Transportation Update October 2008

October 2008

From the editors of CCH's Transportation products, here are summaries of the important recent developments in the area for the past month. Complete coverage of these issues, and many more, appear in our print and electronic products, including: Aviation Law Reporter, Commercial Aircraft Transactions, Issues in Aviation Law and Policy, Federal Carriers Reporter, Federal Motor Carrier Safety Administration Decisions, and Motor Carrier Liability.

If you have comments or suggestions concerning the information provided or the format used, please feel free to contact me directly at aaron.broaddus@wolterskluwer.com.

Hot Topic

FRA Emergency Order Bans the Use of Personal Electronic Devices
In response to the tragic Metrolink crash in California, the Federal Railroad Administration (FRA) has issued an emergency order restricting the use of cellular telephones and other distracting electronic and electrical devices by railroad operating employees while on-duty. FRA determined that it needed to take emergency action following the collision between a commuter train and a freight train that resulted in 25 deaths and more than 100 injuries. While a probable cause of the accident has not yet been definitively determined, preliminary information indicates that the locomotive engineer of the commuter train may have passed a stop signal. It is unclear how the signal was missed, but phone records indicate that the engineer's cell phone had been used to send a text message within 30 seconds of the time of the accident.

Since 2000, there have been numerous train collisions and railroad fatalities alleged to have involved cell phone use. In an effort to eliminate the risks associated with the use of cell phones and other electronic devices, the emergency order prohibits the use of such devices-as defined in the order-by on-duty railroad employees while on a moving train, when any railroad operating employee is on the ground or riding rolling equipment during switching operations, and during any period when another employee of the railroad is assisting in the preparation of the train. However, if a train experiences a radio failure, a wireless communication device may be used in accordance with railroad rules and instructions. Furthermore, a railroad employee may use a wireless communication device to respond to an emergency situation involving the operation of the railroad or encountered while performing a duty for the railroad, and may use the digital storage and display functions of an electronic device to refer to a railroad rule, special instruction, timetable, or other directive, if such use is authorized by the railroad.

Finally, railroads will be required to provide training to their operating employees and supervisors on the requirements of the emergency order and their own operating rules and instructions. Such training must ensure that the requirements of the order are understood, including any relevant distinctions between the minimum requirements of the rule and any more stringent requirements adopted by the railroad. Any railroad or individual who willfully violates the prohibitions or fails to observed the restrictions contained in the emergency order may be liable for a civil penalty or removed from safety-sensitive service on the railroad. Railroads and railroad operating employees must begin observing the prohibitions and restrictions contained in the emergency order no later than October 27, 2008. Federal Carriers Reports, Report Letter No. 1544, October 24, 2008.

TSA Assumes Watch-List Vetting Under Secure Flight Program
The Department of Homeland Security issued its final rule for Secure Flight, the program that will transfer pre-flight watch list matching responsibilities to the Transportation Security Administration instead of individual aircraft operators, carrying out a key recommendation of the 9/11 Commission. "Secure Flight is a critical tool that will further improve aviation security and fix the major customer service issue of watch list misidentifications, a frustratingly common occurrence for travelers under the existing airline-based system," Homeland Security Secretary Michael Chertoff said. He noted that it was better to improve quality across the system, "as opposed to having some unevenness in the performance among the different airlines."

Under Secure Flight, airlines will be required to collect a passenger's full name, date of birth, and gender when making a reservation. DHS said the additional information is expected to prevent most inconveniences at the airport, and will be particularly important for those travelers whose names are similar to those on the watch list. TSA Administrator Kip Hawley added that Secure Flight will improve security by maintaining the confidentiality of the government's watch list information while fully protecting passengers' privacy and civil liberties. "Ensuring privacy has been a cornerstone of this program and TSA has developed a comprehensive privacy plan to incorporate privacy laws and practices into all areas of Secure Flight," Hawley said.

Secure Flight will be implemented in two phases, with domestic flights covered under the new system beginning in early 2009, and international flights following in late 2009. The Air Transport Association (ATA) said it welcomed the release of the final rule, adding that the airline industry is committed to working through the process as efficiently as possible. "The common goals that we all share continue to be greater levels of seamless security combined with greater customer convenience," ATA President James C. May indicated. Meanwhile, American Civil Liberties Union (ACLU) senior legislative counsel Timothy Sparapani questioned whether the revisions to Secure Flight actually will work. "We suspect that although the government will do the vetting now, instead of the airlines, the failure to scrub the watch lists of hundreds of thousands of records of innocent, law-abiding passengers will result in still far too many mistakes and burdens for those travelers whose only crime is that their name is similar to somebody whom the government thinks is suspicious." Sparapani asserted. Aviation Law Reports, Report Letter No. 1390, October 30, 2008.

FAA Funding, Aviation Excise Taxes Extended Until April 2009
President Bush on September 30 signed into law another short-term funding measure that extends the authority for Federal Aviation Administration programs, as well as aviation excise taxes, through March 31, 2009. The Federal Aviation Administration Extension Act of 2008, Part II (Pub. L. 110-330, 122 Stat. 3717), provides $1.95 billion in contract authority for the Airport Improvement Program, authorizes appropriations for FAA Operations, Facilities and Equipment, and Research, Engineering, and Development programs, and extends the agency's authority to make expenditures from the Airport and Airway Trust Fund.

A second bill signed into law on October 2 (Pub. L. 110-337, 122 Stat. 3729) authorizes a Department of Transportation grant to address noise mitigation efforts for California schools situated beneath the flight paths of jets landing at Los Angeles International Airport. That funding stems from a settlement reached between the City and County of Los Angeles and several local school districts related to an expansion project proposed for LAX. Aviation Law Reports, Report Letter No. 1389, October 9, 2008.

Passage of Rail Safety Act Praised by Acting Chairman of NTSB
National Transportation Safety Board (NTSB) Acting Chairman Mark V. Rosenker praised Congress and the President for enactment of the Railroad Safety Improvement Act of 2008 (Pub. L. 110-432, 122 Stat. 4848), saying it will help bring about safety improvements long sought by the Safety Board. The new law addresses several items from the NTSB's Most Wanted list, including positive train control systems, train crew fatigue issues, and track inspection requirements.

Under the new law, all Class I and passenger railroads must employ positive train control systems by the end of 2015. Also, train crew shifts will be limited to 12 hours and workers will be required to have at least 10 consecutive hours off in a 24-hour period. Another element of the law addresses the need for train crews to have emergency escape breathing apparatus in locomotives when freight trains are carrying hazardous materials that could pose a threat of inhalation damage, and strengthens track inspection requirements.

In addition, the Act designates the NTSB as the primary agency for coordination of federal resources to assist families of passengers involved in rail passenger accidents. The provisions of this legislation mirror those responsibilities assumed by the NTSB in 1996, following the passage of the Aviation Disaster Family Assistance Act. Federal Carriers Reports, Report Letter No. 1544, October 24, 2008.

Aviation News

New FAA Aircraft Design Standards Address Onboard Security
Aircraft manufacturers that design new transport category airliners will have to meet new standards aimed at increasing onboard security for passengers and crews, under a final rule promulgated this week by the Federal Aviation Administration. Included in this initiative are design standards to protect the flightdeck from forcible intrusion by unauthorized individuals or from penetration by small arms fire/fragmentation devices. Manufacturers also will be required to design a so-called "least risk bomb location" where a bomb or other explosive device discovered in-flight could be placed so that, if detonation occurred, flight critical structures and systems would be protected from damage as much as possible.

In addition, new aircraft designs must provide means to limit the effects of the detonation of an explosive or incendiary device aboard the aircraft, by, among other things:

Limiting entry of smoke, fumes, and noxious gases into the flight deck or the passenger cabin;
Meeting specified standards for all components of fire-suppression systems in cargo compartments;
Establishing a "least risk bomb location;
Physically separating certain redundant aircraft systems or otherwise designing them so that they would continue to function in the event of a bomb detonation; and
Providing interior features that make it harder to conceal weapons, explosive devices, or other objects, and easier to detect such objects by a simple search of the aircraft cabin.

The initiative also amends existing standards to require operators of existing airplanes with a maximum certificated passenger seating capacity of more than 60 persons to designate a least risk bomb location. Aviation Law Reports, Report Letter No. 1390, October 30, 2008.

Airlines Sue FAA over Slot Auction Rules
The Air Transport Association filed suit against the Federal Aviation Administration seeking to invalidate two slot auction rules recently implemented by the agency—one for LaGuardia Airport and another covering both John F. Kennedy (JFK) International Airport and Newark Liberty International Airport. ATA said October 14 that the lawsuit challenges FAA's claims that slots are agency property that can be leased or otherwise disposed of under FAA's general property-management authority. ATA also indicated that it will seek a stay of the auction, which currently is planned for early January 2009.

Released on October 9, the new regulations enable the auction by FAA of a limited number of take-off and landing slots at the three New York-area airports. The regulations also call for a gradual auctioning over the next five years of up to 10 percent of the landing and take-off slots that airlines currently operate free of charge today.

Transportation Secretary Mary E. Peters indicated that the rules would lower the hourly operating cap at LaGuardia airport from 75 slots per-hour to 71 slots per-hour by "retiring" an additional five percent of the slots currently being used, and by cutting delays by an estimated 40 percent. Existing carriers flying out of LaGuardia would keep 988 of the slots they currently operate, while the remaining 113 slots would be made available over the next five years by auction to airlines interested in starting new service or expanding current operations at the airport. Meanwhile, existing airlines would keep 1,035 of the slots they currently operate at JFK, and 1,154 of the 1,245 slots they currently operate at Newark. The remaining 89 slots at JFK and 91 slots at Newark likewise would be made available over a five-year period for airlines wishing to expand current operations or start new services.

"Without slot auctions, a small number of airlines will profit while travelers bear the brunt of higher fares, fewer choices and deteriorating service," Peters said, asserting that "[s]lot auctions, meanwhile, will keep flights to New York affordable, available, and vibrant while giving all airlines an opportunity to compete in one of the world's most popular aviation markets." According to the Air Transport Association, the DOT decision "patently defies" the recommendation of the Government Accountability Office, as well as the will of Congress, by attempting to move forward with an illegal auction of airport slots. The industry group disclosed that airlines now have "no choice but to pursue [a] court challenge." ATA president James C. May suggested that, rather than forcing a costly and protracted legal challenge, DOT should implement fair and practical solutions to address delays and add needed new capacity. Aviation Law Reports, Report Letter No. 1390, October 30, 2008.

Airline Industry Crisis Deepening, IATA Warns
The crisis facing the airline industry is deepening and no region is immune to the current problems, according to Giovanni Bisignani, Director General of the International Air Transport Association. "Urgent measures are needed. From taxation to charges and operational efficiencies, all areas impacting the business must be examined for ways to reduce costs and drive efficiencies. It's a matter of survival," Bisignani asserted. The slowdown has been so sudden that airlines cannot adjust capacity quickly enough, Bisignani added, noting that, while the drop in the oil price is welcome relief on the cost side, fuel remains 30 percent higher than one year ago.

With traffic growth continuing to decline, IATA is predicting that the industry still is heading for a $5.2 billion loss this year. On a positive note, Bisignani pointed to Brazil's approval for the removal of fuel taxes on international flights, which should result in about $411 million in savings over the next four years. "The challenge is for other governments to follow Brazil's example, conform with global standards, and free the industry of crazy taxation," he said. Aviation Law Reports, Report Letter No. 1389, October 9, 2008.

North Carolina's Air Ambulance Regulation Largely Preempted
A North Carolina state-law scheme requiring air ambulance operators to obtain a certificate of need (CON) and an emergency medical services (EMS) provider license in order to operate within the state is expressly preempted by the Airline Deregulation Act of 1978, a federal court in that state ruled late last month. According to the court, the state's requirement that prospective health-service providers obtain a CON—by showing the population to be served, that the least costly or most effective alternative had been proposed, and that the proposed project would not result in unnecessary duplication of existing or approved health-service capabilities/facilities—directly contravened the pro-competition purposes underlying the ADA.

Moreover, to the extent that the CON mandate prescribed the behavior necessary to operate in state, it clearly was "related to" the air ambulance operator's prices, routes, or services, the court held, adding that, at least with respect to air ambulance services that are required to submit to the CON law, the statute constituted a direct substitution of the state's own governmental commands for competitive market forces in contravention of U.S. Supreme Court precedent set forth earlier this year in Rowe v. New Hampshire Motor Transp. Ass'n [previously reported at 32 Avi. 16,046]. Furthermore, the state law significantly affected the rates, routes, and services of an air carrier in that it barred the air ambulance operator from performing intrastate flights in violation of both Congress' original intent in enacting the ADA and the Act's remedial intent in affirmatively preempting such state action, the court advanced.

Also preempted was the state regulatory requirement that air ambulance operators obtain the approval of local officials prior to offering intrastate services under an EMS provider license, the court said, noting that the collective effect of the challenged regulations was to provide local government officials a mechanism whereby they could prevent an air carrier from operating within the state at all. Such a bar to entry related to an air carrier's routes and services, and violated Congress' clear mandate in establishing the ADA, the court asserted, declaring that the North Carolina regulations were preempted to the extent that they required approval of county government officials which, if denied, would have precluded an air ambulance operator from operating within the state.

The court also held that the ADA preempts the state's requirements that air ambulances be equipped with two-way radios in order to communicate with various public safety entities within a defined service area and provide service continuously available on a 24-hour-per-day basis. The continuous-operation requirement clearly related to air carrier services, the court said, noting that the other two standards had a connection with, or reference to, the operator's routes under the broadly preemptive language of the Act. To the extent that the communications regulation merely required the operator to synchronize its voice radio communications with local emergency medical services resources, it fell outside of the scope of express federal preemption, however, the court instructed. Similarly, the written-plan mandate related to an air carrier's routes in too tenuous a manner to have been preempted under the ADA, the court elucidated, reasoning that this requirement does not define or restrict the operator's service area, but merely necessitates documentation of the operator's own plan for ensuring that patients would be transported to an appropriate medical facility in the event of a diversion or bypass; primarily a patient-care objective properly within the state's regulatory authority.

Additionally, the scheme's required adoption of rules specifying equipment, sanitation, supply, and design requirements for ambulances, mandating inspection of ambulances, and providing for revocation of ambulance permits for ambulances failing to meet standards established by the state health commission impermissibly governed aviation safety in violation of the Federal Aviation Act of 1958, the court determined. Here, the court found that, because the Act's field preemption in the area of aviation safety is absolute, state regulations requiring that air carriers provide specific aviation safety-related equipment and participate in safety-related training were preempted. Aviation safety and emergency medicine share some overlapping goals, and the two fields are not entirely distinct, the court articulated, ruling that, although federal aviation law has preemptive control of aviation safety measures, regulations regarding EMS-related equipment do not intrude on that domain. Med-Trans Corp. v. Benton (EDNC) 33 Avi. 17,101.

Mexican Tax-Related Claims Against U.S. Carrier Preempted
The Airline Deregulation Act of 1978 applied to a passenger's claims against a U.S. airline related to the carrier's collection of (and alleged failure to remit) a tax imposed by the government of Mexico upon passengers flying into Mexico from the United States, a California federal court determined, rejecting the passenger's contention that the tax charged by the carrier had been too tenuous, remote, or peripheral to be considered part of the Act's preemption of claims related to prices, routes, or services of an air carrier. Case precedent holds that the rates that customers pay are related to airline prices, the court elucidated, ruling that the carrier's imposition of the tax on customers flying to Mexico via California undoubtedly had been related to the price of a ticket that customers eventually would pay, and affected the economic deregulation of the airlines and the forces of competition within the airline industry. Furthermore, inasmuch as the tax is imposed only upon those routes reaching Mexico, the claims sufficiently related to airline routes as well, the court held.

The claims also did not fall within the exception to the ADA's preemptive effect carved out by case precedent for circumstances in which an airline has violated its own, self-imposed undertakings, the court added, remarking that the kind of self-imposed undertaking that occurred in the case under which the exception had been delineated was not present in the case at bar. Here, the passenger alleged that the Mexican law imposing the tax had been incorporated into the carrier's international contract of carriage such that the carrier's collection of the tax from exempt passengers had constituted a breach of that contract, the court observed, asserting that the Mexican law only had been incorporated into the contract of carriage to the extent that it was contrary to any terms therein. None of the carrier's actions in collecting the tax had been contrary to the Mexican law, nor had the carrier undertaken to charge only non-exempt passengers. Rather, the carrier only had promised to comply with applicable laws, regulations, and orders that were in conflict with its contract of carriage, the court said. McMullen v. Delta Air Lines, Inc. (NDCal) 33 Avi. 17,121.

First-Leg Carrier Not Liable for Alleged Injury by Second
Where a passenger allegedly sustained injuries on a stopover during international carriage involving a different air carrier on each of two flight legs to her destination, the carrier on the first leg was not liable under the Montreal Convention for injuries allegedly inflicted by the carrier on the second leg, a New York federal court ruled. According to the court, in circumstances where carriage is performed by "various successive carriers," the Convention provides that liability is limited to the carrier that "performed the carriage during which the accident ... occurred, save in the case where, by express agreement, the first carrier has assumed liability for the whole journey."

That provision—and not the Convention's provision on codesharing/wet leasing operations—applied to the flights at issue, the court held, reasoning that the relationship between the first and second carriers was that of successive carriers and not contracting carriers. It was undisputed that the first carrier had sold the passenger a ticket for both her travel on one of its flights to a connecting point on her journey, as well as her flight on the second carrier from the connecting point to her final destination, the court observed. In addition, the fact that the Convention utilizes the word "various" in reference to successive carriers did not defeat the applicability of the treaty's successive-carriers provision because the case had involved only two airlines. Furthermore, the passenger's reliance upon the Convention's codesharing/wet leasing provision was misplaced, as that provision specifically excludes successive carriage arrangements, the court noted, adding that the passenger did not allege that the second leg of her journey had been a codeshare flight with the first carrier, or that the first carrier had leased the plane and crew of the second leg in order to offer service. Therefore, summary judgment for the first carrier was appropriate, the court concluded. Best v. BWIA W. Indies Airways Ltd. (EDNY) 33 Avi. 17,116.

Surface Transportation News

Enforcement Policy for Hazmat Safety Permit Program Adopted
An enforcement policy adopted by the Federal Motor Carrier Safety Administration (FMCSA) would allow carriers denied a hazardous materials safety permit based on their crash rate to request a review of the preventability of the crashes used to assess the rating. Pursuant to federal regulations, FMCSA may not issue a hazardous materials safety permit to a motor carrier that has a crash rate within the top 30 percent of the national average based on crashes listed in the Motor Carrier Management Information System (MCMIS). A carrier's crash rate is calculated based on a specific formula that looks at the number of crashes the carrier vehicles have been involved in during a twelve-month period along with the number of vehicles the carrier operated during that timeframe. Until now, preventability had not been a factor in determining whether a crash was used to calculate the crash rate.

The enforcement policy resulted from the submission of petitions for rulemaking by the Institute of Makers of Explosives and The Fertilizer Institute, requesting that the agency consider crash preventability when evaluating a carrier's crash rate under the safety permit program in the same manner that accident preventability is considered when a carrier contests an unfavorable safety fitness rating. As a result, FMCSA has determined that, if a carrier is denied a hazardous materials safety permit based upon a crash rate in the top 30 percent of the national average, it can submit evidence to show that one or more crashes affecting its crash rate were not preventable.

The standard used to determine preventability provides that, if a driver who exercises normal judgment and foresight could have foreseen the possibility of the accident that in fact occurred and avoided it be taking steps within his/her control which would not have risked causing another kind of mishap, the accident was preventable. In order to preserve the right to seek administrative review of FMCSA's determination of the preventability of one or more crashes, the carrier must submit its evidence that the crash was unpreventable with its request for review. Such evidence may include, but is not limited to, police reports and other verifiable government reports or law enforcement and witness statements. The enforcement policy took effect on September 16, 2008. Federal Carriers Reports, Report Letter No. 1543, October 3, 2008.

FRA Adds Rules for Use of ECP Brake Systems
The Federal Railroad Administration (FRA) is revising its regulations governing freight power brakes and equipment and adding a new section addressing electronically controlled pneumatic (ECP) brake systems. Under the new ECP requirements, trains utilizing ECP brake systems will be permitted to travel up to 3,500 miles between routine brake tests. This is more than double the current maximum distance. In some cases, this may allow trains to travel directly to their destinations without stopping.

The revisions are intended to provide for, and encourage, the safe implementation and use of electronically controlled pneumatic (ECP) brake systems technologies. The updated regulations contain specific requirements pertaining to design, interoperability, training, inspection, testing, handling defective equipment, and periodic maintenance of ECP brake systems. The final rule also identifies existing regulatory and statutory provisions where FRA is endorsing flexibility to facilitate the introduction of the advanced brake system technology. The final rule is effective December 15, 2008. Federal Carriers Reports, Report Letter No. 1544, October 24, 2008.

NTSB Urges Action to Help Prevent Fatigue-Related Accidents
Following an investigation into an accident involving a tractor-trailer and a charter bus on Interstate 94 near Osseo, Wisconsin, the National Transportation Safety Board (NTSB) issued safety recommendations to the Federal Motor Carrier Safety Administration (FMCSA) and the National Highway Traffic Safety Administration (NHTSA). The incident occurred when a tractor-trailer drifted off the roadway and traveled along the shoulder before re-entering the highway and overturning. The tractor-trailer came to rest on its right side and was blocking both westbound lanes. About a minute after the tractor-trailer came to rest on its side, a chartered 55-passenger motorcoach traveling at highway speeds crashed into the underside of the overturned truck. The incident resulted in the death of the motor coach driver and four passengers, minor to serious injuries to 35 of the motorcoach passengers and the driver of the tractor-trailer. Five passengers on the bus were not injured.

NTSB concluded that the probable cause of the accident was fatigue, indicating that the driver of the tractor-trailer had fallen asleep at the wheel because he had not used his off-duty time to get sufficient rest to safely operate the vehicle. Contributing to the accident was the motorcoach driver's inability, in the low light conditions of a dark night, to see the truck blocking the travel lanes in time to avoid the collision. NTSB also found that, had the truck been equipped with fatigue-detecting technology and had the motorcoach been utilizing a collision warning system with active braking, the systems might have prevented or significantly reduced the severity of the accident.

Based on its findings, NTSB recommended that the FMCSA:

Develop and implement a plan to deploy technologies in commercial vehicles to reduce the occurrence of fatigue-related accidents; and
Develop and use a methodology that will continually assess the effectiveness of the fatigue management plans implemented by motor carriers-including their ability to sleep and alertness, mitigate performance errors, and prevent incidents and accidents.

Additionally, NTSB recommended that the National Highway Traffic Safety Administration evaluate the effectiveness of collision warning systems with active braking and electronic stability controls systems in order to determine if these technologies will reduce commercial vehicle accidents and require their use on such vehicles if they are deemed effective. Federal Carriers Reports, Report Letter No. 1543, October 3, 2008.

Rail Industry Urged to Adopt New Technologies to Improve Safety
Mark V. Rosenker, the Acting Chairman of the National Transportation Safety Board (NTSB), encouraged the rail transportation industry to take advantage of newly emerging technologies that can provide the biggest safety improvements in coming years when he spoke to the International Railroad Safety Conference in Denver, Colorado. Rosenker acknowledged the improving safety trends in the railroad industry over recent decades with employee fatalities down 82 percent and grade crossing fatalities down 59 percent since 1980 but asserted that accidents continue to occur.

According to Rosenker, new technologies can provide some of the biggest safety improvements. Among them are Positive Train Control (PTC) systems, which can override mistakes by human operators and prevent train collisions and over-speed derailments. PTC has been on the NTSB's Most Wanted List of Safety Improvements for 18 years. NTSB has recommended that priorities be established for the installation of PTC in high-risk corridors, such as those where commuter and intercity passenger trains operate.

Rosenker addressed other technical solutions to safety problems, including electronically controlled pneumatic (ECP) braking, acoustic bearing detectors, wheel impact detectors, and truck performance detectors. He also noted that intelligent transportation systems (ITS) can play an important role in saving lives at grade crossings, and urged the railroad industry to work with the highway industry to develop useful, intelligent transportation safety systems that can prevent accidents at grade crossings. Federal Carriers Reports, Report Letter No. 1544, October 24, 2008.

Carrier's Carmack Liability Terminated by Refusal of Delivery
A federal district court concluded that a motor carrier's liability under the Carmack Amendment had terminated after a consignee refused to accept delivery of a shipment when it was tendered at the agreed-upon time. The carrier had been hired to transport a shipment of goods from Washington to California. When the goods were presented for delivery in California at the agreed-upon time, the consignee informed the driver that it would not be able to accept delivery of the goods for two days. Because no instructions were provided by the shipper, the driver drove the truck, with the goods in the trailer, to his home. While parked at the driver's home, the truck and trailer were stolen.

The shipper filed a claim for the loss of the goods with both of the carriers involved in the movement. The carriers denied liability, asserting that the Carmack Amendment was not applicable because the loss had occurred after a tender of delivery had been refused. While the Carmack Amendment governs a carrier's liability for the loss or damage to goods during interstate transportation, a tender of delivery that is refused by a consignee terminates the carrier's responsibility as an insurer, the court opined. Thus, when the driver attempted to accomplish delivery in the agreed-upon manner and was turned away, the carrier no longer was acting in its capacity as a carrier but, rather, as an ordinary bailee or warehouseman. Accordingly, the carriers were entitled to judgment on the Carmack claim because the Carmack Amendment was not applicable to the loss. Advantage Freight Network v. Sanchez (EDCal) Federal Carriers Reporter ¶84,562.

Carrier's Lease Violated Truth-in-Leasing Disclosure Requirements
A motor carrier was found to have violated federal truth-in-leasing regulations by having failed to disclose banking fee charges and document charge-back items deducted from the compensation paid to truck owners and drivers, a federal court of appeals concluded. A group of owner-operators who leased their equipment and driving services to a motor carrier that hauled freight in interstate commerce sued the carrier alleging that its leases had violated the federal truth-in-leasing regulations because they had not disclosed banking fee charges or provided documentation related to charge-back items. A federal district court ruled in favor of the carrier, finding that the carrier was not required to disclose banking fee charges or provide documentation supporting charge-back items.

Upon review, an appellate panel reversed the lower court's decision and held that the carrier's lease had not complied with the truth-in-leasing regulations regarding the disclosure of fees and the production of documentation for charge-back items, including Qualcomm's price list. Furthermore, the action was remanded to allow the owner-operators to seek injunctive relief concerning the violations. As to the issue of damages, the appeals court agreed that the owner-operators had to prove actual damages, but remanded the action in order to allow the owner-operators an opportunity to prove actual damages, if any exist. Finally, the appeals court agreed with the lower court's holding that the applicable statute of limitations on the action was four years. OOIDA v. Landstar Sys., Inc. (11thCir) Federal Carriers Reporter ¶84,564.