Decoding OSRA: Section 12. Award of Additional Amounts

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:

• Series Introduction & Quick Coverage of Section 1
• Section 2
• Section 3
• Section 4
• Section 5
• Section 6
• Section 7
• Section 8
• Section 9
• Section 10
• Section 11

Obviously, that means today we’re covering Section 12 of OSRA. Let’s see exactly what it says and changes…

Quick Overview

Section 12 has to be the shortest section of OSRA we’ve covered so far. However, what it does is not insignificant.

Section 12 adds a prohibition previously established in Title 46 of the U.S. Code to a list of things for which the Federal Maritime Commission (FMC) can make ocean freight carriers, terminal operators, or even intermediaries like freight forwarders pay additional damages beyond injury to shippers. Prohibition is almost a weird way to say it. It’s actually something carriers, terminal operators, or intermediaries must not fail to do, or they could be punished if it turns out costly to shippers.

Specifically, for the failure “to establish, observe, and enforce just and reasonable regulations and practices relating to or connected with receiving, handling, storing, or delivering property,” carriers, terminal operators, or intermediaries could have to pay shippers.

Section 12 Text

SEC. 12. AWARD OF ADDITIONAL AMOUNTS.

    Section 41305(c) of title 46, United States Code is amended by 
striking ``41102(b)'' and inserting ``subsection (b) or (c) of section 
41102''.

Original Title 46 Text

§41305. Award of reparations

(a) Definition.—In this section, the term "actual injury" includes the loss of interest at commercial rates compounded from the date of injury.

(b) Basic Amount.—If the complaint was filed within the period specified in section 41301(a) of this title, the Federal Maritime Commission shall direct the payment of reparations to the complainant for actual injury caused by a violation of this part.

(c) Additional Amounts.—On a showing that the injury was caused by an activity prohibited by section 41102(b), 41104(3) or (6), or 41105(1) or (3) of this title, the Commission may order the payment of additional amounts, but the total recovery of a complainant may not exceed twice the amount of the actual injury.

(d) Difference Between Rates.—If the injury was caused by an activity prohibited by section 41104(4)(A) or (B) of this title, the amount of the injury shall be the difference between the rate paid by the injured shipper and the most favorable rate paid by another shipper.

(e) Attorney Fees.—In any action brought under section 41301, the prevailing party may be awarded reasonable attorney fees.

Amended Text

§41305. Award of reparations

(a) Definition.—In this section, the term "actual injury" includes the loss of interest at commercial rates compounded from the date of injury.

(b) Basic Amount.—If the complaint was filed within the period specified in section 41301(a) of this title, the Federal Maritime Commission shall direct the payment of reparations to the complainant for actual injury caused by a violation of this part.

(c) Additional Amounts.—On a showing that the injury was caused by an activity prohibited by section subsection (b) or (c) of section 
41102, 41104(3) or (6), or 41105(1) or (3) of this title, the Commission may order the payment of additional amounts, but the total recovery of a complainant may not exceed twice the amount of the actual injury.

(d) Difference Between Rates.—If the injury was caused by an activity prohibited by section 41104(4)(A) or (B) of this title, the amount of the injury shall be the difference between the rate paid by the injured shipper and the most favorable rate paid by another shipper.

(e) Attorney Fees.—In any action brought under section 41301, the prevailing party may be awarded reasonable attorney fees.

Observations on Section 12

Normally, I’m going through these sections subsection by subsection, even sentence by sentence within those. However, Section 12 is so short, it can’t be broken down that way.

Like last time, there does seem to be a small mistake the lawmakers made in the text. I think they should have struck “section 41102(b)” instead of just “41102(b)” from the original text. Now, the text reads “section subsection (b) or (c) of section 41102” instead of just “subsection (b) or (c) of section 41102” as Section 41305 of Title 46 begins a list of subsections that prohibit actions.

Again, I won’t judge the lawmakers too harshly on this, as it is easy to make editing errors. On the other hand, there is only one sentence that Section 12 changes. You would think they could have double checked to make sure they got it right.

As stated in the Quick Overview, this text simply adds one new prohibited action (or more correctly, failure of action) to a list of actions for which the FMC can order the offender to pay extra damages to an injured party beyond the injury. As the text just points to elsewhere in Title 46 to define the action, here’s Subsection 41102(c), which it points to (subsection 41102(b) is not included because it was already part of the list):

(c) Practices in Handling Property.—A common carrier, marine terminal operator, or ocean transportation intermediary may not fail to establish, observe, and enforce just and reasonable regulations and practices relating to or connected with receiving, handling, storing, or delivering property.

There is definitely some vagueness to “just and reasonable regulations and practices.” It wouldn’t be hard to imagine a carrier and shipper arguing over whether the carrier’s regulations and practices were or are “just and reasonable.” The assumption is, as usual, the FMC will be the final judge of that when investigating shippers’ complaints. Of course, the FMC’s decision could potentially be appealed through the courts.

On top of the vagueness just pointed out, “connected with receiving, handling, storing, or delivering” is quite broad. Thus, this could potentially pertain to any point, part, or parts of the supply chain.

It is worth pointing out that a limit does exist on how much the FMC can award to a shipper against a carrier, terminal operator, or intermediary. The limit is twice the amount of the actual injury.

Conclusion

Section 12 continues the trend we’ve seen in OSRA of protecting shippers. It seems that protecting shippers, who were particularly loud in their complaints during the “supply chain crisis” caused largely by reaction to the COVID-19 pandemic, was lawmakers’ top priority when writing OSRA.

This section adds one more way shippers could suffer financial loss at the fault of carriers, terminal operators, or intermediaries for which those shippers could be awarded additional money beyond the injury. For shippers, there’s probably nothing not to like here. For carriers, terminal operators, and intermediaries, it’s another story.

Of course, there may be something you notice in Section 12 of OSRA that I didn’t. Or there’s another take you have on it that I didn’t consider. If there is, please share it in the comments section below.

Stay tuned for when Decoding OSRA continues, looking at Section 13….