compliance alert: get ready for new food safety act regulations

COMPLIANCE ALERT: GET READY FOR NEW FOOD SAFETY ACT REGULATIONS

April 20th, 2016

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WHO’S ON THE LINE?

Jonathan P. Stringer• Sr. Corporate Cargo Claims Attorney

at Great West Casualty Company• Member of Conference of Freight

Counsel• J.D., 2001

DISCLAIMER

This material may not be reproduced in any form without the expressed written consent of Great West Casualty Company. The material is intended to be a broad overview of the subject matter and is provided for informational purposes only. Great West Casualty Company does not provide legal advice to its customers; therefore the subject matter is not intended to serve as legal advice for any legal issue(s) that may arise in the operations of its insureds or anyone else. Legal advice should always be sought from your own legal counsel. Great West Casualty Company shall have neither liability nor responsibility to any person or entity with respect to any loss alleged to be caused directly or indirectly as a result of the information contained in this presentation.

SANITARY TRANSPORTATION OF HUMAN & ANIMAL FOOD

• What?• On February 5, 2014, the Food and Drug Administration (FDA)

published a proposed rule that would establish requirements for the transportation of food, including food for animals.

• The rule is part of the implementation of the Sanitary Food Transportation Act of 2005 (2005 SFTA) and the Food Safety Modernization Act of 2011 (FSMA).

• Where?• 81 FR 20092 (April 6, 2016) (to be codified at 21 C.F.R. §§

1.900-1.934).


• Why?• To ensure sanitary transportation practices in the

transportation of food in order to ensure that food is not transported under conditions that may render the food adulterated. The rule seeks to establish criteria and definitions that would apply in determining whether food is adulterated.

• When?• The final rule was published on April 6, 2016. • Staggered Compliance dates:

• 2 years after publication of the final rule for “small businesses.”

• 1 year after publication of the final rule for other businesses. (A shipper, receiver, and carrier with less than $500,000 in annual sales is exempt.)


• What is the scope and applicability?• Applies to:

• Shippers, receivers, loaders, and carriers engaged in transportation operations for food whether or not the food is offered or enters interstate commerce.

• Does not apply to:• Transportation activities performed by a farm.• The transportation of food imported for future export, and is

neither consumed nor distributed in the United States. • Transportation of: food completely enclosed by a container

(unless requiring temperature control for safety); live food animals; and compressed food gases.


• Definitions at § 1.904.• “Carrier means a person who physically moves food by rail or motor

vehicle in commerce within the United States. The term carrier does not include any person who transports food while operating as a parcel delivery service.”

• “Loader means a person that loads food onto a motor or rail vehicle during transportation operations.”

• “Receiver means any person who receives food at a point in the United States after transportation, whether or not that person represents the final point of receipt for the food.”

• “Shipper means a person, e.g., the manufacturer or a freight broker, who arranges for the transportation of food in the United States by a carrier or multiple carriers sequentially.”


• Effects on Carriers:

• Vehicle & Transportation Equipment (§ 1.906)

• Vehicles and transportation equipment must be designed, maintained, equipped, and stored in a manner to prevent food from becoming unsafe (i.e., adulterated) during transportation.

• For temperature controlled cargo, the equipment must be equipped as necessary to provide adequate temperature control to prevent from becoming unsafe.


• Effects on Carriers cont’d:

• Transportation Operations (§ 1.908) • Unless a requirement set forth in § 1.908 says otherwise, the

requirements in § 1.908 applies to all shippers, receivers, loaders, or carriers engaged in transportation operations.

• Responsibility for ensuring transportation operations are carried out in compliance must be assigned to competent supervisory personnel.


• Effects on Carriers cont’d:• Transportation Operations cont’d (§ 1.908) • The shipper must specify to the carrier, and when necessary, the

loader, in writing, all necessary sanitary requirements for the carrier’s vehicle and transportation equipment. One-time notification is sufficient, unless design requirements and cleaning procedures change based upon the food being transported.

• For temperature controlled loads, the shipper must specify in writing to the carrier, and when necessary the loader, the operating temperature requirements (including pre-cooling). One-time notification can be sufficient, unless a factor necessitates a change in operating temperature.

• Shippers of temperature controlled food must implement written procedures to ensure food is transported under adequate temperature control.


• Effects on Carriers cont’d:• Transportation Operations cont’d (§ 1.908)• Before loading food not completely enclosed by container onto a

vehicle, the loader must visually inspect the vehicle or equipment to determine if it is in appropriate sanitary condition.

• Before loading food that requires temperature control for safety, the loader must verify the specifications provided by the shipper.

• Upon receipt of food that requires temperature control for safety, the receiver must take steps to adequately assess that the food was not subjected to significant temperature abuse.


• Effects on Carriers cont’d:• Transportation Operations cont’d (§ 1.908)

• When the carrier and shipper have a written agreement that carrier is responsible for sanitary conditions during transportation, the carrier must provide:

• Vehicles and transportation equipment that meet the shipper’s specifications and prevent food from becoming unsafe.

• To the shipper and, upon request, to the receiver the operating temperature specified by the shipper, and if requested, demonstrate it has maintained temperature conditions during transport that are consistent with the operating temperature specified by the shipper.

• Pre-cooled units to the specifications provided by the shipper.• For bulk vehicles, if requested by the shipper, the carrier must

provide the shipper with information regarding the 3 previous cargoes carried in the vehicle as well as the most recent cleaning of the vehicle.


• Effects on Carriers cont’d:• Training (§ 1.910)• Carriers must provide training to personnel engaged in

transportation operations when the carrier and shipper have agreed in a written contract that the carrier is responsible for sanitary condition during transportation operations.

• The training should include: an awareness of potential food safety problems that may occur during transportation, basic sanitary transportation practices to address those potential problems and the responsibilities of the carrier under the rule.

• Carriers must establish and maintain records documenting the training.

• The FDA plans to develop a web-based training course.


• Effects on Carriers cont’d:• Records (§ 1.912)• Shippers must retain records that demonstrate they provide

specifications and operating temperatures to carriers as required by the rule.

• Shippers must retain written agreements and written procedures as required by the rule.

• Carriers must retain records of written procedures and training records required by the rule for a period of 12 months beyond when the procedures are in in use or the person identified in any such records continues to perform the duties for which the training was provided.

CARGO CLAIMS REFRESHER


• What Laws May Apply?• Interstate Shipments

• The Carmack Amendment to the I.C.C. Termination Act of 1995, found at 49 U.S.C. § 14706.

• Domestic Air Shipments• Federal Common Law.

• International Air Shipments• Montreal Convention/Warsaw Convention.

• Ocean Shipments• Carriage of Goods by Sea Act (COGSA).

• 14101 Contracts• The parties can determine what law applies.


• Why it Matters:• Limitations on Deadlines to File Cargo Claims:

• Carmack Amendment: Minimum is 9 months.• Montreal Convention: 14 days for damage/21 days for delay.• One (1) year for ocean shipments under COGSA.• 14101 Contracts may or may not address such deadlines.

• Deadlines to File a Lawsuit:• Carmack Amendment: Min. 2 years after denial of claim.• Montreal Convention: 2 years from delivery/stoppage in

transit.• COGSA: 1 year from delivery.• 14101 Contracts may or may not address such deadlines.

• Limitations of Liability• Differs upon the law that governs the mode of transit.• 14101 Contracts may or may not address limitations.


• Alleging a Cargo Claim is Generally Not Difficult1) Cargo received by motor carrier in good condition;2) Cargo delivered in damaged condition; and3) Amount of Actual Damages.

• NEGLIGENCE NOT REQUIRED


• Standard Motor Carrier Defenses• First, motor carrier is not negligent; and• Second, one of the following:

• Act of God (e.g., tornadoes, earthquakes, etc.)• Act of Shipper (e.g., loading, packaging, labeling, etc.)• Act of the Public Enemy (e.g., acts of war);• Act of the Public Authority (e.g., police); or• Inherent Vice of the Cargo (e.g., rust, rot, etc.).

CARGO CLAIMS REFRESHER – LIABILITY LIMITATIONS

Ways to Limit Liability• Bill of Lading, Tariffs, Rate Confirmations, & Contracts

• Standard Test (under Carmack Amendment)1. Motor carrier should provide the shipper its tariff, rate,

classification, rules, or practices upon request;2. Motor carrier should give shipper a fair opportunity to

choose between two or more levels of liability;3. The motor carrier should obtain the shipper’s choice of

liability level; and4. The motor carrier should issue a bill of lading reflecting

the shipper’s choice.

Always consult with an attorney on how to properly limit liability.


• Upstream and Downstream Limitations of Liability• Intermediaries can limit the cargo owner’s recovery

against the motor carrier.• Werner Enterprises, Inc. v. Westwind Maritime

International, Inc., 554 F. 3d 1319 (11th Cir. 2009). Motor carrier’s released rate limit of liability, negotiated with broker, upheld in direct action by shipper against motor carrier.


• Upstream and Downstream Limitations of Liability cont’d• A connecting motor carrier’s liability may be limited by

the initial bill of lading.• Kansas City So. Ry. Co. v. Carl, 227 U.S. 639, 648 (1913).

Any limitation of liability contained in the contract of carriage of the initial carrier which would be valid in limiting the liability of the initial carrier inures to the benefit of the connecting carriers along the route.

• Missouri, Kansas & Texas Ry. Co. of Texas v. Ward, 244 U.S. 383, 387-388 (1917). “The several carriers must be treated, not as independent contracting parties, but as one system; and the connecting lines become in effect mere agents, whose duty is to forward goods under the contract made by their principal, the initial carrier.”

Watch out for attempts to skirt limitations of liability!

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compliance alert: get ready for new food safety act regulations

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