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May 19, 2017

Transportation Law and Legal Issues Facing The Transportation Industry

          This article summarizes transportation law, identifies some current issues affecting the industry and highlights various services that a transportation lawyer can provide.


          Transportation Law is the body of law (federal, state and local) dealing with all forms and types of transportation, including cars, trucks, trains, ships, airplanes and any other form of getting from one place to another. These laws can apply broadly at a transport system level or more narrowly to specific activities. 

           Additionally, transportation laws apply also to the infrastructure that supports them, such as roads, bridges, airports, trails, ports, etc.

Since the U.S. Constitution authorizes Congress to pass laws regarding interstate commerce, travel between states is governed by federal law. Many federal statutes govern different forms of transportation and are administered by various administrative agencies. For example, the U.S. Department of Transportation (DOT) establishes overall transportation policies for the United States. Moreover, the Federal Aviation Administration (FAA) administers air travel, the National Transportation Safety Board (NTSB) provides certain safety guidelines and investigates mass transit accidents, the Federal Railroad Administration (FRA) monitors rail travel, etc.

             In addition to the statutes enacted by Congress, these administrative agencies establish their own regulations that further expand upon the laws governing interstate transit. The DOT also works with state and local authorities to help decide policies regarding highway planning, mass transit, safety of transportation facilities and many other things.

           Each state is also authorized to pass laws and create agencies that govern transportation within its boundaries. Each state, therefore, has its own version of a department of motor vehicles (usually called a DMV). Additionally, each state uses its police to enforce compliance with speed limits, safety equipment requirements, and rules regarding registration of planes, boats, and automobiles. Many states also empower their agencies to regulate transportation within the state, such as insurance requirements for automobiles.


              Below are some legal issues currently affecting the transportation industry:

1. Foreign Corrupt Practices Act and Anti-corruption Laws Worldwide. The United States Foreign Corrupt Practices Act and similar laws present challenges for global companies, especially those that rely on agents and other third parties throughout the world. Transportation and logistics companies must understand how the changing scope of their services intersects with those laws. Companies should institute comprehensive compliance and training policies.

2. Risk Management and Risk Allocation. Historically, carrier liability has been partially tied to the mode of transport. As both asset-based and non-asset based logistics providers expand their services, they may face unimagined liabilities, including wrongful death, spillage of contaminants, and environmental hazards. All parties involved in the transportation of goods should have a clear understanding of how risk is to be allocated prior to transacting business with each other. Contracts should accurately reflect everything agreed upon and should be purged of inconsistencies that undermine the parties’ intentions. All parties involved must insure that the other party is solvent and fully insured.

3. The Single Window. As of December 2016, the U.S. import-export regulatory process was modernized through the Automated Commercial Environment (ACE) system, which will allow businesses to submit data required by U.S. Customs and Border Protection and other government agencies through an internet-based “Single Window.” The transition for companies and government agencies to the new ACE system may cause temporary inefficiency in the regulatory process. Additionally, the sharing of information among various agencies might lead to expanded agency oversight.

4. The Compliance, Safety, Accountability Program. Compliance, Safety, Accountability (CSA), the truck monitoring program overseen by the Federal Motor Carrier Safety Administration that is supposed to reduce commercial motor-vehicle related accidents, collects safety data on motor carriers and drivers. Although it is not meant to be a new safety-rating system, many shippers use the CSA scores as a method of vetting carriers. Carriers must, therefore, fully understand CSA to ensure compliance.

5. Worker Classification. Because transportation and logistics companies are more often using a contingent workforce, government agencies are taking notice. The IRS and the Department of Labor have in recent years attempted to correct employers’ misclassification of employees as independent contractors. Both agencies have increased funding and manpower devoted to this endeavor. Moreover, many states have their own employment classifications and their definitions often differ from the federal test. In light of the serious implications of misclassification (liability for back payroll taxes and penalties, coverage under the federal discrimination statutes, liability for unpaid benefits, and civil penalties under state law), businesses should insure that their workers are properly classified.

6. Compliance with U.S. Export Controls. Federal law controls what can be exported from the U.S., and on what terms, and with whom, a U.S. party may conduct business and may be implemented for national security and foreign policy objectives. Since logistics companies are essentially on the front lines of U.S. export control enforcement, compliance is essential.

7. International Arbitration. Many believe that cross-border disputes can be resolved quicker and less expensively through arbitration than traditional litigation. Arbitration awards are generally not subject to appeal and are often easier to enforce in foreign jurisdictions. Companies should consider a mandatory arbitration provision in their standard contract forms.

                If your company has a legal issue regarding transportation issues, make sure that you retain a law firm that can handle the following matters:

 a. Represent carriers and shippers in disputes involving federal, state and foreign transportation laws.

 b. Prepare and review transportation contracts, logistics agreements, equipment leases, independent contractor agreements, shipping documents, rate tariffs and carrier interchange agreements.

 c. Defend carriers in regulatory enforcement actions and transportation tax claims.

 d. Represent national, regional and local carrier management in collective bargaining, union representation proceedings, multi-employer grievance hearings, grievance arbitration, drafting of policies and procedures, and other labor relations issues unique to transportation.

 e. Investigate transportation accidents on an expedited basis and prepare for the defense or resolution of claims.

f.  Represent transportation companies in employment and civil rights litigation in state and federal courts, including disability discrimination claims.

                The transportation industry is greatly affected by fast changing laws. Find an attorney who can handle your needs.