There were plenty of informative sessions at last month’s Transplace Shipper Symposium 2015 conference, including the panel discussion I led on drones, 3D printing, and driverless trucks (I plan to have the panelists — Dan McCarthy from Solidscape and Brent Hankins from Peterbilt Motors — as my guests on Talking Logistics soon, so stay tuned). I wasn’t able to attend all of the conference sessions, but I’m glad I sat in on the presentation given by William Bierman, senior partner at the law firm of Nowell Amoroso Klein Bierman, P.A., and Pamela Johnston, vice president, legal and risk at Transplace (a Talking Logistics sponsor), on the Food Safety Modernization Act (FSMA) and its impact on the supply chain.
Bierman and Johnston focused on the Sanitary Transport of Human and Animal Food (STHAF) rule, which they summarized as follows:
The STHAF rule establishes criteria and definitions that will apply in determining whether food will be deemed adulterated because it has been transported or offered for transport by a shipper, carrier by motor vehicle or rail vehicle, or receiver engaged in the transportation of food under conditions that are not in compliance with the sanitary food transportation regulations.
The comment period for the STHAF rule closed on July 30, 2014 and a final rule is expected by March 31, 2016, which will apply to shippers, receivers, motor carriers, and railroads. A 3PL or warehouseman may be considered a shipper, which is defined as “a person who initiates a shipment of food by motor vehicle or rail vehicle.” However, shippers, receivers, or carriers engaged in food transportation operations that have less than $500,000 in total annual sales are exempted, and the rule does not apply to the transportation of shelf stable food that is completely enclosed by a container (among other exclusions and exemptions).
As outlined in their presentation, the proposed rule includes the following expressed obligations:
- Shipper will be required to specify, in writing, its sanitary requirements, such as required temperature, to the carrier
- Shipper must inspect the trailer for cleanliness, confirm sanitation, confirm temperatures
- Shippers must abide by recordkeeping requirements
- Carrier must show shipper and, upon request, receiver, that it has maintained appropriate temperature control during transport for food subject to temperature control requirements. [Note: shipper can assume temp tracking responsibility in writing]
- Motor carriers will also have to provide shippers information about three (3) previous cargoes hauled in bulk vehicles and the intervening cleaning of those vehicles [Note: may agree in writing to vary this if same cargo]
- Must have competent supervisory personnel ensuring compliance and must have training with documentation
The big question Bierman and Johnston addressed was the impact of STHAF on cargo claims. Specifically, does the Sanitary Transport of Human and Animal Food rule conflict with the Carmack Amendment, which Congress enacted in 1906 and has since governed carrier liability for damaged shipments? In other words, will violating the shipper’s required STHAF standard automatically equal “damage” (actual loss) under Carmack?
Bierman and Johnston believe it’s likely that “deemed adulterated” under FSMA will be used to establish “damaged condition” element of Carmack. However, they also said that quality assurance testing for “actual” adulteration may be required in order to recover from a carrier, and that shippers also have an obligation to mitigate under Carmack.
I don’t have the space or expertise to dive deeper into the legal and commerical aspects of this question, but my main takeaway is that shippers, receivers, carriers, and 3PLs impacted by the Sanitary Transport of Human and Animal Food rule need to start preparing today (if they haven’t already) for this change in operating environment. Specifically, as Bierman and Johnston noted, there are steps the parties can take in contract language, tariff items, and Bill of Lading provisions to clearly define, communicate, and protect the interests of everyone involved. Here are some examples of contract language they presented:
Shipper Obligation
If shipper transports items covered under any food, drug or cosmetics legislation, law, statute, code and/or regulation which requires rejection or destruction of the entire shipment because the items “are or may be contaminated” under the definition of the legislation, shipper must clearly indicate on the bill of lading that the shipment is being made pursuant to the applicable federal legislation.
Carrier Lability
If shipper transports items covered under any food, drug or cosmetics legislation, law, statute, code and or regulation which requires rejection or destruction of the entire shipment because the items “are or may be contaminated” under the definition of the legislation, then carrier’s liability will be limited to $_____per pound.
In short, the more you prepare today, the less legal issues you’ll have tomorrow.
