USDA 

~ 

Unltod Slatos 

Department ol 

Agriculture 

Office of the Secretary 

Washington, DC 20250 

January 4, 2023 

HON. DANIEL B. MAFFEI HON. REBECCA F. DYE 

Chairman Commissioner 

Federal Maritime Commission Federal Maritime Commission 

HON. LOUIS E. SOLA HON. CARL W. BENTZEL 

Commissioner Commissioner 

Federal Maritime Commission Federal Maritime Commission 

HON. MAX VEKICH 

Commissioner 

Federal Maritime Commission 

RE: FMC Notice of Proposed Rulemaking, Docket No. 22–24, Definition of Unreasonable 

Refusal To Deal or Negotiate With Respect to Vessel Space Accommodations Provided 

by an Ocean Common Carrier 

Dear Chairman Maffei and Commissioners Bentzel, Dye, Sola, and Vekich: 

The U.S. Department of Agriculture (USDA) writes to commend the Federal Maritime 

Commission (Commission or FMC) for its actions in implementing the Ocean Shipping Reform 

Act of 2022 (OSRA). Of particular note is FMC’s proposed rulemaking to define an 

unreasonable refusal to negotiate or deal with respect to vessel space accommodations. USDA 

believes this rulemaking is one step toward righting an unfair situation: Over the past 2 years, 

agricultural (and other) exporters have endured ocean carriers’ systematic neglect of exports in 

favor of higher value import cargo. USDA believes the proposal could be improved with a few 

key changes: (1) broaden the definition of an unreasonable refusal to negotiate or deal; (2) 

significantly narrow the guidance on reasonable refusals; (3) and encourage specific actions by 

carriers to guard against unreasonable refusals. 

The Commission rightly recognizes OSRA’s high priority on U.S. exports. The law’s explicit 

purpose is to “promote the growth and development of U.S. exports through a competitive and 

efficient system for the carriage of goods by water in the foreign commerce of the United 

States.” In addition, we appreciate the Commission’s recognition that “[t]he primary objective of 

the shipping laws administered by the FMC is to protect the shipping industry’s customers, not 

members of the industry.” 

Over the past 2 years, a host of challenges have prevented agricultural shippers from reliably 

shipping sold product to buyers worldwide. Shippers have continually contended with broken 

export contracts, canceled bookings, inadequate receiving windows, and shortages of empty 

containers and other equipment. These issues reduced prices paid to producers, compromised 

bottom lines for agricultural companies, and damaged U.S. agriculture’s standing with global 

An Equal Opportunity Employer 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

customers. After repeatedly alerting USDA, shipper and producer groups raised these concerns 

again in the comments submitted for the Commission’s proposed rulemaking. 

USDA encourages the Commission to revise and strengthen its proposal along three dimensions: 

• Broaden the definition of an unreasonable refusal to negotiate or deal. USDA agrees 

with the Commission’s understanding that an unreasonable refusal to negotiate or deal can be 

simply defined as the failure to make good faith efforts to work with the shipper. Like many 

commenters, USDA contends that several types of carrier actions show a lack of good faith 

effort to work with the shipper and, therefore, constitute an unreasonable refusal to deal. All 

too commonplace in recent years, such actions include “effective refusals,” such as no-notice 

cancellations and perpetually rolled bookings. For instance, a carrier’s decision to cancel a 

booking or roll it to a future date raises questions about whether the carrier initially engaged 

in good faith discussions and negotiations—especially when such disruptions happen 

frequently. USDA believes the Commission’s rulemaking should explicitly detail what 

constitutes an unreasonable refusal to deal. A more useful definition would name actions, 

such as cancellations without sufficient notice, perpetual re-bookings, failure to provide 

necessary equipment (e.g., containers and chassis), and other “effective refusals.” All these 

actions—which repeatedly appear in shippers’ comments—show a lack of good faith effort 

by carriers. 

• Narrow the proposal’s guidance on reasonableness. USDA believes the circumstances are 

rare in which the Commission should consider it reasonable for a common carrier to fail to 

make good faith efforts to find a mutually beneficial arrangement that works for both parties. 

The Commission should excuse only a few exceptional circumstances. USDA understands 

various factors may get in the way of an ultimate deal between the shipper and carrier, but 

common carriers should be required to do everything they can to work with the shipper 

before refusing to deal. In the proposed rule, the broadness of the language around 

reasonableness leaves USDA wondering whether any refusals to negotiate or deal would be 

considered unreasonable. The inclusion of broad concepts such as “profitability” and 

“compatibility with its business development strategy” are particularly concerning, and the 

existence of legitimate transportation factors alone should not immunize a practice, especially 

in the face of a pattern of problematic practices. USDA urges the Commission to narrow its 

language on reasonableness, clarify that the existence of multiple factors will not absolve 

problematic practices, and focus more on illuminating actions it would consider to be 

unreasonable, such as by specifying as unreasonable the types of “effective refusals” 

discussed above and expanding on what would be considered “illegitimate transportation 

factors.” 

• Encourage specific actions by carriers to guard against engaging in an unreasonable 

refusal. USDA understands the Commission’s intention to take a case-by-case approach to 

defining unreasonableness, but we underscore the importance, therefore, of the 

Commission’s proposal to require the proponent make only a prima facie case of 

unreasonableness to trigger review. USDA appreciates the rule’s preamble statement that 

“situations where an ocean common carrier categorically excludes U.S. exports from its 

backhaul trips” have a “rebuttable presumption of unreasonableness,” and we encourage the 

Commission to make it clear and explicit in the rule. In addition, USDA supports 

requirements on carriers to document and ensure the reasonableness of their practices, 

including requirements to maintain and comply with documented export strategies, written 
 

 

policies and procedures relating to negotiations and dealings, and certifications by U.S.-based 

compliance officers affirming and documenting the reasonableness of specific decisions. 

With respect to each of these approaches, USDA encourages clearer, more affirmative duties 

for carriers, greater specificity with respect to the requirements they need to meet, and that 

the non-confidential portions of these documents be made available for shippers and the 

public to review. Documentation and transparency will assist carriers in ensuring compliance 

by their personnel and will also aid the Commission in meaningfully enforcing the 

requirements of the statute. 

USDA acknowledges the Commission’s important, complex role to ensure competitive and 

efficient ocean transportation service for our Nation’s shippers. Looking beyond the proposed 

rule on a refusal to negotiate or deal, USDA encourages the Commission to continue working 

toward enhancing information, providing fair rules, and promoting competition in the industry. 

The Commission needs to consider the effects of market power gained through carrier 

consolidation and alliances in recent years. USDA also encourages FMC to continue to work 

with ports, ocean carriers, and railroads to facilitate a more efficient and reliable export 

transportation system. 

Thank you for considering the points raised in this letter. USDA may offer additional perspective 

on FMC’s proposed rulemaking as the proceeding progresses and stands ready to work with you 

to advance any of the specific recommendations set forth in this letter. 

Sincerely, 

THOMAS J. VILSACK 

Secretary 

An Equal Opportunity Employer