FREQUENTLY ASKED QUESTIONS: TRANSPORTATION LAW
Q: What do I need to do to make sure that I am not responsible for the freight bill?
A: It is essential that every shipper carefully examines its bills of lading to insure that, when the shipment is F .O.B. (free-on-board) or the freight has already been paid, the shipper has a defense when a carrier demands payment of its freight bill.
For example, the bill of lading – for produce shippers – should always state “For Exempt commodities,” because fresh fruit and vegetables are exempt from the standard motor carrier rules. Specifically, 49 U.S.C. § 13506(a)(6)(B) exempts from the jurisdiction of the Secretary of the U.S. Department of Transportation and the Surface Transportation Board (“SAF”) which was formerly the Interstate Commerce Commission (“ICC”); however, in 1996, the SAF assumed some of the regulatory functions that had been formerly administered by the ICC.
In addition, some regulatory functions were either eliminated or transferred to the Federal Motor Carrier Safety Administration or to the Bureau of Transportation Statistics. Regardless, the transportation by motor carrier of “agricultural or horticultural commodities” is exempt from the usual motor carrier rules that apply to other forms of cargo. For a full explanation of this exemption, see Henslin v. Roaasti Trucking, Inc., 815 F. Supp. 1347 (E.D. Cal. 1993), in which the Court describes the exemption and the history behind it at length, concluding that the federal court had no jurisdiction over the controversy, because the shipment was
exempt from federal law (aff., 69 F.3d, 995, 9th Cir. 1995).
Although this may seem to be a minor point, carriers’ attorneys routinely rely on court decisions under the federal laws and regulations that govern non-exempt shipments, opinions that are not applicable to produce shipments. In the past, a shipper was require to sign the bill of lading to insure that the carrier had no recourse against the shipper for payment of its freight, and/or a trustee in the carrier’s bankruptcy’s proceeding would demand payment.
Under the federal law for non-exempt shipments, a carrier is required to collect its tariffs. In some cases, the shipper has already paid the freight (but the broker never sent the money to the carrier), and so, the shipper may be required to pay the freight invoice again. Consequently, like the signature, an “X” in the “Receiver” box on the bill of lading, where it says, “CHARGES TO BE PAID BY.” In short, a simple printed X in the box avoids any problems with someone not actually signing the bill of lading. In other words, the shipment is “freight collect,” and if the carrier delivers the shipment without collecting its freight, it has NO RECOURSE against the shipper or its agent.
In addition, the bill of lading should have Contract Terms and Conditions on its backside (usually), which include such provisions as : (I) the Carrier agrees to transport the property under protective service, at the temperature specified (on the bill of lading – where it definitely should be stated), between the origin and the destination shown on the bill of lading and to deliver the propriety in good condition at the delivery time specified, if any. Furthermore, the terms and conditions should (2) provide that the Carrier assumes full responsibility for any and all loss, damage or delay to the property while in its possession and until delivery to the consignee, except when the loss, damage or delay is caused by and action of Go, act of public enemy or by an act or omission of the shipper or consignee. Finally, (3) the Carrier should warrant and represent to the shipper and consignee that the motor vehicle described in the bill of lading is covered by a valid effective insurance policy, in at least the amounts required by the federal government, etc. and state that it is bound by the terms and conditions stated in the bill of lading.
We can provide you with a sample copy of a bill of lading (courtesy of Western Growers Association), as well as sample CARB verbiage (mentioned below) which includes terms and conditions and the non-recourse language. Of course, it is essential that the shipper fills in all of the blanks on the bill of lading (i.e., refrigeration instructions, destination), etc. etc.
Importantly, shippers should review the record of any carrier that it uses on the U.S. Department of Transplantation’s SAFER website at http://safer.fmcsa.dot.gov.
Clicking on “Company Snapshot” and entering the carrier’s name, a shipper can discover whether the carrier is authorized for hire, what precisely it is authorized to carry (e.g., general freight, fresh produce, etc.), its safety rating, whether it is also a broker, and whether it has been in any crashes. In short, this website can be a goldmine of information, and suggest to you whether you should use this particular caller.
Q. Are there any special restrictions on shipments in California?
A. Yes. In regard to shipments traveling on California highways, the California Air Resources Board (“CARB”) has new regulations that apply to all affected vehicles and/or carriers regardless of where they are registered.
Consequently, if a carrier is operating within California, the bill of lading should also include the following language: “Carrier or its agent certifies that the TRU [transport refrigeration units, i.e., reefers) equipment furnished for loading this shipment are in compliance with California regulations.”
The CARB regulations do make a few concessions for owner-operators and small fleets. However, the deadline for installation of PM filters for small fleets, such as own-operators with only one vehicle, was January I, 2014. For operators with two vehicles, both would require retrofits by the beginning of the current year or January 1, 2015, and for three vehicles, no later than January I, 2016. The regulations also specify that by 2020, all vehicles with engines older than 1999 must be replaced, and by 2023 , all vehicles must have 20 10 mode-year engines.
Of course, and as noted above, the bill of lading should also state refrigeration instructions and note any temperature recorder serial identification numbers. And, there should be a place for the carrier to sign where it states “Received above perishable agricultural commodities in good order, except as noted.” Further all parties should be clearly identified full name and address (e.g., shipper, motor carrier, driver, license number, etc.). In short, all of the blanks on the bill of lading should be completed and filled in to protect all parties involved.