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Regulatory and Legislative Update - November 2020

By Dan Boaz | Nov 12, 2020


The emergency declaration regarding enforcement relief for drivers and carriers involved in COVID-19 response is in place through December 31. For details, visit www.fmcsa.dot.gov/COVID-19.

Regulation and Enforcement


Advocacy and Comment


Regulation and Enforcement

Coalition urges DOL to affirm that owner-operators are independent contractors

The owner-operator model in trucking would meet the Department of Labor’s proposed economic control test, but the department should explicitly recognize the model as satisfying the independent contractor concept, a coalition of nine trucking-related organizations said. The coalition was among about 1,800 commenters on a DOL notice of proposed rulemaking (NPRM) to clarify the definition of employee under the Fair Labor Standards Act (FLSA) as it relates to independent contractors. (For more on the NPRM, see the October 2020 Regulatory Update.)

“Commenters do not criticize the Department of Labor’s proposed economic control test as an appropriate standard of general application across industries,” the coalition stated. “In fact, Commenters submit that the so-called ‘owner operator model’ is the backbone of interstate trucking and would meet the new proposed test. Commenters’ concern is based upon the special characteristics and importance of the owner operator model. This model, consistent with judicial precedent, begs for its recognition of independent contractor treatment across federal agencies.”

The coalition’s comments detail its members’ position that a driver owning a truck and leasing it to an interstate carrier “is a recognized entrepreneurial option dependent on independent contractors established over 30 years ago.” They argued that DOL’s final rule should affirm the precedent and establish that owner-operators are independent contractors for FLSA purposes. “Issues involving the application of different labor law tests to the independent contractor standard have resulted in costly class action suits which undermine needed uniformity in interstate trucking.”

The organizations participating in the coalition are the Air & Expedited Motor Carrier Association; Alliance for Safe, Efficient and Competitive Truck Transportation; American Home Furnishings Alliance/Specialized Furniture Carriers/Apex Capital Corp.; Auto Haulers Association of America; National Association of Small Trucking Companies; The Expedite Alliance of North America; Transportation and Logistics Council; and Transportation Loss Prevention & Security Association.

For the coalition’s comments, visit https://www.regulations.gov/document?D=WHD-2020-0007-1692. For more information on the NPRM, including the proposal itself and other comments, https://www.regulations.gov/docket?D=WHD-2020-0007.

FMCSA seeks nominations for Motor Carrier Safety Advisory Committee

FMCSA seeks nominations by November 30 for interested persons to serve on the agency’s Motor Carrier Safety Advisory Committee (MCSAC). Composed of motor carrier safety stakeholders from the safety advocacy, safety enforcement, industry, and labor sectors, MCSAC provides advice and recommendations to the FMCSA on various issues related to motor carrier safety. Under its charter, MCSAC is composed of up to 25 members appointed for terms of up to two years. Committee members serve without pay, but they may be entitled to reimbursement of expenses. Committee members must be able to attend two to three meetings each year, either by videoconference or in person.

For qualification requirements and information on information needed for a nomination, see Federal Register notice at https://www.federalregister.gov/d/2020-23969. FMCSA said that nominations received after November 30 may be retained for future MCSAC vacancies after all other nominations received by the due date have been evaluated and considered. For more information on the work of MCSAC, visit www.fmcsa.dot.gov/mcsac.

Comment period extended until November 18 on broker transparency petitions

FMCSA has extended until November 18 the deadline for submitting comments on petitions for rulemaking filed by the Owner-Operator Independent Drivers Association (OOIDA) and the Small Business in Transportation Coalition (SBTC) to tighten the requirements on property brokers for the reporting of transactions. (For details of the petitions, see the September 2020 Regulatory Update.) FMCSA held a listening session on October 28 to take comments regarding the two petitions as well as a more recent petition submitted by the Transportation Intermediaries Association (TIA) for a rulemaking to eliminate the underlying reporting requirement altogether. (See the October 2020 Regulatory Update.) For the original notice of the OOIDA and SBTC petitions, visit https://www.federalregister.gov/d/2020-18130.

FMCSA to expand pool for military younger driver program

FMCSA plans to expand its pilot program for individuals aged 18 to 20 to operate commercial motor vehicles (CMVs) in interstate commerce if they have received heavy-vehicle driver training in certain Military Occupational Specialties (MOS) while in military service. The agency proposes to add five more Army specialties and four more Marine Corps specialties to the list of seven MOS that were approved in 2018.

The training requirements for the nine new proposed MOS are equivalent to those required for the original seven MOS approved for the pilot program, FMCSA. The agency said that it previously was not aware that these classifications received heavy-vehicle training equivalent to the other MOS and that the nine MOS are being added at the recommendation of the Army and Marine Corps to provide additional service members with the opportunity to transition to commercial driving jobs. The expansion will make the pilot program available to 30,000 more drivers, FMCSA said. For the Federal Register notice, visit https://www.federalregister.gov/d/2020-22401.

FMCSA rejects ELD, HOS relief for drivers traveling with pets

FMCSA has denied an application by the Small Business Transportation Coalition (SBTC) to exempt drivers who travel with domestic animals – i.e., pets – from electronic logging devices (ELDs) and to provide hours-of-service relief. Specifically, SBTC had asked that such drivers be allowed to extend their driving window to 16 hours from the current 14 hours and to drive a total of 13 hours during the period. SBTC citied the ELD relief Congress provided to haulers of livestock and the hours of service relief that has been requested by the National Cattlemen’s Beef Association.

FMCSA rejected the application on both procedural and substantive grounds. It said the application did not meet regulatory standards because SBTC failed to identify any carriers or individuals who would use the exemption or the number of drivers or commercial vehicles that would be involved. Also, SBTC proposed no countermeasures to ensure an equivalent or greater level of safety than would be achieved under compliance with the current rules, the agency said. For the Federal Register notice announcing FMCSA’s denial, visit https://www.federalregister.gov/d/2020-22890.

Knight-Swift wins limited exemption from MVR update requirement

FMCSA has granted Knight-Swift Transportation Holdings, Inc.’s application for a limited exemption from regulations requiring carriers to obtain motor vehicle records (MVRs) of CDL drivers whenever drivers’ MVRs are updated by a new medical examination. Knight-Swift sought the exemption only when a newly hired driver undergoes a medical examination. Knight-Swift asked that in these cases it be permitted to satisfy this requirement by obtaining other proof of the results of the medical examination. For the Federal Register notice, visit https://www.federalregister.gov/d/2020-24472.

FMCSA approves tank truck group’s exemption allowing pulsating brake light

FMCSA has granted an application from National Tank Truck Carriers, Inc. (NTTC) for an exemption to allow motor carriers operating tank trailers to install a red or amber brake-activated pulsating lamp positioned in the upper center position or in an upper dual outboard position on the rear of the trailers in addition to the steady-burning brake lamps required by the Federal Motor Carrier Safety Regulations (FMCSR). With a few exceptions, the FMCSRs require all exterior lamps (both required lamps and any additional lamps) to be steady-burning. For the Federal Register notice, visit https://www.federalregister.gov/d/2020-22233.

FMCSA rejects mobile medical operation request for HOS relief

FMCSA has denied an application submitted by DPN USA, LLC, doing business as Matrix Medical Network, for an exemption to its employee-drivers to have a 16-hour window within which to operate CMVs during their work shift and to return to work with less than the mandatory 10 hours off duty. FMCSA concluded that the proposed terms and conditions of the exemption would not achieve a level of safety equivalent to or greater than would be achieved by compliance with the HOS rules. For the Federal Register notice denying the exemption, visit https://www.federalregister.gov/d/2020-22560.

Samsara, Nauto granted windshield placement exemptions

FMCSA has granted exemptions requested by Samsara Networks Inc. and Nauto, Inc. for exemptions allowing their safety system devices to be mounted lower on CMV windshields than currently allowed by regulation. For the for an exemption to allow its AI Dash Cam to be mounted lower in the windshield on CMVs than is currently permitted. For the Samsara Federal Register notice, visit https://www.federalregister.gov/d/2020-23894. For the Nauto, Inc. Federal Register notice, visit https://www.federalregister.gov/d/2020-22361.



Analysis: A Biden administration likely would pursue tighter safety regulations

Although the votes have not been certified and litigation is ongoing, Vice President Joe Biden initially appears to have carried enough states with margins outside realistic recount reversals to give him more than the 270 electoral votes required to become the next president of the United States. If that situation holds, Biden will be inaugurated on January 20, 2021.

Meanwhile, the U.S. House of Representatives would appear to remain in Democratic control, albeit by a narrower margin. The Senate apparently will remain in Republican control unless both Democratic candidates win in two Georgia runoff elections slated for early January. If that happens, the Senate will split 50-50, and the Democrats would take control by virtue of Kamala Harris’ tie-breaking vote as vice president, assuming the apparent outcome of the presidential election holds. Senate races in North Carolina and Alaska have not been declared, but the incumbent Republicans appear to be solidly in the lead.

Although a Republican Senate likely would thwart Democratic plans for sweeping legislatives changes, a change in administration clearly would mean a major shift in regulatory policy. A Biden administration could be expected to reverse the deregulatory course taken by President Trump, but it is far too early to predict how quickly that will occur in terms of rulemaking. Any rules issued within 60 days prior to the inauguration are subject to being vacated by the incoming president. However, no major FMCSA rulemaking is expected during this time frame. The lone FMCSA rulemaking under review at the White House’s Office of Management and Budget is an interim final rule to revise and/or clarify the definitions of the terms “agricultural commodity” and “livestock” in the hours-of-service (HOS) regulations. The broader HOS changes that took effect in late September are well outside the 60-day window. If the Biden administration wanted to undo them, it would have to initiate a completely new proceeding.

The Trump administration withdrew several rulemakings that had been initiated by the Obama administration, including (1) an NPRM that would have changed safety fitness determinations to incorporate Safety Measurement System metrics; (2) an advance rulemaking to consider changes in minimum public liability insurance levels for motor carriers: and (3) and advance rulemaking to consider setting requirements for safety-sensitive trucking and rail workers related to obstructive sleep apnea. Another rulemaking to mandate use of speed limiters was shelved, but it was not technically withdrawn. All these initiatives likely would receive a warmer reception in a Biden administration. Also, FMCSA is pushing some pilot programs regarding pausing the 14-hour clock in HOS regulations and allowing younger drivers to operate interstate. It is not a given that the Biden administration would scuttle these initiatives, but it would not be a surprise.

A Biden administration might be more aggressive on regulations affecting the trucking industry outside the realm of motor carrier safety. The Trump administration’s fast-tracking of a proposed new economic control test for independent contractors is a recognition that a Biden administration – like the Obama administration before it – presumably will be hostile to broad use of independent contractor status. The Environmental Protection Agency certainly would push stronger environmental rules and probably would support, not oppose, efforts by California to adopt restrictions that go beyond federal standards.

California voters approve ‘gig driver’ ballot measure

Nearly 60% of voters in California on November 3 approved Proposition 22, which overrules part of AB 5 to define app-based rideshare and delivery drivers as independent contractors. The initiative had been backed by major firms in this industry, including Uber, Lyft, and DoorDash.

Specifically, Proposition 22 defines app-based drivers as workers who (a) provide delivery services on an on-demand basis through a business’s online-enabled application or platform or (b) use a personal vehicle to provide prearranged transportation services for compensation via a business’s online-enabled application or platform. The narrow definition does not provide any legal support for the leased owner-operator model, although it does indicate that California voters are open to arguments against AB 5.


Advocacy and Comment

The Next Four Years

As the analysis above suggests, the new Administration will undoubtedly be more aggressive on seeking new regulations affecting the trucking industry. Although SMS methodology has been discredited, plaintiff’s bar continues to attempt to use it to gain nuclear judgments. If the Democrats control the Senate an attempt to roll back the affect of the FAST Act can be expected.

The continuation of the traditional owner operator model is in jeopardy. Federal legislation was introduced in both the House and the Senate last year which tracks California’s AB 5 legislation and is intended as a “one size fits all” test for independent contractor status. Because of the B Prong of the test, if this standard were applied to owner operators, it would deprive 800,000 to 1,000,000 independent contractors of the opportunity to choose to operate their own trade or business.

AB 5, which became law in California last January, has disrupted the longstanding owner operator model in trucking there. It took an expensive referendum (Proposition 22) financed by Uber and Lyft, to get a carve-out from the effect of this legislation. In the Department of Labor filing mentioned above, advocates for continued independent contractor treatment of owner operators laid out similar, if not more compelling arguments for continued recognition of owner operators as independent contractors in the trucking industry.

Independent contractor status of owner operators is supported by Federal Leasing Regulations and the National Transportation Policy. There has been no change in truth in leasing regulations which protect independent contractor rights for over 30 years and established Federal Court precedent supports independent contractor treatment. Owner operators choose to be treated as independent contractors and should not be deprived of the entrepreneurial opportunity such treatment provides.

The President of Uber stated Prop 22 would have had no success if it was not supported by the Uber drivers. To make a compelling argument for an owner operator carve-out, a populist movement by owner operators themselves will be necessary to support continued unique treatment for the model.

Read More »

Regulatory and Legislative Update - October 2020

By Dan Boaz | Oct 7, 2020


FMCSA has extended through December 31 its emergency declaration regarding enforcement relief for drivers and carriers involved in COVID-19 response. For details, visit www.fmcsa.dot.gov/COVID-19.

Regulation and Enforcement



Open Dockets

Advocacy and Comment


Regulation and Enforcement

Labor Department proposes to clarify independent contract status

The U.S. Department of Labor’s Wage and Hour Division (WHD) has issued a notice of proposed rulemaking (NPRM) to clarify the definition of employee under the Fair Labor Standards Act (FLSA) as it relates to independent contractors. WHD’s proposed rule would:

  • Adopt an “economic reality” test to determine a worker’s status as an FLSA employee or an independent contractor. The test considers whether a worker is in business for himself or herself (independent contractor) or is economically dependent on a putative employer for work (employee);
  • Identify and explain two “core factors,” specifically the nature and degree of the worker’s control over the work, and the worker’s opportunity for profit or loss based on initiative and/or investment. These factors help determine if a worker is economically dependent on someone else’s business or is in business for himself or herself;
  • Identify three other factors that may serve as additional guideposts in the analysis:
    - The amount of skill required for the work;
    - The degree of permanence of the working relationship between the worker and the potential employer; and
    - Whether the work is part of an integrated unit of production;
  • Advise that the actual practice is more relevant than what may be contractually or theoretically possible in determining whether a worker is an employee or an independent contractor.

Although the NPRM, which takes up 40 pages in the September 25 Federal Register, includes some discussion of truck drivers as examples, the document does not specifically address application of the proposed rule to the trucking industry. The rule likely is on a very fast track, especially if the presidential election results in a change in administration. An incoming president can vacate any final rule issued within 60 days before the inauguration, so expect a rule by November 20 if that happens.

Comments on the WHD proposal are due October 26. For the Federal Register notice, visit https://www.federalregister.gov/d/2020-21018. For further analysis of the WHD’s proposed rule, see the article under “Advocacy and Comment” below.

OMB reviewing interim rule on agricultural commodity, livestock definitions

The Department of Transportation on September 30 submitted for White House Office of Management and Budget (OMB) review an interim final rule (IFR) to revise and/or clarify the definitions of the terms “agricultural commodity” or “livestock” in the hours-of-service regulations. During harvesting and planting seasons as determined by each state, drivers transporting agricultural commodities, including livestock, are exempt from hours-of-service (HOS) requirements from the source of the commodities to a location within a 150-air-mile radius from the source. FMCSA had issued an advance notice of proposed rulemaking (ANPRM) in August 2019 seeking comments on a potential change in the definitions.

Details will not be available until OMB clears the IFR and it is published in the Federal Register. For the ANPRM and comments submitted, visit www.regulations.gov/docket?D=FMCSA-2018-0348.

TIA seeks rulemaking to end transaction reporting mandate

The Transportation Intermediaries Association has filed a petition for rulemaking with FMCSA to eliminate the requirements of 49 CFR §371.3(c), which obligates brokers to maintain detailed records on transactions and to make those details available to parties to the transaction upon request. TIA said the proposed modifications and clarifications “would eliminate an outdated regulation that dates back to 1980 that is not applicable to the current marketplace.” FMCSA currently is inviting comments on separate petitions for rulemaking that would require brokers to distribute routinely the records required by 371.3. See Regulatory Update, September 2020.

TIA also is asking FMCSA to develop guidance “on what constitutes a legitimate ‘dispatch service’ and remove unethical and unscrupulous actors from the marketplace.” TIA said it believed that there are many illegal dispatch services that are operating illegally as unlicensed brokers and that FMCSA should prohibit these companies from offering such a service without a license.

FMCSA has yet to publish TIA’s August 4 petition for comment. The petition has been posted in the federal docketing system and is available at https://www.regulations.gov/docket?D=FMCSA-2020-0194.

FMCSA rejects bid for HOS relief for drivers using Pronto.ai systems

FMCSA has denied an application by Pronto.ai, Inc. for an exemption that would have allowed drivers operating commercial vehicles equipped with its advance driver assistance systems (ADAS) to drive up to 13 hours during a 15-hour driving window. Specifically, Pronto.ai had asked for the relief for drivers operating CMVs equipped with the Copilot by Pronto advanced driver assistance systems (ADAS), the SmartDrive Video Safety Program, and operating under certain other safeguards.

FMCSA said the 14-hour driving window in the regulations is intended to reduce the risk of individuals experiencing fatigue during the work shift. The agency said it was not aware of data or information that would allow it to determine whether the advanced technology reduces the workload for CMV drivers enough that additional driving time should be allowed or that individuals should be allowed to operate an extended work shift. “The premise that the use of advanced technology should reduce the workload on drivers appears reasonable on the surface but the absence of data or information to quantify the impact on driver fatigue and alertness leaves the Agency with no choice but to deny the application,” FMCSA said. For the Federal Register notice, visit https://www.federalregister.gov/d/2020-21324.

UPS asks FMCSA to reconsider its denial of driver training exemption

FMCSA is requesting comments by October 23 on a petition for reconsideration from United Parcel Service, Inc. (UPS) for the agency’s denial of its application for exemption from provisions in the entry-level driver training (ELDT) final rule requiring two years of experience for training instructors. FMCSA had denied the UPS application in December 2019. UPS believes that its current process of preparing driver trainers exceeds any skill set gained merely by operating a tractor-trailer for two years. UPS also believes that a two-year experience requirement doesn't automatically equate to success as a CMV driver trainer. For the Federal Register notice, visit https://www.federalregister.gov/d/2020-21025

FMCSA rejects Ohio DPS request to modify skills test rules for veterans

FMCSA had denied an exemption application from the Ohio Department of Public Safety's (DPS) to modify the mandatory skills test requirements for qualified military veterans. Ohio DPS had proposed to allow the waiver for applicants who held a military position that required operation of a CMV for at least two years sometime during his or her career instead of the requirement that such operation be immediately prior to discharge from the military. FMCSA determined that the state agency did not provide an alternative to ensure that an equivalent level of safety would be achieved under the exemption. It also noted that although a majority of comments favored the exemption, none provided supporting data. For the Federal Register notice, visit https://www.federalregister.gov/d/2020-21325.

Firms receive exemption for mirror-replacement camera system

FMCSA has granted a limited five-year exemption to Robert Bosch LLC and Mekra Lang North America LLC to allow motor carriers to operate CMVs equipped with the CV [Commercial Vehicle] Digital Mirror System installed as an alternative to the two rear-vision mirrors required by the federal safety regulations. FMCSA’s approval included an explicit preemption against states enforcing any law or regulation that conflicts with the exemption. For the Federal Register notice, visit https://www.federalregister.gov/d/2020-20470.

FMCSA denies ELD exemption for pipeline services company

FMCSA has rejected an application from pipeline services contractor Right-A-Way, LLC for an exemption from the requirement that its short-haul drivers use electronic logging devices (ELDs) when they are required to prepare records of duty status (RODS) more than eight days in a 30 consecutive day period. The agency said Right-A-Way did not show how it would maintain safety through an expanded exception and did not provide an alternative means of ensuring compliance if drivers rely on paper RODS for more than eight times in a 30-day period. For the Federal Register notice, visit https://www.federalregister.gov/d/2020-21326.

Exemption granted regarding fuel systems for stationary auxiliary equipment

FMCSA has granted an exemption to Charles Machine Works, Inc. to allow the use of gravity or syphon-fed fuel systems for auxiliary equipment installed on or used in connection with CMVs. The exemption applies to auxiliary equipment that operates only when the CMV is stationary. For the Federal Register notice, visit https://www.federalregister.gov/d/2020-20440.



Stopgap funding bill also extends highway authorization for a year

President Trump on October 1 signed legislation (H.R. 8337) that continues funding for the federal government through December 11. Without the legislation, much of the federal government would have had to shut down. The continuing resolution ensures funding past the election. In addition to continuing funding, the new law extends the authorization for surface transportation programs through September 30, 2021. The prior authorization expired September 30. For details of H.R. 8337, visit https://www.congress.gov/bill/116th-congress/house-bill/8337.

Rep. Gibbs introduces hiring standard bill with remote audit program

Three months after introducing legislation (H.R. 7457) to establish a basic carrier selection standard, Rep. Bob Gibbs (R-Ohio) has introduced a similar bill (H.R. 8513) that basically adopts the same standard but also sets up a pilot program for remote compliance reviews to establish safety ratings. The text of H.R. 8513 is available at https://gibbs.house.gov/sites/gibbs.house.gov/files/documents/CSAReformAct.pdf. For further details on H.R. 8513, visit https://www.congress.gov/bill/116th-congress/house-bill/8513.

Sen. Fischer introduces bill to loosen restrictions on agricultural hauling

Sen. Deb Fischer (R-Nebraska), who chairs the Senate subcommittee that oversees trucking regulations, has introduced legislation (H.R. 4720) to modify certain agricultural exemptions for HOS requirements. The bill would eliminate the limitation that applies ag and livestock HOS exemptions only during state-designated planting and harvesting seasons. The bill also would amend and clarify the definition of “agricultural commodities” and authorize a 150 air-mile exemption from HOS requirements on the destination side of a haul for ag and livestock haulers. For details of H.R. 4720, visit https://www.congress.gov/bill/116th-congress/senate-bill/4720.



Ninth Circuit declines full court rehearing of Amazon decision

The U.S. Court of Appeals for the Ninth Circuit has turned down Amazon’s request for an en banc reconsideration of a three-judge panel’s decision in August that the e-commerce giant cannot compel arbitration of disputes with its delivery drivers just because they don’t cross state lines. In an August 19 ruling, the Ninth Circuit had said that delivery drivers operating under Amazon’s Amazon Flex app-based delivery program are exempt from the Federal Arbitration Act because they are making last-mile deliveries “of goods in the stream of interstate commerce.” The denial of an en banc rehearing would be the last step before an appeal to the U.S. Supreme Court should Amazon choose to pursue it. (For more on the 9th Circuit decision, see Regulatory Update, September 2020.)

FAAA does not preempt negligent selection lawsuit, Ninth Circuit rules

The U.S. Court of Appeals for the Ninth Circuit reversed a district court’s dismissal of a lawsuit against C.H. Robinson alleging negligent selection of a motor carrier resulting in injuries in a motor vehicle crash. The district court had ruled that the lawsuit fell withing the Federal Aviation Administration Authorization Act of 1994 preemption because the claim was “related to” C.H. Robinson’s services and did not fall within the exception for “the safety regulatory authority of a State with respect to motor vehicles.”

Although the appeals court panel agreed that the claim was related to C.H. Robinson's broker services, it ruled that Congress intended to preserve the states’ broad power over safety, including not only through legislation and regulation but also through common law damages. The September 28 opinion is available at https://cdn.ca9.uscourts.gov/datastore/opinions/2020/09/28/19-15981.pdf.


Open Dockets

Comment period still open on various FMCSA initiatives

In addition to newly published proceedings covered in this report, the comment period remains open for several FMCSA proceedings as follows:

  • Availability of property broker transactions – Comments are due October 19 on separate petitions for rulemaking filed by the Owner-Operator Independent Drivers Association and the Small Business in Transportation Coalition. See Regulatory Update, September 2020. For the Federal Register notice and other materials, visit www.regulations.gov/docket?D=FMCSA-2020-0150. (Note that TIA is asking FMCSA to eliminate the recordkeeping requirement altogether. See article above.)
  • Pilot demonstration program on pause in the 14-hour window – Comments are due November 2. See Regulatory Update, September 2020. For the Federal Register notice and other materials, visit www.regulations.gov/docket?D=FMCSA-2020-0098.
  • Pilot demonstration program on interstate operation of CMVs by drivers under 21 – Comments are due November 9. See Regulatory Update, September 2020. For the Federal Register notice and other materials, visit www.regulations.gov/docket?D=FMCSA-2018-0346.


Advocacy and Comment

Independent Contractor Status NPRM

As noted above, the current Department of Labor proposes new independent contractor status criteria. Comments are due on October 26. See https://www.federalregister.gov/documents/2020/09/25/2020-21018/independent-contractor-status-under-the-fair-labor-standards-act?utm_medium=email&utm_source=govdelivery.

Under the proposed rule and similar proposals by the previous Obama Administration there is no carve-out for owner operators or recognition of the historical small business treatment given to contractors who own or lease equipment under the truth in leasing regulations. For over 50 years, federal statutes and regulations have afforded special treatment to owner operators to encourage blue collar entrepreneurship.

The trucking industry has done a poor job of pointing out to the press, the public or the Department of Labor that the owner operator model is vital to trucking and interstate commerce. Traditional independent contractors across the industry are now scrambling to explain that independent contractor status is a choice, not a burden.

The future of the independent contractor model cannot be left to Washington politics or the premise that some “new deal” is necessary to protect blue collar entrepreneurs who choose to operate their own businesses and form the back bone of many segments of the trucking industry.

Independent contractors, small and large carriers, and the shipping industry who use them should make comments and speak out in support of continuation of the independent contractor model under federal rules and regulations across federal agencies.

The ATRI Study

The annual poll of the most important issues facing trucking has been published by the ATA’s research arm. See https://www.research.net/r/2020-Top-Industry-Issues.

Industry is invited and should comment in length the issues they believe are most important. The results are often used in prioritizing trucking’s agenda for the coming year. With the possibility of a new Administration next year, a politically wild ride for trucking may be created. Efforts to increase bureaucratic overreach in the area of safety, employment law and misuse of SMS generated safety data by plaintiff’s bar is likely. The three available topics for selection which best address these issues and should be ranked in the first three by most respondents are:

(1) Independent Contractor Status

(2) Compliance, Safety, Accountability (CSA) (to watchdog possible bureaucratic overreach

(3) Insurance Availability/Cost (which is a manifestation of nuclear verdicts)

Proposed reform of broker regulations

Now pending are conflicting proposals to revise the broker regulations. The regulations have long required brokers to keep records of transactions showing who they billed, when they received funds, and when they transmitted the funds to the underlying carrier. These regulations are important for establishing the constructive trust obligation of brokers. Its existence levels the playing field between large and small brokers and affords protection that the balance sheet of every broker need not be considered in making decisions in the spot market.

Similarly, more rigid enforcement of the carrier’s “right to know” brokers’ margins on every transaction seems a bridge too far. Hopefully, new spot market pricing models which are based on standardized markups can ameliorate the problems of price gouging without tinkering with the existing broker regulations.

Read More »

Regulatory and Legislative Update - September 2020

By Dan Boaz | Sep 9, 2020


Regulation and Enforcement


Advocacy and Comment


Regulation and Enforcement

FMCSA plans pilot programs on 14-hour window, younger drivers

In separate actions, the Federal Motor Carrier Safety Administration is proposing pilot programs to assess changes in regulations concerning the 14-hour driving window and the minimum age for operating a commercial motor vehicle (CMV) in interstate commerce. Neither change to be studied is a new idea for the agency, which previously has proposed one change and has suggested studying the other.

Pause in the 14-hour window

One pilot program would allow property-carrying drivers to pause their 14-hour driving window for 30 minutes to three hours by taking an off-duty break. The agency had proposed to change the hours-of-service (HOS) regulations to allow this relief, but it dropped the provision from the final rule published June 1 after various parties argued that carriers, shippers, or receivers might use the flexibility to pressure drivers into using the break to cover detention time, thereby depriving drivers of an optimal environment for restorative rest. The other changes made by the final HOS rule take effect September 29. (For details of the final rule, see Regulatory Update, June 2020.)

In a Federal Register notice, FMCSA said it still believes that such a break might allow drivers to avoid congestion, thereby making subsequent driving time more productive. A pause also might reduce the pressure to drive above posted speed limits in order to maximize driving within the 14-hour window, it said. The agency also believes that a rest break would reduce fatigue. Also, because drivers still would be required to take 10 consecutive hours off-duty at the end of the work shift, using the pause option would increase the drivers’ off-duty time during the work week. However, under the final rule, drivers using sleeper berths for split rest also could pause their 14-hour windows for up to three hours without having to increase their total rest requirements.

The agency envisions a three-year program with a sample size of between 200 and 400 commercial driver’s license (CDL) drivers. The study group would include drivers from small, medium, and large carriers and independent owner-operators. Some would operate using the “pause” while others would be the control group operating under current regulations. The Federal Register notice includes proposed eligibility criteria for motor carrier and driver participation.

Comments on FMCSA’s proposed pilot program are due November 2. The Federal Register notice announcing the proposed pilot is available at https://www.federalregister.gov/d/2020-19511.

CMV drivers under 21

FMCSA already is pursuing a pilot program that allows interstate CMV operations by drivers aged 18 to 20 with military experience operating heavy equipment – a program authorized by Congress in the FAST Act. In part because very few younger drivers would meet the very narrow qualifications of that pilot program, FMCSA in May of last year solicited comments on a possible second pilot program to allow non-military drivers aged 18 to 20 to operate CMVs in interstate comment. The agency specifically sought comments on the training, qualifications, driving limitations, vehicle safety systems and other issues that it should consider in developing a second pilot program for younger drivers.

On September 4, FMCSA announced that it is moving ahead with a proposed pilot program to assess the safety, feasibility, and potential economic benefits of allowing 18- to 20-year-old drivers to operate in interstate commerce. In order to have a statistically valid sample, about 200 drivers will need to participate in the program, FMCSA said. In announcing the proposed pilot, the agency noted that 49 states and the District of Columbia already allow 18- to 20-year-old commercial driver’s license (CDL) holders to operate CMVs intrastate commerce.

The proposed pilot program adopts several elements that are proposed in proposed legislation (H.R. 1374) known as the DRIVE-Safe Act, including an apprenticeship for drivers lacking CMV experience and technology requirements for equipment being operated by younger drivers. For more on the DRIVE-Safe Act, visit https://www.congress.gov/bill/116th-congress/house-bill/1374.

In a draft Federal Register notice, FMCSA proposes to allow drivers to participate if they fall within one of two categories:

1. 18- to 20-year-old CDL holders who operate CMVs in interstate commerce while taking part in a 120-hour probationary period and a subsequent 280-hour probationary period under an apprenticeship program established by an employer; or

2. 19- and 20-year-old commercial drivers who have operated CMVs in intrastate commerce for a minimum of one year and 25,000 miles.

Study group drivers would not be allowed to operate vehicles hauling passengers or hazardous materials or special configuration vehicles. Participating drivers also would be required to have completed CDL training that meets the standards of the agency’s rule on entry-level driver training. FMCSA also is proposing various restrictions on participation, such as no disqualifications, suspensions, or license revocations within the past two years and no convictions for various serious violations.

Similar to the DRIVE-Act, FMCSA proposes to require the following vehicle safety technologies on the CMVs operated by study group drivers:

  • Active-braking collision mitigation systems;
  • Forward-facing video event recorders;
  • Automatic or automatic-manual transmissions; and
  • Speed limiters set to 65 miles per hour.

The draft Federal Register notice also includes various qualifying criteria for motor carriers. FMCSA also said it would prioritize approval of those motor carriers that equip their vehicles with additional technologies, such as various collision avoidance systems, lane centering, etc.

The Federal Register notice announcing the proposed pilot program on younger drivers is available at https://www.federalregister.gov/d/2020-19977. For previous notices and comments related to this pilot program, see https://www.regulations.gov/docket?D=FMCSA-2018-0346.

OOIDA, SBTC seek rulemakings to expand broker transparency

FMCSA is requesting comments by October 19 on separate petitions for rulemaking filed by the Owner-Operator Independent Drivers Association (OOIDA) and the Small Business in Transportation Coalition (SBTC) to tighten the requirements on property brokers for the reporting of transactions. Current regulations (Part 371.3) require brokers to maintain transaction records and to allow parties to those transactions to review those records. However, the regulations do not specify a particular manner for providing the information. In addition to basic information about consignors and carriers, transaction records must include the compensation received by the broker for its services, the amount of freight charges collected by the broker, and the date of payment to the carrier.

OOIDA requested that FMCSA (1) require property brokers to provide an electronic copy of each transaction record automatically within 48 hours after the contractual service has been completed and (2) prohibit explicitly brokers from including any provision in their contracts that requires a motor carrier to waive its rights to access the transaction records. The group argued that some brokers allow a motor carrier to access records only at the broker's office during normal business hours, making it virtually impossible for motor carriers to access the records.

SBTC's petition is similar to the second portion of OOIDA's request. The group asked that FMCSA prohibit brokers from coercing or otherwise requiring parties to brokers' transactions to waive their right to review the record of the transaction as a condition for doing business. SBTC also requests that FMCSA adopt regulatory language indicating that brokers' contracts may not include a stipulation or clause exempting the broker from having to comply with the transparency requirement.

In publishing the petitions, FMCSA posed several specific questions to potential commenters, including how a rule restricting the rights of private parties from adopting certain contract terms aligns with the agency’s authority; whether a rule should apply to brokers of all sizes; how much a system of automatic notification would cost and whether brokers could form networks to provide the information; and what would be the economic benefits to motor carriers and economic costs to brokers. For the Federal Register notice, visit https://www.federalregister.gov/d/2020-18130.

Proposed HHS guidelines on hair testing would require backup alternative

The Department of Health and Human Services (HHS) has proposed long-awaited mandatory scientific and technical guidelines for the inclusion of hair specimens in federal workplace drug testing programs, but HHS would require agencies to collect at least one other recognized specimen – e.g., urine or oral fluid – that could be used if necessary. Although the proposed guidelines specifically apply to the testing of federal workers, the FAST Act authorized the Department of Transportation (DOT) to use HHS guidelines, once available, to allow motor carriers to use hair testing of safety-sensitive workers instead of urine testing.

The proposed mandatory guidelines would require an alternate specimen if the donor is unable to provide enough hair due to faith-based or medical reasons or due to an insufficient amount or length of hair. The alternate sample could be provided either simultaneously with the hair sample or later if the Medical Review Officer determines it is necessary after reviewing laboratory-reported results for the hair specimen.

The proposed guidelines are scheduled to be published in the Federal Register on September 10, triggering a 60-day comment period. A pre-publication version already is available at https://www.federalregister.gov/d/2020-16432, and the published version will be available at the same link.

FMCSA retreats on carrier size analysis in Beyond Compliance study

FMCSA apparently has dropped its plan to study the practices and technologies used by top safety performers specifically among small, medium, and large motor carriers and now will just give smaller carriers an opportunity to supplement a survey of motor carriers the agency invites to participate. FMCSA has requested comment by September 19 on its revised plan for a study that would help it implement the long-delayed Beyond Compliance program, which Congress authorized nearly five years ago.

The idea behind Beyond Compliance, which FMCSA had begun pursuing even before enactment of the FAST Act in December 2015, is that carriers would receive some type of recognition for voluntary use of advanced technologies or enhanced driver fitness measures. For example, recognition might include an improved Safety Measurement System percentile. Prior to the proposed study, the last official action FMCSA had taken regarding Beyond Compliance was a Federal Register notice in April 2016 requesting comments on the program.

FMCSA originally proposed the study in December 2019. As described in the December Federal Register notice, the agency said it would collect data “through an electronic survey of motor carriers who have safety performance records that are better than the national average” as defined by crash rates and driver and vehicle out-of-service (OOS) rates. “Only those carriers that perform near the top quartile (as determined by the selection criteria laid out below) across all three carrier size categories (large, medium, and small) are potential participants,” FMCSA.

On August 18, FMCSA again published a proposed information collection that is nearly identical to the one published in December. Although the language is slightly different in places, the only fundamental change appears to be in backing away from ensuring study participation across carrier size categories. Now, FMCSA plans to collect data “through an electronic survey of a panel of industry experts” recruited from carriers with safety performance records better than the national average as identified by examining DOT-reportable crash rates and driver and vehicle OOS rates.

The sentence that previously included an assurance of carrier size representation now reads as follows: “Only those carriers that perform near the top quartile across all three categories are potential participants.” In context, the “three categories” clearly refers to the three categories of safety metrics as the latest notice makes no reference at all to small, medium, and large carriers.

The interpretation that no commitment about representing carriers of different sizes in the formal study is reinforced by a new paragraph that did not appear in the earlier notice. It states that in addition to carriers invited by FMCSA, the agency will reach out to the National Association of Small Trucking Companies and Owner-Operator Independent Drivers Association to invite them to voluntarily survey members as a supplemental data collection to the structured design. “This would enable greater participation by smaller carriers and owner-operators, and would also enable a wider perspective of responses,” FMCSA said.

The current Federal Register notice is available at https://www.federalregister.gov/d/2020-18014. The original notice is available at https://www.federalregister.gov/d/2019-27255. For prior notices and comments related to Beyond Compliance, see https://www.regulations.gov/docket?D=FMCSA-2015-0124.

Railroads seek broad HOS relief for unplanned events

FMCSA is requesting comments by September 21 on a an application from the Association of American Railroads and American Short Line and Regional Railroad Association on behalf of member railroads for an exemption from various HOS requirements to allow railroad employees subject to the HOS rules to respond to unplanned events that occur outside of or extend beyond the employee’s normal work hours. The request covers the regulations on mandatory minimum rest, the 14-hour driving window, the 11-hour driving limit, and cumulative work limits. The Federal Register notice is available at https://www.federalregister.gov/d/2020-18215. The exemption application is available at https://www.regulations.gov/docket?D=FMCSA-2020-0171.

IANA training now counts as intermodal inspector qualification

Individuals who complete a training program consistent with a set of intermodal recommended practices (IRPs) and associated requirements developed by the Intermodal Association of North America (IANA) now may be considered qualified inspectors or qualified brake inspectors for intermodal equipment (IME). FMCSA has granted IANA’s request for an exemption from the regulation that requires a year of training of experience – or a combination of both – before becoming a certified inspector/brake inspector. For the Federal Register notice, visit https://www.federalregister.gov/d/2020-17957.

J.J. Keller, Netradyne seek windshield exemptions for cameras

FMCSA is requesting comments on two applications for exemptions to allow cameras to be mounted lower in the windshield of CMVs than currently is permitted. Comments on a request from J.J. Keller are due September 14. The Federal Register notice is available at https://www.federalregister.gov/d/2020-17708. Comments on a request from Netradyne are due September 21. The Federal Register notice is available at https://www.federalregister.gov/d/2020-18217.



More appellate courts address final-mile drivers and arbitration

Just weeks after the U.S. Court of Appeals for the First Circuit ruled that last-mile delivery drivers transporting goods moving in interstate commerce are exempted from coverage of the Federal Arbitration Act (FAA) even if they do not physically cross state lines, three judge panels of two other federal appeals courts have weighed in on the issue. (For more on the July 17 ruling in Waithaka v. Amazon.com, see Regulatory Update, August 2020.)

In an August 19 ruling, the Ninth Circuit essentially agreed with the First Circuit that delivery drivers operating under Amazon’s Amazon Flex app-based delivery program are exempt from FAA became they are making last-mile deliveries “of goods in the stream of interstate commerce.” As in the First Circuit decision, AmFlex drivers did not need to cross state lines in order to be engaged in interstate commerce, the appeals court said. They “pick up packages that have been distributed to Amazon warehouses, certainly across state lines, and transport them for the last leg of the shipment to their destination,” it noted.

The appeals court contrasted that situation to one in a 1935 case Amazon had cited involving live poultry shipped from out of state to slaughterhouses. “Once the poultry reached the slaughterhouses, any further ‘commerce’ involving the poultry required new or subsequent transactions, all of which took place within the state of the slaughterhouse.” The Ninth Circuit decision is available at http://bit.ly/Amazon-9th.

The other case addressing the arbitration issue revolved around a similar point. The Seventh Circuit on August 4 distinguished Grubhub workers who deliver food prepared at local restaurants from those, as in the First Circuit and Ninth Circuit cases, involved in the movement of goods in interstate commerce. The appeals court concluded that the plaintiffs had completely ignored the governing framework.

“Rather than focusing on whether they belong to a class of workers actively engaged in the movement of goods across interstate lines, the plaintiffs stress that they carry goods that have moved across state and even national lines,” the court said. It noted that a bag of potato chips might have traveled across several states or a piece of dessert chocolate might have traveled from Switzerland before landing in meal prepared and delivered by a Grubhub drivers. That’s not good enough to qualify for the FAA exemption; workers most be involved in moving goods across state or national boarders, the Seventh Circuit said.

“By erasing that requirement from the statute, the plaintiffs’ interpretation would sweep in numerous categories of workers whose occupations have nothing to do with interstate transport – for example, dry cleaners who deliver pressed shirts manufactured in Taiwan and ice cream truck drivers selling treats made with milk from an out-of-state dairy,” the court said. The Seventh Circuit decision is available at http://bit.ly/Grubhub-7th.

Judge rules against Uber, Lyft in AB 5 case; Ninth Circuit hears CTA case

A California judge has ruled that Uber and Lyft must stop classifying their ride-hailing drivers operating in California as independent contractors as that practice is barred by state law as enacted in AB 5, which took effect at the beginning of the year. However, the ruling is on hold pending appeal.

In his August 10 ruling, San Francisco County Superior Court Judge Ethan Schulman rejected the plaintiffs’ various arguments, including a motion to stay action in the case until the election when California voters will consider Proposition 22, which would exempt Uber and Lyft from AB 5. On that request, Schulman said that the fact that Uber and Lyft “are attempting to persuade voters to change that law, and effort that may or may not succeed, is no reason for this Court to refrain from deciding the issues currently before it.” For a copy of the preliminary injunction and other documents in the Uber/Lyft case, visit https://webapps.sftc.org/ci/CaseInfo.dll and search Case No. CGC-20-584402.

The decision does not directly affect motor carriers, which have been protected against enforcement of AB 5 requirements pending litigation over whether AB 5 is preempted by the Federal Aviation Administration Authorization Act of 1994. A preliminary injunction obtained by the California Trucking Association (CTA) has been in place since mid-January, but the State of California is appealing the injunction before the U.S. Court of Appeals for the Ninth Circuit. Oral arguments in the case, CTA v. Xavier Becerra, were held on September 1. A recording of the oral arguments is available at https://youtu.be/959SGrORb2I.

ATA files complaint against ocean carriers over intermodal charges

The American Trucking Associations has filed a complaint with the Federal Maritime Commission alleging that the Ocean Carrier Equipment Management Association and 11 ocean carriers have overcharged motor carriers and their customers for intermodal container chassis at ports and inland terminals throughout the U.S. By limiting motor carriers’ choice of equipment providers, ocean carriers have forced trucking companies and their customers to subsidize nearly $1.8 billion of the ocean carriers’ costs in just the past three years.

In an August 28 Federal Register notice, FMC said the initial decision of the presiding office in the proceeding would be issued by August 24, 2021 with a final decision to be issued by March 10, 2022. The ATA complaint and other documents related to the proceeding are available at https://www2.fmc.gov/readingroom/proceeding/20-14.

Advocacy and Comment

1) Expanded Broker Transparency. The “Expanded Broker Transparency” petition filed by OOIDA is well intended. The broker regulations which provide for disclosure of broker commissions are too easily waived along with other carrier rights in standard broker contracts presented to small carriers on a take it or leave it basis. Yet, the FMCSA has no appetite for making new rules of commerce. For 22 years, it has proclaimed that safety is its major, if not sole, job and has identified rules of commerce as “nothing burgers.” Hopefully new and small carriers will come to recognize that chasing back haul freight for empty trucks at the price of non-compensatory rates is not sustainable.

2) Beyond Compliance Study. For 5 years, the Agency has been noodling about how carriers can get some type of improved safety fitness score for yet to be defined enhanced safety procedures and technology. This request for comment seems like SMS methodology all over again. There is no identification of what will be measured or how it would be used. To its credit, the Agency is reaching out to representative small carriers to obtain “a wide perspective of responses.” Yet until the program is better identified with respect to the advance technologies to be used and the cost / benefit of the program, meaningful responses will be difficult. If SMS is the measuring tool, it is difficult to see how “beyond compliance” can be integrated into existing algorithms which themselves have not proven workable.

3) Misclassification and Final Mile Cases. Misclassification and final mile cases discussed above create vexatious legal issues. Uber and Lyft (the gig economy) and final mile delivery (Amazon et al.) share several things in common. Both typically provide services between two points in the same state and use non-commercial motor vehicles weight less than 10,000 pounds gvw. Also, both models are heavily dependent on the use of independent contractors which, unlike owner-operators in the big truck world, have traditionally been classified as independent contractors for both federal and state purposes. The cases discussed above make clear that final mile delivery of parcels, even when the service is provided between points in the same state is moving in interstate commerce when the shipment is sourced outside the state. Because of federal law, this means arbitration provisions in agreements with lease operators are invalid and class actions against many final mile upstarts can proceed. On the other hand, Uber and Lyft, and locally sourced home delivery providers like pizza and grocery delivery services, are not classified as interstate delivery services and face other challenges.

Under any form of control test, the Uber and Lyft load matching services and particularly their use of independent contractors would seem most easy to justify. Yet in blue states like California, without the federal preemption argument, truly intrastate service providers are left without the “federal preemption argument” which is organized trucking’s strongest defense in pending litigation. At stake in the confusion is more than the parochial issue of the scope of state law versus federal law. The independent contractor model is blue collar entrepreneurship at its best but the future of the model has become a political football which threatens its continued viability.

These legal issues will be played out on the canvas of future politics at both the federal and state levels as well as in the courts.

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