April 2022 Shipping Update: The Ocean Shipping Reform Act Hopes to Update Federal Shipping Regulations

Although its official name is the Ocean Shipping Reform Act of 2021 (OSRA), due to the fact it was introduced in August 2021, it’s making headlines again. That’s because it can take months—and even years—before a bill becomes a law. At the end of March, the Senate unanimously voted to sign of on the legislation, clearing the way for it to be finalized by Congress before moving to the office of the President.

The Situation: The Path of a Bill from Idea to Law

If you remember the Saturday morning educational tidbits in the form of Schoolhouse Rock, “I’m Just a Bill” may have stuck in your brain. If not, here’s a refresher:

  • First, a Representative sponsors the bill. In this case, John Garamendi (D-CA) and Dusty Johnson (R-SD) introduced the Ocean Shipping Reform Act of 2021 in August.
  • The bill is then assigned to a committee in the House to conduct research.
  • If the bill gets through the study, it is put to a vote in the House, where it passes with a simple majority. That happened with OSRA in December.
  • The bill is then introduced into the Senate, where another study is conducted. Senators Amy Klochubar (D-MN) and John Thune (R-SD) took this on in February.
  • Once the Senate completes its study, they vote on the bill, which passes with another simple majority.
  • A committee is formed with bipartisan members from the Senate and House to discuss any differences between the bills and come to a consensus.
  • The finalized bill is returned to Congress for final approval.
  • Once approved, the bill is sent to the President, who has ten days to sign it into law or veto it.

Currently, the Ocean Shipping Reform Act is currently in final review by a committee of Senators and Representatives.

The Specifics: What the Ocean Shipping Reform Act Will Do

The goal of the Ocean Shipping Reform Act is to ease backups at ports and update ocean shipping policies while supporting the US import-export sea trade. Specifically, it will:

  • Require ocean liners’ late fees to comply with federal regulations or face penalties.
  • Prohibit ocean carriers from unreasonably declining shipping opportunities for US exports.
  • Require carriers to report annually on total import and export tonnage, as well as how many 20-foot units make port in the US (whether they are full or empty).
  • Establish authority for the Federal Maritime Commission to register shipping exchanges, including initiating probes into carriers’ business practices and enforcing requirements.
  • Shift burden of proof of the reasonableness of “detention or demurrage” charges to ocean carriers and away from customers.

Projections: Could the Bill Become Law?

It’s highly likely that this legislation will make its way through final approval in Congress to the desk of President Biden, who will no doubt sign it into law. In his February State of the Union address, he pointed out current shipping issues, going so far as to call out shippers for raising their rates. He also highlighted his administration’s efforts to address supply chain congestions and costs.

It may be a few weeks before a final bill is presented to the President, but when it is, experts expect it will become law. And that could mean more income for US farmers and manufacturers who plan to export goods to locations around the globe.

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