WASHINGTON GRAPEVINE

Ocean Shipping Reform Act: What’s Next

BY JOHN HOLLAY, DIRECTOR, GOVERNMENT RELATIONS, INTERNATIONAL FRESH PRODUCE ASSOCIATION

The Ocean Shipping Reform Act (OSRA) was signed into law by President Biden on June 16, 2022. IFPA President and CEO Cathy Burns was honored to be invited to celebrate the work of our volunteers and IFPA team at the bill signing.

OSRA, a bipartisan, bicameral bill cosponsored by U.S. Reps. John Garamendi, D-CA, and Dusty Johnson, R-SD, and Sens. Amy Klobuchar, D-MN, and John Thune, R-SD, was first introduced in August 2021. The bill endured numerous changes and iterations before being passed in its final form unanimously in the Senate and by a resounding 364-40 votes. On March 15, IFPA submitted a letter to the Senate’s Majority and Minority Leaders Chuck Schumer and Mitch McConnell expressing the fresh produce industries’ strong support for the passage of the OSRA. This letter was signed by more than three dozen organizations and associations representing the produce industry.

Additionally, when IFPA convened the first Spring Policy & Regulatory Forum in April of 2022, OSRA was a key topic for a number of volunteer leaders who marched on the Hill to advocate for a variety of policy initiatives. Those in attendance for this event included the volunteer leaders serving on relevant IFPA committees, including the Food Safety Council, Political Advisory Committee, U.S. Government Relations Council, the Supply Chain Logistics Council, Organic Committee and Grower Shipper Council. These volunteers met with members of Congress from a variety of states to seek bipartisan participation in proposed solutions that are important to our industry, including the OSRA.

Of course, with the passage of the bill, the work now begins with the rule-making process. IFPA will shift from advocating for the bill to educating members on the regulatory requirements and changes to business operations based on the law.

Here are a few highlights of what we’re sharing with members about what comes next.

OSRA empowers the Federal Maritime Commission (FMC) and requires the commission to issue and enforce regulations to support the law. This includes the requirement that the FMC will issue regulations that define prohibited practices related to the detention and demurrage fee assessments for carriers, marine terminal operators, shippers, and ocean transportation intermediaries, and also to define “unfair or unjustly discriminatory methods” and “unreasonable refusal” to negotiate vessel space (for exports generally or a specific importer or exporter).

The law also requires the FMC to investigate complaints and publish results of investigations into charges assessed by carriers. Under the law, carriers would bear the burden of proving the reasonableness of any charges. FMC is also required to disclose findings of false invoices by common carriers and penalties imposed against carriers for violations of the regulations.

It’s important to note that the law does not expand FMC jurisdiction related to charges and invoices, it only applies where the commission has existing jurisdiction. This is according to the notice provided by the Office of General Counsel at the FMC, which was issued on June 24, 2022.

One of the key changes based on the bill is regarding new requirements for ocean carriers. Under OSRA, ocean carriers would be prohibited from “unreasonably” refusing cargo when space is available, assessing fees that do not comply with applicable regulations, and giving unreasonable preference to any commodity group or shipment.

The law also requires carrier invoices to include accurate detailed information and, through the rule-making process, the FMC may choose to impose penalties or require refunds if it find that a carrier’s invoice includes false or inaccurate information. In this case, shippers would not be obligated to pay fees if an invoice is inaccurate.

Additional provisions under the law affect shipping emergencies, where the FMC would have 60 days of enactment to issue a request for information to determine if an emergency order could be used to reduce congestion. This is critical to maintaining the reliability of international transportation supply system.

In another effort to optimize supply chain efficiency, the FMC would also enter an agreement with National Academies of Sciences, Engineering, and Medicine to develop best practices for on-terminal or near-terminal chassis pools that provide service to marine terminal operators, motor carriers, and other stakeholders.

Ultimately, IFPA has been advocating for this important legislation because it provides much needed relief for those in the fresh produce and other industries that rely on a fair system of commerce at our nation’s ports. The regulations that will come out of this legislation have the potential to provide even greater relief and much needed certainty for importers and exporters alike. This is particularly important to the fresh produce industry which, due to perishability, relies heavily on reliable, efficient ocean transport. pb