Decoding OSRA: Section 10. Charge Complaints

Posted September 21, 2023

In carriers, Congress, container carriers, FMC, International Shipping, ocean freight, ocean shipping lines, shippers

Introduction

We’re still only beginning to see how the recent and ongoing changes to U.S. shipping law will affect businesses’ imports and exports as well as carriers’ and other industry stakeholders’ operations within maritime shipping. At Universal Cargo, we want to help shippers know how law changes will affect them. What exactly does the Ocean Shipping Reform Act (OSRA) say and do? This blog series goes through it section by section, so you can see exactly what our lawmakers changed in the U.S. Code dealing with shipping.

We’ll give you the OSRA text; the text of the U.S. Code, usually in Title 46, before and after its amendments; and consider what those changes mean for U.S. importers and exporters.

Previously covered in this series:

Obviously, that means today we’re covering Section 10 of OSRA. Let’s see exactly what it says and changes…

Quick Overview

Section 10 of OSRA adds a new section at the end of Chapter 413 of Title 46 of the U.S. Code.

The section is specifically telling shippers they can submit complaints about ocean freight carriers’ fees, with detention and demurrage fees specifically mentioned, to the FMC. The FMC must accept such complaints and investigate. Carriers must prove that such fees are reasonable. Failing that, carriers must pay refunds and/or penalties as previously laid out in Title 46.

Section 10 Text

SEC. 10. CHARGE COMPLAINTS.

    (a) In General.--Chapter 413 of title 46, United States Code, is 
amended by adding at the end the following:

[[Page 136 STAT. 1278]]

``Sec. 41310. <<NOTE: 46 USC 41310.>>  Charge complaints

    ``(a) In General.--A person may submit to the Federal Maritime 
Commission, and the Commission shall accept, information concerning 
complaints about charges assessed by a common carrier. The information 
submitted to the Commission shall include the bill of lading numbers and 
invoices, and may include any other relevant information.
    ``(b) Investigation.--Upon receipt of a submission under subsection 
(a), with respect to a charge assessed by a common carrier, the 
Commission shall promptly investigate the charge with regard to 
compliance with section 41104(a) and section 41102. The common carrier 
shall--
            ``(1) be provided an opportunity to submit additional 
        information related to the charge in question; and
            ``(2) bear the burden of establishing the reasonableness of 
        any demurrage or detention charges pursuant to section 545.5 of 
        title 46, Code of Federal Regulations (or successor 
        regulations).

    ``(c) Refund.--Upon receipt of submissions under subsection (a), if 
the Commission determines that a charge does not comply with section 
41104(a) or 41102, the Commission shall promptly order the refund of 
charges paid.
    ``(d) Penalties. – <<NOTE: Applicability.>> In the event of a 
finding that a charge does not comply with section 41104(a) or 41102 
after submission under subsection (a), a civil penalty under section 
41107 shall be applied to the common carrier making such charge.

    ``(e) Considerations.--If the common carrier assessing the charge is 
acting in the capacity of a non-vessel-operating common carrier, the 
Commission shall, while conducting an investigation under subsection 
(b), consider--
            ``(1) whether the non-vessel-operating common carrier is 
        responsible for the noncompliant assessment of the charge, in 
        whole or in part; and
            ``(2) whether another party is ultimately responsible in 
        whole or in part and potentially subject to action under 
        subsections (c) and (d).''.

    (b) Clerical Amendment.--The analysis for chapter 413 of title 46, 
United States Code, <<NOTE: 46 USC 41301 prec.>>  is amended by adding 
at the end the following:

``41310. Charge complaints.''.

Original Title 46 Text

Section 10 does not edit text within the U.S. shipping code. Rather, it adds an additional section to Chapter 413 of Title 46. That chapter is titled Enforcement. Putting the whole chapter here seems like too much. However, I will include the analysis for the chapter, which is really just a list of its sections that comes at the beginning of the chapter:

Sec.
41301.      Complaints.
41302.      Investigations.
41303.      Discovery and subpoenas.
41304.      Hearings and orders.
41305.      Award of reparations.
41306.      Injunctive relief sought by complainants.
41307.      Injunctive relief sought by the Commission.
41308.      Enforcement of subpoenas and orders.
41309.      Enforcement of reparation orders.

Amended Text

I could just put an N/A here as there isn’t really any edited text in Title 46 from Section 10 of OSRA. However, I’ll show the list of Chapter 413 sections including the new one added by this section:

Sec.
41301.      Complaints.
41302.      Investigations.
41303.      Discovery and subpoenas.
41304.      Hearings and orders.
41305.      Award of reparations.
41306.      Injunctive relief sought by complainants.
41307.      Injunctive relief sought by the Commission.
41308.      Enforcement of subpoenas and orders.
41309.      Enforcement of reparation orders.
41310.      Charge Complaints.

Inside the chapter itself, the new section simply appears after what had previously been the final section of the chapter.

Observations on Paragraph (a)

Since you can read the addition OSRA is making to Title 46 here as well as I can, rather than summarize or paraphrase the changes made, I’ll just quote the paragraphs in the following parts of this blog and state what stands out to me about each paragraph in relation to the international shipping industry.

Starting with Paragraph (a), I’m referring to the paragraph within the new text added to the chapter, not paragraph (a) of Section 10 of OSRA. Paragraph (a) of Section 10 of OSRA just tells us where this new text goes in Title 46.

“(a) In General.–A person may submit to the Federal Maritime Commission, and the Commission shall accept, information concerning complaints about charges assessed by a common carrier. The information submitted to the Commission shall include the bill of lading numbers and invoices, and may include any other relevant information.”

This paragraph really shows Congress’s focus on targeting unfair charges from ocean carriers against shippers. Really, this feels a bit redundant. The first section of Title 46’s 413th chapter already gave people the ability to make complaints to the FMC:

“A person may file with the Federal Maritime Commission a sworn complaint alleging a violation of this part…”

The point of the new section seems to be emphasizing shippers ability to submit complaints about fees charged by carriers. This does make sense as shippers have long complained about unfair fees, particularly but not exclusively detention and demurrage fees, from carriers. Congress likely wants to show it’s being responsive to its constituents.

There is actually a feeling of encouragement for shippers to make complaints against ocean freight carriers in relation to their fees. It’s as though the government is saying we’re doing something about these unfair detention and demurrage fees.

Observations on Paragraph (b)

The next thing piece of law added from OSRA Section 10 is:

“(b) Investigation.–Upon receipt of a submission under subsection (a), with respect to a charge assessed by a common carrier, the Commission shall promptly investigate the charge with regard to compliance with section 41104(a) and section 41102. The common carrier shall–
“(1) be provided an opportunity to submit additional information related to the charge in question; and
“(2) bear the burden of establishing the reasonableness of any demurrage or detention charges pursuant to section 545.5 of title 46, Code of Federal Regulations (or successor regulations).”

What’s most interesting to me in this part of the new section is that the burden falls upon carriers to prove their detention and demurrage fees are resonable. It feels like a guilty until proven innocent situation. The target is clearly carriers and these detention and demurrage fees. If they can’t prove to the FMC’s satisfaction that their fees are reasonable, then, well, that’s the next part…

Observations on Paragraphs (c) and (d)

As promised, Paragraphs (c) and (d) cover what happens if carriers can’t prove their fees are resonable:

“(c) Refund.–Upon receipt of submissions under subsection (a), if the Commission determines that a charge does not comply with section 41104(a) or 41102, the Commission shall promptly order the refund of charges paid.
“(d) Penalties.– <<NOTE: Applicability.>> In the event of a finding that a charge does not comply with section 41104(a) or 41102 after submission under subsection (a), a civil penalty under section 41107 shall be applied to the common carrier making such charge.”

The refund part in Paragraph (c) is about as straightforward as it gets. But it does start referring to previous Title 46 sections, as does the “Penalties” part in Paragraph (d). Luckily, we already covered the refunds and penalties part of Title 46 when we dug into Section 8 of OSRA. You can check that out for the specifics on refunds and penalties.

Observations on Paragraph (e) and Its Subparagraphs

Paragraph (e) gives a caveat for NVOCCs (non-vessel-operating common carriers):

“(e) Considerations.–If the common carrier assessing the charge is acting in the capacity of a non-vessel-operating common carrier, the Commission shall, while conducting an investigation under subsection (b), consider–
“(1) whether the non-vessel-operating common carrier is responsible for the noncompliant assessment of the charge, in whole or in part; and
“(2) whether another party is ultimately responsible in whole or in part and potentially subject to action under subsections (c) and (d).”

For those unfamiliar with what an NVOCC is, they’re basically middle-men between shippers and ship operators. NVOCCs buy space on ships from the ocean freight carriers and sell that space to shippers. They basically act as the carrier for the shippers. Often, freight forwarders are NVOCCs, but they don’t have to be.

Here, Congress protects NVOCCs by making sure the FMC investigates whether they’re actually the responsible party for unreasonable fees if shippers submit complaints against them. Again, Congress seems to be keeping its eyes on the prize of going after shipping lines themselves for unfair fees.

Conclusion

Section 10 shows lawmakers’ commitment of protecting shippers from long-complained-about fees levied by carriers. As I read the law, it mainly serves to emphasize that shippers can submit complaints to the FMC, and the FMC will investigate carriers and their fees rather than adding much that is truly new. Specifically protecting NVOCCs who are not responsible for such fees is a nice caveat.

Of course, there may be something you notice in Section 10 of OSRA that I didn’t talk about above. If there is, please share it in the comments section below.

Stay tuned for when Decoding OSRA continues, looking at Section 11….

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decoding OSRA, Ocean Shipping Reform Act, OSRA, unpacking OSRA

Jared Vineyard

For more than ten years, Jared has researched and written about the international shipping industry for the freight forwarder Universal Cargo. His work has been republished on the web and in print, including the maritime news magazine Inside Marine. When first joining Universal Cargo, Jared trained in the freight forwarding process and helped customers with their imports and exports, giving him his initial international shipping sea legs.