II 115th CONGRESS 2d Session S. 3740 IN THE SENATE OF THE UNITED STATES December 11, 2018 Ms. Murkowski (for herself and Mr. Sullivan ) introduced the following bill; which was read twice and referred to the Committee on Commerce, Science, and Transportation A BILL To establish a congressionally chartered seaway development corporation in the Arctic, consistent with customary international law, with the intention of uniting Arctic nations in a cooperative Arctic shipping union, where voluntary collective maritime shipping fees will help fund the infrastructural and environmental demands of safe and reliable shipping in the region.

1. Short title This Act may be cited as the Shipping and Environmental Arctic Leadership Act or the SEAL Act . 2. Findings Congress finds the following: (1) The Arctic seas have historically been considered impassable and impractical maritime routes, but diminishing Arctic sea ice, better icebreaking technology, and global demand for Arctic resources has opened up opportunity for international trade routes through Arctic Ocean waters. (2) According to the National Oceanic and Atmospheric Administration, over the last 20 years atmospheric temperatures have increased at a rate at least 3 times the global average, and as of 2011 sea ice thickness was 42 percent below what it was in 1979. If trends continue, summers may produce ice-free waters in the Arctic Ocean by the late 2030s. (3) The Bering Strait is experiencing significant increases in international traffic from vessels using the Northern Sea Route, the Transpolar Sea Route, and the Northwest Passage. Increases in international traffic are projected to continue. (4) While the Arctic Council’s agreements on search and rescue, spill prevention and response, and initiatives through the International Maritime Organization to bring about a mandatory polar code are significant, little or no cooperation yet exists in the Arctic region to bring about needed maritime infrastructure, nor do Arctic coastal states and user states cooperate in establishing common seaway administration. International coordination and investment in infrastructure for shipping routes, icebreaker service and refuge, ports, spill prevention and response, salvage, and LNG bunkering, would be collectively beneficial for all associated states, the environment, and global commerce. (5) Trans-Arctic shipping brings substantial commercial benefits. Shipping distance between Europe and Asia could be reduced by 4,500 nautical miles, saving a week’s time and 40 percent in freight shipping distances compared to alternative routes. Through a voluntary tariff model, user nations from the remainder of the world can be invited to share with Arctic nations the capital and operating costs necessary for safety and reliability infrastructure in the Arctic Ocean and its approaches. (6) As this new frontier emerges, the United States should assume leadership to ensure safe, secure, and reliable Arctic seaway development, and further to ensure that the Arctic becomes a place of international cooperation rather than competition or conflict. (7) Setting precedent for cooperative infrastructure investment and greater reliability in domestic and international shipping is the St. Lawrence Seaway between the United States and Canada, which links the Great Lakes to the Atlantic Ocean. The Seaway operates in internal waters, rather than international waters, but offers ship operators a coordinated suite of services, similar to what is needed in the Arctic Ocean and its approaches. (8) The St. Lawrence Seaway Development Corporation, established in 1954, is a model for a United States Government corporation that constructs, operates, and maintains sea passage infrastructure in water bodies shared with another nation. It corresponds with its Canadian counterpart, the St. Lawrence Seaway Management Corporation. In 2010 the Great Lakes-Seaway system generated— (A) 226,833 United States and Canadian jobs; (B) $33,600,000,000 in business revenue from maritime activity; and (C) $4,600,000,000 in Federal, State, provincial, and local tax revenue from maritime activity. (9) In 2012 the Russian Duma passed legislation to create a single management agency called the Northern Sea Route Administration, to manage all infrastructural and navigational services across what Russia claims to be its Arctic territorial waters. This is a claim the United States and many other nations do not recognize. Russia is investing heavily into Northern Sea Route infrastructure, anticipating an increase in cargo transport from 1,800,000 tons in 2010 to 64,000,000 tons by 2020. The Russian Northern Sea Route Administration charges escort fees for international cargo ships as high as $500,000, and aims to collect a share of revenues that might otherwise be paid as tariffs on the Suez Canal where collections totaled $5,300,000,000 in 2017. (10) The Russian Federation has considered legislation to require all energy traffic on the Northern Sea Route to be carried by Russian-flagged ships. (11) Rising transit in United States Arctic region waters necessitates a management agency and infrastructure investment in a transportation system. As identified in the Ten-Year Prioritization of Infrastructure Needs in the United States Arctic prepared by the United States Committee on the Marine Transportation System Arctic Transportation Integrated Action Team for the United States Department of Transportation, there is a significant infrastructure gap in the Arctic in the areas of— (A) navigable waterways, such as waterway coordination with international stakeholders; (B) physical infrastructure, such as infrastructure around Port Clarence and Port of Nome in Alaska to support commercial activity; (C) informational infrastructure, such as up-to-date nautical charts and electronic aids to navigation; (D) MTS Response Services, such as emergency response and rescue capabilities; and (E) vessel operations, such as United States icebreaking capabilities. (12) The Arctic offers economic value to the United States through commercial shipping and international trade routes, energy, mining, commercial fishing, tourism, and tug and barge operations. The Arctic offers environmental and cultural value through ecological significance, unique wildlife, indigenous peoples and Alaskan communities, and scientific research. The Arctic offers security value to the United States as a way to move United States vessels and forces between the world’s oceans, and through other waters. While the United States does not support mandatory tariffs in this region, it does not currently have a way to collect voluntary tariffs for providing assistance to vessels crossing through the Bering Strait or the Arctic Ocean. (13) Reinvesting into infrastructural and environmental demands with funds collected from international shipping fees will be essential to the long-term viability of the Arctic. (14) Environmental protection of the Arctic takes the form of pollution prevention, clean-up, and accident response. (15) Arctic prevention and clean-up involves all feasible efforts to remove or mitigate pollutants from the environment. Arctic ecosystems are more susceptible to biological damage from pollutants than more temperate climates. Existing removable hazards, such as dumped radioactive waste and other toxic substances, must be handled. (16) Arctic pollution prevention takes collective adherence to regulations and best practices. United States leadership on clean practices in the Arctic will be essential in the ecosystem’s sustainability. Provision of bunkering facilities to enable the use of clean LNG fuels for ships will strengthen pollution prevention. (17) Environmental response capabilities in the Arctic are weak, sparse, and have only begun to be internationally coordinated. Transportation of oil and gas and maritime traffic is expected to increase significantly in the Arctic, which will increase the risk of accidents. The Arctic region is particularly vulnerable to pollution from oil and gas shipping. Because oil spills in ice are considerably more complicated to address than oil spills in open waters, effects of oil spills could remain in the region for periods of 50 years or more. In 2010 the International Maritime Organization passed Guidelines for Ships Operating in Polar Waters, citing, the need to ensure that all ship systems both are capable of functioning effectively under anticipated operating conditions and provide adequate levels of safety in accident and emergency situations . (18) In June 2014, the Government Accountability Office (GAO) reported that the Coast Guard was experiencing a gap in its heavy icebreaking capacity and was without a heavy icebreaker from 2010 to 2013. Tariffs collected through this system can help United States public and private icebreaker capacity grow, and induce additional private investment in marine safety and services. (19) During the most recent United States Chairmanship of the Arctic Council, May 2017, the Arctic Council’s Protection of the Arctic Marine Environment Working Group established an Arctic Shipping Best Practices Information Forum to help serve as a resource hub of information, guidance, and guidelines that aid decision makers involved in Arctic maritime navigation and those affected by maritime operations related to the Polar Code. Insurers of Arctic shipping encouraged this Forum to help bring about safer and more reliable shipping in the Arctic region, and to reduce losses. This Act is in support of the same goals. 3. Creation of the U.S. Arctic Seaway Infrastructure Development Corporation (a) Establishment There is hereby created, subject to the direction and supervision of the Secretary of Transportation, which shall work in conjunction with the Department of State and with the Department in which the Coast Guard is operating, a body corporate to be known as the U.S. Arctic Seaway Infrastructure Development Corporation (hereinafter referred to as the Corporation ). (b) Management (1) Administrator The management of the Corporation shall be vested in an Administrator who shall be appointed by the Board of Directors of the Corporation with the approval of the Secretary of Transportation. (2) Board of directors (A) Composition There is established the Board of Directors of the Corporation (hereinafter referred to as the Board of Directors ), which shall be composed of 9 members (each serving for a 4-year term or until a new appointee is designated) as follows: (i) The Chair of the Board of Directors shall be appointed and designated by the President of the United States. (ii) The Administrator of the National Oceanic and Atmospheric Administration shall designate 1 senior representative to the Board of Directors. (iii) The Secretary of State shall designate 1 senior representative to the Board of Directors. (iv) The Secretary of Transportation shall designate 1 senior representative to the Board of Directors. (v) The Secretary of the Department in which the Coast Guard is operating shall designate 1 senior representative to the Board of Directors. (vi) The Governor of Alaska shall designate 4 senior representatives to the Board of Directors— (I) 1 of whom shall represent the government of the State of Alaska; (II) 1 of whom shall represent the Alaska business community; (III) 1 of whom shall represent the Alaskan coastal and subsistence communities affected by the Corporation; and (IV) 1 of whom shall be nominated to represent Alaskan maritime labor organizations. (B) Meetings The Board of Directors shall meet at the call of the Chair, not less often than once every 90 days. (C) Functions The Board of Directors shall develop a set of policy recommendations regarding the demands for construction of facilities and infrastructure, including the following: (i) The establishment of rules of measurement for vessels and cargo and rates of charges or tolls for the services provided by the Corporation. (ii) All other matters which the Board of Directors determines to be relevant. 4. Functions of the U.S. Arctic Seaway Infrastructure Development Corporation (a) Deep water ports The Corporation is authorized to work with the United States Army Corps of Engineers, the State of Alaska, and regional port authorities, to construct deep water port facilities within the Alaskan region necessary to manage and facilitate increased marine traffic, including cargo, tugs, commercial fuel bunkering, and icebreaker vessels. The Corporation shall also maintain a relationship with east and west coast ports serving Arctic trade. (b) Provision of facilities for icebreakers The Corporation shall collaborate with the State of Alaska and the United States Coast Guard in the provision of facilities for icebreaker vessels necessary towards the navigation of the Bering Sea and Arctic Ocean. United States Coast Guard icebreakers shall be provided facilities on the condition that they are available, concurrent with meeting other Coast Guard missions, to assist in the navigation of the international Northern Sea Route, Transarctic Route, or the Northwest Passage, in cooperation with coastal States along those routes. The Corporation is authorized to lease private icebreakers and to cooperate in offering services with icebreakers of other nations. (c) Establishment of places of refuge and improvement of navigational infrastructure The Corporation shall assist, with expertise and financial support, the Coast Guard in its role to determine the location and, where necessary, construction of places of refuge and points of navigational aid within United States territorial waters due to the Arctic’s harsh and unpredictable climate. Charts of locations of places of refuge shall be made readily available to all vessels voyaging north of the Bering Strait in the interest of ensuring vessel safety. (d) Ties with arctic residents The Corporation shall establish strong ties with United States residents of the Arctic region, Arctic shippers, and the maritime insurance industry whose common goal of preventing loss and increasing reliability will assist in building an appropriate system to support shipping in the Arctic region. An annual meeting of the Corporation shall be held in the State of Alaska. 5. General powers of the corporation For the purpose of carrying out its functions under this Act, the Corporation— (1) shall have succession in its corporate name; (2) may adopt and use a corporate seal, which shall be judicially noticed; (3) may sue and be sued in its corporate name; (4) may adopt, amend, and repeal bylaws, rules, and regulations governing the manner in which its business may be conducted and the powers vested in it may be exercised; (5) may make and carry out contracts or agreements as are necessary or advisable in the conduct of its business; (6) shall be held to be an inhabitant and resident of the third judicial district of the State of Alaska within the meaning of the laws of the United States relating to the venue of civil suits; (7) may appoint and fix compensation, in accordance with the provisions of subpart D of part III of title 5, United States Code, for such officers, attorneys, and employees as may be necessary for the conduct of its business, defining their authority and duties, and delegating to them such powers vested in the Corporation as the Administrator may determine; (8) may acquire, by purchase, lease, property, and any interest therein, and may sell, lease, or otherwise dispose of such property, as the Administrator deems necessary for the conduct of its business; (9) shall determine the character and necessity for its obligations and expenditures, and the manner in which they shall be incurred, allowed, and paid, subject to provisions of law specifically applicable to government corporations; (10) may retain toll revenues for purpose of eventual reinvestment in the Corporation or publicly owned seaway infrastructure and preservation of the surrounding ecosystem; (11) may provide services and facilities, at reasonable prices, towards the servicing and maintenance of the Sea Routes as well as vessels and visitors using the Bering Strait and Arctic Ocean Routes; (12) may participate with partner development corporations of Arctic or other nations regarding the ownership and operation of a tolling company, and may lease icebreakers, and enlist and return assets if the United States portion of the revenue from the tolls charged to the users of any services provided under this section is applied solely towards the reinvestment in infrastructure and preservation of the surrounding ecosystem as specified in paragraph (10); and (13) shall be credited with amounts received from any of the activities authorized under paragraphs (10) and (11). 6. Bonds; issuance; maturity; redemption; interest; purchase of obligations by the Secretary of the Treasury (a) In general To finance its activities, the Corporation may issue revenue bonds payable from corporate revenue to the Secretary of the Treasury. (b) Total value The total value of all bonds issued as described in subsection (a) shall not exceed a sum that shall be determined by the Secretary of Transportation in conjunction with the Secretary of the Treasury. (c) Maturity dates Bonds issued as described in subsection (a) shall have maturity dates agreed upon by the Corporation and the Secretary of the Treasury that shall not be in excess of 50 years. The obligations on such bonds may be redeemable at the option of the Corporation before the maturity in such a manner as may be stipulated in such obligations, but the obligations thus redeemed shall not be refinanced by the Corporation. (d) Coordination with title 31 (1) Authority to use proceeds from sale of Treasury securities For the purpose of purchasing obligations of the Corporation, the Secretary of the Treasury may use as a public debt transaction the proceeds from the sale by the Secretary of any securities issued under chapter 31 of title 31, United States Code, and the purposes for which securities may be issued under such chapter are extended to include such purchases. (2) Treatment of transactions All purchases and sales by the Secretary of the Treasury of obligations issued by the Corporation under this section shall be treated as public debt transactions of the United States. 7. Reports (a) In general Not later than 1 year after the outset of corporate activities of the Corporation, the Corporation shall submit a special report to Congress regarding the success of the Corporation and its general operations. (b) Additional reports (1) New proposals In addition to the report described in subsection (a), the Corporation shall submit to Congress a special report whenever there is proposed a new feature, facility, design, or phase of the Corporation involving an estimated value exceeding $1,000,000, that shall include justification for the new feature, facility, design, or phase. (2) Progress reports The Corporation shall submit reports upon the request of the Board of Directors, the President, or Congress regarding progress of the undergoing of the Corporation, including financial reports regarding expenses or revenues, extreme weather patterns in the Arctic region, or reports as determined necessary by Congress. Such reports shall be submitted not later than 180 days after the date of the initial request. (3) Environmental impact reports The Board of Directors may direct the Corporation to compile detailed reports regarding the environmental impact of increased marine shipping within the Arctic region. Such reports shall be submitted not later than 180 days after the date of the initial request from the Board of Directors. 8. The role of the Department of State in facilitating international engagement (a) Promoting international cooperation The Secretary of State shall undertake a leadership role in engaging in multilateral dialogues with fellow member and observer nations of the Arctic Council with the intention of encouraging cooperation in providing coordinated services for shipping in the Arctic Ocean and its approaches. The Corporation shall encourage synergistic relationships with the fellow member and observer nations of the Arctic Council in order to establish fair and reasonable tolls and, where applicable, joint facilities, as described in section 5. (b) International fees and tolls The Corporation is hereby authorized and instructed to waive fees and tolls as necessary for international cooperation.