Tuesday, September 9, 2014

FMCSA AND “DUE PROCESS”



FMCSA AND “DUE PROCESS”

            The Fourteenth Amendment to the United States Constitution guarantees that no persons property shall be taken without due process of law. 5 U.S.C. §702 et seq (The Administrative Procedures Act) states that: “A person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute, is entitled to judicial review thereof.”

             The United States Supreme Court has stated: “...we have held that the opportunity to be heard must be at a meaningful time and in a meaningful manner. (Armstrong v. Manzo, 380 U.S. 545, 552 (1965); Barry v. Barchi, 443 U.S. 55, 66, 99 S.Ct. 2642, 61 L.Ed. 2d 365 (1979) In a concurring opinion, Justice Brennan stated:

                                    “Once licenses are issued...their continued possession
                                    may become essential in the pursuit of a livelihood.
                                    Suspension of issued licenses ... involves state action
                                    that adjudicates important interests of the licensees.
                                    In such cases the licenses are not to be taken away               
                                    without that procedural due process required by
                                    the Fourteenth Amendment.” (Barchi, id., at 69;
                                    Dixon v. Love, 431 U.S. 105, 112 (1977); Gibson
                                    V. Berryhill, 411 U.S. 564 (1973).

            It is now established that once an entity has been issued a license to operate, (i.e., DOT Registration Number, license to operate a motor carrier, etc.) that license cannot be taken away without a due process hearing. The license can be suspended for a short period of time, however, a post suspension hearing must be held promptly (Barchi, id. at 64)

            The reason for the requirement for a prompt, independent hearing was clearly stated in Two Dayes Trucking (FMCSA-2013-0006):
                                                                                                                                                           
                                    “It appears undisputed that the issuance of an IHOOS
                                    Order is perhaps the most devastating action FMCSA
                                    can take against a motor carrier. An IHOOS Order,
                                    which immediately suspends an owner’s business
                                    license, is issued by FMCSA when it deems a business
                                    to pose an imminent hazard to the public safety. This
                                    is rare agency action that deprives a business owner
                                    of a protected interest prior to affording the business
                                    owner an opportunity for a hearing. The business owner
                                    suffers not only a financial loss while out-of-service, but
                                    also a loss of reputation. The business owner also
                                    suffers the possibility of the complete loss of its
                                    business. Even when the government’s interests justify
                                    such immediate suspension action, a full hearing must be
                                    available promptly after the temporary depravation occurs.”


            A review of the Rules of the FMCSA reveals that there are two procedures whereby a motor carrier’s permission to operate may be revoked. One is the determination of a safety rating of “unsatisfactory” pursuant to 49 CFR §385.9 and the other is a designation of “Imminent Hazard” pursuant to 49 CFR §386.72 (hereinafter referred to as Parts 385 and 386).

            Under Part 386.72(a), Imminent Hazard Orders are allegedly only issued when it is determined that an imminent hazard exists as a result of the transportation by motor vehicle of a particular hazardous material. That would appear to exempt motor carriers that only transported passengers, however, a recent article in the Bus & Motor Coach News reported that five (5) bus companies had been placed out of service through the issuance of an Imminent Hazard Out of Service Order (IHOOS Order), revocation of their Federal operating authority registration, and suspension of their USDOT number.

            There has been some administrative “litigation” concerning the due process applicable when FMCSA issues an IHOOS Order. Part 386.72(b)(4) dictates that upon issuance of an IHOOS Order an opportunity for a review of the Order must be provided and the decision must be issued within ten (10) days of the issuance of the Order. The DOT Administrative Law Judge in DND International, Inc. (FMCSA-2014-0159) ruled that Congress had satisfied the “due process” requirement by requiring an Administrative Procedure Act review within 10 days of the issuance of the IHOOS Order. However, it that case, the Agency did not afford the carrier a Hearing and a decision within the 10 day time period. The ALJ also ruled that it was the issuance of the IHOOS Order that started the process, not a Petition by the carrier, therefore, as the FMCSA had not begun the process within the 10 day period, the IHOOS Order and the registration revocation were rescinded. In addition, after conducting a Hearing the ALJ also ruled that the FMCSA had not supported its IHOOS Order and ruled that this was an additional reason for rescinding the Order.

            Part §385, however, is an entirely different process. First, the FMCSA conducts a compliance review that may consist of a review of the carrier’s paperwork and an inspection of its vehicles. If the compliance review reveals alleged violations, the FMCSA will then issue a safety rating. The regulations require that the rating be issued within 30 days from the compliance review. (§385.11(a)) The rating for passenger carriers becomes final 45 days after the date of the notice. If the rating is “unsatisfactory”, the carrier may request a change in the rating under §385.17 based on corrective action taken after the notice. According to §385.17(e)(1), the FMCSA will make a decision on any request to change a rating within 30 days of receipt of the request. Obviously, the request for a change in the rating should be made within 15 days of receipt of the notice as the FMCSA historically will not delay the 45 day period for issuance of a final rating.

            Under §3858.17(h), if the FMCSA determines that the carrier has corrected the violations from the compliance review and currently meets the standards in §385.5 and §385.7, it is required to upgrade the rating. It should be stressed here that neither the Statute nor the Regulations require the carrier to enter into a Consent Order for the rating to be upgraded. However, it has been my personal experience that the FMCSA will threaten the carrier that, unless it signs a Consent Order, the FMCSA will not upgrade the rating. The Consent Orders normally places the carrier under stricter rules than the Regulations and allows the FMCSA to order the carrier off of the road at a moment’s notice.

            The FMCSA also will string the carrier along making them think there corrections will be accepted and their safety status upgraded when there is more that the Agency will require before the status is ungraded. One carrier I am aware of has submitted at least four (4) different revised safety plans only to have the FMCSA deny them and refuse to upgrade their status for insignificant reasons. The status was only upgraded to “Conditional” after signing a Consent Order, and then they could not get back on the road because their registration has been suspended and the process to get that returned has taken another few months. A typical Consent Order usually does not provide for a lifting of the suspension of the registration or a return of the DOT number.

            Pursuant to §385.15 the carrier can request the FMCSA for an administrative review of the rating process. This review must be requested within 90 days of the notice of the proposed rating, however, the regulations suggest that the request be made within 15 days of the notice as the FMCSA has 30 days to conduct the review which would exhaust the 45 day time limit between notice and the imposition of the Cease Order. What is not stated is how the review is to be conducted. The request is sent to the Chief Safety Officer in Washington, DC, who is actually an Assistant Administrator, but there is no requirement for the FMCSA to appoint an Administrative Law Judge or provide any independent review. In fact, the last few decisions issued under this regulation have been by an Assistant Administrator and not an ALJ. There is also no provision for a hearing on the merits or for the carrier to present witnesses.

            It is apparent that, under Part 385, the Agency is merely reviewing its own procedures and actions, which does not qualify as an independent review or as due process either under the U.S. Supreme Court cases, the APA,  or even the Agency’s own Administrative Law Judge’s decisions. I would also question whether or not the procedure under Part 386 complies with judicial due process, as the Assistant Administrator has the authority to review an ALJ’s decision and can overrule them, making the process futile.
                                                                                   
            The one avenue that is apparently open, but never used, is a Petition for Temporary Restraining Order or Injunction in the local U.S. District Court. The basis for the Motion would be that the carrier has not been afforded, nor do the regulations provide for, a due process hearing pursuant to the Administrative Procedures Act. As none of the decisions generated from the Field Administrator (other than default orders) are classified as Final Orders, according to the regulations, the determination of an “unsatisfactory” safety rating does not have to be appealed to the Circuit Court of Appeals. It can therefore be challenged in District Court. The carrier would then be entitled to an APA review of the Agency actions and a reversal if it is found that they have not complied with their own regulations, or if their determinations were arbitrary, capricious, or without a substantial basis in fact.
           
            There is also the question of disparity in treatment. Assume that you have two passenger carriers, one of whom has been issued an IHOOS Order and the other has been rated as “unsatisfactory” after a compliance review. For the carrier issued an IHOOS Order, the Agency is limited by §386.72(b)(2) to those restrictions which are required to abate the hazard. For the carrier issued an “unsatisfactory” rating, there is no such limitations on the punishment issued by the FMCSA and, therefore, no guidelines on which to judge the punishment. Therefore, we have two passenger carriers, that may have committed the same violations, treated very differently merely because the FMCSA Field Office decided to utilize different parts of the regulations. This is a violation of due process on its face.

            What would be a fair resolution to this bureaucratic inequality? The carrier industry should push for a system much akin to that used by the Federal Agencies for contract disputes under the Contract Disputes Act. There a dispute, or claim, once decided by a contracting officer, is appealed to a Board of Contract Appeals composed of Administrative Law Judges. They are semi-independent in that while they are paid by the Agencies, their decision are not reviewed by Agency personnel, but appealed to the U.S. Court of Appeals for the Federal Circuit.

            Considering the economic damage that can be visited upon a carrier by an IHOOS Order or an “unsatisfactory” rating, the least the DOT can do is to provide a hearing whereby the carrier can challenge the violations or the ratings and receive an impartial hearing and resolution. The DOT already has ALJs on payroll and it would only require a minor change in the regulations to provide the necessary, and required, due process. The Bus Industry should marshal its legislative muscle to obtain such a change in the regulations.
                                                           
            Of course, all of this assumes that the FMCSA has overreached in its evaluations of the carriers performance. Ultimately the carrier will have to prove that the alleged violations did not occur; were minor of paperwork violations; or, had been quickly corrected. Therefore, the best advice is to make sure that your Safety Plan is in order, the drivers are all qualified and are complying with the restrictions covering driving time and your vehicles are properly maintained. In addition, as I have advised all of my clients, do not let the FMCSA conduct their compliance reviews alone. Make sure that you shadow them and ensure that any alleged violation are justified and any vehicle problems are corrected quickly.
                                                                                   

J. Hatcher Graham, J.D.; LL.M.; LL.M.

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