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Rail Law Alert – 5-Year Bill Raises Rail Liability Cap

House and Senate Negotiators Agree on Surface Transportation Bill, Increase Liability Cap for Passenger Rail Accidents

Under the comprehensive five-year surface transportation bill agreed to by the House and Senate on December 1, 2015, the current $200 million cap on personal injury and damage claims resulting from passenger rail accidents will increase to approximately $295 million and will be indexed to inflation.

U.S. House and Senate negotiators have reached agreement on a $305 billion dollar surface transportation reauthorization bill named the Fixing America's Surface Transportation (FAST) Act. Both the House and Senate are expected to act quickly to send the bill to the President for his signature before the current surface transportation extension ends on December 4, 2015.

Among the policy changes included in the thirteen hundred page bill is a provision increasing the liability cap under 49 U.S.C. § 28103, currently $200 million. Under Section 11415 of the FAST Act, the cap would be adjusted upon enactment to reflect the cost of inflation since December 2, 1997, resulting in a revised liability cap of approximately $295 million. The adjustment would become effective 30 days after the Secretary of Transportation provides public notice of the adjustment. The FAST Act also provides that the liability cap would be adjusted every five years to reflect inflation.

Entities owning or operating passenger rail service subject to 49 U.S.C. § 28103 should review their insurance coverage as well as the liability and insurance requirements in their current agreements with freight railroads. If the FAST Act is enacted as expected, passenger rail providers will need to assess whether to revise their agreements to reflect the liability cap change.