Wednesday, February 25, 2015

REGULATORY UPDATE March 1, 2015



REGULATORY UPDATE
March 1, 2015

Further Delays

1.         E-Log.  The FMCSA has pushed back the date for a final rule which will require all drivers who currently must prepare RODS to use electronic devices.  The new date for a final rule is November 9, but whenever it is issued, the rule will not take effect for 2 years.


2.         Speed Limiters.  The target date for a proposed rule to require the use of speed limiters for large trucks has been extended to June 8.  The FMCSA and NHTSA must first agree on the proposed rule which will be subject to comment and rulemaking before being implemented.

3.         CDL Drug and Alcohol Clearinghouse.  This final rule has been pushed back until December 14 and will track all drivers holding CDLs who fail or refuse to take a drug or alcohol test.  The final rule will not become effective for 18 months after publication, but ultimately will require carriers to keep records and to obtain clearinghouse checks for all new drivers.

4.         Prohibition of Driver Coercion.  The Agency has published proposed rules to impose fines on carriers and shippers and brokers for coercing truck operators to violate the Federal Motor Carrier Safety Regulations.  See Fed Reg. 2014-10722.  The Final Rule is scheduled for issuance on September 10 and will be effective when issued.  This rule will bring shippers and brokers under FMCSA regulation for violation of safety offenses for the first time and should abate demands for delivery times which exceed the hours of service requirements.

5.         Safety Fitness Determination.   A long awaited safety fitness determination rulemaking has again been delayed until July 1.  Some suggest the rule would merely allow the FMCSA to use ratings from CSA’s Safety Management System to target carriers for intervention.  Yet, Joe DeLorenzo, the Agency’s Director of Enforcement, in February is quoted as saying that, “When the safety fitness determination rule is published the Agency will have the authority to assign monthly safety ratings – satisfactory, conditional or unsatisfactory – to carriers based on algorithms rather than conducting manual compliance reviews.

This prospect is indeed scary as the following commentary suggests.

They Can’t Mean That

Joe DeLorenzo, the FMCSA’s Director of Enforcement and Compliance, previewed the long awaited safety fitness determination at the Omnitracs convention in Dallas.  The Commercial Carrier Journal and a number of attendees reported that when the long awaited safety fitness determination is finally published, the Agency will have the legal authority to assign monthly safety ratings – satisfactory, conditional, and unsatisfactory – to carriers based on algorithms rather than conducting manual compliance reviews.

Rating carriers based upon compliance information has been the Agency’s goal for the past 11 years.  Yet, certainly Mr. DeLorenzo could not have meant the ultimate safety fitness rule will be published in July or that the Agency, any time soon, will be authorized to replace existing rules with “its algorithm” to rate carriers to make a safety fitness determination on a monthly basis without a compliance review.
Whatever the Agency publishes in July must be the first step in the long delayed rulemaking process.  Although the Agency has indicated that its ultimate safety fitness determination will rely on raw scores, not peer group percentiles, peer grouping of carriers is not the only fatal flaw in SMS methodology.  The law of large numbers pointed out in the Gimpel Study and confirmed by the GAO, proves the SMS system lacks sufficient data to rank 90% of the carriers.  The Agency has professed an ability to determine crash preventability and a 75% error factor which leads to wild fluctuation in small carrier scores is a problem the Agency cannot ignore.  The Agency’s use of average or medium trend lines to vindicate the alleged nexus between compliance in the BASICs and safety gives no predicate for placing a carrier out of service based upon raw scores alone.

As the misuse of SMS methodology by shippers and plaintiff’s bar has shown over the past 4 years, SMS may be useful in profiling carriers for “further monitoring” by the Agency but not as a predicate for making an ultimate safety fitness determination which deprives a small business of its right to operate or its access to business without due process.

Currently if a carrier after audit is issued a proposed fitness standard of conditional or unsatisfactory, it has an appeals process before the Agency’s action is final and the safety rating is published. Clearly, any administratively final rule will have to give carriers similar appeal rights in order to comply with due process requirements.  Will the result of grading carriers as satisfactory, conditional or unsatisfactory based upon the flawed “algorithm” ultimately just publicly brand thousands of carriers as damaged goods before their rights of due process are exhausted?

Currently using SMS methodology as originally intended, the Agency audits 14,924 carriers annually and ultimately concludes that only 465 are unfit to operate on the nation’s roadways.  Will publicly branding carriers as conditional or unfit on a monthly basis based upon compliance numbers alone somehow improve this ratio?

Congressman Gibbs and Barletta are already asking the Agency the right questions about SMS methodology.  At this point, the Agency’s SFD rulemaking should add some more questions to the stack.

A Win for the Owner-Operator Model in New England

The State of Massachusetts, a traditionally unfavorable venue for owner-operators, passed a wage act which applied the so called ABC Test so as to make it impossible for a motor carrier to have owner-operators in the conflicting lower court decisions including a favorable Virginia District Court decision interpreting Massachusetts statute resulted in Massachusetts Delivery Ass'n v. Coakley, 671 F. 3d 33 (Court of Appeals, 1st Circuit 2012).  Our firm, on behalf of small trade associations, filed an amicus curiae in support of petitioners.  On appeal of an adverse decision to the 1st Circuit Court of Appeals, a favorable decision has been entered.

As Wes Chused, a Massachusetts based transportation lawyer notes, “Motor carriers’ use of independent contractors in Massachusetts [is now] a whole new ball game.”  Not only did the court reverse adverse lower court decisions, importantly it found that the preemption provisions of the F4A (49 U.S.C. 14501(c)) preempted the second prong of the state law which otherwise would have precluded the use of owner-operators without the risk of consequences of a misclassification claim.

Remember, preemption is the doctrine that under the commerce clause of the Constitution, federal law is supreme and trumps state law.  The federal court in Coakley found that the Massachusetts statute in effect prevented the use of independent contractors in Massachusetts, making impossible use of a business model federal law is intended to permit. Hopefully this decision will have legs and will be adopted by other Circuits as well.

Now, if only we could get the doctrine of federal preemption affirmed when plaintiff’s bar attempts to use state law to penalize the public for using motor carriers the FMCSA has determined are safe to operate.





Henry E. Seaton, Esq.
Seaton & Husk, LP
info@transportationlaw.net

1 comment:

  1. Looks like the GVMT is trying to go back to the pre-1980 B/4 DeReg Act...picking winners and losers ...I have been on both sides owning a LTL company b/4 DeReg...then went through the "Cowboy" Days of every man for himself ....How can you run a Trucking Company that is marginal and the Govmt keeps changing the rules? Trucking is a heavy investment in equipment and employees ..Lot of times for little return..Who in their right mind would start a Trucking Company now with out a political inside ..They would do better @ CDs @ 1%..This is a way to "Thin The Herd"..of small brokers and small trucking companies...Watch transportation prices soar and fewer people in the game....Darby

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