United States Code, is amended--
(1) in subsection (c)--
(A) in paragraph (7) by striking ``; and'' and inserting a semicolon;
(B) in paragraph (8) by striking the period and inserting ``; and''; and
(C) by adding at the end the following:
``(9) any other essential terms or minimum contract requirements that the Federal Maritime Commission determines necessary or appropriate.''; and
(2) by adding at the end the following:
``(g) Service Contract Requirement.--With respect to service contracts entered into under this section, a common carrier shall establish, observe, and enforce just and reasonable regulations and practices relating to essential terms and minimum contract requirements the Commission determines are necessary or appropriate under subsection (c)(9).''. SEC. 4. SHIPPING EXCHANGE REGISTRY.
(a) In General.--Chapter 405 of title 46, United States Code, is amended by adding at the end the following: ``Sec. 40504. Shipping exchange registry
``(a) In General.--No person may operate a shipping exchange involving ocean transportation in the foreign commerce of the United States unless the shipping exchange is registered as a national shipping exchange under the terms and conditions provided in this section and the regulations issued pursuant to this section.
``(b) Registration.--A person shall register a shipping exchange by filing with the Federal Maritime Commission an application for registration in such form as the Commission, by rule, may prescribe containing the rules of the exchange and such other information and documents as the Commission, by rule, may prescribe as necessary or appropriate in the public interest.
``(c) Exemption.--The Commission may exempt, conditionally or unconditionally, a shipping exchange from registration and licensing under this section if the Commission finds that the shipping exchange is subject to comparable, comprehensive supervision and regulation by the appropriate governmental authorities in the home country of the shipping exchange.
``(d) Regulations.--In issuing regulations pursuant to subsection (a), the Commission shall set standards necessary to carry out subtitle IV for registered national shipping exchanges, including the minimum requirements for service contracts established under section 40502, and issue licenses for registered national shipping exchanges.
``(e) Definition.--In this subsection, the term `shipping exchange' means a platform, digital, over-the-counter or otherwise, which connects shippers with common carriers (both vessel-operating and non-vessel-operating) for the purpose of entering into underlying agreements or contracts for the transport of cargo, by vessel or other modes of transportation.''.
(b) Applicability.--The registration requirement under section 40504 of title 46, United States Code (as added by this section), shall take effect on the date on which the Federal Maritime Commission issues regulations required under subsection (d) of such section.
(c) Clerical Amendment.--The analysis for chapter 405 of title 46, United States Code, is amended by adding at the end the following: ``40504. Shipping exchange registry.''. SEC. 5. DATA COLLECTION.
(a) In General.--Chapter 411 of title 46, United States Code, is amended by adding at the end the following: ``Sec. 41110. Data collection
``(a) In General.--Common carriers covered under this chapter shall submit to the Federal Maritime Commission a calendar quarterly report that describes the total import and export tonnage and the total loaded and empty 20-foot equivalent units per vessel (making port in the United States, including any territory or possession of the United States) operated by such common carrier.
``(b) Prohibition on Duplication.--Data required to be reported under subsection (a) may not duplicate information--
``(1) submitted to the Corps of Engineers pursuant to section 11 of the Act entitled `An Act authorizing the construction, repair, and preservation of certain public works on rivers and harbors, and for other purposes', approved September 22, 1922 (33 U.S.C. 555), by an ocean common carrier acting as a vessel operator; or
``(2) submitted pursuant to section 481 of the Tariff Act of 1930 (19 U.S.C. 1481) to U.S. Customs and Border Protection by merchandise importers.''.
(b) Clerical Amendment.--The analysis for chapter 411 of title 46, United States Code, is amended by adding at the end the following: ``41110. Data collection.''. SEC. 6. NATIONAL SHIPPER ADVISORY COMMITTEE.
(a) National Shipper Advisory Committee.--Section 42502(c)(3) of title 46, United States Code, is amended by inserting ``, including customs brokers or freight forwarders'' after ``ocean common carriers'' each place such term occurs.
(b) Analysis.--The analysis for chapter 425 of title 46, United States Code, is amended by inserting before the item relating to section 42501 the following: ``Sec.''. SEC. 7. ANNUAL REPORT AND PUBLIC DISCLOSURES.
(a) Report on Foreign Laws and Practices.--Section 46106(b) of title 46, United States Code, is amended--
(1) in paragraph (5) by striking ``and'' at the end;
(2) in paragraph (6)--
(A) by striking ``under this part'' and inserting ``under chapter 403''; and
(B) by striking the period and inserting a semicolon; and
(3) by adding at the end the following:
``(7) an identification of any anticompetitive or nonreciprocal trade practices by ocean common carriers;
``(8) an analysis of any trade imbalance resulting from the business practices of ocean common carriers, including an analysis of the data collected under section 41110; and
``(9) an identification of any otherwise concerning practices by ocean common carriers, particularly such carriers that are--
``(A) State-owned or State-controlled enterprises; or
``(B) owned or controlled by, is a subsidiary of, or is otherwise related legally or financially (other than a minority relationship or investment) to a corporation based in a country--
``(i) identified as a nonmarket economy country (as defined in section 771(18) of the Tariff Act of ( U.S.C. 1677(18))) as of the date of enactment of this paragraph;
``(ii) identified by the United States Trade Representative in the most recent report required by section 182 of the Trade Act of 1974 (19 U.S.C. 2242) as a priority foreign country under subsection (a)(2) of that section; or
``(iii) subject to monitoring by the Trade Representative under section 306 of the Trade Act of 1974 (19 U.S.C. 2416).''.
(b) Public Disclosure.--
(1) In general.--Section 46106 of title 46, United States Code, is amended by adding at the end the following:
``(d) Public Disclosures.--The Federal Maritime Commission shall publish, and annually update, on the website of the Commission--
``(1) all findings by the Commission of false certifications by common carriers or marine terminal operators under section 41104(a)(15) of this title; and
``(2) all penalties imposed or assessed against common carriers or marine terminal operators, as applicable, under sections 41107, 41108, and 41109, listed by each common carrier or marine terminal operator.''.
(2) Conforming and clerical amendments.--
(A) Conforming amendment.--The heading for section 46106 of title 46, United States Code, is amended by inserting ``and public disclosure'' after ``report''.
(B) Clerical amendment.--The analysis for chapter 461 of title 46, United States Code, is amended by striking the item related to section 46106 and inserting the following: ``46106. Annual report and public disclosure.''. SEC. 8. GENERAL PROHIBITIONS.
Section 41102 of title 46, United States Code, is amended by adding by adding at the end the following:
``(d) Prohibition on Retaliation.--A common carrier, marine terminal operator, or ocean transportation intermediary, either alone or in conjunction with any other person, directly or indirectly, may not retaliate against a shipper, a shipper's agent, or a motor carrier 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, has filed a complaint, or for any other reason.
``(e) Certification.--A common carrier or marine terminal operator shall not charge any other person demurrage or detention charges under a tariff, marine terminal schedule, service contract, or any other contractual obligation unless accompanied by an accurate certification that such charges comply with all rules and regulations concerning demurrage or detention issued by the Commission. The certification requirement only applies to the entity that establishes the charge, and a common carrier or marine terminal operator that collects a charge on behalf of another common carrier or marine terminal operator is not responsible for providing the certification, except that an invoice from a common carrier or marine terminal operator collecting a charge on behalf of another must include a certification from the party that established the charge.''. SEC. 9. PROHIBITION ON UNREASONABLY DECLINING CARGO.
(a) Unreasonably Declining Cargo.--Section 41104 of title 46, United States Code, is amended in subsection (a)--
(1) by striking paragraph (3) and inserting the following:
``(3) engage in practices that unreasonably reduce shipper accessibility to equipment necessary for the loading or unloading of cargo;'';
(2) in paragraph (12) by striking ``; or'' and inserting a semicolon;
(3) in paragraph (13) by striking the period and inserting a semicolon; and
(4) by adding at the end the following:
``(14) fail to furnish or cause a contractor to fail to furnish containers or other facilities and instrumentalities needed to perform transportation services, including allocation of vessel space accommodations, in consideration of reasonably foreseeable import and export demands; or
``(15) unreasonably decline export cargo bookings if such cargo can be loaded safely and timely, as determined by the Commandant of the Coast Guard, and carried on a vessel scheduled for the immediate destination of such cargo.''.
(b) Rulemaking on Unreasonably Declining Cargo.--
(1) In general.--Not later than 90 days after the date of enactment of this Act, the Commission shall initiate a rulemaking proceeding to define the term ``unreasonably decline'' for the purposes of subsection (a)(15) of section 41104 of title 46, United States Code (as added by subsection (a)).
(2) Contents.--The rulemaking under paragraph (1) shall address the unreasonableness of ocean common carriers prioritizing the shipment of empty containers while excluding, limiting, or otherwise reducing the shipment of full, loaded containers when such containers are readily available to be shipped and the appurtenant vessel has the weight and space capacity available to carry such containers if loaded in a safe and timely manner. SEC. 10. DETENTION AND DEMURRAGE.
(a) In General.--Section 41104 of title 46, United States Code, is further amended by adding at the end the following:
``(d) Certification.--Failure of a common carrier to include a certification under section 41102(e) alongside any demurrage or detention charge shall eliminate any obligation of the charged party to pay the applicable charge.
``(e) Demurrage and Detention Practices and Charges.-- Notwithstanding any other provision of law and not later than 30 days of the date of enactment of this subsection, a common carrier or marine terminal operator, shall--
``(1) act in a manner consistent with any rules or regulations concerning demurrage or detention issued by the Commission;
``(2) maintain all records supporting the assessment of any demurrage or detention charges for a period of 5 years and provide such records to the invoiced party or to the Commission on request; and
``(3) bear the burden of establishing the reasonableness of any demurrage or detention charges which are the subject of any complaint proceeding challenging a common carrier or marine terminal operator demurrage or detention charges as unjust and unreasonable.
``(f) Penalties for False or Inaccurate Certified Demurrage or Detention Charges.--In the event of a finding that the certification under section 41102(e) was inaccurate, or false after submission under section 41301, penalties under section 41107 shall be applied if the Commission determines, in a separate enforcement proceeding, such certification was inaccurate or false.''.
(b) Rulemaking on Detention and Demurrage.--
(1) In general.--Not later than 120 days after the date of enactment of this Act, the Federal Maritime Commission shall initiate a rulemaking proceeding to establish rules prohibiting common carriers and marine terminal operators from adopting and applying unjust and unreasonable demurrage and detention rules and practices.
(2) Contents.--The rulemaking under paragraph (1) shall address the issues identified in the final rule published on May 18, 2020, titled ``Interpretive Rule on Demurrage and Detention Under the Shipping Act'' (85 Fed. Reg. 29638), including the following:
(A) Establishing clear and uniform definitions for demurrage, detention, cargo availability for retrieval and associated free time, and other terminology used in the rule. The definition for cargo availability for retrieval shall account for government inspections.
(B) Establishing that demurrage and detention rules are not independent revenue sources but incentivize efficiencies in the ocean transportation network, including the retrieval of cargo and return of equipment.
(C) Prohibiting the consumption of free time or collection of demurrage and detention charges when obstacles to the cargo retrieval or return of equipment are within the scope of responsibility of the carrier or their agent and beyond the control of the invoiced or contracting party.
(D) Prohibiting the commencement or continuation of free time unless cargo is available for retrieval and timely notice of cargo availability has been provided.
(E) Prohibiting the consumption of free time or collection of demurrage charges when marine terminal appointments are not available during the free time period.
(F) Prohibiting the consumption of free time or collection of detention charges on containers when the marine terminal required for return is not open or available.
(G) Requiring common carriers to provide timely notice of--
(i) cargo availability after vessel discharge;
(ii) container return locations; and
(iii) advance notice for container early return dates.
(H) Establishing minimum billing requirements, including timeliness and supporting information that shall be included in or with invoices for demurrage and detention charges that will allow the invoiced party to validate the charges.
(I) Requiring common carriers and marine terminal operators to establish reasonable dispute resolution policies and practices.
(J) Establishing the responsibilities of shippers, receivers, and draymen with respect to cargo retrieval and equipment return.
(K) Clarifying rules for the invoicing of parties other than the shipper for any demurrage, detention, or other similar per container charges, including determining whether such parties should be billed at all.
(c) Rulemaking on Minimum Service Standards.--Not later than 90 days after the date of enactment of this Act, the Commission shall initiate a rulemaking proceeding to incorporate subsections (d) through (f) of 41104 of title 46, United States Code, which shall include the following:
(1) The obligation to adopt reasonable rules and practices related to or connected with the furnishing and allocation of adequate and suitable equipment, vessel space accommodations, containers, and other instrumentalities necessary for the receiving, loading, carriage, unloading and delivery of cargo.
(2) The duty to perform the contract of carriage with reasonable dispatch.
(3) The requirement to carry United States export cargo if such cargo can be loaded safely and timely, as determined by the Commandant of the Coast Guard, and carried on a vessel scheduled for such cargo's immediate destination.
(4) The requirement of ocean common carriers to establish contingency service plans to address and mitigate service disruptions and inefficiencies during periods of port congestion and other market disruptions. SEC. 11. ASSESSMENT OF PENALTIES.
(a) Assessment of Penalties.--Section 41109 of title 46, United States Code, is amended--
(1) in subsection (a)--
(A) by inserting ``or, in addition to or in lieu of a civil penalty, order the refund of money'' after ``this part''; and
(B) by inserting ``or refund of money'' after ``conditions, a civil penalty'';
(2) in subsection (c) by inserting ``or refund of money'' after ``civil penalty'';
(3) in subsection (e) by inserting ``or order a refund of money'' after ``civil penalty''; and
(4) in subsection (f) by inserting ``or who is ordered to refund money'' after ``civil penalty is assessed''.
(b) Additional Penalties.--Section 41108(a) of title 46, United States Code, is amended by striking ``section 41104(1), (2), or (7)'' and inserting ``subsections (d) or (e) of section 41102 or paragraph (1), (2), (7), (14), or (15) of section 41104(a)''.
(c) Conforming Amendment.--Section 41309 of title 46, United States Code, is amended--
(1) in subsection (a)--
(A) by inserting ``or refund of money'' after ``payment of reparation''; and
(B) by inserting ``or to whom the refund of money was ordered'' after ``award was made''; and
(2) in subsection (b) by inserting ``or refund of money'' after ``award of reparation''.
(d) Award of Reparations.--Section 41305(c) of title 46, United States Code, is amended--
(1) by inserting ``or (c)'' after ``41102(b)''; and
(2) by inserting ``, or if the Commission determines that a violation of section 41102(e) was made willfully or knowingly'' after ``of this title''. SEC. 12. INVESTIGATIONS.
Section 41302 of title 46, United States Code, is amended by striking ``or agreement'' and inserting ``, agreement, fee, or charge''. SEC. 13. INJUNCTIVE RELIEF.
Section 41307(b) to title 46, United States Code, is amended--
(1) in paragraph (3)--
(A) in the heading by striking ``and third parties''; and
(B) by striking the second sentence; and
(2) by adding at the end the following:
``(5) Third party intervention.--The court may allow a third party to intervene in a civil action brought under this section.''. SEC. 14. TECHNICAL AMENDMENTS.
(a) Federal Maritime Commission.--The analysis for chapter 461 of title 46, United States Code, is amended by striking the first item relating to chapter 461.
(b) Assessment of Penalties.--Section 41109(c) of title 46, United States Code, is amended by striking ``section 41104(1) or (2)'' and inserting ``paragraph (1) or (2) of section 41104(a)''.
(c) National Shipper Advisory Committee.--Section 42502(c)(3) of title 46, United States Code is amended by striking ``Representation'' and all that follows through ``Members'' and inserting ``Representation.--Members''. SEC. 15. AUTHORIZATION OF APPROPRIATIONS.
Section 46108 of title 46, United States Code, is amended by striking ``$29,086,888 for fiscal year 2020 and $29,639,538 for fiscal year 2021'' and inserting ``$32,603,492 for fiscal year 2022 and $35,863,842 for fiscal year 2023''. SEC. 16. NAS STUDY ON SUPPLY CHAIN INDUSTRY.
(a) In General.--Not later than 60 days after the date of enactment of this Act, the Secretary of Transportation shall seek to enter into an agreement with the National Academy of Sciences under which the National Academy shall conduct a study on the United States supply chain that examines data constraints that impede the flow of maritime cargo and add to supply chain inefficiencies and that identifies data sharing systems that can be employed to improve the functioning of the United States supply chain.
(b) Contents.--The study required under subsection (a) shall include--
(1) the identification of where bottlenecks or chokepoints are most prominent within the United States supply chain;
(2) the identification of what common shipping data is created with each hand-off of a container through the United States supply chain and how such data is stored and shared;
(3) the identification of critical data elements used by any entity covered by subsection (c), including the key elements used for various supply chain business processes;
(4) a review of the methodology used to store, access, and disseminate shipping data across the United States supply chain and evaluation of the inefficiencies in such methodology;
(5) an analysis of existing and potential impediments to the free flow of information among entities covered by subsection (c), including--
(A) identification of barriers that prevent carriers, terminals, and shippers from having access to commercial data; and
(B) any inconsistencies in--
(i) terminology used across data elements connected to the shipment, arrival, and unloading of a shipping container; and
(ii) the classification systems used across the United States supply chain, including inconsistencies in the names of entities covered by subsection (c), geographical names, and terminology;
(6) the identification of information to be included in an improved data sharing system designed to plan, execute, and monitor the optimal loading and unloading of maritime cargo; and
(7) the identification of existing software and data sharing platforms available to facilitate propagation of information to all agents involved in the loading and unloading of maritime cargo and evaluate the effectiveness of such software and platforms if implemented.
(c) Collection of Information.--In conducting the study required under subsection (a), the National Academy of Sciences shall collect information from--
(1) vessel operating common carriers and non-vessel operating common carriers;
(2) marine terminal operators;
(3) commercial motor vehicle operators;
(4) railroad carriers;
(5) chassis providers;
(6) ocean transportation intermediaries;
(7) custom brokers;
(8) freight forwarders;
(9) shippers and cargo owners;
(10) the National Shipper Advisory Committee;
(11) relevant government agencies, such as the Federal Maritime Commission, the Surface Transportation Board, and the United States Customs and Border Protection;
(12) to the extent practicable, representatives of foreign countries and maritime jurisdictions outside of the United States; and
(13) any other entity involved in the transportation of ocean cargo and the unloading of cargo upon arrival at a port.
(d) Facilitation of Data Sharing.--In carrying out the study under subsection (a), the National Academy of Sciences may solicit information from any relevant agency relating to the United States supply chain.
(e) Report.--Not later than 18 months after entering into an arrangement with the Secretary under subsection (a), the National Academy of Sciences shall submit to the Committee on Transportation and Infrastructure of the House of Representatives and the Committee on Commerce, Science, and Transportation of the Senate, and make available on a publicly accessible website, a report containing--
(1) the study required under subsection (a);
(2) the information collected under subsections (b) and (c), excluding any personally identifiable information or sensitive business information; and
(3) any recommendations for--
(A) common data standards to be used in the United States supply chain; and
(B) policies and protocols that would streamline information sharing across the United States supply chain. SEC. 17. TEMPORARY EMERGENCY AUTHORITY.
(a) Public Input on Information Sharing.--
(1) In general.--Not later than 30 days after the date of enactment of this Act, the Federal Maritime Commission shall issue a request for information seeking public comment regarding--
(A) whether congestion of the common carriage of goods has created an emergency situation of a magnitude such that there exists a substantial adverse effect on the competitiveness and reliability of the international ocean transportation supply system;
(B) whether an emergency order described in subsection (b) would alleviate such an emergency situation; and
(C) the appropriate scope of such an emergency order, if applicable.
(2) Consultation.--During the public comment period under paragraph (1), the Commission may consult, as the Commission determines to be appropriate, with--
(A) other Federal departments and agencies; and
(B) persons with expertise relating to maritime and freight operations.
(b) Authority to Issue Emergency Order Requiring Information Sharing.--On making a unanimous determination described in subsection (c), the Commission may issue an emergency order requiring any common carrier or marine terminal operator to share directly with relevant shippers, rail carriers, or motor carriers information relating to cargo throughput and availability, in order to ensure the efficient transportation, loading, and unloading of cargo to or from--
(1) any inland destination or point of origin;
(2) any vessel; or
(3) any point on a wharf or terminal.
(c) Description of Determination.--
(1) In general.--A determination referred to in subsection (b) is a unanimous determination by the Commission that congestion of common carriage of goods has created an emergency situation of a magnitude such that there exists a substantial adverse effect on the competitiveness and reliability of the international ocean transportation supply system.
(2) Factors for consideration.--In issuing an emergency order under subsection (b), the Commission shall ensure that such order includes parameters relating to temporal and geographic scope, taking into consideration the likely burdens on ocean carriers and marine terminal operators and the likely benefits on congestion relating to the purposes described in section 40101 of title 46, United States Code.
(d) Petitions for Exception.--
(1) In general.--A common carrier or marine terminal operator subject to an emergency order issued under this section may submit to the Commission a petition for exception from 1 or more requirements of the emergency order, based on a showing of undue hardship or other condition rendering compliance with such a requirement impractical.
(2) Determination.--Not later than 21 days after the date on which a petition for exception under paragraph (1) is submitted, the Commission shall determine whether to approve or deny such petition by majority vote.
(3) Inapplicability pending review.--The requirements of an emergency order that is the subject of a petition for exception under this subsection shall not apply to a petitioner during the period for which the petition is pending.
(e) Limitations.--
(1) Term.--An emergency order issued under this section shall remain in effect for a period of not longer than 60 days.
(2) Renewal.--The Commission may renew an emergency order issued under this section for an additional term by a unanimous determination by the Commission.
(f) Sunset.--The authority provided by this section shall terminate on the date that is 2 years after the date of enactment of this Act.
(g) Definitions.--In this section:
(1) Common carrier.--The term ``common carrier'' has the meaning given such term in section 40102 of title 46, United States Code.
(2) Motor carrier.--The term ``motor carrier'' has the meaning given such term in section 13102 of title 49, United States Code.
(3) Rail carrier.--The term ``rail carrier'' has the meaning given such term in section 10102 of title 49, United States Code.
(4) Shipper.--The term ``shipper'' has the meaning given such term in section 40102 of title 46, United States Code. SEC. 18. DETERMINATION OF BUDGETARY EFFECTS.
The budgetary effects of this Act, for the purpose of complying with the Statutory Pay-As-You-Go Act of 2010, shall be determined by reference to the latest statement titled ``Budgetary Effects of PAYGO Legislation'' for this Act, submitted for printing in the Congressional Record by the Chairman of the House Budget Committee, provided that such statement has been submitted prior to the vote on passage.
BREAK IN TRANSCRIPT
Mr. GARAMENDI. 4996, as amended.
Mr. Speaker, I want to thank the chairman of the committee, Mr. DeFazio. Congressman Dusty Johnson and I announced our intention to pursue this bipartisan legislation, the Ocean Shipping Reform Act of 2021, just this past June. In late August, we introduced H.R. 4996 and have since earned the support of more than 90 bipartisan cosponsors. On November 17, the Biden administration put out a public statement endorsing our bipartisan bill.
Now, less than 4 months since we first began to develop this legislation, I am thrilled--in fact, I am awed, and I am amazed but very happy--that the House is taking up our comprehensive reform.
The amendment in the nature of a substitute reflects relatively minor changes and a reorganization of H.R. 4996 as introduced. In other words, it is not important to the substance of the bill. I am thrilled with the compromise legislative text reached by the committee's majority and minority staff and the members.
This is what the voters sent us here to do, to identify problems, develop practical solutions, and then work together across the aisle to reach a compromise to achieve a result. That is exactly what the House, both Democrats and Republicans, are now doing in taking up this bipartisan Ocean Shipping Reform Act of 2021 on this date.
I want to thank the gentleman from Oregon (Mr. DeFazio); the gentleman from California (Mr. Carbajal); the ranking member, the gentleman from Missouri (Mr. Graves); and the gentleman from Ohio (Mr. Gibbs) for working with me and my Republican counterpart, the gentleman from South Dakota (Mr. Johnson) to get this result.
I will very, very briefly go through what the bill attempts to do. We are all aware that the pandemic highlighted the longstanding issues of the ocean shipping industry and also the staggering vulnerabilities in the integral supply chain that drives global commerce.
The Ocean Shipping Reform Act would be the first overhaul of Federal regulations for the international ocean shipping industry since 1998. For decades, the United States has run a significant trade imbalance, due in large part to export-driven, nonmarket economies like mainland China.
In 2001, the People's Republic of China was granted permanent normal trade relations with the United States, the so-called most favored nation status, following that country's admission to the World Trade Organization. There has since been considerable consolidation among the foreign-based ocean carriers, coinciding with the continued decline of the U.S.-flagged international fleet in favor of foreign flags of convenience.
A handful of foreign-flagged ocean carriers now dominate the global ocean shipping industry, three of which are from China, another from Korea, and a fifth from Europe, several of which are effectively controlled by these foreign governments. Foreign business access to the American market and our consumers is a privilege; it is not a right.
In 2001, the United States' trade imbalance with the People's Republic of China was approximately $83 billion in nominal dollars. In 2020, our trade imbalance with mainland China was $310 billion, having increased year over year most every year.
This legislation would ensure reciprocal trade to help reduce the United States' longstanding trade imbalance with export-driven countries like China.
California agricultural exporters and other businesses are willing to pay to ensure that their products reach markets in Asia, but they can't pay a fortune to do it. One example, Jelly Belly, the candy company in my district, last spring would pay $3,000 for a container full of candy to ship to the Western Pacific. Today it is $31,900. That is the problem.
The Ocean Shipping Reform Act does make critical reforms requested by major U.S. importers, like the National Retail Federation's member companies. There are many, many examples. I will let those go for now.
Mr. JOHNSON of South Dakota.
It is impossible for any American to ignore the supply chain crunch, a supply chain crunch that seemingly impacts most every part of the American economy.
In that kind of an environment, I want to echo so much of what my friend from California said. I am indeed thrilled that the House is taking up this bill today. I am grateful for his leadership. I am grateful to be the lead Republican on this, and I am grateful that this bill has been endorsed by 360 national, State, and local groups. This is much-needed legislation.
How did we get here? With a massive influx of Federal dollars into the economy and with COVID-19 changing how Americans purchase goods, for more than a year, United States ports have faced unprecedented volumes of cargo. Some estimates say that American demand for consumer electronics has gone up 40 percent compared to prepandemic. This pressure on our ports has trickled down to every other part of the supply chain, leading to what Americans have seen: delays and product shortages.
Now, those constraints and the resulting extremely high shipping rates have made it more difficult not just for our country to receive imports but also for us to ship our manufactured goods and agricultural goods out to the rest of the world.
We have seen unprecedented rejection of American container loads by the large ocean carriers. They are in contravention of their contractual obligations, just refusing to haul that cargo, preferring instead to take the empty containers and get them back to Asia for a quick turn. That has caused serious problems, not just conceptual dollars, real dollars, real cents. The American dairy industry has seen $1 billion worth of losses just in the first 6 months of this year.
Now, Mr. Speaker, I am a big fan of the free market, but the free market is many buyers and many sellers, and that is not in place today. Mr. Garamendi so rightfully talked about the consolidation we have seen in this industry. And indeed, 30 years ago the largest foreign-flagged ocean carriers controlled about 15 percent of this traffic. Today, they control about 75 percent. That is not quite the free market that we used to have.
And so, H.R. 4996, the Ocean Shipping Reform Act of 2021 helps to address these supply chain bottlenecks. It helps to promote American competitiveness. And it holds accountable these foreign-flagged ocean carriers, which I would note are increasingly dominated by Chinese state-backed firms.
Now, let me be honest and let me be clear, this bill is no silver bullet, but shame on us if we fail to act. This supply chain crunch has laid bare the deficiencies in the marketplace, and we have an opportunity today to address many of those deficiencies.
Probably the most common question, Mr. Speaker, my colleagues ask of me about this bill is why a Congressman from the plains of South Dakota would be so interested in maritime law. I would just remind them of the world's great hunger for American beef, American beans, American corn, and American dairy. Indeed, 60 percent of South Dakota's soybeans are exported abroad.
In that environment this is not just a coastal issue, but it is an issue that impacts lives from the farm gate to every Main Street.
And indeed, I have been hearing from South Dakota businesses like Strider Sports International in Rapid City to Valley Queen, a cheese processor in Milbank, and they are telling me about how these issues are having a real impact on dollars and cents.
Valley Queen has two million pounds of lactose. This is a product that has already been sold to Asian markets, and it is just sitting there in their warehouses waiting for an opening at the ports. A recent container load of this lactose waited on the ports, Mr. Speaker, for 75 days. The lactose began to turn, and, of course, that meant a big deduction on the price that Valley Queen could get for that lactose. Just a destruction of American value.
This bill is about American competitiveness. Broadly speaking, the legislation provides the Federal Maritime Commission--that is the cop on the beat--the tools they need to make sure that this system runs more efficiently and runs more fairly and makes sure that the interests of the foreign-flagged ocean carriers are better aligned with the interests of American shippers.
So the bill does a number of things, but I will quickly hit on just five.
First off, under this bill the FMC can set minimum standards for ocean shipping that makes sure that U.S. shippers are protected from the actions of others which leave export cargoes stranded at U.S. ports.
Number two, it protects U.S. shippers from retaliation if they file a complaint with the FMC.
Number three, this bill prohibits the foreign-flagged ocean carriers from unreasonably denying American export cargo on their vessels.
Number four, it requires foreign ocean carriers to certify the accuracy of the detention and demurrage fees. These are fines they can hit shippers with; they have to certify that those fines are accurate.
And number five, it would authorize the National Academy of Sciences to study how best to improve transparency in the supply chain.
Now, I just don't know, Mr. Speaker, how any of my colleagues can allege any of these things are not reasonable. These are very basic guardrails. These are very basic rules of the road that people who are using American ports should be obligated to follow.
And so the choice for my colleagues is simple, a vote for H.R. 4996 is a vote to put U.S. shippers, manufacturing, farmers, truckers, retailers, and consumers first. That is where they should be.
Mr. Speaker, I urge support of this legislation, and I reserve the balance of my time.
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Mr. GARAMENDI. Schrier).
Mr. JOHNSON of South Dakota. Mr. Speaker, I want to take an opportunity to thank Chair DeFazio and Ranking Member Graves for the various hearings they have had in talking with Chairman Maffei, Commissioner Dye, and others on the FMC about these issues. I thank Mr. Garamendi and others for bringing up this legislation in a number of hearings we have had on the supply chain crunch. I think it has helped to fill out the record on these incredibly important issues and the role that this legislation can play in advancing this cause.
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Mr. GARAMENDI. Mr. Speaker, I continue to reserve the balance of my time.
Mr. JOHNSON of South Dakota. Mr. Speaker, I am prepared to close, and I yield myself the balance of my time.
Mr. Speaker, there are a few things that I know for sure. The first is that when you use American ports you should be subjected to some very basic rules of the road. Things like not being allowed to unreasonably discriminate against American cargo, that is one thing I know for sure.
Another thing I know for sure is that although this bill is not a silver bullet, and nobody is alleging that it is only the ocean carriers that are responsible for this supply chain crunch, this will help. This better aligns the interests of the ocean carriers with the interests of American manufacturers and American farmers and ranchers. That will go a long way toward helping to resolve the supply chain crunch.
Mr. Speaker, finally, one more thing that I know for sure, and that is when you have 360 national, State, and local groups, when you have 90 Members of Congress, when you have a bipartisan coalition that has come together to embrace this concept in what is all too often a partisan environment, then I think you know you have a good policy solution.
With that in mind, I once again thank the gentleman from California for his leadership, and I urge all of my colleagues to support the bill, and ask the Senate for their expeditious consideration of it.
Occasionally, we toss words back and forth across the aisle here, and I would like to toss a word back across the aisle to Mr. Johnson.
He said compliments my way. The actual compliments go his way. It is not often that we spend time, and we spend a good deal of time working together on these bills, and we ought to do more across the aisle.
Mr. Speaker, it has been a pleasure working with Mr. Johnson and his team, and I thank him. I thank him for stepping forward, as have other Members on your side and my side of the aisle, stepping forward and saying, Hey, there is a problem. It is a problem out there. There are problems of retention and demurrage charges that are, Well, how could that be.
An importer of plastic Christmas trees and wreaths and other ornaments from China could not get his containers off of the port. Yet, he was being charged $4 million, which pretty much puts him out of business. He is not the biggest company in the world, but he would like to be. And given the unfair situation that he was facing, he may never become a major company in the United States. So we need to set up rules of the road, words that Mr. Johnson laid out so clearly. Rules of the road; the guardrails. Within these rules, operations, free enterprise, market competition can take place, but right now, it is a wide-open system in which there is a gunfight on the street, and that is leading to companies not being able to get their goods on the ships to export.
And comments that you have already heard from Mr. Costa, California is a big agricultural export, and so is South Dakota, and so is the Midwest, and so is the Southeast. All of America wants to export, but when you cannot get a container, you are not going to export and you are likely to be out of business, and you are going to incur a very, very significant charge.
So we set up a system in which these charges and the availability are regulated in a mechanism that will be conducted by the Federal Maritime Commission. We can go on and on here, and we probably ought to, but I won't take my full 10 minutes. I will say, as Mr. Johnson said earlier, this isn't the silver bullet, this isn't going to solve all the problems, but when you consider what has already occurred in legislation here--specifically, the Infrastructure Investment and Jobs Act, that piece of legislation will provide $2.5 billion to the ports so that they can upgrade their facilities, so that they can, the next time around, be able to avoid the kind of congestion that is plaguing all of the commerce in this Nation.
We also look to the Build Back Better legislation, which has another $2.5 billion in it to deal with additional infrastructure that is necessary to connect the ports to the rest of the transportation system in this Nation.
Mr. Speaker, we need this bill. We, the American farmer, needs this bill. We, the American export industry--whether it is heavy, light--and the import community, all need this bill. So I urge my colleagues to support the legislation, and in that process, we will, I believe, have a much better market system here in the United States, one that has guardrails, one that provides an equitable and balanced system for the importers and the exporters.
Mr. Speaker, I want to take an opportunity here to thank some very important people. The staff that put this together, on our side of the aisle, Matt Dwyer, the lead person on the Subcommittee on Coast Guard and Maritime Transportation; CheriAnn Thompson on that committee; Cheryl Dickson; and Iain Hart from my own staff.
Mr. JOHNSON of South Dakota. Mr. Speaker, I would just echo the thoughts of Mr. Garamendi that there have been so many who have worked together, and really a broad national coalition, and he is exactly right to call attention to the people who do the work behind the scenes.
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Mr. GARAMENDI. Mr. Speaker, on that I demand the yeas and nays.
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