U.S. House of Representatives Sends Ocean Shipping Reform Act (OSRA) to President Biden
House Members Overwhelmingly Approve Senate Version by a 369-42 Vote
After months of Committee mark-ups and related debate, on Tuesday the U.S. House of Representatives voted to pass S. 3580, the Ocean Shipping Reform Act (OSRA). Similar to its House-passed companion, S. 3580 improves fairness, establishes boundaries and sets metrics for fees often incurred by the household goods and global shipping community. While the approved Senate version differs slightly from the earlier House bill, sections on detention and demurrage fees, and their application through the U.S. Federal Maritime Commission’s (FMC's) Final Interpretive Rule (FIR) on Detention and Demurrage remain a centerpiece.
Next Steps and Timing
The legislation sets off several rulemaking requirements for the FMC to undertake, all necessary for OSRA's provisions to take effect. In anticipation of OSRA being signed into law, and to deal with a number of ongoing port-connected challenges, the Commission has already begun gathering information in many of these areas.
In April, IAM submitted comments on what information should be included in D&D invoices, and more importantly, what practices both ocean carriers and marine terminal operators should adhere to when issuing these invoices. At its core, the Commission determined that D&D charges should be applied to incent the movement of cargo, which should be beneficial to a number of shipping entities as regulations are put into place.
FIR on Detention and Demurrage (D&D)
45 days after President Biden signs OSRA into law (expected Thursday, June 16th) the Commission must begin formal rulemaking on the FIR on D&D, which will put into place binding regulations on the Rule's findings. The regulation resulting from this effort is required to become effective not later than June 2023 (1 year). IAM has engaged with the Commission multiple times via in-person and written testimony over the past five years, urging the inclusion of D&D fees connected to consider government inspections. In addition to government inspections, regulations concerning metrics around chassis availability, appointment times and similar congestion related issues will be addressed in that rulemaking.
Other key areas to be developed under OSRA over the coming 12 months include:
- Prohibiting ocean carriers from unreasonably declining shipping opportunities for U.S. exports, (as determined by the FMC in new required rulemaking, also to be finalized next year).
- Shifting the burden of proof regarding the reasonableness of detention or demurrage charges from the invoiced party to the ocean carrier. This rulemaking will also set out D&D billing elements that will be required for future invoices (i.e., the listing of the container availability date, number of free days provided and most importantly, the applicable detention or demurrage rule on which the charge is based)
- Prohibiting ocean carriers from retaliating against either a shipper or an ocean transportation intermediary (OTI) by refusing, or threatening to refuse, cargo space
- Provides new authority for the FMC to register shipping exchanges (would need to be in place by 2026)
- Studying intermodal chassis pool best practices to deal with chassis supply (ongoing)
IAM will continue to follow and engage on OSRA's provisions and developments as they are announced. For more information or if you have any questions, please contact Bryan Vickers (703-403-2882, firstname.lastname@example.org) with IAM's Government and Regulatory Affairs Team.