U.S. House Rep. Dusty Johnson (R-SD) co-led a bipartisan group of six fellow members in urging the Federal Maritime Commission (FMC) to uphold congressional intent regarding a key definition proposed for the Ocean Shipping Reform Act (OSRA) of 2022, which President Joe Biden signed into law on June 16.
OSRA prohibits ocean carriers from discriminating against American exporters and unreasonably refusing cargo space accommodations, and gives the FMC authority to investigate ocean carriers’ business practices and apply enforcement measures if there is the unreasonable refusal of American exports throughout the COVID-19 pandemic.
The FMC is currently seeking public comments in response to a Notice of Proposed Rulemaking (NPRM) issued on Sept. 13 implementing a requirement of OSRA to define ‘unreasonable refusal’ to deal or negotiate with respect to vessel space accommodation provided by an ocean common carrier.
Specifically, the NPRM proposes a “burden-shifting regime” that would allow ocean common carriers to establish why it was not unreasonable to refuse vessel space to a particular complainant, as well as a list of factors the FMC would consider when deciding whether a refusal to deal was unreasonable.
“The FMC’s current definition of unreasonable refusal is so feckless it has us wondering: What was the point of passing OSRA in the first place?” said Rep. Johnson and U.S. Rep. John Garamendi (D-CA) in a joint statement released on Nov. 4.
“We all witnessed the havoc foreign-flagged ocean carriers wreaked on our ports in 2021, price gouging shippers and leaving American exporters high and dry. If this definition stands, they could easily do it again,” said the lawmakers, who in August 2021 introduced the original, same-named version of OSRA in their chamber.
In their statement, Reps. Johnson and Garamendi added that the FMC’s proposed definition “is not in line with congressional intent — it needs to be remedied for the sake of our farmers, exporters, and manufacturers who already faced extreme losses at the hands of foreign carriers.”
The representatives reiterated that stance in a Nov. 4 letter sent to FMC Chairman Daniel Maffei, pointing out that the new prohibition in the law is “obviously intended” to prevent ocean carriers from disproportionally and unfairly favoring one side of their trade over the other. U.S. Rep. David Valado (R-CA) is among the lawmakers who also signed the letter.
“Ocean carriers refusing to accommodate American exports is an unreasonable business practice and, following passage of the [OSRA] of 2022, also is now illegal,” wrote Rep. Johnson and his colleagues.
Additionally, the FMC’s broad definition of unreasonable will not protect American shippers and exporters from unfair business practices of foreign ocean carriers, according to their letter. The members wrote that they expect the FMC’s rulemaking to account for the significant consolidation within the ocean shipping industry, which they said is now dominated by foreign-flagged and state-controlled carriers.
“The 10 largest ocean carriers and three global alliances reportedly control more than 80 percent of the global market,” they wrote. “As American exporters and other businesses navigate this anti-competitive marketplace, they must have an ally in our nation’s only ocean carrier regulator: the Federal Maritime Commission.”